The city of Denver in Colorado seems to be the dream destination for many home sellers as the metro has sellable criteria of gorgeous surroundings, truly luxurious properties, and an exceptional quality of living. However, the increasing home prices in the city seem to be putting a possibility of an onslaught of home buyers backing out even though Denver is recently hailed as one of the most favorable real estate market for first time home buyers by finance website Wallethub, placing the city on the 7th spot.
With swelling home prices, dwindling inventories but continuous praise of the city’s real estate industry, aspirants can find themselves at a loss on whether to venture for a piece of land in the ever-glorious Mile High City.
Below, we’ve discussed the setbacks rising in the real estate market of Denver and how home sellers and homebuyers can maximize them and find good opportunities for their benefit!
Denver real estate in numbers
The gradual increase of average home prices in Denver started as early as February this year with regular single family homes being sold for a staggering price of more than $500,000. From a report courtesy of S&P CoreLogic Case Shiller Home Price Index, home prices escalated for 8.4 percent compared to the same month of February in the year 2017.
The trend continued through the following months of 2018 and May saw a median price for single family homes that is $540,624. This is an 11% increase from the same month last year, as according to the information provided by Denver Metro Association of Realtors.
Looking at the figures, we can say that the Denver luxury homes are overvalued. In fact, this is widely known by many and not an obscure speculation. Business Insider stated that half of the cities in America has an overvalued real estate market, listing New York, Las Vegas, Miami, Los Angeles, and Denver as some example of these cities. For comparison, they have included Boston, San Francisco, and Chicago as cities that is able to remain their home prices steady.
Overvaluing owes itself to low inventory of homes, problematic labor supply and demand, and the high cost of living in Denver. By May, only 6,437 homes were up for listings and home buyers engaged on a tough bidding war. Once you acquire a home, you will also be facing a mortgage that is also rising, adding at least $50 to your monthly payment.
The growing home prices in Denver seems to be really taking a toll to the industry of the city, with many seeing it as a mini-bubble (along with other top metro cities) but there are still good sides to it that one must uncover.
What many does not know is that home prices in Denver seems to be entering a transition of slowing down. According to Zillow, the current median price for single family homes listed is $485,000 and the price for the homes sold is $401,100, a clear drop from the statistics displayed by the previous months. And due to the inadequate inventory, more and more builders are starting to be motivated to create new properties. According to Census Bureau, 13,525 housing units are approved to be built this year.
Naturally, ballooning home prices can be alarming but they also bring a positive change to the trade. This factor can apply to what’s happening to Denver. It drives builders, challenges sellers and buyers, and gives the whole city a chance to improve a quality living that is already established. After all, the distinction of Wallethub is made possible by the incredible lifestyle offered by the city and not by the good home prices.
The most important thing to point out, however, is that despite the numbers, the luxury homes in Denver are still completely affordable, at least for buyers whose monthly earnings is 60 percent of the median income as according to Denverite. If you are a home buyer who wants to really purchase a home in Denver, you can go for other options such as buying more attainable properties like town homes or condos or renting long term which is a smart decision for young buyers as they have plenty of time to save up for a better home in the future.
Large home prices can scare away homebuyers and even dampen the enthusiasm of home sellers but what everyone should realize is that real estate is business and it takes adjustments, initiatives, and potentials for returns to make everyone feel comfortable. What people can do is endure, try to discover good prospects, and find alternatives if they cannot really afford.