When Will Denver Home Prices Cool Off?

According to a just-issued study completed by CoreLogic, Denver has seen housing costs rise the third quickest throughout a 15 year span, out of 20 major cities surveyed. While metro home prices are expected to keep rising over the course of 2021, the rate of increase is expected to slow down considerably from the current record-setting pace. The average price of a detached home in Denver is $674,990 (April 2021), an increase of more than $40,000 from last month and more than $100,000 above the same period a year ago.

Here’s a CoreLogic graphic highlighting the combined HPI percent change for the Denver and eight other major metropolitan areas. Denver’s year-over-year percent change is the third-fastest among those listed, behind Phoenix-Mesa-Scottsdale and San Diego-Carlsbad.

Click here to read the Westword’s interview with Selma Hepp from CoreLogic in which she explains the cause for the rise in housing costs, if & when we can expect the Denver market to peak, and why there is only a 1.9 year-over-year percentage change expected for the market through February 2021.

Find the Denver Metro Association of Realtors (DMAR) April Market Trends Report here. Here are a few interesting facts found in Market Insights:

  • Colorado is home to low property taxes. According to a study, the two counties with the lowest rates were both found in our state: Jefferson County (0.55 percent) and Arapahoe County (0.57 percent.)
  • Builders are struggling with the cost of building materials ranked as the number one problem by the National Association of Home Builders and availability of building materials ranked second. Local contractors are telling clients to order appliances a year in advance to make sure they arrive on time.
  • The Wall Street Journal notes that there are more real estate professionals than homes for sale in the U.S.- a feat that has only occured once before in December 2019. In January, the National Associaton of Realtors had 1.45 million members, a 4.8 percent increase compared to a year earlier.
  • Rates ticked up to 3.18 percent as of April 1st, a mere 0.25 percent lower than they were a year ago, 1.5 percent lower than a decade ago, 3.75 lower than two decades ago and 15 percent lower than four decades ago.

The Denver housing market is still hot despite economic turmoil during COVID19

While economic turmoil is certainly taking place across the US, the housing market appears to be booming. People searching for homes are struggling with high prices, limited inventory and tough competition across the board. Many buyers have taken advantage of record low interest rates and in turn have rewarded those buyers that took a chance on listing their homes during such an uncertain time.

“Some analysts question if the housing market can maintain its momentum, given the expiration of enhanced federal unemployment benefits this month, a pullback in forbearance programs that forestall foreclosures, and a resurgence in COVID-19 infection rates that is forcing more business closures.

CoreLogic, which lists metro Denver among its overvalued markets, is predicting a 9% decline in home prices here a year out. Its reports also note that U.S. mortgage delinquencies, after 27 straight months of declines, spiked in April to their highest level since January 2016.”

To read more predictions about the Denver market find The Denver Post article here.

Drawbacks of forbearance

If you are currently struggling to pay your mortgage because of the effects of COVID19, know that you are not alone. Many are wondering how they are going to keep their homes during these trying times. This could be a time that loan forbearance comes into play. Under forbearance, your loan payments are postponed or reduced, but interest continues to accrue during the period of forbearance. If you don’t pay the interest during that period, the interest may be “capitalized,” which means it is added to your principal balance. Forbearance does not affect your credit rating however the payment history or loan modification can limit your options for future financing for a period of time.  People should use Forbearance as a last resort.  If you are in a position where making your mortgage payments is difficult, contact your mortgage servicer right away to talk through options.