Status of the Denver Real Estate Market in 2017
After years as one of the nation’s hottest real estate markets, Denver initially seemed to have cooled off in mid-2017, only to rebound as the year drew to a close. The job market remained strong, with the unemployment rate dropping to a record 2.3% low in April 2017, ensuring a strong market. In October, home prices rose 7.2 %, which the S&P Case Shiller Index ranked the fifth highest out of the twenty major metro areas surveyed. However, the inventory of single-family homes remained low with sluggish housing starts. The average inventory of available homes was down 11.9%, while a credit.com analysis stated that vacancy rates in the metro area are among the lowest in the country at just 0.56%.
Demographics in Denver
Formerly a hub for baby boomers, Millennials, those born between 1981 and 1997, now rank as Denver’s largest group. A study by the Metro Denver Economic Development Corp reveals that a full 24% of the area’s population, roughly 891,500 people, is of that demographic. However, the labor market, and thus those owning homes, is still dominated by Generation X’ers (those born between 1961 and 1981) and Baby Boomers (post WW2- pre-1961). That trend is expected to change as time goes on, as more millennials start families and buy property.
Average prices of housing in the Denver Real Estate Market
Zillow lists the median home value in Denver at $389,900, a 6.3% increase over the last year and well above the national average of $200,000. Rents continue to be high, with the median rent for a one bedroom apartment sitting at $1,436, with the year-to-year increase among the highest in the nation.
Reasons for growth and outlook for 2018
Despite the continued growth in 2017, the real estate market is expected to cool off significantly in 2018. Zillow predicts the median home value, while continuing to rise, will ease to 3.5%. The employment rate is expected to remain high due to the diverse economy, with the large base of millennials evenly split among several sectors, including hospitality, professional & business services, retail, and more. Millennials will want to buy homes, and baby boomers will want to sell them, so activity should remain high, although the area is expected to be eclipsed by other major metros. This will be a big opportunity for those looking to buy, and this reversal market will allow those struggling to find affordable homes a bit of a break in 2018. All this is a reaction to the high home prices, which, analysts say, have led to skeptical home buyers.
However, Denver shouldn’t be considered a buyer’s market just yet, with inventory still too low, and houses going on the market still being bought quickly. Additionally, the commercial real estate segment is expected to be strong in the year ahead, despite the major shift into online retail. Retail vacancy sits at only 6.4%, with a major trend being the closing of big box stores, with the available space being converted into gyms and fitness centers in many cases. Industrial spaces continue to grow as well, with the e-retail wave leading to many distribution centers being built in the area.