Greetings! Doug Phelps here with Colorado Home Realty. I pray this finds you and your family doing well.
Today, I bring you an overview of what happened in 2020 in the Denver metro real estate market and some projections for 2021 based on our team’s research and analysis.
Looking Back on 2020
I would be remiss in not first acknowledging what a surprising and challenging year 2020 was. The virus, the shutdowns of businesses and schools, the loss of jobs, shelter-in-place orders, social unrest, economic instability, plus a political landscape – all of which most people have not seen before in their lifetimes.
We saw in most cases, we were resilient. Families spending more time together. Work environments shifting from lengthy commutes to a quick walk to a spare room – sometimes in our pajamas. We began to see population movement away from the larger traditional cities to suburbs and smaller towns where community might be found. We saw more golfing, camping and mountain biking in Colorado than ever before. And we saw an attention in the recognition of the need for human interaction, which many of us previously took for granted.
We also saw unprecedented movement in the Denver metro real estate market and the markets around the country. This was fueled by lives adapting to the demands of work and school from home, coupled with a freedom for many people that allowed work to happen from any geography.
Whether or not migration for community or lifestyle continues into 2021, there are fundamentals to the national and local real estate markets that most likely mean continued appreciation in home values.
Reviewing the Data
There are important data points in 2020 to understand that will influence the year to come, and possibly your decisions to stay put in your current home or make a housing change.
The overall metro market appreciated about 9% this last year, slightly above the last 5-years average. The sold price of the average single-family-home accelerated in appreciation the last 6 months of the year and was up as much as 18% year over year in October, hitting an all-time high of $614,000. For people who were homeowners the entire year, they may have seen an average of $100,000 of mostly tax-free wealth creation.
At the end of December there were only 2,400 homes available for sale and half of those were detached single family homes.
You might hear or read that we do not have inventory because no one is selling their home. This just is not true. The issue is a significant increase in the number of buyers rather than a decline in the number of sellers. There were actually more homes that came to market in 6 of the 12 months of 2020 than the same months over the last 3 years.
We ended 2020 with:
a 7% increase in the number of homes sold and a 2% increase in the number of homes listed for sale compared to the last 3-years average.
Four factors in particular fueled demand over the last year:
One: Population increases
While many cities around the country saw population declines, the Denver metro area saw modest population growth.
Two: Flexible and remote work environments
Many people were required to work from home, only to realize it might be sustainable and preferable.
Three: Kids in school from home
Whether wanting space away from each other or needing more functional environments to do school, many households made changes motivated by these needs.
And Four: Interest rates
Incredibly low interest rates made more expensive homes more affordable for the average consumer, simply driving demand even higher.
So, what does all this mean for 2021?
The virus, the vaccine, are changing how people live. Remote working will allow people to be on the move, perhaps hours away from where they are currently. The need for more rooms and space will create move-up competition.
While the impacts of policies of a new administration remain to be seen, our best predictions are interest rates remain low in 2021. If so, buyer demand should still be remarkably high.
And, we are starting off the year with a lower inventory of available homes. The combination of high demand and low inventory means ongoing home value appreciation. The Denver metro market is poised to be at least as strong as the national averages of 5-7% for the year.
One of the questions you might be asking is: What does this all mean for me and my family?
If you do not have plans to move any time soon, consider the potential to refinance this coming year. If rates stay low or even drop further, you could have the opportunity to build substantial wealth through effective financing. I have great lender referrals if you want to brainstorm options.
If you are thinking about selling and moving, do not get too wrapped up in what the Denver metro market has done or might do. We need to analyze exactly what is happening in your neighborhood and the appreciation of your home, while taking a hard look at your needs and desires. And please remember, regardless of the strength of the market, effective home preparation makes all the difference in maximizing your equity.
And, If you are considering buying, you need to get pre-approved with a lender before you start looking. Sellers will not even consider your offer if you are not organized. I can walk you through these steps.
Call me at (720) 323-4176 and let us sit down to think through your goals and whether now is the right time for you to be selling and/or buying.
I wish you all a healthy, happy and thriving 2021.
Let me know if I can in any way help you or anyone you know.
I’m your ally, your advocate, helping make home happen.