Keep Your Seat Belts Fastened
A look at Denver’s 2018 housing market
We have reached cruising altitude. You are free to use your portable electronic devices, or … so we thought. As 2018 succeeds a year of upward evolution for Denver’s real estate market, we must be cautious before removing the fasten seat belt sign and watch for items that may shift the landscape this year.
First, a recap:
During the latter half of 2017, the Denver-area market began what can only be described as a cooling, as prices began – not to drop – but to rise at a much more manageable speed. As Denver experienced large logistical changes in 2017, ranging from a 9 percent average sales price increase to a staggering 40 percent decrease in inventory for single-family homes, many “bubble” theories reminded us that the freight train of appreciation would eventually slow to a crawl.
The good news is, without signs of a slowing demand just yet and less than one-month’s worth of available inventory, good old supply and demand will continue to usher us into 2018 with positive momentum and a continued desire for local real estate.
Other highlights from the past year include 2017 breaking the half-million-dollar mark for Denver’s average sales price. Now at $521,227, according to data provided by the Colorado Association of REALTORS®, the number doesn’t feel quite as staggering when we consider that the nationwide average hovers around the $375,000 mark for Q3 of 2017, the most recent available data.
While the vast majority of the land covering the United States falls well below this number, there is no getting around the fact that Denver isn’t quite the inexpensive city to live that it once was. With minimum wage increases starting their way up at the first of the year, the Green Roof Initiative set to turn Denver’s Building Department upside down, and anti-growth initiatives emerging around our suburban landscape, demand, while absolutely high, will see the legislative process begin to affect the natural rhythm of this free market. These changes, though positive, could greatly reverse the work achieved to upend our condominium market’s construction litigation reform, desirability to invest in and develop around through intended, as well as unintended consequences they set in motion.
The overall story of 2018 will not one of doom.
In fact, the median price for Denver dropped $18,000 from November to December, or just more than 4 percent – not terribly uncommon over the holidays but a large enough number to take note of for future buyers over future holiday seasons. With just less than a month’s worth of inventory available to the homebuyer today and four months being the rule of thumb for a balanced buyers-to-sellers market, the prices, though slowing, are sure to increase in 2018 as demand, once again, conquers supply.
Perhaps after the spring market shows us what the remainder of 2018 will look like, the captain will remove that seat belt sign and everyone can resume movement around the cabin. Until then, please stay seated, your belt tightly fastened and enjoy your in-flight magazine as we fly into 2018.