2016 is shaping up to be another strong year in the real estate market here in Denver. Home sales prices are still rising in double digits; in fact, Metro Denver home prices rose 10.2 percent in January, marking the 12th consecutive month of double-digit annual price increases, according to the latest update of the S&P/Case-Shiller Home Price Indices. Since the Great Recession peaks 10 years ago, home values in Denver have increased 49.3 percent, which is the biggest gain in the country according to mortgage resource company HSH.com.
While the inventory is still being bid up and flying off the shelf, growth is not as aggressive as it was last year as some properties now are sitting a couple of days to a month on market instead of a couple of hours. Currently, there is only about one month’s supply of inventory for homes less than $600,000 in the Denver market, meaning if no more homes came on the market, all of the current inventory would sell in less than one month. We see that change in homes above $700,000 where the month’s supply of inventory is about 6 months. For buyers that bought a home around $600,000 a few years ago, and the price has appreciated enough to take some equity out, now might be the time for those buyers to step up to the $700,000 price range in order to avoid buyer bidding wars and paying above asking price.
The rental market is also still strong in Denver, though we are starting to see a slight softening. Leasing is still not difficult, but there is a lot more available rental inventory on the market now that is not rented than there has been in a long time, particularly in luxury high rise product. Accordingly, future prospective renters are touring more homes before they make a decision and rentals are taking slightly longer to lease up as a result. Again, the rental market is still strong, and we expect to see rental rates rise a little more this year, but we believe we are starting to reach the pinnacle of this sales cycle on rents.