Stop me if you’ve heard this before: Home price growth is again accelerating in metro Denver. The bright side though is that home builders finally seem to be responding to the signals of demand.
Home prices rose 8.6 percent in March compared to the same month in 2017, according to the S&P Case Shiller Home Price Index. Prices in the metro had appeared to be cooling a bit, rising less than 7 percent late last year, but the dip was temporary.
“Our local market is sizzling hot and showing no signs of slowing down anytime soon,” says Anthony Rael, a Denver agent with RE/MAX Alliance. He noted that price growth was strong for single family homes and condos alike.
Prices are expected to steadily rise for the foreseeable future since — again, you heard this one too — more people are looking to buy than there are homes for sale right now. Selling a house hasn’t been the problem, finding a new one to buy is. Charles Roberts, with Your Castle Real Estate in Denver, doesn’t see that changing either.
“Inventory is low, lots of demand, interest rates are still rather low, we’re still near record low unemployment.”
Housing inventory, or lack thereof, is a major reason for the rise in prices. There were 6,943 active listings in metro Denver in April, according to REcolorado.
Roberts adds that the metro needs “to probably get to the 16, 17, 18,000 [listings] to start to get a balanced market. So we’re not close, we’re just not close.”
Still, more new homes could be on the way. The Census Bureau reports 17,197 housing units have been approved for construction in Colorado year-to-date. That’s a 27 percent increase over the same time in 2017, as rising prices and a hot economy increasingly incentivize home construction. But it will take years for some of these buildings to finish, which won’t likely make much of a difference for prices now.
“More supply is needed to level out home prices,” says Lawrence Yun, the chief economist at the National Association of Realtors, who lamented the lack of inventory nationally. “Homebuilding will be the key as to how the housing market perform in the upcoming years.”