If you’ve been keeping track of the Colorado housing market, then you know that things have been on an upward trajectory for quite a while now. Well, 2021 was no exception to that. The housing market is hitting all-time highs in terms of prices and all-time lows in inventory.
We wanted to break down what we saw in 2021 and what we expect to see in 2022. The below information can be summarized with the following sentiment: if buying a home is something you would like to accomplish soon – don’t wait.
Seasonality Did Not Come Into Play
In previous years we have seen inventory increase and demand decrease as we transition into winter; however, 2021 proved to be the exception. Average sale prices continued to increase through December, and the inventory was at historic lows at the year’s close. As 2022 begins, we see these trends continue, so we are not anticipating a change in inventory or prices until spring.
Low Inventory and High Prices
As we mentioned earlier, we are seeing historically low inventory with average purchase prices up over 18% year-over-year. Because of this, many first-time homebuyers are struggling to purchase their first home – seasoned buyers with more cash are winning out on offers and consistently offering above the original list price.
This has also led to more non-traditional offers, like skipping inspection or claiming properties “as is.” While we never recommend this as a first option, this market has proven that sometimes these exceptions are necessary.
Hot Markets Across Colorado
Housing markets across the state are hot, but we are seeing the most activity in a few areas – Denver, Lakewood, Arvada, Aurora, Parker, and Colorado Springs. These areas all have great residential areas surrounded by reputable school districts and many amenities.
Denver is still proving to be the most competitive with the lowest inventory of these markets, so many buyers are beginning to consider other areas. We anticipate a “migration” to the mountains from many people 35 and older, which is why locations like Colorado Springs are becoming so popular.
If you are looking for a realtor in these areas, we’d love to be your first choice! We take exceptional care of all of our clients and listings and make sure that you get the best value possible, whether you’re buying or selling. Reach out to us today if you are ready to begin the conversation!
Interest Rates are Increasing After Historical Lows
At the beginning of 2020, when Covid-19 first hit, we saw interest rates hit lows that we haven’t seen in over 60 years. However, we are starting to see these interest rates increase over 3% for the first time in a while. They are currently closer to 4% on a 30-year fixed-rate loan.
This means that the average monthly cost of owning a home is increasing, which is why we encourage you to take action on purchasing a home as soon as you’re ready. It’s crucial to get pre-approved as a first step in your home buying process to know what you qualify for and what budget range you can shop in. We expect rates to increase slightly with current inflation and then level out.
New Construction
New construction is still happening, but many builders are struggling with supply chain issues, which means that these projects are well behind on their timelines. Nevertheless, in 2021, we saw about 4,000 new homes built in and around Denver, and we expect to see similar numbers in 2022.
If you are exploring a new-construction home in a new development, it’s still important to work with a realtor who is solely responsible for representing you. Ultimately, these developers are interested in getting top-dollar for their builds, so having someone on your side is guaranteed to save you time and money.
We are very experienced working with developers and would love to help you purchase a new-build home!
Twenty years ago, we used to say that the secret of Colorado living was going to get out soon, and we were certainly right. The market has been hot and will stay hot for the foreseeable future, which means it’s more important than ever to work with a professional to make sure you are timing your purchase or sale correctly.
As an experienced Denver realtor, I’d love to be your trusted confidant on this exciting journey!