Coming into the fourth quarter of 2017 the state of the metro Denver real estate market remains strong. Prices are up (year over year!), inventory remains low, days on market are at rock bottom and there continues to be much more demand than supply in all but the high-end, luxury market.
The median single-family home price fell 2.4 percent from July to August and inventory has fallen. However, this is nothing to be alarmed at as all you have to do is go back a couple of years and see the exact same trend happened in the summers of 2015 and 2016. In 2015, single-family home prices fell 2 percent from July to August. In 2016, single-family home prices fell 3 percent from July to August. Yet both years ended with large price increases as the market continued to climb. There is every reason to believe same thing will happen again this year.
Let’s look at our metro Denver housing market for the past 45 years and see how it has developed over time. In the graph, you see metro Denver home prices from 1971 to present day. Prices rose from 1971 into the mid 80s, at which point they flattened out for several years during a downturn in our economy and record-high interest rates. Then in 1991 they started rising again and continued rising for 15 years. We peaked in 2006 and had a dramatic 25 percent drop in prices through 2009. By 2013 prices got back to their previous 2006 highs and have shown no sign of slowing since.
Every week my clients ask if the market is overheated and headed for a crash. Over and over my response has been that the underlying market fundamentals remain strong and I see only continued gains in the market for the foreseeable future. So far in 2017 prices have continued to rise, up another 7.8 percent in the past 12 months. Our job is to watch these fundamentals closely to give us warning of an impending downturn. Here are only a few of the many reasons why I’m still optimistic that prices will continue to rise:
Feel free to call me if you’d like to discuss what the markets doing, where the markets going, and what you can do to take full advantage of this terrific housing market.