While Colorado’s housing market remains a seller’s market, there is also the potential for increased home prices, especially in Denver. As interest rates continue to rise from the historic lows, they reached in 2020, we see rents increasing as well. That is why there is a renewed interest in investment properties again. There are several factors driving this growth including the emergence of a new buying generation and increased consumer confidence.
It’s Still a Seller’s Market
Contrary to housing market trends in recent years when buyers made slight unseen offers, home inventory levels are still low. At the same time, we are seeing homes sit on the market for an average of two weeks, 30% longer than what they were doing only a few months ago. By expanding your search radius and negotiating the features you’re looking for, you can increase your chances of snagging a great deal on a home.
Plus, you can improve those chances even more by being more flexible with your needs and lowering your expectations. Despite still being a seller’s market, Denver’s housing market isn’t as skewed as other housing markets are. While we saw the housing market bubble burst in 2008, it wasn’t until 8 years later when it recovered to its anticipated values. During that time, homebuyers were paying a premium for homes that had fallen below market value. Thus, there is a volatility in the real estate market.
Rents Will Most Likely Continue to Increase
Although rental growth is positive throughout, the pace we witnessed a year ago has slowed considerably. Unfortunately, rental prices are expected to keep increasing for the next 2 or 3 years in the Denver area. In fact, the pace of Denver’s rental growth will be considerably faster than most other states. This factor is based on 2021-2023 gross rent trend estimates. This trend factor was calculated for each Consumer Price Index area and region.
Additionally, HUD made changes to their calculation methodology that was designed to incorporate more data concerning rental market inflation. HUD also performs “mover adjustments” for all areas when calculating their fair market rent or FMR data. This is intended to provide a more accurate estimate of FMR’s for 2023. And while interest rates have been steadily rising over the past year, home inventories are below average as housing prices continue to rise.
Contact Your Colorado Mortgage Expert Today!
We’re still seeing a seller’s market here in Colorado, but the outlook for 2023 looks considerably brighter. Home prices are expected to increase, but at a slower, steadier pace. For more information, call Front Range Mortgage today at (303) 500-1900. Our representatives are available to discuss your case and offer you expert advice. Call now!