2021 turned out to be another competitive year for Denver real estate. The year started out with the hope of more inventory and the decline of the pandemic. Neither happened. Late spring through summer yielded some of the tightest months of inventory and fiercest bidding wars. Some relief was found in early fall, but has since been accelerating.
Days on the Market
Looking back over the last decade the annual days on market resembles my last EKG; a rhythmic pattern. Days on market increases predictably during the seasonal slowdown in the fall and then drops in the spring. The only change this year: the low is getting lower.
Zooming into 2021, there is a noticeable seasonal drop-off in late February to early March. We expect the same this year, just with lower numbers.
The annual averages gives us an idea of where we’re heading. The market was tight at the end of 2021 and we anticipate a scarcity of new homes hitting the market in 2022, which will result in homes selling even faster.
You might be tired of hearing how low our inventory is, but this graph says it all. In the last two months of 2021, inventory dipped below one month (0.75 in November and 0.61 in December), which dragged down our yearly average significantly.
From September 2021 forward, inventory has been heading downhill — and fast. We need more homes on the market. We typically see new listings start to pick up in early spring. The concern is that with pent-up demand, we won’t even notice the increase.
The sum of attached and detached single family listings in 2021 is less than just attached single family listings in 2020. Condo and townhome popularity has been rising post-pandemic. The single-family market has been brutal over the last several year, but you used to be able to concede and find something in the attached market. Not anymore. Buying anything in Denver right now takes tenacity.
Interest rates will likely be what affects the Denver housing market in 2022 the most. Rates flirted with the 4% mark toward the end of the year. Most experts anticipate it exceeding that number by the end of 2022. For those new to the housing gig, lower rates have made cheaper to buy a home in the last decade. There may be some reading this that remember the double-digit rates in the late 70’s and early 80’s. It will still be a good time in history to buy, comparatively, but rising rates will decrease your buying power.
A quick peak at 2021’s monthly averages shows rates rising toward the end of the year. We have seen a small reprieve in the beginning of 2022.
Median Sales Price
Most reports on the median sale price for homes show it as an aggregate for the entire Front Range. That’s a great number to compare to other metro areas, but it’s not super helpful in gauging the local markets. Not to fear, we’ve got you covered (and next month we’ll be sharing Denver neighborhood specific stats with you… stay tuned).
Wow! It now costs $625k for a typical, detached, single-family home! Like most things we buy today, Denver continues to become more expensive. A quick look at this chart says it all. Other than the small dip in attached homes at the start of the pandemic, prices haven’t gone anywhere but up!
This split chart really points out the hit the condo market took in 2020 and its fast rebound starting in August. The attached market has fluctuated since then. I expect 2022 to set new records for the attached market and continue its upward trend for detached homes.
The last chart I want to introduce breaks down both attached and detached into median sales price per bedroom. This is an important statistic if you have a handful of kids or roommates living with you. I’ve always wondered why we don’t see a ton of kids playing in the neighborhoods closer to downtown. With four children of my own, looking at this chart, I can understand why!
Something else to consider is that 1- and 2-bedroom condos are typically cheaper than their detached counterparts. Once you venture into 3- and 4-bedroom condos you are considered a luxury buyer, as the prices for these exceed single-family homes with the same number of bedrooms by quite a bit.
Taking a quick glance around the metro area, we aren’t the only ones seeing high prices. I guess misery really does love company!
2021 was hot, fast-paced, and the lack of inventory left many disappointed. 2022 will likely be another record-breaking year, making home ownership a little bit harder for some to obtain.