Denver Real Estate Forecast & Market Report – February 2022

Metro Denver real estate market update Feb 2022

Will Rising Interest Rates Help to Fix the Denver Real Estate Market by Bringing Inventory Back and Slowing Historically Increasing Housing Prices?

In January 2021, rates briefly dropped below 3%, to the lowest levels on record. Today on average, a 30-year mortgage rate is above 4%. 

While mortgage rates are not directly tied to federal reserve interest rate changes, they are still affected by them. The Fed has signaled that multiple hikes in interest rates are imminent, with the first likely in March. The Fed also is slowing the pace of its purchases of mortgage-backed securities, something that creates upward pressure on rates. Other factors that will increase mortage interest rates are lower than expected unemployment, high inflation, and the sharp rise of the 10-year Treasury yield. To make a long story short, mortgage interest rates are going to continue to go up this year. 

Higher interest rates and what I expect to be a record number of homes to come on the Denver real estate market in April and May will help to increase our record low inventory and slow the torrid pace of price increases. The questions that remain, are how much and how quickly will price increases be slowed and will enough listings come on the market to catch up with the demand. Read on to see my predictions for the year to come.

NOTE: Statistics are taken from Greater Denver Metro Counties: Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park

The best way to read this post: The majority of this post is comprised of me analyzing different metrics to break down what is happening with price, supply and demand across different segments of the Metro Denver real estate market. This helps me determine where the real estate market has been, where it is now and forecast where it is likely to be in the near future. If you are a stats nerd like me, you might enjoy reading the entire post, if not - skip to the summary at the end of each section, or all the way down to the overall Denver real estate market review and Denver real estate forecast at the end of the post. If you are reading this post on a cell phone, turn your device sideways to see the graphs in their entirety.

Metro Denver Real Estate Market Statistics Snapshot - All Property Types

Latest Month
January 2022
Previous Month
December 2021
Year Over Year
January 2021
Median Sold Price$547,500$545,000$460,000
# of Active Listings1,4302,1014,143
# Under Contract4,0213,3844,612
# Sold Homes3,1845,0083,393
Months Supply of Homes0.30.40.8
Median Days on Market566

Metro Denver Real EState Prices

Median Closed Price For The Entire metro Denver MLS - All Property Subtypes

The median sold price of homes in the Denver area rose slightly from $545,00 last month to $547,500.  Prices as a whole are down less than 1% from the peak in June and are up 19% year over year from January 2021.

Median Closed Price - Single Family Homes

The median sold price of single family detached homes (houses) stayed even at about $600,000 for the 3rd consecutive month. Prices are up 17% year over year.

Median Closed Price - Attached (townhomes and Condo)

The median sold price for condos and townhomes in Metro Denver rose sharply from $350,000 to $365,000. Prices for condo and townhomes are now up 22% year over year.

Pricing Summary

Single family home prices stayed even while condos and townhomes rose 4.2% in January. Overall, prices only dropped 2.7% from our seasonal peak in June to our seasonal low in September.

Metro Denver Real Estate Market Supply

New Listings - Metro Denver, All Subtypes

3,706 homes were listed in December. This is about 1,000 homes (25%) less than average in January, not a good start to the year if you are hoping inventory stabilizes to bring our market back to normal.

Homes For Sale - Metro Denver, All Subtypes

Another new record low in inventory for a 3rd consecutive month. Our current inventory as of January 31st was only 1,430 homes. This is 75% lower than the average inventory for the four Januarys prior to COVID.

Supply Summary

Supply of homes for sale in the Denver area is the lowest it has been since record keeping began. This is because our inventory has not recovered from the COVID fallout in the spring of 2020, higher demand, and fewer new home starts due to worker, material, and permit shortages. 

Metro Denver Home Buyer Demand

Sold Homes - Metro Denver, All Subtypes

3,184 homes sold in January. This number is on par with the typical number of homes closed in January. Most of the homes that closed in January, went under contract in December, our slowest month of the year. 

Pending Sales - Metro Denver, All Subtypes

The pending homes sales metric is the best indicator of our current market because it is our most recent metric and tells us how many homes went under contract during the month of January, while closed sales and sold prices in January show the results of homes that went under contract months ago in December and late November.
During the month of January, 4,021 homes went under contract. This is a normal number for January.

Demand Summary

Demand is typical for this time year and will continue to climb through May. Inventory is getting lower because the number homes that went under contract was higher than the number of new listings that came to the market.

Denver real estate Forecast and market review

Pricing – Single family homes throughout the metro Denver area stayed even from December to January, while townhomes and condos went up 4.2%. 

Supply – Our inventory hit a new record low; it is 75% lower than the average for this time of year.

Demand – Demand is rising now that the holidays are behind us and will typically continue to rise through May. I believe demand is higher than the numbers dictate, but there is not enough inventory to supply the current demand.

What’s Next for the Denver Real Estate Market? – My Denver Real Estate Market Forecast: – 

We have likely passed the low price point of the season and prices will rise from now through June or July. I expect prices for homes closed in February to go up 2% to 3%. I predict that a record number of homes will go on the market in April and May. Along with higher interest rates, this should slow the increase in home prices closer to somewhere around 10% to 12% rather than the 19% increase we saw in 2021.

My Advice for Potential Sellers – If you are ready to sell now, prices are where they were during the spring peak and will start rising. You will still get a record high price for your home in a short amount of time while avoiding much competition.

My Advice for Buyers – Don’t wait if you are considering buying. Start now and you might find a better deal than if you wait for prices to rise and interest rates to go up.

Interest Rates

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About the Author

Nathan Hart, CRS, ABR, PSA, RENE
Nathan Hart, CRS, ABR, PSA, RENE

I have been a REALTOR in the Denver area for 25 years. Through continuing education and extensive real-world experience, I have become an expert in the real estate field. Blog posts give me an opportunity to share my knowledge and insights.

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