After roaring for years, the Denver housing market is cooling rapidly, drawing questions about whether a price correction is imminent.
In April, the supply of active listings in the Denver metro area hit 10,354, up a whopping 65% from a year ago and the highest level for any April in records dating to 2017, according to Realtor.com® listing data.
Local real estate agents say a combination of factors is to blame, including a slowdown in migration to Colorado from other states, rising insurance costs, and a downturn in demand for condos and townhomes, which make up an outsized share of the Denver market.
Affordability is also a major headwind, with a recent report from the Common Sense Institute of Colorado finding that the cost of owning a home in Denver has increased by 18% since 2022, yet wages have increased by only 6%.
“It just makes purchasing less attainable for a lot of people in the area,” says Amanda Snitker, a real estate agent with Coldwell Banker and chair of the Denver Metro Association of Realtors’ market trends committee.
“It's a really great place for a lot of different types of people to live and have a great quality of life, so it appeals to a very broad range,” she adds. “But the costs are challenging.”
As of April, the number of homes for sale in the Denver metro is 90% higher than the pre-pandemic average from 2016 to 2019.
The explosion of inventory represents supply growth that is quickly outpacing demand, with the number of new listings hitting the Denver market in April up 24% from a year ago, while pending sales, an indication of buyer activity, rose less than 2%.
List prices have already weakened in the Denver metro area, with April’s median price of $599,450 down 4% from last year. List prices per square foot were down 1% annually, a potential sign of falling home values.
Meanwhile, rent in Denver is falling quickly, with the median asking rent in April down 7.1% from a year ago following a boom in multifamily construction. For prospective first-time buyers, falling rents might provide an incentive to remain renters for longer, delaying their buying plans.
Nick Gerli, the CEO of real estate analytics firm Reventure App, tells Realtor.com he believes the Denver market is now headed for correction, and forecasts median home values in the area will fall 9% over the next 12 months.
"The local buyers are priced out, and the local buyer just would rather probably rent," he says.
Denver’s weak condo market is leading the slowdown
Denver’s housing market includes an unusually large share of attached homes, a category that includes townhouses and condos.
Attached homes have been a major driver of Denver’s explosion in inventory, Realtor.com data shows.
Over the past 12 months, an average of 34% of active listings in Denver were attached homes, up 5.2 percentage points from the prior year. Nationally, just 22% of listings were attached homes, a gain of just 1.5 percentage points.
List prices for attached homes are also falling faster than those of single-family homes in Denver. In April, median list prices for attached homes in Denver fell 7.3% from a year ago, a larger drop than the 3.1% decline for single-family listings, according to Realtor.com data.
“Attached homes take up a growing share of the Denver housing market, so home price shifts in this segment of the market have a growing effect on the overall market,” says Realtor.com senior economic research analyst Hannah Jones. “Attached home prices have fallen faster than single-family home prices in Denver, though both are down annually.”
Liz Richards, a global real estate adviser with Sotheby’s in Denver, says that as first-time buyers wait longer to purchase their homes due to affordability constraints, more of them are opting to skip a townhome and go straight to a traditional single-family home.
“Renters ... normally, maybe, had they only stayed in that [rental] townhome a year, they might have bought another townhome,” she says. “But now they're just like, ‘the hell with that. We want a yard, we want some space, we just want some breathing room.’”
Soaring homeowners association fees are another major hurdle for Denver’s condo market, a trend driven in large part by a surge in insurance premiums in Colorado.
“Those HOAs make it really tough for buyers,” says Keri Duffy, broker at Kentwood Real Estate and DMAR market trends committee member. “With the higher interest rates, their monthly budget can really get impacted in terms of what they can qualify for."
However, Duffy believes that Gerli’s forecast for a 9% price decline over the next 12 months across the Denver metro area is “a little dramatic.”
“I still see multiple offers,” she says. “And a lot of people have a tremendous amount of equity. If people don't have to move, they're not moving.”
How Denver sellers can navigate the soft market
For Denver home sellers, staying competitive in a soft market requires extra effort that wouldn’t have been necessary a few years ago, local experts say.
Overpricing is a common mistake in Denver, with 27% of listings there carrying a price reduction in April, according to Realtor.com data.
But even a price reduction can’t necessarily undo the damage, if potential buyers have already seen and dismissed your listing due to the unrealistic price point, says Duffy.
"If you overprice it, you're deleted—like you don't come back, even if with a price change,” she says. “You don't necessarily come back to the buyer pools with a fresh set of eyes. People just no longer see your home."
Denver homebuyers are also increasingly picky, preferring properties that will not need any updates or repairs to be move-in ready.
“It's the homes that have done the updating, the homes that have taken care of any deferred maintenance, that show really well,” says Snitker.
That could mean new paint and carpets, or new appliances, or replacing an older roof. Just don’t expect your home to command a large price premium for those updates.
"I always say you want to be the prettiest girl in the room when you're selling a house,” says Richards. “And if you've made updates, and you're very turnkey and in a great location, those homes still go fast."
Read more at Realtor.com
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