Colorado’s Red-Hot Real Estate Market

General Colorado Real Estate Trends

While Colorado’s winters are known for their frigid temperatures, their real estate market is currently not at all in the same position. Colorado’s market is sizzling, experiencing significant growth and rapid home sales. While the number of sold listings decreased in 2021, the reason for that is also one of the reasons for rising home prices: a decline in inventory of homes for sale. This is a problem across America. Few homes are available, which leads to an increase in buyer competitiveness and home prices.

Homes sell faster and for more money, indicating a clear sellers’ market. According to the Colorado Association of Realtors, in December of 2021, the median sales price for a single-family home was $529,995. This was up 18% year-over-year, a significant growth rate. Meanwhile, the average amount of days homes spent on the market went down to 30 in 2021, a significant decline from 45 in 2020.

This is in large part due to the lack of inventory. The months’ supply of inventory has plummeted 50% from December 2020, with December 2021 having only 0.6 months’ supply. A six-month supply is considered healthy. Inventory of active listings was down 47.6% in 2021 compared to 2020, and home and condo sales followed with significant declines.

Luxury Market Surge

With home prices rising, it may be time to take a second look at what is defined as a luxury home sale in Colorado, or at least the wealthiest areas of Colorado. In 2013, when the Colorado Association of Realtors defined the luxury market, it was made up of homes that cost $1 million or more. But according to the Denver Post, this may not constitute luxury anymore.

The Denver Post analyzed luxury home sales in the Denver, Arapahoe, Adams, Brookfield, Boulder, Douglas, and Jefferson counties. They found that in 2016, the number of luxury homes sold in those areas was 1,353. In the first 11 months of 2021, there were 5,548 luxury homes sold in these areas. This is more than 4x the number of homes from a few years ago. This level of growth is massive and recent.

The same report by the Denver Post shows that in 2020, there were 3,544 luxury homes sold, compared to the 5,548 sold in the first 11 months of 2021. That is an eye-popping increase. While the trend had been upwards for years, that was easily the biggest single-year leap in the history of Colorado.

Boulder’s Scorching Hot Real Estate

Boulder is located roughly 30 miles north of Denver, and it has a lot to offer. It is one of the up-and-coming small cities in America for several different reasons. For one, it is a gorgeous city in the mountains. It is also a city with a young and growing population, many jobs in the tech industry, and trendy art galleries, restaurants, and boutiques. It is easy to see why Boulder has become so appealing, but that has also come with a stark rise in real estate pricing.

In 2021, that rise in real estate prices continued. According to a Norada Real Estate report, in 2021, the value of a home in Boulder has gone up just under 20%. Homes in Boulder were never cheap to begin with, but now they are downright expensive. The median sales price for a home in Boulder grew to $783,650 in 2021, which was a 15% increase from the year prior. Months supply of homes and condo/townhouses in Boulder dropped to 0.8.

Boulder has long been one of Colorado’s known expensive real estate markets, but buyers tolerate it for the great perks of living in the city. This trend continued in 2021.

Where Do We Go from Here?

2022 is likely to bring more of the same for Colorado. Barring something unexpected, the value of a home in the state will continue to rise. This is because inventory isn’t likely to increase overnight drastically. That is what would help stabilize the market to become more balanced. For homeowners in Colorado, this is good news. For those looking to purchase a new home in Colorado, it will likely be more expensive in 2022 than in 2021.

Colorado is a real estate market that is all the more desirable due to the past few years’ events. With spacious homes and incredible natural scenery, it is an appealing place to live in the age of COVID-19, where outdoor space is something buyers value more than ever. With home prices rising throughout 2021, expect an interesting year for the Colorado market in 2022.