Denver Real Estate Trends: A Hot Colorado Market

Denver is Colorado’s biggest city, a major metropolitan hub that encompasses nearly 750,000 people within the city limits and just under three million in the metropolitan area. Denver is a beautiful city with incredible access to the Rocky Mountains, an emerging tech sector, and top-notch outdoor scenery. It is a desirable place to live in a time where people are seeking to migrate to cities with nearby nature and growing economies. Because of this and a confluence of other factors, the real estate market is heating up. Let’s look at some of the major ongoing trends in the Denver real estate market.

Denver’s Real Estate Climate

Denver’s real estate market surged in 2021, with buyer interest fueling record amounts of sales. According to a report by Norada Real Estate, there were more homes sold in the Denver area in 2021 than any other year ever, with 63,684 home sales. This is despite the fact that inventory and listings were down in Denver throughout the year. New listings on the market fell 5.26% throughout the year, culminating dramatically at the beginning of January 2022, where there were only 1,477 active properties on the market, which is 11,175 fewer than usual.

Inventory is down in major cities throughout the United States, as an incredible demand and lack of supply fuel a strange real estate market. The heightened demand coupled with the lack of supply is causing prices in many places around the United States to surge. This is no different than in Denver, where prices have climbed. 2021 marked the tenth straight year where prices in the Denver area grew.

In 2021, the average sales price of a home in the Denver metro area was $612,274. This was a 16.68% increase over 2020 and broke a record for both the highest average sales price and the highest percentage of growth within a year. This is attributable to several factors, but the biggest one is likely the increased demand for a home within the state.

Denver’s Months of Inventory supply was low throughout 2021 and broke the area’s record for lowest ever. This directly coincided with surging house prices. In 2022, the situation does not appear to have been fixed, with inventory still incredibly low. The prices of homes in the Denver area will likely continue to climb as long as inventory remains low.

Denver’s Luxury Real Estate

While inventory was the biggest factor that led to an increase in the prices of homes, another major factor is the growth of Denver’s luxury real estate market. With more expensive homes than ever before being purchased in the state, naturally, the price will rise accordingly. The luxury market in the Denver area is desirable to out-of-state buyers seeking winter retreats or just looking to capitalize on an emerging market.

According to the Denver Post, the luxury market in Denver had an eye-catching 2021 that shows the appreciating value of a home in the metro area. Denver’s luxury market is qualified as homes sold for $1 million or more, but this is creeping towards becoming less of a luxury and more of a norm. In the first 11 months of 2021, there were 5,548 luxury home sales in Denver and its surrounding area. In the entirety of 2020, there were 3,544. This is a shocking increase from year to year, and it isn’t just in the area of the city that was expected.

The same report by the Denver Post shows that less traditional neighborhoods in Denver are seeing luxury sales. In 2016, there were no luxury sales in Curtis Park, Whittier, or Sunnyside. In 2021, there were 13 in Curtis Park, 26 in Whittier, and 25 in Sunnyside. These aren’t the only parts of the city that have experienced rapid surges. In 2016, there were six luxury sales in Sloan’s Lake. In 2021, there were 69.

This indicates that the luxury market in Denver is growing massively, and not just in the same parts of the city. Newer, less traditionally expensive markets in Denver are surging, reflecting the strength of the housing market in the city overall. Denver is Colorado’s biggest state and a rapidly growing one, where housing costs are surging, and the luxury market is steadily increasing. With low inventory and high demand, expect the median home cost and the number of luxury home sales to increase in 2022.