Homeowners have much to celebrate this holiday season after a solid year of rapid appreciation. The median price for a single family home in central Denver (map) rose from $700,000 to $811,200 in the past twelve months. That’s just shy of a 16% increase. Below is a graph of the appreciation rates by year since our market turned the corner from the great recession in 2011:
The million dollar question is how much longer can this trend continue? All indicators show that appreciation will not slow down in the near future. For example, if no other homes come on the market, and homes sell at the same rate at which they’ve sold over the past 12 months, our market would consume all of the current available homes for sale in just 10 days. This metric, known as the absorption rate, is typically measured in months, and 4 to 5 months indicates a balanced market between buyers and sellers. Clearly, sellers are in the driver’s seat.
For buyers looking in central Denver right now, you have 74 homes from which to choose. Our available inventory is at a historic low as well as a seasonal low, and demand remains strong. Typically, our market really steps up in price appreciation starting in March; however, given the current market environment, we expect to see strong growth continue through the end of this year and into January and February. This spring will most likely be brutal for buyers. Yes, buyers will be purchasing at the top of the market, however, if it’s any consolation, buyers have been buying at the “top of the market” since 2011.