Low supply and strong demand continue to push Denver home prices higher. Currently the Central Denver (map) rolling 12-month median price is at a historic high — $725,000. Last month was a historic high, and the month before that was as well. In fact, ever since May of 2012, we’ve been at historic highs month-after-month with a few exceptions:
The difference with the past nine months, however, has been the rate of change in prices. Since June 2020, our median prices are up $80,000, or almost 12%. For buyers this is a bit intimidating and frustrating, because they can’t see into the future to know if buying a home now is a good idea.
Fortunately, we have been here before. In 2015 prices rose 13% over a nine month period. I recall the same anxiety and frustration that buyers were feeling then. Valuing homes for sale based on recently sold, comparable homes did not make much sense, because home prices were skyrocketing so fast. Buyers felt that they were purchasing at the top of the market, and they were, but most of them, if not all, are happy that they bought when they did.
Even if the current market is a bubble about to burst (it’s not), the market will recover quickly. Prices have dropped in our market three times over the past 50 years. In 1987 they dropped 4% following the black Monday stock market crash. One year later they recovered. Of course, the great recession around 2007 saw prices plummet about 25%, but recovered by 2010. More recently, prices dropped about 4% in June 2019, but recovered by July 2020.
The anxiety buyers are feeling in this market is nothing new. Many Denver homeowners who are now sitting on plenty of equity, felt the same way when they purchased. We can’t predict the future, but with 50 years of ever increasing prices, it’s safe to say that Denver real estate will continue to appreciate over the long run.