The local real estate market has swiftly gained value as home prices increased since 2012. But, with record average home prices and a continued listing shortage, many wonder if we’re in a Denver real estate market bubble. No one can say for sure, but nothing can support predictions like current and historical data! Watch Charles Roberts – a locally respected real estate trends expert – as he shares metro Denver real estate trends and discusses the possibility of a Denver real estate market bubble.
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We’re Likely Not In A Denver Real Estate Market Bubble
Average home prices paint a clear picture of the real estate market over time. These historical trends indicate that we’re not in a Denver real estate market bubble – to the contrary, the data points to the fact that we’re in a typical upturn. The first upturn shown on the chart lasts 10-12 years in the 70s and 80s which was followed by a short downturn. In 1991, we came out of this slight downturn and saw an amazing 16-year run of increasing average home prices.
Then, we hit the national recession between 2006 and 2008 when the average home price went down drastically (a 25% decrease). In 2012, the market began to level with prices slowly increasing. What we’ve seen over the past 5 years is drastic increases in metro Denver’s average home price.
You can see that this pricing climb is typical of long-term trends. We’re currently 8 years into an upswing but no one knows when the next downturn will approach. What we can say is that the strong interest in the Denver real estate market and the continued rise in home prices suggest that we won’t see a downturn for another couple of years… we are not in a Denver real estate market bubble.
Denver’s Lower Priced Homes Are Driving Demand
Showing trends illustrate the interest in properties on the market – showing us how many times (on average) an active listing was shown to a prospective home buyer. The higher the amount of showings per month, the more demand is seen in the housing market.
Homes priced below the $300,000 mark show the most demand, indicating impressive competition for purchasing homes in the “affordable” homes sector. Denver’s most expensive homes failed to keep pace with the average but all other price points display strong showings. Clearly, Denver’s impressive housing demand isn’t going anywhere anytime soon.
Metro Denver is Chock-Full of Demand!
Another way to look at showing trends is to view historical changes. The years 2010-2012 saw about 10 showings per listing monthly and have greatly increased since then. Record highs were seen for showings in 2017, especially as the year came to a close. This indicates record interest in Denver residential real estate and shows that Denver is not on the precipice of a bursting housing bubble. Quite to the contrary, the spike in showings in December of 2017 shows that our market continues to strengthen with increasing demand; based on the premise of supply and demand, we know that prices will continue to rise when demand increases.
Low Supply + High Demand = Continued Price Increases
Denver’s most persuasive indication of a lack of a Denver real estate market bubble is the persistent listing shortage. Just like high demand drives prices up, low supply increases home values. These two statistics combined show that the Denver housing market’s strength will continue until one of these factors change – both supply and demand remain on a constant trajectory for what we predict will be at least a couple more years.