Home Values Expected to Increase in 2023
According to one of the country’s leading observers and forecasters of the real estate industry, the median home value in metro Denver increased by 11.6 percent over the past 12 months, which is a healthy rate of growth by most measures. The real estate industry analyzer also predicts that the pace of growth will increase over the course of the next 12-month period, which means throughout 2023. As of December 2022, the median home value in the Denver area was $626,721.
With housing bubbles aside, home prices in the U.S. tend to rise around three to four percent annually. Double-digit annual increases, such as those seen in the Denver real estate market in recent prior years, are unusual. They’re also unsustainable over the long-term, as inflated prices tend to cause affordability issues.
Rapid price growth such as double-digit increases cannot be sustained. At some point, prices will have to slow down and even plateau in some cases, but the report states that this has not been seen in Denver over this past year, given the rapid increase in home prices.
The population of Denver has grown steadily since the 1990’s, and this increases demand for housing. The city is particularly attractive to millennials (age 18-34) who are relocating from elsewhere in the country.
According to a major mortgage loan company report, millennials account for 45 percent of all mortgage requests in Denver. Another survey, this one conducted by Mayflower Moving Company, revealed that Denver was one of the top 10 destinations for millennials who are planning a move.
These migration and home buying patterns are partly why the Denver real estate market has shown healthy gains in recent years. However, high growth rate is hard to sustain over the long run, and so now we’re starting to see a slower rate of growth.
Even though home prices are expected to continue rising in 2023, buyer demand will likely remain high for the foreseeable future. Buyers entering the market in 2023 should be prepared for a high level of competition.
Limited housing inventory is a factor in this market. The supply of homes in Denver has increased, but the market is still quite competitive. In December, buyers are competing for just over a three-month supply in Denver. That is a tight scene and is a big reason why home prices continue to soar. Demand in metro Denver continues to be relatively high, and so this has balanced out the increases in supply which has been witnessed most recently.
So, what’s the bottom line? Home prices in metro Denver will probably rise steadily the next couple of years. The local real estate market will remain very active due to high employment and housing demand.
Limited inventory will have buyers competing for the most desirable homes. Buyers have more choices, but the demand is still high and so competition will still be strong. This is the overall forecast for the metro Dener market for 2023 from a variety of sources.