What a year! As the start of a new decade, 2020 began with high hopes and big energy for many people and businesses, but the Covid-19 pandemic brought things to a halt before we could close out the first quarter. In the summer months, we turned our collective attention to racial injustice which brought long overdue awareness to the issue and the first steps towards progress, including the renaming of one of Denver's most iconic neighborhoods. We kept six feet of distance in order to come together to stop the spread of the virus, yet the country grew more divided as the election drew near, and the holidays were bittersweet for many who weren't able to gather and celebrate as usual. Throughout all of the political, social, and Covid-19 turbulence, the Denver real estate market remained strong and hopeful for buyers taking advantage of the lowest interest rates on record, and sellers taking advantage of the best seller's market on record. If there was one thing you could count on in 2020, it was a healthy housing market.
2020 IN REVIEW
Let's take a look back at the hot topics in Denver real estate from 2020.
Housing Inventory
We started 2020 with low inventory and then watched it continuously dwindle as the year went on, ending the year with .3 months of inventory for detached homes in the Denver metro area, making it the most extreme seller's market we've ever seen.
Interest Rates
Interest rates were already low at the start of the year, yet we watched them drop to record-breaking historic lows 16 times over the course of 2020!
Housing Demand
Housing demand was strong at the beginning of the year, but it continued to surge each time interest rates hit a new low. Buyers scooped up available homes faster than they came to market, leaving even less inventory in the wake of a record high number of closings for the year.
Affordability
Low interest rates significantly increase the amount of home you can afford to purchase for your approved monthly payment which translated to 10% higheraffordabilitythan in 2019 even though Denver homes were appreciating.
Covid-19 and the Market
Real estate remained essential during the spring quarantine. Although extreme restrictions during that time did stifle activity, it bounced back with fervor and the real estate industry hit a new stride with safety precautions becoming a normal part of the home buying and selling process. Businesses in every industry had to get creative in order to continue to provide value and real estate was no exception. Interactive media like 3D Matterport tours, narrated video tours, and open houses via Facebook Live all became a part of how we do business.
Appreciation
Despite the pandemic and events of 2020, the Denver real estate market saw substantial price appreciation, closing out the year 17% higher for detached homes due to the relationship between supply and demand.
Downtown Condo Market
Overall, attached homes in the metro area still appreciated at an average of 5% (which is some solid equity gain), but that number would have been higher if the downtown condo market hadn't taken a hit due to the pandemic. High monthly HOA payments for amenities that couldn't be taken advantage of and close proximity to other urban dwellers was not at the top of homebuyer's wish lists this year. We hope to see this sector of the market bounce back alongside the economy as restrictions are dialed back.
Odds of Selling
The œodds of selling measures the likelihood that your home will go under contract or close within 30 days of listing and it reached an all time high of 78% in the fall of 2020. Prior to this year, the high for this metric was 61%.
Buyer Wants & Needs
Home took on a whole new meaning this year as people reconsidered the spaces they were confined to, creating a significant shift in homebuyer focus as well. The open floor plan that has been popular for decades suddenly felt a little too open for co-working and schooling spaces and a dedicated home office moved to the must-have category.
While the Denver real estate market did slow in the spring, it more than recovered to end the year with several records that weren't so much broken as smashed, including lowest active inventory at year's end, most homes closed in a year, highest dollar volume sold, highest average sales price, lowest median days on market, and more.
2021 DENVER REAL ESTATE MARKET PREDICTIONS
All price points up to three million in the Denver market are starting the year off in an extreme sellers market, with less than a month of inventory. Contributing to the sustained momentum and keeping the Denver real estate market healthy in 2021 are several factors....
Strong Job Market
Denver is experiencing faster job recovery than the rest of the country, at 80%, with much of the country still struggling at around 50%.
Migration Gains
Telework has become the norm and may continue throughout 2021 and beyond for many workers. If you have the choice to work anywhere, wouldn't you want to be in Colorado? Colorado as a state had a net migration gain in 2020 andis seeing an influx of residents from Georgia, Florida, and California, while the Denver metro area has attracted people from Chicago, New York, and San Francisco.
Millennial Movers
Millenials are the largest group of homebuyers and make up about 30% of the Denver population. This age group is looking to either purchase their first home or move up in the market to accommodate their growing families.
Interest Rates
Interest rates can't get much lower, and while they may creep up a bit, they are predicted to remain low throughout 2021, keeping the cost of borrowing low and affordability high. Many homeowners have recently refinanced which may keep them in their current home longer, thus keeping it off the market and further contributing to the inventory crisis.
For all of these reasons, we predict that the Denver real estate market will continue to see a shortage of inventory, sustained demand, healthy appreciation, and low days on market throughout 2021. While we can't keep up the same record-breaking pace as 2020 forever, the market is in no danger of crashing. If anything, an increase in interest rates or a drop in affordability due to the escalation of home prices could slow the market to a more manageable pace, a welcome reprieve for fatigued homebuyers.
Twenty-twenty was a year of loss, but also of hope. We lost many wonderful people and iconic businesses, but we gained awareness and gratitude, and ended the year with hope. We continue to hope for swift and sustained recovery in 2021 for Denver area residents and businesses as herd immunity develops and our city opens back up. We love you Denver and we wouldn't have wanted to be quarantined anywhere else, but we are looking forward to a different kind of year this year and all the opportunities that await our communities in 2021.
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