Four Factors That Play Important Roles in Denver's Real Estate Market in 2016

Posted by Staff Reporter ( on Jan 21, 2016 12:31 PM EST
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DENVER - SEPTEMBER 4: The city of Denver skyline viewed from Mile High Stadium prior to a game between the Denver Broncos and the San Diego Chargers at Mile High Stadium on September 4, 1994 in Denver, Colorado. The Chargers won 37-34. (Photo : Photo by George Rose/Getty Images)

A report by Denver Metro Association of Realtors has detailed that Denver's real estate market soared with record-high home sales of $20.16 billion, which is way higher than 2014 home sales by 14.5 per cent.  

According to 5280 Denver Magazine, the total homes sold reached 55,509 last year and with that the median home price went up by 14 per cent to $314,000. Surprisingly even if inventory was up by six per cent to $65,872 new listings, supply was still tight. There was not enough supply to satisfy demand in the region.

The chairman of the Denver Metro Association of Realtors' Market Trends committee Anthony Rael said, "The Denver metro area continues to be the number one real estate market in the country."

And speaking about inventory, Rael added, "Inventory was the big story in 2015. A balanced market needs five to seven months of inventory, and in Denver, we're looking at just a few weeks."

Moving forward, Denver real estate agents are expecting a more balance market condition in 2016 with a few things to look out for.

First thing to watch out for is inventory. As mentioned earlier, demand supersedes supply and homes were getting sold above the asking price.  It is safe to say that 2015 was a seller's market. Jill Schafer, a Denver-based real estate agent specializing in the luxury market could not agree more, saying, "There are just not a lot of choices. It's definitely a seller's market unless you are willing to go to the suburbs."

Interest Rates are the factor to watch out for. Last December, the Federal Reserve has raised interest rates for the first time in a nearly a decade. Such raised concerns that the real estate market would take a big hit from the federal rate hike. But according to a previous report, the increase was 0.25 percent and that the Federal Reserve reportedly will continue to raise rates in 2016, raising concerns that mortgage rates might in effect rise. In a previous Forbes report there are many factors that cause mortgage rates to rise or fall, and the federal rate increase is only one of them. Therefore, as long as the federal rate hike is minimal it should cause no drastic effect in real estate market of Denver.

The last two considerations besides inventory and interest rates are building laws and appraisers. Moving on, the construction defect laws are expected to make headlines in 2016 according to 5280 Denver Magazine. It was said that these laws have discourage builders from adding more building developments, which is a problems for market with tight supply. This year, there will also be a shortage of property appraisers as licensing requirements are said to have been drastically changed.

2016 could either be a bright or gloomy year for Denver's real estate market depending on the four factors mentioned above.

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