If you live in the Denver area, you’ve felt the rapid rise in home values. That’s because Denver averaged a 12 percent per year increase from 2013 to 2015. Wondering what’s causing it? Here are the top reasons why Denver home prices are growing so fast.  

    1. Supply & Demand - Thousands of people are moving to Denver every week and the housing market simply cannot keep up. According to the DMAR Trends Report, Denver's housing inventory hit a record low of 5,463 active listings this past May. It has come up since then, but it’s still almost 10,000 below our 30-year average.  It also doesn't compare to the 30,457 listings that we saw in 2006. No wonder they call it a seller's market.
    2. Rents Are Growing Too - Denver's rent growth is rising at a much faster rate, according to ApartmentList.com [see graph]. In fact, the average monthly rent is $1,760 for just a 2 bedroom! Renters are realizing that for a little bit more a month, they can buy a home and gain a long term investment. 

Denver Rent Growth Aug 2016

  1. Still Cheaper than Cali - California was the #1 state for relocation to Colorado (based on 2014 data, the most recent available from the IRS). Housing cost is a huge contributor of this. Colorado’s average listing of $513K seems pretty affordable when compared to California’s $650K (Trulia, August 2016).   
  2. Not Just Out-of-State - The rural areas of Colorado are not seeing the economic growth that is taking place in Denver and Boulder. Many in-state residents are choosing to relocate to the Front Range as a result.
  3. New Construction Can’t Keep Up - New construction homes in Denver are going up at a rate 26 percent faster than a year ago, according to a recent Metrostudy report. They predict nearly 10,000 new units will be built before the end of 2016. This is still not fast for Denver’s larger-than-expected population growth. 
  4. New Construction Homes are Expensive - Denver builders are primarily building higher priced homes. The average sales price of a new construction home in metro Denver is over $500K, which contrasts with average sales price of $398K for existing homes, according to the DMAR April report.  Thus, first time home buyers aren’t seeing much relief.
  5. Still A Good Investment - The seller’s market and rapidly appreciating home values are not deterring Denver home buyers. Buying a home is still a great investment for many people, as the housing shortage will continue due to the amount of people moving to Denver.  

With all this said, experts are predicting that Denver home prices will level out soon or at least see less dramatic growth. What’s the cause? Basically, the Denver home prices have finally reached the limits of what Denver incomes can support. No need to run for the hills, though. As long as Denver continues its predicted economic growth, the Denver housing market will still be in a great place. 

Posted by Jess Feaster on


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