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Embrace the New Normal in Denver's Real Estate

Cher Revolinski

Your go-to real estate professional for Parker Colorado and the surrounding South Metro Denver area...

Your go-to real estate professional for Parker Colorado and the surrounding South Metro Denver area...

Aug 11 5 minutes read

Understanding the Denver Real Estate Market

Want to know what experts say will happen in the rest of 2023? 🧐 

  • Home prices are already appreciating again in many areas - including Denver (see chart at bottom for details). The average of the expert forecasts shows positive price growth. 
  • Where mortgage rates go for the rest of the year will depend on inflation. Based on historical trends, rates are likely to ease as inflation continues to cool.
  • Even though low inventory continues to be a challenge, experts project 5 million homes will still sell this year. That pace should pick up if rates come down. 

If you’re thinking of buying or selling a home, one of the biggest questions you have right now is probably: what’s happening with home prices

And it’s no surprise you don’t have the clarity you need on that topic. 

Part of the issue is how headlines are talking about prices. 

They’re basing their negative news by comparing current stats to the last few years. But you can’t compare this year to the ‘unicorn’ years (when home prices reached record highs that were unsustainable). And as prices begin to normalize now, they’re talking about it like it’s a bad thing and making people fear what’s next. But the worst home price declines are already behind us. What we’re starting to see now is the return to more normal home price appreciation. 

To help make home price trends easier to understand, let’s focus on what’s typical for the market and omit the last few years since they were anomalies. 

Let’s start by talking about seasonality in real estate. In the housing market, there are predictable ebbs and flows that happen each year. Spring is the peak homebuying season when the market is most active. That activity is typically still strong in the summer but begins to wane as the cooler months approach. Home prices follow along with seasonality because prices appreciate most when something is in high demand. 

That’s why, before the abnormal years we just experienced, there was a reliable long-term home price trend. The graph below uses data from Case-Shiller to show typical monthly home price movement from 1973 through 2021 (not adjusted, so you can see the seasonality):

As the data from the last 48 years shows, at the beginning of the year, home prices grow, but not as much as they do entering the spring and summer markets. That’s because the market is less active in January and February since fewer people move in the cooler months. As the market transitions into the peak homebuying season in the spring, activity ramps up, and home prices go up a lot more in response. Then, as fall and winter approach, activity eases again. Price growth slows, but still typically appreciates. 

Why This Is So Important to Understand 

In the coming months, as the housing market moves further into a more predictable seasonal rhythm, you’re going to see even more headlines that either get what’s happening with home prices wrong or, at the very least, are misleading. Those headlines might use a number of price terms, like: 

Appreciation: when prices increase.
Deceleration of appreciation: when prices continue to appreciate, but at a slower or more moderate pace.
Depreciation: when prices decrease. 

They’re going to mistake the slowing home price growth (deceleration of appreciation) that’s typical of market seasonality in the fall and winter and think prices are falling (depreciation). 

Don’t let those headlines confuse you or spark fear. Instead, remember it’s normal to see a deceleration of appreciation, slowing home price growth, as the months go by. 

Check out the graph below for what's happening specific to Denver prices (green line). See the recent uptick? The orange line represents national prices (and note the scale on the right is different). Denver median prices are roughly $200K above national prices.

Connect with Cher Revolinski at Extra Mile Homes

Whether thinking of buying or selling, having the clarity and support you need is vital. Download free eGuides for buying or selling your house, or reach out to Cher Revolinski at Extra Mile Homes w eXp Realty.

Homebuyers are adapting, home prices are rebounding, and today's mortgage rates are being accepted. Stay informed and connected with the Denver real estate market by subscribing for future updates. If you have any questions or comments, I'm here to help! 👍

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