Business

Will Average Denver Home Soon Cost $1 Million?

This three-bedroom, two-bathroom, 1,990 square-foot home at 511 South Pennsylvania Street is currently listed for $1 million.
This three-bedroom, two-bathroom, 1,990 square-foot home at 511 South Pennsylvania Street is currently listed for $1 million. Google Maps
Housing costs in Denver and its suburbs have been on a spectacular rise over recent years, pricing many house hunters out of the market. According to a new study, the Denver-Aurora-Lakewood metropolitan statistical area (MSA) is now the sixth-worst among major U.S. cities for people looking to make their initial purchase of a house.

And in Denver County, one expert predicts that the average home will soon cost $1 million, despite recent signs of moderation.

"The Best and Worst Places for First-Time Homebuyers in 2022," from the Bankrate website, ranks fifty MSAs across the United States based on five elements: affordability (30 percent of the total), employment factors (20 percent), housing market tightness (20 percent), safety (20 percent), and wellness and culture (10 percent).

By these standards, the top five are Pittsburgh, Minneapolis, Cincinnati, Kansas City and Buffalo, while the communities filling the slots from 46 to 50 are a pair of California communities, San Jose and Riverside, followed by Seattle, Las Vegas and Los Angeles.

Denver landed just outside this group, at number 45. Its best finish was in the wellness-and-culture category, where it had the eighth-best mark of the cities analyzed. But the grades went downhill from there: seventeenth-worst for employment factors, a tie with Jacksonville and Seattle for fifteenth-worst in safety, a thirteenth-place tie with Las Vegas for worst affordability, and eighth-worst for housing market tightness.

Price and inventory dominate the take of Denver-area realtor Matthew Leprino in the June market-trends report from the Colorado Association of Realtors.

"The median and average prices this month cooled and actually dropped from April to May — but that isn’t actually all that remarkable, looking at past years," Leprino acknowledges. "Over the last seven years, three of those saw a dip in the same time period, while the other four only recognized modest increases." What was unusual, though, was "the $28,000 jump from March to April in the average column, the $108,000 jump from February to March, and $101,000 jump from January to February even before that."

These increases "had everyone, including me, predicting that the $1 million average" for Denver County "was a mere month or two away. The jumps were unprecedented in both size and percentage, and the insatiable appetite seemed to be growing even more unrelenting," Leprino adds.

Instead, Denver County's average actually slipped $34,334 from April to May, ending up at $912,861 — more than $100,000 above the $805,508 average calculated by the Denver Metro Association of Realtors for all eleven counties that make up the metro area, but still shy of $1 million. Denver County's median price for the same period was $810,949, compared to $680,000 for the greater Denver area.

Leprino attributes these developments to an interest-rate hike that month, as well as media coverage of spiking prices. "Did the buyers panic and stop buying? Did the extra cost on a mortgage knock many would-be buyers out of the game?" he asks. "The answer is probably yes to both."

Up until last month, Leprino concedes, "Denver was in the fast lane to a $1 million average. We’re still likely to hit that mark, but there has been a large and very noticeable course change on that path. Inventory is creeping back into the picture. Prices, though still up, are less up."

Even so, few American cities present more challenges to first-time homebuyers than Denver. Click to see the Colorado Association of Realtors' latest market update for Denver County.
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Michael Roberts has written for Westword since October 1990, serving stints as music editor and media columnist. He currently covers everything from breaking news and politics to sports and stories that defy categorization.
Contact: Michael Roberts