It’s one of the most basic laws of the universe — what goes up, must come down. And this week, Denver realtors say that the region’s rising home prices are finally starting to fall again. Or, if you prefer temperature-related real estate metaphors, after a “white hot spring and summer,” the housing market in Denver is turning lukewarm.
While home prices fell in most cities and states in the country this year, metro Denver saw strong gains in its housing market. According to the Zillow Home Value Index, Denver was leading the nation in annual home price gains so far this year. The site even declared that Denver “continues to be the hottest large real estate market in the country,” with 90% of homes rising in value this year.
The average home price in metro Denver jumped 16.3% between August 2013 and August 2014 to reach $308,600. And this year, only 1.5% of homes decreased in value between August 2014 and August 2015. But over the Labor Day Weekend, local realtors say, those gains vanished — nearly overnight.
“We’ve seen a big slowdown,” said RE/MAX Unlimited realtor Ronda Courtney. “I have a listing that I’ve had to reduce twice in the past month.”
Denver appears to be catching up to national slowdowns in the real estate market. This summer, data showed that the number of homes losing value nationwide tripled since 2014, while the number of homes rising in value fell 12%. In Baltimore, Philadelphia, and Washington D.C., more than 40% of homes lost value. Unfortunately, Denver may not be immune to the trend after all.
Courtney said that sellers are suddenly in a much less favorable position this fall.
“They have to price it right,” Courtney warned sellers. “They can’t overprice their homes in this market. Their homes have to show perfect.”
The local slowdown is further proof that the real estate market has a long way to go in the rocky recovery from the Great Recession. Even so, there are signs of positive growth. As of March 2015, the nation saw 618,000 single-family home starts, which grew to 1.13 million in August. Not only that, but permits to build single-family homes grew in August to their highest level in seven years.