What’s Going To Happen with Denver Home Prices This Year?

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Many experts expected home price appreciation to slow down in the last quarter of 2021 after nearly two years of double-digit gains. However, the latest CoreLogic Home Price Insights Report confirms that the market hasn’t slowed down despite prices plateauing. Here’s how prices have trended during 2021. December data was not yet available.

The graph shows that appreciation has remained constant lately at around 18%.

Additionally, both the S&P Case-Shiller Price Index and the FHFA Price Index show a slight deceleration from last year – just not at the same rate. Despite that, both indicate that price growth has continued throughout the country. In all nine regions of the country, home values increased by double digits, according to the FHFA. Case-Shiller’s 20-City Index shows all 20 metro areas appreciated by double-digits.

Why Haven’t We Seen the Deeper Deceleration Many Expected?

Housing experts had predicted a decline in buyer demand in the latter half of 2021 as the supply of housing inventory increased. As prices are based on supply and demand, it appeared that appreciation would decline under those conditions.

Despite this trend, buyer demand has not slowed as much as expected, and listings have dropped instead of improved. Below is a graph based on Realtor.com data showing the number of available listings each month, including the decline in listings at the end of the year.

In our opinion, active listings did not increase as hoped for three reasons:

1. While the forbearance program ends, there has not been a surge in foreclosures.

2. Because of supply chain challenges, new construction has slowed considerably.

3. There was a perception that more sellers would come to market once the concerns associated with the pandemic receded. Unfortunately, those concerns are still lingering. In an article on realtor.com, the following information is explained:

“Before the omicron variant of COVID-19 appeared on the scene, the 2021 housing market was rebounding healthily from previous waves of the pandemic and turned downright bullish as the end of the year approached. . . . And then the new omicron strain hit in November, followed by a December dip in new listings. Was this sudden drop due to omicron, or just the typical holiday season lull?”

Whether this is true or not is unknown, but it seems plausible.