What Will Happen To House Prices In Denver, CO? [2023 Update]

In the short term, we will see Denver house prices increase over the next 6 months. This increase is measured against homes sold between July 2022 and January 1st, 2023. The reasons for the increase in prices include the following:

1. Seasonal adjustment (homes sell for more in the summer).
2. Home buyer perception of interest rates. 
3. The housing supply is still very low.
4. Ongoing net increase in the number of people calling Denver, CO home. 

Let’s talk about each point in more detail. 

Denver House Prices, Trends, and Forecasts.

Since the great recession, Denver house prices have marched upward. Appreciating homes has helped anyone who bought a house on the front range of Colorado. I know people that bought houses for less than $100,000. They would sell for half a million dollars in today’s housing market! This house price rise left many wondering if it would ever go down.

The rise of Denver’s home values came to screeching in the summer of 2022. Not only did house prices stop going up, but I witnessed a significant drop in many neighborhoods. For example, I saw houses selling in less than a week in the mid-500s in neighborhoods like Barnum, Wheatridge, or Edgewater, all on Denver’s western side, site for 90-plus days. 

Not only did houses sit, but I saw prices drop from the mid $500’s down into the low $400’s. Will home prices keep going down in Denver?

“I was surprised just how fast the Denver housing market turned, and house values decreased in the summer of 2022,” said Shaun Martin of We Buy Houses In Denver, a local cash buyer from who you can get a fair cash offer to sell your house fast at https://webuyhousesindenver.org/. I expected Denver real estate to cool off as interest rates went up, but it dropped much faster than I predicted. In the long term, I am confident that anyone who buys a house in Denver will gain financially. You may have to wait a few years for prices to increase again, but as long as you pay the mortgage and take care of the house, it will be a huge financial win.”

Seasonal Adjustment for Real Estate in Denver, CO – 2023

Denver house prices will increase from January 2023 until July 2023. This increase will primarily be because of the summer selling season. This increase is not a year-on-year increase. Instead, the increase will be compared to what homes sold for in December 2022. 

Plenty of research shows houses in Denver sell for more money in the warmer months. I performed an analysis that confirmed this.

My research of Denver’s housing market history showed houses expected to sell for $480,000 in December typically sell for $535,000 in June. And this isn’t just for Denver house prices. It happens all over the country. This trend has been going on for decades. The lesson to be learned for people selling a house in Denver is sell your house for more cash in the summertime!

Because of this trend, I forecast that house prices will be higher in June 2023 than in December 2022. 

“The time of year makes a huge difference in how much cash you can get for your house”, said Alex C of Brotherly Love Properties, a San Diego cash home buyer you can sell your house fast to starting with a cash offer from his website at https://brotherlyloveproperties.com/sell-my-house-fast-san-diego-ca/. San Diego mirrors Denver with higher prices in the summer and lower prices in the winter. 

Higher Mortgage and Interest Rates Are Here To Stay 

As stated, my research suggests that Denver house prices will increase over the next 6 months. But what will happen then?

I believe Denver home prices will decline slightly over the next two years. The decline in house prices will be slow and methodical. House prices in Denver and Colorado will not fall off a cliff. The Denver housing market would have to be in an extreme bubble for house prices to fall off a cliff. 

IT IS NOT!

House Prices in Denver Will Slowly Decline Over 2 Years

A dramatic rise in Interest rates through 2022 is a large part of why the real estate market slowed down in Denver during the summer of 2022. The interest rates were increased by the Federal Reserve. They raised the cost of borrowing money because of inflation. 

The high cost of real estate can cause inflation

When real estate gets more expensive, it can cause inflation to increase. The reverse can also be true. If house prices go down, inflation can go down, also. We have all experienced high prices lately in real estate, supermarkets, and other places. All of these increases are the result of inflation. Because of this, the Federal Reserve tries to reduce inflation. If they can reduce inflation, they can reduce the cost of buying stuff. 

“The Federal Reserve tries to keep inflation near 2%, which is what they believe is a healthy number for the U.S. economy”, said Phil G, a local real estate investor in Seattle who buys houses for cash from his website at https://www.soldsimpleseattle.com/. “In recent times, inflation has rocketed up to 10%, which largely has been on the back of long-term house prices going up significantly.”

One thing the Federal Reserve can do to reduce the high prices is to increase interest rates. Increasing interest rates makes buying a house harder. This is because the monthly premium is more. The higher cost of owning a home leads to a slowing down in the real estate market, just like what we saw in Denver in 2022. 

This slowdown was seen all across the country. Because fewer people are buying houses, prices come down. As this slowdown continues, inflation will cool off. The result will be cheaper prices in real estate and at the supermarket. 

Will House Prices Go Down in Denver, CO in 2023?

From now until June 2023, the prices of houses will go up again. This is because of the seasonal adjustment I discussed earlier in this article. 

After June 2023, we will see house prices decrease over the next year or 2 in Denver. House prices will go down because the cost of borrowing will remain higher than in recent history. The Federal Reserve will likely keep 30-year mortgage rates around 5%. They need to do this to prevent another fast rise in house prices. Higher rates will keep a steadier growth rate in Denver’s house prices. It will also have the same effect all over the country. 

To counter my argument, Norada Real Estate had this to say: Will Denver home values fall in 2023? “Prices will decline, but less than expected. Prices will drop 4–6%. They are expected a comeback by 2024 after a bad first half. NAR estimates a 1% price hike nationwide. NAR expects the smallest-gaining markets to lead in 2023. Unfortunately, Metro Denver was often one of the top-performing markets in the nation and will likely not be this year. However, lower sales should lower prices. Since it will take longer to sell and buyers will use their newfound leverage, client expectations must be managed.” Read the entire article Denver Housing Market: Prices, Trends, Forecast 2022 & 2023 by following this link. 

FHA Loans and the Effect on Denver House Prices.

FHA loans are a great vehicle to buy a house. You can buy a house with as little as 3.5% down. The Federal government controls FHA loans. The Federal Government sets the rules and requirements for buying a house using an FHA loan. For example, they say that if your credit score is above 580, you only have to put 3.5% down. If it is between 500-579, you will be required to put 10% down. 

Another benefit to an FHA loan is getting an FHA with collection accounts, which I know would be a huge win for me. My credit score is far from perfect! 

Will There Be A Housing Market Correction in Colorado in 2023?

Since June of 2022, we have witnessed a housing correction in Denver and all of Colorado. The extent of how much of a correction will be influenced on local, national, and global levels. 

Local politics, snowfall, crime, and even the weather can influence how much house prices will correct in Denver over the next months and years. Nationally, government policies and what “The Fed” does with interest rates will affect how much of a correction there will be. 

Internationally I must point to the war in Ukraine and what is happening in China. 

Do Denver house prices need to correct? 

Are Denver prices overvalued? Many experts believe they are not. If this is the case, we will not see a price drop. I forecast that Denver and all of Colorado will see a decline in home values over the next few years. Time will certainly tell, right?

Are Foreclosures the Cause of House Prices Dropping in Denver?

Foreclosures are not the reason house prices have gone down in Denver. Foreclosure rates are still at historically low levels. If we go into a national recession that last for more than a year we may start to see this increase to a more normal level

Denver real estate market will settle in 2023

Since June 2022, house prices in Denver have gone down a lot. They will go up again but not quite as high as they were at the peak in early 2022. We have all witnessed a roller coaster of a ride that will continue. House prices will continue to pendulum back and forward as buyers react to interest rates. Sellers’ sentiments and the need to sell fast or not will also cause this roller coaster to continue. 

2022 and 2023 will be the most turbulent for the Denver housing market. I have seen the comps drop by 15% in some neighborhoods – from June 2022 to January 2023. A 15% drop is incredible!

Whether you are looking to buy a house or need to sell your house I highly suggest you move slowly. Be patient. Make a plan. Stick to it. Adjust if necessary. But always consult with trusted real estate experts. 

Is Denver Real Estate a Good Long-Term Investment?

Denver is a fantastic place to live. Because of this, many people will continue to move here. This increase in population adds to the demand for housing. When you increase the demand, the cost will go up. 

This means that over the next 10 or more years, the price of houses will go up in Denver, Colorado. That may seem like a long time, but because of this, I highly recommend buying a house or rental house in Denver. 

Conclusion. 

Denver house prices will go up over the next 6 months. The reason Denver house prices will go up over the next 6 months is due to a seasonal adjustment. Following this, Denver prices will slightly decline over the next 2 years. House prices will drop because of higher interest rates and economic headwinds. 

For the long term, Denver house prices will trend upward for at least 20 years. Prices will go up in the long term because many people are moving here. They are moving here because the Mile High City is a beautiful place to live. All these people will add pressure on the housing market. They will add to the demand. This increase in demand for Denver houses will ultimately force the prices up. 

About the Author

Shaun Martin is a local Denver real estate investor. He has been buying and selling houses in Denver and Colorado for over two decades. 

“Denver, and Colorado, is a vibrant, fun, and energetic place to live. I love living here, so it makes sense that other people want to, also. Because of this demand, I wanted to invest in Denver real estate. When not pouring over numbers or swinging a hammer, I ride my bike. In the winter, I like to go skiing when I can. Keystone, Copper, and Vail are all places I like to ski. If you would like to learn more about me as a Colorado cash buyer, I invite you to follow this link and check out my company, We Buy Houses In Denver, also known as The Home Buying Company, at my website at https://webuyhousesindenver.org/.