Everything You Know About Denver’s Real Estate Market Is Wrong

Let’s start with the good news: If you own a house in Denver, its value probably has gone up in the past year. If you sell that home, you’ll likely pocket some cash. And if you’re looking to buy here…well, at least you’re investing in an appreciating market. (Median home-sale prices are increasing more than 30 percent year over year in some areas.) Plus, the market is so hot that real estate agents can make solid arguments for why purchasing a property in nearly any Denver neighborhood is a good idea.

But all that buying and selling means the metro area’s housing market is a different beast today than it was a decade ago. Denver once was known as a place where you could buy a stand-alone home with a yard, in a central neighborhood, for less than $350,000. Today, that house is real estate’s version of a pink unicorn. When one is spotted, there’s a frenzy of offers—many above asking price—with cash-only options, rent-back promises, appraisal waivers, and sometimes more bizarro proposals, like the buyer who suggested adopting a seller’s cat because the seller was moving out of the country (the buyer still didn’t win the bid).

To make sense of these changes, we asked more than a dozen real estate experts—with over 200 years of collective experience—for the new rules of surviving (or even thriving) in Denver’s real estate market. Along the way, we discovered a must-have app for house searching; compiled top neighborhoods for a variety of buyers; and gleaned advice on learning to love the home you can afford. Because, in this climate, the most difficult part might simply be getting into the game.

The Fine Print

Median sale prices for attached single-family and detached single-family homes, percentage changes in those prices (year over year), and median days on market (DOM) are through January 2017 and were provided by REColorado, via agent Jill Schafer, with Kentwood Real Estate; neighborhood boundaries were determined by Schafer.

---

Rule No. 1

Understand the impact of record-low inventory levels.

Like your favorite slopeside wipeout GIF, the Denver metro area is stuck in a loop: Lots of people want to buy homes. Prices rise because there isn’t enough inventory for all the new transplants, empty-nesters who want to downsize, and millennials having babies (see Rule 13 for more on our starter-home and condo shortages). Homeowners see the appreciation and consider selling…until they realize they won’t be able to afford to buy another home in Denver, so they stay put. Inventory stays low. Demand builds, which leads to—you guessed it—prices going up even further.

Rule No. 2

Target traditionally quiet times to buy and sell in what’s now a yearlong season.

The ups and downs of the market used to be predictable. Inventory would start to increase when tulips began blooming in the spring. By midsummer, buyers and sellers would be in a furor. And it would all wind down when the Broncos kicked off and snow started piling up in the mountains. Not anymore. “The selling season was off to an early start this year,” Kentwood City Properties’ Brigette Modglin says. “Inventory and sellers picked up once February hit.” For some buyers, looking at properties during quiet times (holidays, snowstorms, sweltering summer weekends when Denverites flee to the high country) is a strategy. “The smartest time for someone to purchase last year was during the election,” says Vivi Gloriod with Cherry Creek Properties. “Everyone was watching news and looking at Facebook instead [of buying].”

Denver’s Classic Neighborhoods

When you’ve compiled as many real estate lists as we have (more than two decades’ worth!), you notice that certain neighborhoods never seem to go out of style, like this batch of perennial safe bets.

South Park Hill

Median Sale Price: $611,300
Price Change: +11.15 percent
Median Days On Market (DOM): 11

Congress Park

Median Sale Price: $478,437
Price Change: +10.62 percent
Median DOM: 8

University Hills

Median Sale Price: $365,000
Price Change: +7.2 percent
Median DOM: 6

West Highland

Median Sale Price: $513,000
Price Change: +9.94 percent
Median DOM: 10

Rule No. 3

Don’t count on rising interest rates to stall Denver’s market.

In both December and March, the Federal Reserve raised federal-fund interest rates by 0.25 percent—and suggested it would do so again later in 2017. Denver’s real estate agents don’t have a crystal ball, but any hike means people will have less cash to spend: A one percent increase in interest rates equals a 10 percent loss in purchasing power. If you could afford $400,000 at a four percent rate, for example, you would only be able to afford $360,000 if the rate went up to five percent. However, Tim Beyers, a local mortgage analyst with American Financing, notes that small rate increases may not make a big impact on hot real estate markets. “We’re still at an interest rate level that is almost unprecedented,” he says. “You can get a 30-year mortgage for around four percent or less, and that’s an extraordinary number when you think that the rate of inflation is less than three percent.” So don’t expect Denver’s housing market to tank just because of rising interest rates. “In the 1980s, we were selling houses at 16 percent,” says Re/Max co-founder Dave Liniger, noting that there is a plethora of factors that impact why and when a person decides to buy or sell a home. “Sales fell off dramatically, but we still sold them.”

Rule No. 4

Get the right app.

Thanks to an abundance of real estate apps, you can be almost as informed as your agent about homes listed for sale. But not all apps are created equal. Some are updated infrequently, prices can be inflated, and many won’t tell you about contract status (which could falsely keep your hopes up). Real estate agent tip: Download Homesnap, which features real-time information and has addictive features like being able to take a picture of a home and instantly pull up all kinds of data about it. If you’re a member of the HGTV crowd, you’ll love it even if you aren’t looking to buy.

Numbers Game

3,878: Homes available for sale in February 2017, the lowest number for that month since the Denver Metro Association of Realtors started tracking inventory in 1985

14,308: The historical average for homes on the market in the Denver metro area in February (1985 to 2017)

The Up & Comers

First-time homebuyers: These rapidly changing neighborhoods have properties you want—with yards, near light rail, in Denver!—but you’ll need to move fast. (Seriously. We mean it. Stop reading and call your real estate agent right now.)

Harvey Park

Median Sale Price: $295,000
Price Change: +18 percent
Median DOM: 6

Chaffee Park

Median Sale Price: $298,700
Price Change: +12.72 percent
Median DOM: 7

Montbello

Median Sale Price: $256,000
Price Change: +11.3 percent
Median DOM: 6

Ruby Hill

Median Sale Price: $264,500
Price Change: +16.52 percent
Median DOM: 5

Rule no. 5

Find a rock-star agent, and be prepared to offer more than list price.

You’ve probably heard the horror stories: first-time buyers outbid by investors with cash offers; sellers who get more than two dozen offers (all above asking price); new listings with lines of hopeful home-seekers waiting on the sidewalk to get inside; people who write lengthy letters to homeowners about why they should be the victor. Even so, you can still win with the help of solid financing and a reputable real estate agent. “I’ve beat out cash offers,” says Corey Wadley, Nostalgic Homes’ owner. “I knew the brokers from past deals, and they knew when I say something, I mean it. And they were more comfortable with the lenders.”

Rule No. 6

Embrace the backup-buyer trend.

In February 2016, one in five first offers fell through. In some instances it was due to bad timing, shaky financing, or inspection and appraisal issues. Other times it was because frenzied buyers had a what-did-I-just-do moment after submitting an aggressive bid. To gain a little more leverage after the bidding process, buyers can use problems that come up during inspections—poor plumbing, an old roof—as a way to push back on sellers, who may not be keen to break off negotiations, because it means they’ll likely have to re-list the property at a lower price. But given the age of much of Denver’s housing stock—a Victorian built in 1890 sold in West Highland last year—there are bound to be issues. Kentwood City Properties’ Modglin sometimes suggests that sellers get pre-inspections so they know if there are any big-ticket items to fix. (This report, of course, has to be disclosed to a new buyer.) “Whenever I take on a listing, I want to make sure it is ready for the buyer,” she says, adding that sellers can also line up a plan B to feel more comfortable. “The big thing last year was backup buyers,” she says. “If a buyer is willing to wait it out, if the initial offer falls through they can move into first position.”

Trade-offs

Buy near a…Coffeeshop with Wi-Fi
And you might be able to live without a…Home office

Buy near a…Food market
And you might be able to live without a…Large pantry

Buy near a…Light-rail stop
And you might be able to live without a…Two-car garage

Buy near a…Hotel
And you might be able to live without a…Guest bedroom

Buy near a…Park
And you might be able to live without a…Massive yard

Rule No. 7

Beware of buyer fatigue.

In 2016, a bevy of potential buyers entered the market in the spring, saw a bunch of houses (the average went from 15 to 50), and by June had re-upped their rental leases at record levels. “They made so many offers and went back to renting,” Cherry Creek Properties’ Gloriod says. “That’s happening now—only it started in February.”

Rule No. 8

Think beyond the house.

“People are accepting that as Denver has more density, they need to give up space,” says Allison Parks, owner of Conscious Real Estate. She encourages clients to look at what amenities are within walking distance of properties—e.g., that LoDo condo might not have a private patio, but the building does have a shared pool and barbecue area—and think of that access as getting more square footage for free (or, you know, for the price of a microbrew on a nearby pub’s rooftop deck).

The Suburban Standouts

The ’burbs just don’t seem that far away anymore, especially when we tend to think of the mountains as being in our backyard and don’t mind driving a few hours for a pristine camping spot. Judging by the number of sales in these near-to-Denver areas, buyers agree.

Wheat Ridge

Median Sale Price: $363,000
Price Change: +17.1 percent
Median DOM: 7

Arvada

Median Sale Price: $360,000
Price Change: +15 percent
Median DOM: 7

Aurora

Median Sale Price: $281,900
Price Change: +12.76 percent
Median DOM: 6

Broomfield

Median Sale Price: $390,000
Price Change: +11.43 percent
Median DOM: 7

Rule No. 9

Assume the seller is listening.

As you tour an empty house, chatting confidentially with your real estate agent about that awful paint color, don’t expect you are having a private conversation. “Colorado is a one-party consent state [for recordings],” Denver Metro Association of Realtors’ Steve Danyliw says, explaining that it isn’t uncommon for sellers to watch showings via security cameras. “Be very cautious of what you say when you are in a property. It may erode your buying power.”

Rule No. 10

Ignore conventional geographic boundaries.

The things that distinguish one neighborhood from another are blurring as buyers focus on the metro area as a whole. With more than 16 years in the business, Nostalgic Homes’ Wadley has watched buyers’ location requests morph again and again in west Denver, which makes sense because demand is outpacing inventory. Live Urban Real Estate’s Jana Miller has seen the same on the other side of town: “The Park Hill line has moved so far north it has disappeared,” she says.

Panic Meter

Your budget: $1,000,000+
Your level of panic: Low. You could find your dream home—and actually buy it.

Your budget: $750,000 to $999,999
Your level of panic: Moderate. There are houses available, but you’ll still need to match list price.

Your budget: $500,000 to $749,999
Your level of panic: High. You’ll be competing against more buyers than usual due to people stretching their budgets to get into a less intense section of the market.

Your budget: $499,999 and below
Your level of panic: Very high. You might find the perfect house, but so will 20 other buyers.

The Top-Dollar ’Hoods

If you’re in the market for a seven-figure property, you’re in the most buyer-friendly segment of Denver’s real estate market—and you should be looking in these perpetually popular areas with plenty of lavish digs.

Washington Park

Median Sale Price: $760,000
Price Change: +14.11 percent
Median DOM: 21

Cherry Creek

Median Sale Price: $765,000
Price Change: +5.52 percent
Median DOM: 34

LoDo

Median Sale Price: $557,500
Price Change: +8.57 percent
Median DOM: 30

Hilltop

Median Sale Price: $955,000
Price Change: +3.83 percent
Median DOM: 32

Rule No. 11

Increase your budget to decrease your stress.

When it comes to Denver real estate, money actually can buy happiness—in a sense. Competition thins as you move up in list price, and it’s even a buyer’s market when the price tag swells over a million dollars, thanks to a more traditional inventory level. But don’t expect any killer deals; sellers are willing to wait for the right offer.

The Construction Zones

To help increase housing inventory, Denver needs to build. These four areas are filled with construction crews and new (or somewhat new) properties for sale.

Lowry

Median Sale Price: $530,000
Price Change: +32.53 percent
Median DOM: 9

Five Points

Median Sale Price: $445,342
Price Change: +9.96 percent
Median DOM: 12

Jefferson Park

Median Sale Price: $472,500
Price Change: +7.38 percent
Median DOM: 20

Stapleton

Median Sale Price: $475,115
Price Change: -0.02 percent
Median DOM: 10

Rule No. 12

Love the one you can afford.

No matter what your price range is, real estate agents agree that you’ll need to compromise (on cost, location, size) to find your ideal home. “People are looking to move closer to the city, but they sometimes are having to go farther out to get what they want,” says Kentwood Real Estate’s Jill Schafer. She quizzes her clients on what they like best about a neighborhood and then sets out to find similar attributes in other parts of the metro area (and beyond). She’s not the only one. Adam Moore with Liv Sotheby’s International Realty likes to figure out what kind of lifestyle a buyer wants. “Then we can plug-and-play them anywhere in the city,” he says. “It makes their search a little easier.”

Final Destination

Can’t find the perfect home in your first-choice area? Try, try again.

West

You are retired and settled in another state but desperate to live near your grandkids (and your kids’ place doesn’t have a grandparents’ suite). You start in Harvey Park, where there are actually homes for sale. » You decide you want something smaller—and closer to downtown, where there are restaurants and activities to fill your newly clear social calendar—so you look in Sloan Lake. » If you’re going to pay that much for a condo, you think, why not be at the center of things? You buy near Union Station in LoDo.

East

You’ve been rental-hopping for years—near Colfax Avenue in Capitol Hill, then Uptown, then City Park West. South Park Hill’s tree-lined avenues are appealing after dealing with city-center traffic. » But the historic area is expensive, so you look in North Park Hill. » And then in Northeast Park Hill. » Your agent points out that you could get more house in family-friendly Stapleton, which is right next door. » You want an older home, though, so you head back down toward Colfax—but this time go to Aurora.

South

You dream of raising kids on the charming blocks near Washington Park’s namesake green space, but you want to be able to afford retirement before you are 80. » Platt Park is appealing, but you need an extra bedroom for visiting family. » You find a place in University Hills but get outbid. » You buy in Littleton.

Rule No. 13

Consider buying new.

A key way to increase inventory in Denver is by infilling or repurposing old places. That’s what’s happening in Lowry, a former military base; Stapleton, the previous address of Denver’s airport; and the 9th and Colorado Project, a onetime medical campus. Some neighborhoods—a prime example is Ballpark—are building up, up, up with dense condominium and apartment buildings. (Whether to loosen Colorado’s current construction-defects laws to encourage developers to tackle more of these projects has become a constant topic at the Capitol.) In other areas of the city, homes are being scraped and replaced with new builds that generate controversy, as evidenced by the Denver Fugly Facebook page’s more than 5,000 members, who weigh in almost daily on architectural aesthetics, especially in Jefferson Park.

For buyers who like open floor plans and energy-efficient technologies, some new builds can offer more house per dollar, especially if buyers are willing to wait for in-progress neighborhoods to mature. “Stapleton just started releasing new land filings on the north side,” says Liv Sotheby’s International Realty’s Jared Blank, noting that the area’s Forest City development was one of the fastest-selling new-home communities in the country in 2016. But even with all those cranes in the sky, Denver is struggling to meet demand. More than 18,000 residential building permits were issued in 2016 for the seven-county metro area; Denver County alone, however, added more people than that in 2015. In short, keeping pace with our growing population will continue to be a challenge.