Buyers in metro Denver who expected to have an easier time snagging a discounted home given all the economic turmoil may need to recalculate.
"At least through this summer and fall, the rising list prices, rock-bottom inventory and pent-up demand from missing transactions this spring will keep sale prices pretty resilient," said Jeff Tucker, an economist with real estate portal Zillow.
Home prices continue to rise year-over-year in all 50 major metros, led by Indianapolis, up 11.8%, and Salt Lake City, up 9.8%, according to Zillow indices. Metro Denver home price gains, at 3.9%, have lost some steam and are running below the U.S. average of 4.6%.
But Denver is also a much more expensive market, with a May median sales price of $432,153 here versus a median sales price of $263,408 nationally, Zillow said. So far, that higher valuation doesn't appear to be leaving the market more exposed to softer prices.
Just like the stock market, the housing market appears to have detached from the underlying economy, which is struggling with the highest unemployment rates since the Great Depression, a big loss in earnings and high rates of business failures. Although Nevada struggles under the weight of a 25.3% unemployment rate, home prices in Las Vegas still rose 0.8% in May, according to Zillow's index.
"As surprising as it might have seemed at the time, sellers who forged ahead with listing their homes this spring were richly rewarded, when buyers buoyed by
Another sign of the heated market is the share of homes that received competitive bids. Back in June 2019, only 12.3% of metro Denver homes sold received multiple offers, according to brokerage firm Redfin. But in April and May of this year, 55.6% and 53% of homes sold had competing offers.
Some analysts question if the housing market can maintain its momentum, given the expiration of enhanced federal unemployment benefits this month, a pullback in forbearance programs that forestall foreclosures, and a resurgence in COVID-19 infection rates that is forcing more business closures.
CoreLogic, which lists metro Denver among its overvalued markets, is predicting a 9% decline in home prices here a year out. Its reports also note that U.S. mortgage delinquencies, after 27 straight months of declines, spiked in April to their highest level since January 2016.
Ralph McLaughlin, a senior economist with Haus, said his outlook for the U.S. housing market has also soured, but he isn't convinced Denver will see a price decline in the next year.
"Denver is by no means immune to these uncertainties, but does benefit from a regional economy that was on strong growth trajectory pre-pandemic and is also blessed with many natural and human amenities that will likely continue to attract young households who want to buy homes," he said.
