South Denver is a residential neighborhood within the metropolis of Denver, Colorado, along the I-25 corridor. South Denver is filled with busy coffee shops, cafes, restaurants, and bars, as well as quieter residential areas. Neighborhoods within South Denver include the beautiful Cherry Hills, Wellshire, and Observatory Park. It’s a great choice for anyone looking to enjoy the ample amenities of the Denver metro area, as well as the stunning natural surroundings of Colorado.
Denver is an outdoor lover’s paradise. Nestled in the towering Rocky Mountains, it has access to many hiking trails, including challenging routes through unspoiled backcountry, mountain biking, climbing, kayaking, paddle boarding, and more. In the winter, residents of South Denver have easy access to world-class skiing and riding at some of the world’s best snow resorts. Within a two-hour drive, residents can easily get to Breckenridge Ski Resort, known for its diverse terrain and options for all levels of ability, as well as Loveland Ski Area, with challenging terrain and some of the best options for snowcat skiing, and Copper Mountain and Keystone Resort, both with excellent options for intermediate to advanced riders and skiers.
Wellshire Denver homes for sale and Cherry Hills real estate are in high demand. If you’ve been considering entering the real estate market in South Denver, you might be wondering what the market has in store for 2023. Will prices and home values continue to rise? Or will inflation and rising mortgage rates start to bring the market back to equilibrium? Our guide will answer these questions and take you through the major trends to expect in the coming year.
Decreased demand
One of the biggest trends that have been ongoing in 2022 and will continue into 2023 is a decreased demand for homes. From 2018 to 2021, home demand rose exponentially. According to the Denver Metro Association of Realtors, in the Denver metro area, the number of active listings at the end of the month decreased by 43.66% between 2019 and 2020 and by 29.97% between 2020 and 2021. However, from 2021 to 2022, there was an increase of 115.94% in active listings at the end of the month. Throughout these years, the number of new listings only decreased slightly, with 2.60% from 2019 to 2020, 5.26% from 2020 to 2021, and 7.02% from 2021 to 2022. This data indicates that demand was increasing dramatically up until 2021, but in 2022 demand began to decrease.
This trend is further evidenced by the number of closed homes in Denver. From 2018 to 2019, the number of homes closed increased by 3.06%, and from 2019 to 2020, by 5.73%. This growth began to slow from 2020 to 2021 when the number of homes closed only increased by 2.07%. Moving into 2022 from 2021, homes closed declined by 17.23%.
Stable home values
Although demand has slowed throughout 2022 and will most likely continue, there have been relatively stable home prices in the Denver metro area. According to the Denver Metro Association of Realtors, the average close price of homes in the Denver metro area continued to increase from 2018 to 2022. From 2018 to 2019, there was a 2.45% increase. From 2019 to 2020, a 7.01% increase. From 2020 to 2021, a 16.95% increase, and from 2021 to 2022, a 12.4% increase. Thus, although demand is slowing, there is still a steady increase in the home values and average closing prices of homes in Denver. As demand continues to slow, we may see a reduction in closing prices, but for now, even with a decreased demand, there is still sufficient demand to keep home prices stable and rising.
Interest rates
One of the main reasons for decreased demand in real estate is rising interest rates. During the pandemic, interest rates were at all-time lows. As of December 2020, according to Freddie Mac, the interest rate on a 30-year fixed-rate mortgage was 2.65%. This has been slowly increasing, with significant increases seen in the summer of 2022. As of November 23, 2022, the interest rate on a 30-year fixed-rate mortgage was 6.58%, down slightly from November 10, 2022, when the rate was 7.08%. Mortgage interest rates are expected to remain high throughout at least the first half of 2023, which will continue to cool demand and thus decrease the number of homes sold.
Inflation
The cause of increased mortgage rates is the rise in inflation around the globe. Pent-up demand and a slowed supply chain from the pandemic surged prices for both goods and services, driving up inflation. According to the Bureau of Labor Statistics, the consumer price index, which is a measure of inflation, recorded all goods at 7.1% inflation as of November 2022. The drastic increase in inflation prompted the Federal Reserve to increase interest rates in an attempt to cool the market. As long as inflation remains high, interest rates will also remain high, and the real estate market will be expected to cool.
Next steps
Although demand has decreased, home prices are still on the rise in the Denver metro area. This is good news for sellers, as prices will continue to remain stable. Sellers may need to have a bit more patience when searching for buyers, however. For buyers that don’t require financing, there should be more options on the market with the decreased demand. For buyers that will use financing, creating a larger down payment can help compensate for the increased mortgage rates seen today.
If you’re looking to enter the Denver real estate market, you’re going to want to work with a great real estate agent like Ashleigh Fredrickson. With plenty of experience and a passion for creating the perfect home, Ashleigh Fredrickson is one of the best realtors in the Denver area. Ashleigh is ready to help you through every step of the way, whether you’re buying or selling a home or looking for an investment property.
