Colorado used to have four distinct seasons, and we’re not talking about the weather. The frenetic spring home-buying season used to be followed by a summer swoon, a fall uptick, and a winter cool-down.
Record-low inventories and pandemic-induced buying changed all that. According to the Colorado Association of REALTORS® (CAR®), housing prices and insatiable demand were at record highs all year in 2021. Home activity from January through December virtually eliminated the seasonal highs and lows typically seen in the housing market.
Three metrics tell the story of 2021.
Inventory
At the end of the year, there were just 1,801 single-family homes and 614 condos/townhomes for sale in the seven-county Denver metro area. Those numbers represent a 52 and 70 percent reduction respectively from the year before. The months’ supply of inventory hit record lows at year-end, sitting at 0.4 percent for single-family homes (down 50 percent from the prior year) and 0.3 percent for condos/townhomes (down 75 percent). Statewide, the story was similar, with 0.6 months’ supply for single-family homes and 0.5 months for condos/townhomes, a 40 and 64 percent reduction from the previous year.
Median price
Across the Metro area, median selling price for a single-family home was $575,000 at year-end, an 18.5 percent increase from the previous year, while condos/townhomes were up 16 percent to $389,000. Statewide, median price for a single-family home was close to $530,000 (an 18 percent increase) while the median price for a condo/townhome was $385,000 (up 10.6 percent).
Housing Affordability
Market conditions continued to impact housing affordability on the Front Range in 2021. CAR’s housing affordability index, which looks at interest rates, median sales price, and median income by county, fell to new lows in the Metro area last year, down about 20 percent from 2020.
Most industry watchers expect the current trends in inventory, median price, and housing affordability to continue in 2022. The rise in interest rates suggests a move toward a more balanced or normalized market, but it will likely take years for equilibrium to be established across the region.