According to the Denver Metro Association of Realtor (DMAR), inventory rose 15.52% in June over May, to 7,436. While greater supply often means lower prices, the city’s inventory is still limited compared to demand, and prices continue their climb.
The average residential sold price in June rose 1.05% over May, to $492,029. This represents an 8.80% increase over June of 2017. As a result of cumulative yearly increases, Denver now ranks as one of the least affordable cities in the nation, according to several studies.
The mortgage information site HSH.com recently placed Denver eighth among the most expensive cities in the country. The site determined that it takes a yearly income of $87,222.49 to afford monthly mortgage payments in Denver. By contrast, Denver’s median income, according to Metro Denver Economic Development Corporation, is only $73,271.
Denver’s affordability rate is just above New York City’s, which requires an income of $97,564.91. San Francisco had the highest rate of all, with a required income of $181,777.09.
The study was based on a 30-year fixed-rate mortgage and the standard 20% down payment, along with a median home price of $441,500 for the Denver metro area, according to Denver 7. (Note: that price is about $50,000 less than the current average.) Meanwhile, the Denver area’s median household income is $73,271, as reported by the Metro Denver Economic Development Corporation.
In another study, this one by Nationwide Insurance, titled “Health of Housing Markets,” Denver showed the fifth steepest decline in affordability over the past year among major Metropolitan areas, according to Denver 7. San Jose, CA came in first, followed by San Francisco, Seattle and Oakland.
All told, many buyers are finding themselves in an income/home price squeeze, a development that has spurred some to action. According to DMAR, Gov. John Hickenlooper recently signed a bill to extend Colorado’s Affordable Housing Tax Credit program until 2024; the program incentivizes developers to build affordable housing.
Additionally, homebuyers are finding outside investors to help with down payments. “Some private companies have developed equity sharing programs to assist homebuyers in lowering monthly payments,” notes DMAR.
Happily, some experts see market forces tempering prices in the weeks to come. “Signs are pointing to more balance in the months ahead,” said Steve Danyliw, chairman of the DMAR Market Trends Committee.