Denver Housing Inventory Up, but Affordability still a Concern

According to the latest market report from the Colorado Association of Realtors (CAR), even though rising interest rates helped soften Colorado’s red-hot housing market in May, affordability challenges remain.

Overall, Colorado saw a sharp increase in housing inventory with more than 11,000 new listings created by the end of last month, representing a more than 10% increase year-over-year. This increase of inventory helped usher the state’s median home price back under $600,000; however, the median price remains more than 15% above what it was in May 2021.

Meanwhile, CAR’s statewide affordability index for Colorado, which compares the buying power of state’s median wage compared to its median home price, remains near record lows. The index came in at 52 points (out of 100) in May. This means that median wage workers need to supplement their income by at least 48% to afford a median price home. That total also represents a 30% drop since May 2021.

One reason why Colorado’s housing market saw a brief slowdown in May is that the Federal Reserve increased interest rates by 50 basis points in May. According to personal finance website NerdWallet, the average interest rate for a 30-year fixed mortgage is 5.9%. This time last year, the average interest rate on a 30-year mortgage was 2.8%.

The impact of rising interest rates can be seen across nearly all of Colorado’s local housing markets as well. In Durango, the average home price has skyrocketed by 30% over the last 12 months to nearly $900,000.

Up north in Larimer County, nearly 2,600 homes have been listed for sale so far this year, which represents a nearly 10% decline from May 2021, according to CAR's data. This has helped push the county’s median home price up to nearly $600,000, a 14% increase from last year.

While affordability is still a consideration would-be home buyers still need to make, there are options to help your money go further and areas where you’ll get more bang for your buck. If you’re ready to check out the rising inventory in Denver, contact Metrowest today – we’d love to show you around!