Colorado Housing Market Predictions 2022

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A brief overview

Colorado offers an outdoor lifestyle and scenic beauty that has been an attraction for many people over the years and 2022 is no different. Colorado remains a sought-after market, and with the major shift in real estate market trends recently in the US, we take a look at the Colorado housing market predictions for 2022.

Colorado Housing Market Predictions 2022 - Table of Contents

Colorado has long been an attractive state for many people, with its wide-open space and outdoor lifestyle, the state offers a desirable way of living for people from all over the country. Before the pandemic, Colorado had a healthier housing inventory and was a more affordable place to live. Now, we are seeing much lower inventory in the state’s real estate market and affordability has swiftly become a thing of the past. Let’s take a closer look at the Colorado housing market predictions for 2022.

Colorado home prices

Colorado

Historical home prices in Colorado

Over the last few decades, home prices in Colorado have been robust, showing consistent growth. With many people being attracted to the state, Colorado typically had more people looking for homes than they had available on the market. Which meant that homes remained at an affordable rate on the housing affordability index.

During the last recession, house prices in Colorado remained somewhat steady, and after a period of small decline between 2006 and 2009, prices began to grow steadily up until today. Typically, Colorado has operated on a median house price growth of 6%, according to Nicole Rueth, Senior Vice President for Fairway Independent Mortgage Corp.

The rise of the pandemic, however, caused a stir in the Colorado housing market, with the usual seller’s market shifting. House prices began to sky-rocket, rising 16.7% in 2021 alone, according to Rueth. The number of houses on the market also decreased, which meant that houses were priced higher.

Current home prices

The Colorado Association of Realtors released a report in June which indicates the predicted slowdown in home price growth across the state. Along with most places in the US, house prices have been on a major growth path that is no longer sustainable with the increase in mortgage rates and the current economic climate.

The median sales price for a single-family home in Colorado as of June 2022 was $589,000. This is a decline of $10,000 from May 2022 and is the first downward movement of home prices in the state since January. Along with this, affordability in the state has been low, making it difficult for first-time home buyers or newcomers to enter the real estate market in the state. While Colorado boasted good affordability stats before the pandemic, this has swiftly changed since 2020.

Colorado housing market statistics

Median Sales Price

$589,000

Days on Market (Average)

22 Days

Housing Affordability Index

51 points

Total Homes Listed

4,960

Population Size In Colorado

5.9million

Median Household Income

$72,331

Mortgage Rates (30-Year Fixed)

5.51%

Unemployment Rate

3.4%

The population in Colorado is estimated to be around 5.9million based on previous years’ statistics. Colorado is the 8th largest state in the US, with a surface area of 104,094 square miles. The Rocky Mountain range takes up a large part of this area, leaving big sections of Colorado uninhabitable.

The median household income in Colorado in 2022 so far is $72,331. According to the Bureau of Labor Statistics, consumer prices increased by 8.5% between March 2021 and 2022. This was the highest inflation rate that had occurred since 1981.

According to the Colorado Association of Realtor Affordability Index, houses in the state are literally half as affordable as they were 7 years ago with a decline of 45.4%. The state now sits at 51 points on the housing affordability index which is the lowest it has been in the Denver area since 2010.   

There were 4,960 homes listed for sale in Colorado in June 2022, which was an increase from May where 4,619 homes were listed on the market. Of these homes that were listed, 1,712 home sales occurred in Colorado Springs alone. There is currently a high demand for houses in the state, so inventory is getting sold quickly.

Homes in Colorado spent an average number of 22 days on the market in April 2022, which is a good indicator of just how hot the real estate market is in this state. The major demand has led to homes being snapped up quickly.

The median home sales price in Colorado as of June 2022 was $589,000, and this was a 15.2% increase from the same period in the previous year. In March, the median sales price topped $600,000 for a single-family home, but then its growth slowed a little as the year has continued. The price of homes in Colorado in June was a 14% increase from June 2021.

Mortgage rates in Colorado are currently 5.51% for a 30-year fixed mortgage and 4.77% for a 15-year fixed mortgage. Colorado’s mortgage and refinancing rates are well below the national average, which makes this a desirable place for home buyers.

The unemployment rate is just 3.4% in Colorado at the moment, which means that there is a total of 112,000 people unemployed in the state. Which is relatively low compared to many other states where the unemployment rates sit well over 4% and even over 5% in some cases.

 

*All resources used in this article for data can be found at the end

Predictions for Colorado housing market in 2022

As the Federal Reserve cut the interest rates in the first half of 2022, the housing market in Colorado responded with a slowdown in house price growth and a rise in inventory. Mortgage rates hit an average of 5.23% for a 30-year fixed mortgage across the country and this led to a cooling of the housing market in most states, including Colorado. As with the rest of the country, there have been speculations around whether the housing market will crash in the popular state.

Colorado

Will the Colorado housing market crash in 2022?

Both this year and last year, the housing market in Colorado was characterized by a high demand, lower inventory and increased home prices. The high demand was largely thanks to the stay-at-home culture that was fostered by the pandemic, which led people to seek out bigger homes.

Experts believe that, while house prices have been on the rise and are now cooling, the Colorado housing market will not crash, and neither will the economy. Employment statistics are predicted to rise, even amidst the turmoil in 2022 and the economy is expected to recover to pre-pandemic levels in the near future.

A house price growth slowdown is already taking place and expected to continue however prices aren’t expected to drop off a cliff and therefore the market should remain robust. A strong real estate demand in the state is a driving force for the real estate market and the demand doesn’t seem to be waning much just yet. According to Mashvisor, the Colorado housing market will rise by over 10% this year, despite the rising mortgage rates and lower inventory.

Denver housing market forecast 2022

Denver

The state capital of Colorado, Denver, has a bustling real estate market thanks to the influx of tourists which promotes investment into rental properties, and the median house price is $450,868. This is decidedly lower than the state average. The demand for houses in Denver remains high, even though supply has fallen, with new listing declining by 5.26% over the first half of 2022.  

There’s likely to be no price increase over the months remaining this year, due to the high demand and lower supply, along with rising interest rates. The housing market in Denver is likely to continue growing over the remainder of 2022, but it may function a little differently than before. Denver is forecasted to remain a hot housing market in 2022.

Where to find affordable housing in Colorado

For those who are interested in moving to Colorado for the outdoor lifestyle, idyllic scenery or any other reason, you may be looking for an affordable place to start out. Here are 3 of the most affordable locations in Colorado that you could consider:

Lamar

Lamar

Lamar offers residents a slower pace of life, away from the hustle and bustle of big cities. This area has a median home value of just $103,000, which makes it one of the most affordable places in Colorado, and a great place to buy your first home. Lamar is one of Colorado’s best birding destinations and is home to a plethora of state parks and wildlife areas. Lamar is located along Route 50, and the town boasts great schools and hospitals.

Fruita

Fruita

The city of Fruita is a great, affordable option for those who simply can’t fork out what it costs to buy a home in Aspen or Vail. Fruita has a median home price of $351,00, and offers residents a phenomenal place to ski, along with hiking trails and many outdoor activities. Fruita has a Fall Festival that gives life to the city every year as people flock to this event.

Fort Lupton

Fort Lupton

Fort Lupton offers residents a relaxed lifestyle, not far from the glitz of big city life. The median house price in Fort Lupton is $409,500, which is significantly less than the average across the state. The city is full of amenities for residents, from wineries to museums and more. The city has great schools and therefore attracts many families.

Hottest housing markets in Colorado

Colorado has proven itself to be one of the best places to invest in real estate. There are multiple places where investors can consider purchasing property, each with its own benefits. Some of the hottest housing markets in Colorado this year are:

New Castle

New Castle

New Castle is one of the fastest growing places in Colorado. Home prices in New Castle are moderate, which provides plenty of opportunities for investors who are looking to snap up a good deal. The median home value in New Castle is $371,400, which is well below the state average and offers investors a prime spot for real estate purchasing, particularly for rental properties as the city attracts many tourists. According to Zillow, house prices in New Castle will rise by 7.5% over the next year, after their 5.8% rise over the previous year.

Manitou Springs

Manitou Springs

Just outside of Colorado Springs lies Manitou Springs, a quaint town with its roots firmly entrenched in its history. There are a host of outdoor activities in this area which draw many tourists and make this destination another prime spot for purchasing properties to rent out. Whether short-term or long-term rentals, Manitou Springs has a variety of options for investors, with the median home value sitting at $388,500. Zillow predictions for the house price growth in Manitou Springs over the next year are a solid 5.6%, which is good growth considering the current economic climate.

Colorado Springs

Colorado Springs

Colorado Springs offers a very similar lifestyle to Denver, without the high rent prices. The median sales price in Colorado Springs is $495,000, however the area’s median rent is just $1,131 per month. This makes Colorado Springs the ideal location for young professionals who are looking to change cities and rent a home. There were 2,125 homes for sale in this city in June 2022, and according to Realtor.com Colorado Springs is also one of the hottest housing markets for 2022, coming in 14th out of 100 cities.

Denver real estate trends

Denver

Denver’s housing market is booming, with 3,652 homes for sale at the end of May 2022. However, it’s one of the country’s least affordable housing markets, and so people moving to this metro should be aware of the higher house prices. The median rent price in Denver is $2,150, and the median sales price of homes is $415,300.  

With a population of around 600,000 people, Denver has become a hotspot for investing in short-term rental properties to use for the likes of AirBnb. With the vast tourist volume, there are an array of short-term rental options for real estate investors to make a profit from. Currently, Denver is a buyer’s market, so the time is right for those looking for an investment property.

The bottom line

The Colorado housing market was hot before the pandemic and continues to be a growing market as we race towards to the end of 2022. It’s a buyer’s market in Colorado at the moment, and although the median sales price is relatively high, the state offers areas for those who are looking for more affordable housing as well.