Higher gas prices in 2008 were one of the reasons cited as causing the previous housing bubble to burst as the increase in gasoline-related payments caused people to fall behind on their mortgages setting off waves of defaults in Denver and across the country. Will we see a repeat this summer due to higher gas prices?
In the past ten years, the U.S. has seen a dramatic increase in the number of high-income renter households, from 3.8 million in 2008 to 5.7 million in 2017. Nowhere has this surge been seen more than in Denver. Denver and Austin lead the nation in high-income renter growth. These metros housed nearly 2.5 times more six-figure renter households in 2017 than they did in 2008.
Month over month, prices in the Denver Metro area reversed the trend, by rising 1.27% for median and 1.11% for average residential prices. Year over year the pace of the housing price increases slowed with the average residential prices rising by only 0.66% and the median residential prices falling 1.23% from February 2018.
After predicting these for a year since we have started blogging we are seeing the bubble finally burst before our eyes. Matthew Leprino, a Denver-area Realtor reported, “The median price for a Denver single-family home is now equal to that of March 2017 — $425,000.” In June 2018, we hit the high in terms of median sales prices, which was $451,500. From June 2018 to January 2019 that is an almost 6% decline!
Month over month, prices in the Denver Metro area started to weaken again, by 1.25% for median and 0.26% for average residential prices. Year over year the pace of the housing price increases slowed with the average residential prices rising by only 2.89% and the median residential prices rising 3.6% from January 2018.
87% of millennial renters in the metro Denver area say that they plan to purchase a home at some point in the future, but just 5% expect to do so within the next year, while 28% say that they won’t buy for at least five years. This is bad news for the cheerleaders in the real estate industry who are banking on millennials to power home prices gains in 2019 after a lackluster year in 2018.