Neighborhood Inscope

Denver's Housing Shortage

By Dr Denver H. Bubble

Wed Feb 28 2018

The Denver Post had an article "Housing shortage pushes metro Denver buyers toward new homes, but builders can’t keep up" that highlighted tight supply and increasing prices from existing homes in the metro Denver area.

With a population of 2.8 million, there were fewer than 4,000 homes listed for sale in January. This inventory is down around 3% year over year. The average active listings for January 1985-2017 is 13,760. A new record low was achieved in January 2018 with only 3,869 homes listed! Experts say it could take up to 10 years to correct the imbalance of home needs. This deficit of homes listed is what is driving the increase in prices and blowing the housing market bubble in the metro Denver. One factor that could pop the bubble is an increase to normalize levels of inventory leading to a decrease in prices

The average price of a home sold in January topped $490,932, while the median price was $416,000 according to the article. The article then states "The average price of a new home sold last year in metro Denver was $560,000." I am not sure how they squared this peg at the fine writes at the Denver Post, but whichever number you use the next line is a shocker. "To qualify for a 30-year mortgage at a 4.5 percent interest rate on a new home at the average price, a household putting 3 percent down would need to make more than $143,000 a year to qualify, including taxes and insurance, according to MortgageCalculator.org." The median income in metro Denver, according to the Census.gov, Denver County median income in 2016 dollars was $56,258. As the bubble in real estate prices grows larger it continues to price our buyers, just to have a minimum down payment it takes an incoming of three times the median income to afford the mortgage. Prices can't continue to rise with a steady stream of new buyers, even with the huge gap in available inventory. Prices can't continue to hold at this level