From ritzy resort chalets to the tract homes running along the Front Range, the pandemic has transformed housing markets across Colorado, pushing prices up to record highs and the supply of listings down to record lows — not exactly the outcome expected from the worst disease outbreak to hit the globe in a century.
Over the past two years, the median price of a single-family home sold in Colorado has risen by nearly a third, while the already tight inventory of listings available for sale has dropped by nearly two-thirds, according to a Denver Post analysis of statistics released earlier this month by the Colorado Association of Realtors.
In a state with 5.8 million residents, there were only 6,408 active listings on the market at the end of the year, down from 17,617 at the end of 2019.
“In 2019, we were starting to see a plateau in the real estate market with appreciation under 5% in most areas, and homes were starting to stay on the market longer and longer throughout the year. COVID happened in 2020 and the expected waning of the real estate market made an abrupt change. It appeared that many people wanted to live in Colorado but were tied to their jobs elsewhere,” said Kelly Moye, a Broomfield-area Realtor, in comments included with the year-end wrap-up.
A seller boycott is not behind the supply shortages. The number of new listings put on the market in 2019 was 142,040. Last year it was 139,212, off by only 2%. But the demand side of the equation definitely shifted, with 130,810 homes and condos sold last year compared to 115,492 in 2019, an increase of 13.3%. Had more homes been available, it is likely more would have gone under contract.
What is unusual about the robust housing market is that it overlaps with historically weak population growth. That definitely wasn’t the case in the early 1980s, when a downturn and outmigration hit housing markets in the state hard.
Of the state’s 64 counties, 26 lost population between 2019 and 2021, Patricia Silverstein, chief economist at Development Research Partners, said at a market forecast hosted by the Denver Metro Association of Realtors, or DMAR. And of the counties that did see gains, growth rates have dipped well below the annual pace averaged last decade — a result of fewer births, more deaths and restrictions on international migration during the pandemic.
“It was a very low population growth year, one of the lowest we have ever had,” she said. And yet home sales are up 13.3% over the past two years.
Colorado’s housing markets have benefitted from a higher concentration of millennials, said Nadia Evangelou, director of forecasting at the National Association of Realtors, at the DMAR forecast. During the migration wave last decade, 53% of those relocating to Colorado were millennials, compared to 43% of those who moved nationally, she said. When the Federal Reserve pushed interest rates to historic lows, they had a strong motivation to buy, and the pandemic pushed many renters to seek out more space and a place to call their own.
Silverstein notes that the biggest single age cohort in Colorado is 30, and the average age when someone buys their first home is 34. That means more demand is coming.
Higher altitude, hotter markets
Mountain and Western Slope housing markets have risen the most in the past two years, of the 30 counties with 300 or more sales last year that were examined. The median price of a single-family home sold statewide was $529,995 last month, up from $400,000 in December 2019, a gain of 32.5%.
Pitkin County led the state with a 97.5% gain in the median price of a single-family home sold the past two years. That median home sales price was already lofty at $2.9 million at the end of 2019 and it went up to $5.75 million at the end of 2021.
Although highly-priced homes and condos in resort counties can cause median and average values to swing based on what sells at any given point, Pitkin County had a 67.4% increase in sales, the largest jump in the state. It also had the biggest percentage drop in active listings, which fell from 499 to 89 over two years, or 82.2% — another sign of a very hot market.
“Everybody who comes from another place wants to be in the heart of Aspen. There have been multiple sales over $20 million,” said Ann Abernethy, a broker associate with Slifer, Smith & Frampton RFV. “During the pandemic, a whole lot of people wanted to create a life with more recreation and more outdoor space.”
Existing owners of second or third homes in the county relocated to Aspen during the pandemic, while well-off buyers in more congested and higher-tax states like California, New York and Connecticut also picked up and moved, making the county a primary residence. The sharp rise in the value of stocks and cryptocurrencies in 2020 and 2021 generated a huge amount of wealth. And with inflation now on the rise, the wealthy are looking for ways to shelter their assets, and real estate is one option, Abernethy said.
Eagle County, which includes the resorts at Vail and Beaver Creek, also experienced strong demand, with single-family home values up 54.2% to a median of $1.65 million. The inventory of active listings fell from 744 to 195, a decline of nearly 74%, while the number of sales rose 19.4% despite an 8.3% drop in new listings in 2021 compared to 2019.
But it wasn’t all about multimillion-dollar mansions and ski condos. Between Pitkin and Eagle, the biggest pandemic price gains in Colorado belonged to three counties not normally considered high-end or hot.
Montezuma County, home to Cortez and the Ute Mountain Ute Indian Reservation, saw the median price of a home sold rise from $212,000 before the pandemic to $390,000 last month, an 84% gain. The number of home and condo sales in 2021 was nearly 30% higher than it was in 2019, and the active inventory of listings fell by about 40%.
Delta County’s median home sales price went from $215,000 to $364,000, a gain of 69.3%, while Montrose County clocked a 54.8% gain from $267,450 to $414,000.The number of listings at year-end was down 61.5% in Delta County and 42.2% in Montrose County.
Yet not every mountain county was a hot mess. Grand County has a two-year gain in the median sold price of 14.1% to $781,128,, the second-lowest after Garfield County, with an 8.8% gain to $511,250.
In almost every other context, that would be very respectable appreciation, but not during the pandemic. Those were the two smallest gains of the 30 Colorado counties examined. Both counties did see the number of available listings drop by around 60%, although Grand County suffered the biggest drop in sales in Colorado between 2019 and 2021 at 6.2%. Broomfield County was the only other county studied with fewer home and condo sales in 2021 than in 2019.
Front Range counties
The Front Range looks relatively restrained compared to the frenzy that overtook some of the mountain counties during the pandemic. But in historical terms, price gains have been anything but tame.
Douglas County leads metro Denver with a 40.9% gain during the pandemic. The median sales price for a single-family home there was $685,500 at the end of 2021.
Adams County was the only other metro county to beat the state two-year gain of 32.5%, but barely, at 32.6%. Long considered a pocket of affordability, the median sales price of a home there is now at $507,878, up from $383,000 before the pandemic started.
Denver matched the statewide gain of 32.5% and had a median sales price in December of $622,950, up from $470,000, according to the Colorado Association of Realtors. That is higher than the median sales price of $599,900 that DMAR reported. Price gains in Boulder, Broomfield, Jefferson and Arapahoe counties were below the statewide gain in median prices, though it seems odd to describe gains still in the 30% range as “lagging.”
Pueblo County managed to beat out El Paso County with a 40.4% vs. 37.9% gain in the price of a home sold. The median sold price in Pueblo moved from $215,000 to $301,900 while in El Paso it went from $330,000 to $455,000 over the past two years. What sets Pueblo County apart is that new listings have risen the most between 2019 and 2021 — 18.5% — and the inventory of available listings has decreased the least, 9.9%.
Colorado Springs Realtor Patrick Muldoon said in his comments that the real estate industry as a whole feels like it needs a strong detox, and that doesn’t leave him optimistic about what comes next.
“I don’t have a crystal ball in front of me, but the future may not be as bright this year. The U.S. has stacked up record debt. The middle class is getting clobbered. And the Federal Reserve has painted itself into a corner and not admitted it. Raise interest rates, crash the economy — leave them where they are, super inflation becomes a very real issue. All of this affects real estate,” he said.
