Home prices in the Denver metro area have gone up by 20.4% year over year as of February, marking the fourth highest price growth in the nation, according to the latest market data from CoreLogic.
Home prices nationwide grew by an average of 20% in February, which was the 12th consecutive month of double-digit price appreciation, according to CoreLogic, which analyzes property data. The only three metro areas to see higher price appreciation than Denver were Phoenix, Ariz.; San Diego, Calif.; and Las Vegas, Nev., respectively.
Economists say a continued mismatch between housing supply and homebuyer demand will continue to push home prices higher over the next year.
“New listings have not kept up with the large number of families looking to buy, leading to homes selling quickly and often above list price,” Frank Nothaft, chief economist for CoreLogic, said in a statement. “This imbalance between an insufficient number of owners looking to sell relative to buyers searching for a home has led to the record appreciation of the past 12 months.”
According to data from the Colorado Association of Realtors, the average sales price of a home in Denver was more than $810,000 in February, representing a climb of 11.4% year over year.
Meanwhile, the city’s affordability index – which measures the purchasing power of a worker earning an average wage – has fallen precipitously.
In February, the affordability index stood at 59 points, meaning that an average wage worker needs to supplement their income by approximately 40% to afford an average priced home. The 59-point total represents a drop of 20.3% when compared to last year’s figures.
One potential area of relief for homebuyers is that interest rates are rising, which could depress demand for homes as it becomes more expensive to take out a mortgage. Because of this, CoreLogic said it expects moderate price appreciation of 5% over the next year.
“Higher prices and mortgage rates erode buyer affordability and should dampen demand in coming months, leading to the moderation in price growth in our forecast,” Nothaft said.
This article was originally posted on Denver home prices up 20.4% over the last year