How is the Denver Housing Market Doing?

When compared to actual average prices for the same period from Zillow, approximations of overpricing (premium) or underpricing (discount) can be estimated. The latest results indicate that the average single-family residence in the metro area is selling for a discount of 0.62%. In May of 2022, homes were selling at an average premium of 25.0%. Currently, the average property price, in non-inflation adjusted terms, is $581,000.[1]

A similar index for renting the (Waller, Weeks, and Johnson Rental Index) is also available on a monthly basis.  From this source, we can find average rents, statistically predicted rents, premiums or discounts, affordability, and other measurements of interest. 

Currently, the average rent for the average rental unit in the Denver metro is $1,975, which is a discount of 3.44%. In the last year, rents have declined on average 1.77%, and the annual income needed for a household to reasonably afford the average rental unit is $79,031.[2]

The tradeoff between owning and renting is always in question for any housing market. The Price-to-Rent Report provided in the Real Estate Initiative offers guidance on this question for Denver. Currently, Denver’s price-to-rent ratio is 23.88.

This is interpreted as the average purchaser/investor pays $23.88 in price for each one dollar in annual rent. When comparing this figure to the historical price-to-rent ratio (23.17) in Denver, a premium of 3.05% currently exists.  Here this premium indicates that, on average, rent is relatively inexpensive when compared to ownership in Denver.[3]

Affordability is always a major issue in housing.  Home prices and rents are what they are, but are they affordable? Good measures of local household income are needed to help answer this question. The Big Radius Tool produced by STATSAMERICA provides numerous data points of interest with Average Annual Earning per Job, among them. For a 25-mile radius around Denver, this annual average is $98,651. 

Returning to the Waller, Weeks, and Johnson Rental Index, an annual household salary of $79,031 is needed to be able to afford the average rental unit in the area.  From an ownership perspective, a ratio of house price to annual income of between 3 and 5 is considered to be reasonably affordable. In Denver, this ratio is 5.89, assuming a single worker per household. From this perspective, renting is affordable for a single worker per household while ownership is not.[4]

In summary, while home prices and rents are currently trading at discounts relative to their long-term pricing and rental trends, only rents are across the board affordable at this point. The average Denver home is affordable to only dual earner households. For single earner households, homeownership remains out of reach.

Endnotes

[1] The Real Estate Initiative provides two housing indices (Real Estate Initiative Top 100 Housing Markets and the Price-to-Rent Report).  Both are updated monthly, come with brief explanations of the metrics, and are easy to use when viewing the reader’s housing market of choice.  Readers may be accessing this report at some future date and should recognize that estimations and results change monthly.

[2] A difference with the Waller, Weeks, and Johnson Rental Index is it provides a snapshot of the current rental market as opposed to the time-series view of less data but traced back through time with the Top 100 Housing Markets.  Here, again, readers may be accessing this report at some future date and should recognize that estimations and results change monthly.

[3] When no premium or discount exists in a housing market’s price-to-rent ratio, market stability tends to follow between monthly rents and home prices.  When premiums exist in this ratio, the housing market in question favors renting.  When discounts exist in this ratio, the housing market in question favors owning.  The larger the premium or discount, the more susceptible a market is to price and rent changes.

[4] Clearly, assuming two workers per household and average salaries, both rents and home prices are affordable.

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Denver Metro Housing Market: Monthly Update – October 2025