2025 Denver
Real Estate Market Prediction

1-9-25

With the holidays and New Year officially behind us, we are now looking ahead at a new year, 2025. Last year proved to be an interesting market in Denver. If you missed our 2024 year recap article, I encourage you to take a moment to read that and then return to this 2025 Denver Market Prediction article. 2025 is starting off with interest rates as high or even higher than 2024 started. It feels strange to type that when a year ago today every media channel was spouting that 2024 would be the year interest rates came down. It looks like most sources got that prediction wrong. This might make you wonder if 2025 will be the year interest rates come down.  If they do, will it create a feeding frenzy from pent-up buyer demand waiting for those lower interest rates? Keep reading and learn what TK Homes, a Denver based real estate team at Keller Williams, predicts will happen with Denver’s real estate market in 2025.

First, one major difference right now versus 2024 is we aren’t seeing the message that 2025 will be the year interest rates come down or any talk about pent-up buyer demand. This might seem interesting considering we never saw the lower interest rates or feeding frenzy in 2024. However, I think there are two reasons we’re not seeing this message today. First, the last Feds meeting of 2025 indicated that there would be less rate cuts in 2025, in fact, as little as two. With fewer Fed rate cuts, there will be less opportunity for mortgage rates to come down. Second, the industry isn’t going to make the same mistake they did in 2023 by making such a strong statement regarding interest rates and 2025. I think this is wise.

At TK Homes, we have always stayed cautious about overpromising how low interest rates might go and how quickly. We understand that even a low 5% or high 4% rate is historically a very low interest rate. So, we have always said it’s unlikely we’ll see rates fall below 5% and that rates would not come down quickly. The reason they went up was to help combat high inflation. Dropping the rates too quickly would just fuel higher inflation again. There has to be a balance. So, the rate is likely to stay higher and drop slowly over a period of time. I think this is what most have come to realize and accept in 2025.

This, in my opinion, is good news for the Denver real estate market because homeowners looking to change their living situation or buyers wanting to buy are starting to accept higher interest rates. Once homebuyers and sellers accept higher interest rates, they will start making selling and purchasing decisions without the idea of having to wait for better rates. Accepting that these rates aren’t going anywhere anytime soon means that many waiting for lower rates will decide to stop waiting and take action. It was the idea that lower rates were coming that kept many buyers from getting into the market while they were waiting for these promised lower interest rates. With fewer buyers in the market, homes were taking longer to sell and selling typically for less than list price and less than previously sold homes.

If home sellers and buyers are starting to accept interest rates, what does this mean our prediction is for 2025? First, I think you will see the market will be slightly steadier this year. You’ll have a higher number of buyers coming into the market; this could cause homes to sell quicker than the previous year. If homes are selling a little quicker, then you might see home sellers that have been holding off in previous years for better conditions decide to list their homes and purchase a home that better suits their needs. With more sellers, this will help keep the new buyer demand in check, so we don’t see crazy appreciation or market conditions similar to 2021. Because we won’t see a huge increase in buyers in 2025, sellers are still going to have to be realistic when pricing their homes. Homes priced correctly will likely sell quickly   and sell near list, at list, or even slightly over list. Homes that are not priced correctly will continue to sit and need a price reduction to get them priced correctly before attracting a buyer. Overall, the market will feel more “normal” than we saw during COVID or what we saw in 2024.

It's my prediction that interest rates will remain higher, especially the first half of 2025; however, as the market stabilizes throughout the year, I am hopeful we’ll see rates start trending downward. This time they hopefully will level out and remain lower versus what we saw in 2024, when we saw them tick down only to shoot right back up. 

In simple words, I believe in 2025 we will see positive appreciation starting early in the year and leveling out mid to end of summer. Then, we’ll have our normal fall slowdown bring values down slightly, but most homes will be worth more at the end of the year than they are today, perhaps a more historical average of 3-4% appreciation.

We do not have a crystal ball to predict Denver’s real estate market. This prediction is based on experience and time spent working with Denver area homeowners and buyers for many years. However, what actually happens is yet to be seen. This is why on the first Thursday of every month we will be releasing our Denver Market Update articles to keep you up to date on the most current market conditions. Make sure to subscribe to our newsletter or visit us each month to learn more about Denver’s current real estate market conditions. If you’re looking to sell or buy a home in 2025, contact us today and let’s talk about your specific real estate goals!

~ Written by CEO/REALTOR® Trevor Kohlhepp