Metro Denver home prices, after years of effervescent gains, are going as flat as that unfinished bottle of champagne.

“Metro Denver real estate values have peaked and are falling in some locales,” said Van Lewis, a broker associate with Re/Max Alliance in Aurora. “Nothing drastic, but definitely a change from recent years.”

Since January 2010, the median home price in metro Denver has shot up from $202,896 to $424,051, according to a report from Daryl Fairweather, chief economist with the Seattle-based real estate brokerage Redfin.

That works out to a compounded annual average gain of 7.65% a year, compared to compounded wage gains of 2.3% a year over the same time frame.

But those gains moderated in a big way this year. The median price of a home sold in metro Denver actually dipped in February on an annual basis, before a big drop in mortgage rates and stronger demand from buyers this spring pumped life back into the market.

Year-to-date through November, the median price of a home or condo sold in metro Denver is up 2.4%, according to the Denver Metro Association of Realtors.

Zillow estimates that metro Denver home prices, as measured by its index, are up only 1.7% this year to $431,790, which is below the 3.8% rate of appreciation measured nationally by Zillow.

A year ago, metro Denver’s annual appreciation rate was running at 7.2%, according to Zillow and 7.9% according to DMAR.

“Denver’s home price growth came crashing back to Earth after several years of stratospheric increases. We forecast that to continue, with a mere 1.4% price growth over the next year,” said Jeff Tucker, an economist with Zillow.

Denver isn’t alone in seeing the party come to an end. Several of the hottest housing markets from 2018 — San Francisco, San Jose, Los Angeles and Seattle — have all suffered sharp slowdowns, Taylor said.

But Colorado’s relatively strong job gains, combined with the lack affordable options in metro Denver, is pushing buyers up and down the Front Range.

Of the 10 metro housing markets that the National Association of Realtors expects to outperform over the next three to five years, two are in Colorado — Fort Collins and Colorado Springs.

NAR based its selections on domestic migration, consistent job growth, demographics and attractiveness to retirees, and especially on affordability.

“Affordability is key to price growth projections,” said Lawrence Yun, NAR’s chief economist, in a conference call.

Five years ago, Denver was on the list of outperforming housing markets, along with popular metros like Seattle, Austin and Salt Lake City. But Denver is now in the camp of metros that have gone from hot to not.

“Going forward they will lose some momentum given their strong performance in the past,” Yun said of metros like Denver and Seattle.

The NAR is calling for U.S. home prices, based on existing home sales, to rise 3.6% in 2020, down from a 5% gain in 2019, assuming no recession. The NAR puts the odds of one happening at under 3 in 10.

Diminishing concerns about a recession are leading some forecasters to predict more robust home price gains in metro Denver and elsewhere. A strong job market, rising incomes and low mortgages could drive the market forward.

“This economic environment should add to first-time buyers’ desire to own. But with supply expected to remain lean, especially for lower-priced homes, look for a quickening in price growth,” predicts Frank Nothaft, chief economist for CoreLogic, a leading provider of property data and housing market analysis.

CoreLogic forecasts its index of metro Denver home prices will rise 4% next year, an acceleration from the 3.4% gain measured through October.

A change in attitudes

Sellers are aware that the market is increasingly shifting against them, but some struggle to tamper their expectations or acknowledge the need to show more flexibility in working with buyers.

“Overall, sellers will have to rein in their price expectations given motivations. Sellers need to offer more value — they must do repairs and be willing to negotiate on prices and concessions,” Lewis said.

After being in the driver’s seat for so long, it is hard for sellers to let go of the steering wheel.

“They have read the headlines and heard the stories from neighbors about prices. But, they still want top dollar and are willing to try for it,” Lewis said.

Lewis points to a listing he had in July, a fixer-upper. The owner decided to make the required repairs and had it under contract by October. That purchase fell apart after the inspection. It went back under contract in December. But the delay contributed to a 6% reduction in price from July.

Time is money, but now in the opposite direction for sellers.

Buyers are still out there and actively looking, but they are less desperate to buy. Their big worry is about getting in at the top of a market, said Matt Leprino, a spokesman with the Colorado Association of Realtors.

“I will be telling any buyers who come through my office to be looking at a longer-term game. You won’t make $50,000 in appreciation in two years,” Leprino said. Today’s buyer needs to take a long-term view.

Leprino said one thing to watch next year is what investors, many of whom bought low after the housing market crashed, do with their rental properties.

If they perceive the market has finally peaked, some may be more inclined to list their homes, which could boost the supply on the market and provide buyers with more options. That could put downward pressure on prices.

“You might see a lot of people pull the trigger on selling properties primarily income properties,” Leprino said. “You will see a larger influx of inventory.”

Another trend to watch in the year ahead is the growing influence of iBuyers, who entered the Denver area in October 2018. Zillow Offers, Opendoor, Redfin Now and 8Z provide sellers who have a home they want an upfront offer. If the seller accepts, the companies will buy the house, handle repairs, and save the owner the hassle of a listing and showings.

iBuyers have gone from zero to 2.7% of all sales in the third quarter, estimates Redfin. That is still small, but expect it to increase, provided the capital to make offers remains available.

In cities where iBuyers have been around longer, they have a bigger piece of the market. In Raleigh, N.C., it is 6.8% and in Phoenix, it is 5.1%. In one Phoenix neighborhood, Pecan Creek, instant offers accounted for 13.7% of homes sold in the first three quarters of 2019.

“The fact that iBuyers have reached over 10% market share in some places could be an indication of how big iBuying could get nationwide once the business model is perfected,” said Fairweather.