The parts of the equation:
Inventory: December 3, 2008
Homes and condos = 22,271 (a 19.12% decline in inventory from December 2007)
Mortgage Rates: At 4 year lows, hovering just under 5%.
Job Growth: Up in 2008 over 2007 and predicted to increase more in 2009.
These 2nd two factors will cause more buyers to enter the market in Denver. This, along with the low available inventory, will cause the home prices to appreciate.
Our inventory is actually at a 5 year low. When there are not enough choices, buyers ten to buy more quickly, for fear of losing out on a good one. As houses sell faster, of course, the prices begin to increase. The only thing preventing them from increasing faster is the number of short sales and bank owned homes still in the market.
To substantiate the premise that homes are selling faster one only need take a look at the number of properties currently under contract. Currently there are 5,396 homes under contract and 12 months ago there were 5,045.