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October 29, 2025 Posted In Estate Planning
by admin
Denver’s housing market has been hit with a dramatic increase in homes for sale this spring. This sudden influx of supply far exceeds the demand for single-family dwellings, both in Denver proper and its surrounding suburbs.
As a home seller, seeing an increase in the number of homes for sale can be worrisome; as a buyer, though, it’s a pleasant change from the tight market the Mile High City has experienced in the last decade. In fact, inventory in Denver is almost 100% higher than historic housing inventory for April.
How can this real estate shift affect your estate plan? It depends on your financial goals, plans for moving, and whether you plan to purchase or sell your home. Any time that a housing market takes a sharp uptick in demand, there’s going to be a correction. But is this just a correction, or something that investors and homeowners need to take more seriously? Your Denver estate planning lawyer can help you revise your estate plan to account for this dramatic shift.
A buyers’ market affects the value of real estate assets; buyers have their pick of houses, and sellers may become more desperate to unload their homes. A housing market that stays in the buyers’ market phase for several years can have a significant impact on estate planning decisions, impacting gifting or trust decisions. High inventory often deflates property values, and if property values remain depressed, it impacts the overall worth of your estate.
Lower property values may make strategic gifting of assets more effective, as they may appear, on paper, to have a lower value. However, don’t necessarily count on this being an effective long-term solution; as professional real estate attorneys, the one thing we know about housing markets is that there are consistent corrections in large metro areas like Denver.
Your estate is composed of all the property you owned when you passed away. It can include assets, money, real estate, and the family home. Many people include their family home, as part of their estate, so the overall value of their estate is tied to the value of the house.
A housing market with excessive inventory impacts your estate planning and generational wealth-building strategy in a few key ways:
Reduced property values inherently reduce the value of your estate if your home is included. The market value of real estate in an estate may be lower than heirs expect. If the house is primary asset or assets in the estate, though, its value may be considerably lessened.
With property values in Denver plummeting and no sign of home values achieving their mid-pandemic highs, gifting real estate may be a viable strategy for your long-term estate planning goals.
Gifting real estate when its value is lower may lower your tax obligations. If you plan to give your home to a child or spouse, the gift tax may be based on the market value of the house, not necessarily what you paid for it at the peak of the market.
If you have your home in a trust or are planning to put your house in trust, the value of the trust will be affected by the market value of the real property it contains.
If the primary asset in the estate is a mortgaged house, excessive inventory in the local housing market may make it more difficult to settle the estate’s debts, as the house may be sitting on the market for months. Depending on the balance of the mortgage, the house may be upside down. If the estate has considerable debts and selling the house is the primary means of settling them, this creates serious problems. This may mean that the balance of the estate must be used to pay creditors, leaving the heirs with next to nothing.
The best way to preserve a house’s property value is to ensure that, if it must be sold, it is appraised at fair market value. You may need to work with your estate planning attorney to have the property valued correctly by a professional appraiser with experience in specialty appraisals. Real estate agents experienced in probate sales may have insight into how to help you preserve the house’s property value and the best way to sell the house while the estate is working its way through the probate courts.
Do you need help with estate planning in a soft real estate market? Please contact Colorado Estate Matters at (303) 713-9147 for a professional consultation.