Market Statistics

The Denver real estate market is going through an interesting time. While the local media talks of the high foreclosure rates in some areas, overall, the market fundamentals are good. The market for 'detached' homes continues it's long term strength and stability vs. attached homes.

We keep hearing about all the doom and gloom in the real estate markets and while there are parts of the country that are experiencing this, let’s look at what’s happening where it matters most – here in Denver.  The home builders certainly are suffering after many boom years.  Residential building permits (single family) are down about a third since 2000.  If they stay low and continue the downward trend this bodes well for resales because their overall value goes up.  Why?  New home builders are typically slow to respond to the fluctuating real estate market.  Because the Denver economy is still better than the rest of the nation and continues to grow, creating more demand for housing and we will see a shortage of homes – an example of supply and demand.  The builders will eventually respond and begin building up again, but for now they’re still downsizing.

Looking at the foreclosures in the metro Denver area, we see a steady increase since 2001 to a high in 2007.  2008 will still be high but we will start to see a downward trend in the next year or so.  This can be supported by the statistics about the foreclosure loans.  We can see that the average loan value on a foreclosure was about $200K, which is less than the average home price in the Denver metro area.  Many of these loans were to people who really wouldn’t have qualified for a loan and the ARM’s they signed up for made it more

                                                                        lucrative–for a while!  Most of the loans currently foreclosing originated in 2004 and on average were foreclosed in about 2 ¾ years.  Based on the number of these loans in successive years and the result of the mortgage industry tightening the guidelines we will see this downward trend in foreclosures.

So what is the Denver real estate market looking like?  Pretty boring compared to the rest of the country.  Between 2000 and 2006 home prices in the US have risen the fastest in history.  Denver’s has kept up with that pace, not as rapidly but with slightly stronger prices.  If you look at other parts of the country, Florida, Nevada and Arizona are seeing dramatic depreciation in their home values because their’s appreciated in past years at a frenzied rate.  These are the areas we see most of the time on the news!  Since 2006 we have essentially flattened out.  A by product of this is that people are waiting to sell their homes because after the cost of selling a home, many cannot recoup their equity since the prices are flat.

The volume of home sales in the Denver metro area show our strongest year ever in 2004.  Going back to our foreclosure facts we see that this is the year when most of the foreclosed loans originated.  We flatten out in sales volume from there on out, but remember that new home sales are on the decline so that means that re-sales are on the rise.  Because many homeowners are hesitant to sell their homes unless they have to, the volume is made up by the great deals on the market in foreclosures.

Since every neighborhood is different just call me to discuss your particular situation. I can provide a comparative market analysis to help in your next transaction.