Denver Housing Market: “Just Flat”
Earlier this week, the Rocky Mountain News predicted another rough year for the Denver housing market. Today, the Denver Post echoes that sentiment, but is slightly more optimistic, calling the current market “just flat.”
Home prices in Denver and Aurora appreciated at a meager 1.3 percent rate in the fourth quarter of 2006 - compared with the same period in 2005 - as the metro housing market struggled to find footing.
That’s the slowest appreciation rate for Colorado’s most populous area since the third quarter of 1990, when the country was mired in a recession, according to the Office of Federal Housing Enterprise Oversight (OFHEO).
“People who buy a house thinking ‘the market will take care of me’ - those days are gone,” said John Sullivan, a mortgage broker and co-owner of Re/Max Cherry Creek.
Over the past five years, as low Colorado mortgage rates spurred strong numbers of home purchases, average home values in the Denver-Aurora area are up 16.8 percent, compared with a 55.2 percent gain nationally in that same period.
Subtract a modest 9 percent inflation rate over the period and a 6 percent real estate commissions from any housing gain, and a typical seller who bought five years ago would turn little profit.
“The Colorado economy is in great shape, but the housing market is just flat,” said Lou Barnes, a mortgage broker in Boulder.
The home-price gain in the fourth quarter was below the meager gains recorded in 2003, when the state was reeling from the loss of tens of thousands of jobs following the tech and telecom bust.
Home prices appreciated at a 3.3 percent pace for the Colorado housing market as a whole in the fourth quarter, ranking 43rd among all U.S. states, according to OFHEO.
Variations within Colorado were wide.
Greeley and Boulder showed gains below 2 percent. The Fort Collins-Loveland region had the weakest gain of any major metro area in the state, 0.85 percent. Colorado Springs and Pueblo experienced price gains of 4.7 percent and 5.35 percent.
In the Grand Junction area, an influx of energy workers and continued interest in the area as a retirement haven have resulted in a housing shortage, said Kathi Williams, director of the Colorado Division of Housing.
Its housing market posted a home-price gain of 13.3 percent, comparable to those in Utah, Wyoming and Idaho, which led the country with appreciation rates of 14 percent or higher.
The OFHEO index looks at the sale or mortgage refinancing of a large block of homes across time, tracking more than 32 million transactions over the past 32 years.
It is considered a more precise gauge of home values than Realtor-generated resale numbers, which calculate values based on the mix of homes sold in a given period. Also, Realtors have a vested interest in putting the best spin on market trends and home mortgage demand.
SOURCE: Denver Post