Denver Housing Market May See Home Prices Rise
Despite widespread Colorado mortgage problems, the Denver housing market likely will buck this year’s national trend of falling home prices and sales, and may appreciate next year by as much as 10 percent.
At least that’s the assessment offered Wednesday by the chief economist for the National Association of Realtors, who emphasized that all real estate is more or less local.
“Despite the national figures, individual markets can do better or worse,” Lawrence Yun told the Rocky Mountain News. “The Rocky Mountain region is one part of the country that I’m most optimistic about.”
He said the Denver housing market just recently started to recover from the downturn of the tech train wreck that cost the region tens of thousands of high-paying jobs since late 2000.
“Denver did not really participate in the boom of other cities for the last couple of years,” Yun said. “But Denver is ripe for a turnaround. You still have a high inventory problem that needs a little working off, but I think this year your prices and sales will be positive.”
At the end of May, there were 29,110 unsold homes in the Denver area, a 4.6 percent drop from the 30,457 in May 2006. The inventory rose 4.3 percent from 27,858 in April, but that increase was expected.
“I think you will outperform the nation as a whole this year and next year,” Yun added. “I feel by the end of 2008, your housing prices could rise by better than 5 percent and as much as 10 percent.”
Nationally, he’s calling for an overall gain of only 1.7 percent in 2008 home prices.
A big reason for that is the bad credit mortgage loan crisis continuing to rankle the market, as well as unsustainable prices in many markets.
In the first five months of the year, there were 27,869 homes placed under contract in the Denver area, a 1.1 percent growth from the same period in 2006.
The median home price of a single-family property sold through May dropped to $243,500 from $247,000 in the first five months of last year, according to reports by independent broker Gary Bauer and Coldwell Banker.
The reports were based on Metrolist data.
Todd L. Crosbie, a broker at Coldwell Banker Previews International Devonshire, which has seen Colorado home loan activity slow this year, agreed with Yun’s assessment.
“Simply put, there has been some really negative press during the past couple of years because of Denver mortgage foreclosures,” said Crosbie, who has been selling real estate since 1986.
“I’ve seen positive cycles and I’ve seen negative cycles. While it’s not a boom market right now, it is not gloom and doom, either. Homes are still selling for a good asking price, and if priced correctly, they will move pretty fast.”
Independent broker Bauer said the National Association of Realtors’ report is skewed by “metroplexes across the country,” such as Phoenix, Las Vegas and Miami, which were formerly hot but are now hurting.
They dragged down the national averages, he said.
Bauer predicted the resale market in the Denver area will be basically flat this year. “And if you take the resale and new home market together, we might see somewhere in a 3 percent-plus overall drop, with the majority of the drop coming from new homes,” he said.
The Denver housing market by the numbers
- 10 percent: The predicted gain for next year’s Denver-area housing market. Nationally, due in large part to bad credit home loan concerns, experts predict an overall gain of only 1.7 percent in 2008 home prices.
- 29,110 homes were unsold at the end of May in the Denver area, a 4.6 percent drop from the 30,457 unsold in May 2006.
- $243,500: The median price of a single- family home sold through May, down from $247,000 in the first five months of last year.
- 27,869 homes were placed under contract in the first five months of the year in the Denver area, a 1.1 percent increase from the same period in 2006.
SOURCE: Rocky Mountain News