Denver Real Estate Spotlight

For the next installment in our Market Spotlight series, we turn to the scenic state of Colorado that sits at the boundary of the West and Midwest. Previously, we’ve looked at the regional housing markets in DC, Phoenix, and Orlando. Today we turn our attention to Denver, which has been a relatively stable metro during the housing market collapse and economic recession.

There’s no shortage of lousy news about the housing market, but Denver has stood as an exception to several national trends. At the end of January, The Washington Post reported that the housing bust is now worse than it was at the bottom of the recession, based on the Case-Shiller index for November 2011… that is, except in three cities: Phoenix, Minneapolis, and Denver.

Graph c/o The Washington Post

Now Denver was only posting a yearly increase of 0.6 percent (Economix). That’s pretty lousy, except  for the fact that it’s one of that markets where losses have been less devastating and prices are edging up ever-so slowly.

Graph c/o ZipRealty

The chart above shows the median price history, not the average prices. But the trends are extremely similar: summer 2010 was the peak of the last two years in terms of price, but this slow winter selling season looks better than 2011 both in price and units sold. But the improvement in price is unbelievably small.

ZipRealty data for November 2011 has the average home price at $267,000—that’s down almost $100,000 from a peak in August 2010, but better than the month before when the average price was $267,000. And when we look at the most current data for last month, average home prices are seasonally down at $260,891—compared to January of last year, that’s an improvement of $413. That’s right—an improvement in the hundreds!

To sum up: Denver is one of a handful of markets that are seeing improvement, but those improvements are miniscule.

Other positive numbers:

·         Quarterly price growth of 1.9 percent (Clear Capital)

·         Yearly price growth of 3.5 percent (Clear Capital)

·         Foreclosure filing rate for January 2012 lower than national rate (RealtyTrac)

·         Growth in building starts, prices, and employment (NAHB)

In the last part of 2011, apartment vacancy was down to a 12-year low as demand for rentals continued to surge. This would suggest that although the housing market in Denver is showing meager improvement, the REO saturation (just under a quarter) means lots of folks have lost their homes. And rather than being able to qualify for a new loan and buy a smaller, cheaper place, these people are turning to the rental market, causing supply to go down and demand (as well as median rent prices) to rise sharply.

This, of course, provides a great opportunity for the savvy investor who has his or her nose to the regional market trends. With some cash to invest and some careful study of the Denver real estate market, one could benefit from the competitive rental market. Here on ZipRealty’s blog, we’ll be tackling the topic of investment properties in a few weeks, so if you’d like to generate some cash flow by buying a home for sale or a building and becoming a landlord, stay tuned!

Of course, for most people, buying a rental isn’t a financial possibility. But if you’re looking to buy or sell real estate in Denver, take heart—yours is one of a few housing markets with positive numbers.