Oct. 9, 2008
With the nation's financial markets in turmoil people want to know if it's a good idea, or even a doable idea, to buy a house. Paraphrasing Richard Nixon in 1970, "Frankly, if I had any money, I'd be buying a house right now." If you have good credit and a good source of financing, buying a house in Denver right now is a solid choice. The market is either at bottom, or just slightly on the rise.
Denver's real estate prices continued to drop in September. Single family home median prices were down 11.78% and average prices were down 14.84% from September 2007, while condos and townhome median prices dropped 4.73% and average prices dropped 10.75% from this time last year. More homes sold in September 2008 by 14.13%, but sales were down 6.10% from August 2007.
The only good news for sellers is that 21% fewer homes were on the market than were available for sale in September 2007. 1.48% fewer homes went under contract than did a year ago. Average days on market for both single family homes and condos/townhomes remain virtually the same as last year, indicating that homes are not languishing longer as might be expected in a soft market. The lower inventory of available homes is likely due to sellers deferring plans to sell till the market shows a substantial increase in prices.
Denver is in a much better position than many U. S. cities. The S & P/Case-Shiller report for July 2008 showed an overall 1.1% increase in home prices over June, the fourth consecutive increase. Denver was one of only two cities out of 20 measured nationally that showed any increase. Only Minneapolis showed a greater increase (1.8%).
But the continuing loss in value from last year is striking. Has Denver reached bottom? It's still too soon to say. Bottom can only be defined retrospectively, after prices start rising more consistently month over month. When will that be? It's anybody's guess.
On the whole Denver's economy is showing a slow-down, but is still in better shape than many other U. S. cities. Job growth is stable, and unemployment through September was 5.4%, less than the U. S. rate of 6.1%. Governor Bill Ritter predicts that unemployment will slowly drop through 2009, and believes the Denver economy is relatively strong. A report issued by the Governor's office on September 19th shows that "Colorado's economy…is more resilient and perhaps better poised to rebound from the current national financial turmoil than the national economy," noting that "Colorado has lower unemployment, greater job growth and lower inflation than the nation overall."
Another interesting fact indicating the strength of Denver's economy is that its credit rating was recently upgraded to AAA from Standard & Poor's Rating Service, citing its "role as the economic center for the Colorado Front Range - with a diverse economy and reliant per-capita property values" (Denver Post, 9/9/08). And Wells Fargo, one of Colorado's largest lenders has just upgraded their ratings for Denver housing from "distressed" to "stable." In an article in Denver's Rocky Mountain News (9/16/08) Thomas Thibodeau, academic director for the CU Real Estate Center in Boulder was quoted as saying that "The housing market here is vastly different than the rest of the U.S. I think the Denver housing market has turned the corner and is on the way to recovery."
Two large renewable energy projects are slated for the metro area. Rentech recently opened a demonstration plant in Commerce City to produce synthetic jet and diesel fuel. And Vesta Wind Systems announced plans to build a wind turbine blade manufacturing
plant in Brighton. The two projects combined could bring as many as 1,800 new jobs to the Brighton/Commerce City area. Colorado is becoming internationally known as a center for renewable energy and aerospace development activity. "Metro Denver's dynamic and innovative industry base continues to support the region's economy through challenging times," stated Tom Clark, executive vice president of the Metro Denver Economic Development Corporation.
A question asked by many of my buyers is "If I buy now, what about declining values? Will my home be worth less when it comes time to sell it?" The answer varies depending on how long you stay in your new home.
On average buyers stay in their homes about 5 years before selling according to independent real estate broker, Gary Bauer. (Bauer issues a monthly market report used by the Denver dailies and is widely regarded in Denver real estate circles as a market expert.) In an April 2008 report in the Rocky Mountain News by Rob Reuteman, Bauer is quoted on the issue. He says, "If I bought my home a year ago for $200,000, and I had to sell for $180,000, I'd be upset. If I'm staying in the Denver market I take $180,000 and buy a house that would have cost me $200,000 a year ago. But I'd still have a little feeling that I really didn't do so well. If I were that individual five years ago, my average appreciation would be 39 percent. Would I be concerned about a 10 percent drop in price today? I don't think so. I would have bought it for $130,000 and sold it for $180,000."
The Denver Post has updated their very useful interactive map
of home values across the metro area. You can look at values by neighborhood, discover whether values are rising or declining and much more.
Interest rates are still low (conventional loans were at 6.000% for well-qualified buyers as of October 9, 2008 from our preferred lender, Rate One, The Mortgage People). Homes are more affordable. Denver's economy is steady and jobs are expected to increase this year.
Denver's cost of living makes it an easy choice over higher cost areas like both coasts. According to CNN/Money.com it costs 51.1%% less to live in Denver than in San Jose; 43.8% less than in San Diego; 66.6% less than in San Francisco; and 12.9% less than Seattle. If you live in the east, it will cost 37.6% less than in Washington, D.C.; 32.8% less than in Boston; 101.9% less than in New York; 22% less than in Philadelphia.
For buyers coming from the south and the midwest, Denver could cost more. It costs 4.9% more in Denver than in Atlanta; 12.8% more than in Houston; 8% more than in Dallas; 8.3% more than in Dayton, Ohio; 5.2% more than in Rochester, MN, and 10% more than in Boise. But living in Denver still costs 10.7% less than in Chicago, 15.1% percent less than in Portland, and a whopping 49.3% less than in Los Angeles.
Having an Exclusive Buyers Agent to find the best buys will shore up your buying ability by representing your best interests - finding the best home at the lowest possible price, and saving you time and hassles. See client references
. Phone numbers available upon request. Call Judith Clausen now at 303-587-3509 to help you find your next house.