Denver Market
No more than one year after the height of the Denver housing market
frenzy, prospective buyers have been confronted with a remarkably tight
inventory. At the beginning of 2013, there were approximately 7,610
homes for sale in the Denver area; the following year there were 7,094.
In comparison, a healthy Denver housing market should contain roughly
17,000 homes for sale.
While Denver’s problematic inventory
numbers have complicated the market, there has been one upside:
appreciation. Denver homes continue to gain value at a rapid rate, not
unlike Houston and Dallas. “There are only three neighborhoods that went
down statistically.” The average Denver home gained about 10% in value
in 2013 (even six percent is considered a good year), and the end of
2014 was similarly strong.
Denver’s constricted housing market,
which has squeezed buyers since early 2013, has begun impact the renting
population. Higher home prices and quicker sales times have resulted in
a larger number of landlords cashing out, leaving fewer homes for lease
and pushing up rents.
Similar to that of San Diego and other
California markets, homes in Denver experienced significant
appreciation. Zillow has already predicted a 1.1% increase in home
values over the next year. However, few markets appreciated as fast as
Denver. Over the last year, homes in Denver were the beneficiary of a
10.4% increase – that is more than twice as much as the national
average. Perhaps even more surprisingly, homes have gained an average of
$61,100 over the previous seven years, whereas the rest of the nation
actually saw a loss of $11,500. It is safe to say that the recent
recovery has extended the trend of positive price growth.
Of
course, the growth of equity is entirely dependent on the purchase
price. Therefore, homeowners that purchased in the Denver area for the
better part of the decade are presently surprised – all things
considered. Those who purchased about nine years ago have seen an
incredible return on their investment, as the average Denver home has
gained $101,638 in equity. Conversely, the national average over the
same period is only $5,043. It is not till five years ago that the
national average for equity gain comes close to half of that of the
Denver market. Homeowners that purchased five years ago have built up an
average of $109,268 in equity, whereas the national average was only
$48,225. Despite appreciation, homes purchased in Denver a year ago have
managed to establish an average of $34,643 in equity. Price
appreciation and principle payments in the last three years have boosted
total equity growth since the recession.
Fortunately for the
Denver housing market, the local economic outlook remains strong.
Employment has become a stalwart of the community and is currently
trending upwards. Over the course of a year, job growth has experience a
2.7% increase. At that rate, local employment growth is strong and a
whole 1.0% higher than the rest of the nation. As the job growth rate
would suggest, the unemployment rate in Denver is better than the
national average and improving.
Despite trends showing a slowdown
in the market, many brokers remain confident the market will bounce
back, and the selling season will remain strong throughout the holidays.
Strong neighborhoods, in particular, should support claims of a healthy
market. According to Trulia, “popular neighborhoods in Denver include
Stapleton and Green Valley Ranch, with average listing prices of
$412,874 and $234,428.” City Park, however, is one neighborhood
investors may want to keep their eye on. In fact, Redfin recently
acknowledged City Park as one of the top 10 neighborhoods of 2014.
Denver Housing Market Summary:
Current Median Home Price: $316,300
1-Year Appreciation Rate: 10.4%
3-Year Appreciation Rate: 35.9%
Unemployment Rate: 5.2%
1-Year Job Growth Rate: 2.7%
Population: 649,495
Average Days On Market: 28
Percent Of Underwater Homes: 9.7%
Median Household Income: $58,823
Total Listings: 1,856
Denver Housing Market Q1 Update:
Heading
into 2015, the Denver housing market was on fire. Homes were
appreciating at a remarkable rate and the economy was keeping pace.
Everything was in place to support one of the hottest real estate
markets in the country. Fortunately, that trend is looking to continue.
The current median home price is still within a couple thousand dollars
of where it was at the end of 2014 and appreciation rates are through
the roof. In fact, appreciation rates have actually increased 2.3
percent in a matter of months. However, perhaps even more importantly,
the city’s job sector continues to provide strong support for the Denver
housing market. Last time we visited the unemployment rate in Denver,
it was lower than the national average at 5.2 percent. Fast-forward to
today, and Denver’s unemployment rate is a miniscule 3.9 percent. The
decline is almost certainly the result of the city’s impressive 3.3
percent job growth rate.
There are currently 802 homes up for
sale in the Denver housing market, according to RealtyTrac. That number
represents a 4 percent increase from the end of 2014 and a 5 percent
increase over the course of a year. Not surprisingly, the number of
properties that received a foreclosure filing in Denver was 10 percent
lower than the previous month and 76 percent lower than the same time
last year. The decline is likely the result of the area’s appreciation
rates.
Investors looking to take advantage of the foreclosure
situation in the Denver real estate market should know that the median
sales price of a foreclosure home was $196,000. At that price point,
distressed properties are approximately 32 percent cheaper than those of
a non-distressed nature.
Of the foreclosures in today’s Denver
real estate market, nearly 95 percent are set for auction. The
remaining 5 percent are all bank-owned, which is down significantly from
the year before.
The truth behind Denver real estate is that it
was doing well at the end of 2014. However, it is doing even better now.
The local economy will continue to support supply and demand. The
market is healthy and should continue to be so for the foreseeable
future.
*The information contained herein was
pulled from third party sites. Although this information was found from
sources believed to be reliable, FortuneBuilders Inc. makes no
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