September 2008 Market Conditions

Denver's real estate prices continued to drop in August. Single family home median and average prices were 12.6% lower than August 2007, while condos and townhome median prices dropped 8.2%. The number of homes sold in August was down 9.34% from last year, and 11.34% from July. The only good news for sellers is that 20% fewer homes were on the market than were available for sale in August 2007, and that 4.98% more homes went under contract than 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.

Average sold price for single family dwellings decreased by only .43% from July, but showed a significant decrease of 13.72% from August 2007. Condos and townhomes fared better, showing an increase of 2.57% from July 2008 and an increase of 1.96% from August 2007.

Denver is in a much better position than many U. S. cities. The S & P/Case-Shiller report for June 2008 showed an overall 1.5% increase in home prices over May, the third consecutive increase. Denver was one of only two cities out of 20 measured nationally that showed any increase.

But the loss in value from last year is striking. Has Denver reached bottom? It's 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, like its real estate market, is better than many other U. S. cities. Job growth remains steady and unemployment through July was 4.8%, only slightly more than through the comparable period in 2007.

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.

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 5.875% for well-qualified buyers as of September 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.

You'll need to do your due diligence to compare cost of living between your city and Denver at websites like Sperling's Best Places, Bank Rate or CNN/Money.

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 home.