Denver's housing market is beginning to reflect the deepening economic crisis, but with some bright spots that show continuing buyer activity and potential for 2009.

According to recently released housing reports Denver's market is stronger than elsewhere.  The Case Shiller Housing Index shows a year over year average price drop of 18.5% nationally.  Of the 20 metropolitan areas measured, Denver showed the smallest decline, 4.0%, from 2007 to 2008.

The new OFHEO (Federal Housing Finance Agency) report for 2008 shows that Denver's values decreased by only -0.71%, 111th of 292 Metropolitan Statistical Areas. In the fourth quarter of 2008 values actually increased by 0.77%.

Foreclosure filings dropped by 2% in 2008 according to the Colorado Division of Housing. Completed foreclosures dropped 16% from 2007.

Denver's drop in values began in 2001, unlike most U.S. cities where the drop didn't begin until 2003, and then only in cities showing the greatest increase in prices during the early 2000s. Denver's increases took place in the 1990s and prices did not drop steeply from 2001 to date.

More houses went under contract in January than in December by 16.59%, following a trend beginning in December. But average prices for all residential housing dropped significantly by 5.29% from December. The mix of single family residences sold under $200,000 in January was 56.19% and over $200,000 was 43.81% compared to December where the mix was evenly split. For condos the split was greater. Only 20.9% of sold condos were over $200,000 while 79.1% were under $200,000.

For buyers, the time is still opportune, especially given recent interest rate drops. Interest rates reached 4.875% on February 20th for a $300,000 loan from our preferred lender, Rate One, The Mortgage People. FHA rates were at 5.000% for a $140,000 loan and 4.875% for a $300,000 loan. Credit is still tight, but loans are still possible for buyers with good credit and a 10-20% down payment.

Single family homes priced well, in good condition, in good locations were staying on the market fewer than the average of 99, and were selling in 30 days or less for 98.73% of list price. Homes staying on the market over 90 days sold at 94.46% of list price. If you’re a seller you’ll want to price your home well and make sure it’s in good condition, attractively staged. If you’re a buyer and you want to buy a move-in ready home in a good location, be prepared to pay close to list price. My experience over the last month to month and a half shows that premium homes are selling, many with more than one offer, and some even at above list price. Denver’s real estate market isn’t uniformly declining, contrary to what you may hear on the news or read on the internet or in the newspaper.

According to the Denver Economic Development Council, the outlook for Denver’s economy in 2009 is better than average. Denver’s unemployment rate at the end of 2008 (the latest figures available) was 6.1, considerably better than the national unemployment rate of 7.6%. Jobs outlook is better, too, for the Denver Metro area. According to the Manpower Employment Outlook Survey for the area issued on February 6th, 15% of employers expect to hire more employees, 12% expect to reduce their work force, 70% hope to maintain their current work force, and 3% are uncertain. Sectors hoping to hire include construction, transportation and utilities, information, financial activities, education and health services, and other services. Sectors expecting job losses are manufacturing, leisure-hospitality, and government.

Of course, all this could change given the volatility in the economy, but for now the Denver metro area is plugging along and likely won’t be as hard hit as other metro areas in the country, partly due to Denver’s recession beginning in 2001 which tended to stop the real estate bubble earlier than other metro area. Prices have held relatively steady through the end of 2007, and only in the last two months have prices dropped significantly, which is good news for buyers.

The Pew Research Center cites Denver as THE top place to live! Just what I've always thought. And the recently-released Case Shiller Report shows a loss of value much less than in other cities, just 1.1% less in November than in October 2008 (the report lags by two months), and 4.3% lower than in November 2007.

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."

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 house.