Denver Real Estate Blog

The good news is that Denver’s year-over-year decline of 1.8 percent is far better than the average of 10 cities it was compared too. The bad news: The index fell 6.7 percent, its worst decline since April 1991. It was the 10th consecutive month of declines and the 23rd consecutive month of worsening price performance.

The index is considered a strong measure of home prices because it examines price changes of the same property over time, instead of calculating a median price of homes sold during the month.

Denver’s depreciation is occurring despite population and job growth. It’s estimated that at least one-quarter of the price decline is due to the area’s rampant foreclosures, with dampened consumer confidence and tightened access to mortgage credit also playing a role. Denver is not alone. Among the 20 metropolitan areas used in the broader index, 11 posted record monthly declines and all 20 declined in October compared with September.

Miami, Tampa, Fla., Detroit, Las Vegas, Phoenix and San Diego all posted double-digit year-over-year declines.

Atlanta and Dallas, which had previously posted price appreciation, fell in October. Prices fell 0.7 percent in Atlanta and 0.1 percent in Dallas compared with a year earlier. From September to October, home prices in the metro area fell 1.7 percent, exceeding the 1.4 percent average of major metros in the Standard & Poor’s/Case-Shiller home price index.

Although the supply of unsold homes is at a record high and forecasts of further price depreciation and swelling inventories bode well for buyers, housing affordability remains low. The decrease in housing prices has only begun to eat into the nearly 13 years of quarterly price gains.

The National Association of Home Builders said in November that only 42 percent of all homes sold in the third quarter were priced low enough to be affordable for families earning the national median income of $59,000. That’s down from 61.5 percent in the third quarter of 2001, when incomes and, more importantly, home prices were lower during this decade’s recession.

The supply of unsold homes, including these in the Denver Metro area, is at a record high, but the ability of people to afford them is low. Inventories of unsold homes are at the highest levels since post-World War II, even though many national builders such as Centex Corp., Pulte Homes Inc. and many others have been holding special promotional sales.

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Jeffery McClintock, is a real estate broker in Denver and prides himself on providing clients with professional guidance in all phases of residential new construction, including market research, product development, consulting, marketing and advertising. His personal mission is to bring to you a level of knowledge, experience, commitment, high standards and results to answer your real estate needs. He believes, the most effective way to provide superior service is to build a strong working relationship with you. His system includes regular consultations and feedback, which is the best tool for identifying and clarifying your real estate objectives and help define strategic solutions.