By Steve Blank, managing broker of Fuller Sotheby’s International Realty
Just like the stock market, we have (housing) Bears and Bulls who render their opinions about where the market is currently, and where it is going. The primary difference in real estate is that we evaluate hard facts and statistics which are not based on daily events or various individual economic reports. Real estate values develop as a result of economic trends affecting people’s ability to buy or sell a home. That includes everything from interest rates, availability of money, employment, and other business/economic indicators that ultimately influence the levels of supply and demand as it relates to housing.
Whether contemplating buying or selling real estate, it is always well to stay abreast of national economic headlines. Your primary focus should be about local trends that have an effect on employment, new construction; both residentially and commercially, as well as availability of housing for sale. Once your general areas are selected, trends within individual neighborhoods will emerge. For example, a large employer can influence people relocating or an HOA can be financially impaired due to lack of revenue or foreclosures.
Some areas may be improving due to new housing (in-fill) projects, and/or they may be experiencing strong growth with major remodels or improved growth due to the addition of new public transportation or major shopping districts.
Become aware of factors that may impact a neighborhood’s desirability, whether you are buying or selling. “The variables impacting home prices have proven to be driven by low available inventory and growing household formations” as stated by Altos Research.
A positive dimension to the Colorado market is the current impressive unemployment rate of 4.7%. Colorado ranks 4th in the country for employment growth, measuring 4.3% above the 2008 peak. Colorado saw a 32% increase in new-business filings for the 3rd quarter (Q3) of 2014, over the Q3 of 2013, according to Scott Gessler, Colorado’s Secretary of State.
The Denver Metro Micro Report (MMR), prepared by Fuller Sotheby’s International Realty, compares 2014 YTD statistics through Q3, to YTD in Q3 of 2013, for single family (SF) homes and condos alike. The average price of single family homes rose nearly 6%, resulting in an average price of $323,000 for a Denver SF home.
Interestingly, the number of SF home sales was up 10.7%, while the number of condo sales was down 21% (YTD) from 2013. The average price for a condo is increasing slightly faster than that of single family homes, which is the first time in occurrence in over 30 years in real estate. This is due to the fact that over 95% of issued residential permits for new construction are for multi-family apartments and single family homes, with less than 5% of permits available for condo dwellings. The MMR uncovered several neighborhoods reflecting significant improvement over (an excellent) 2013:
- Cherry Creek North’s average price is $981,100 – up 9.4%; however Cherry Creek South’s and East’s average price is $584,100 – up 19.8%, (with the number of sales coming in 24.5% less than one year ago).
- City Park (CP) and CP South rose over 20%, averaging about $450,000.
- Combining the Highlands, Lo-Hi, Berkeley and Sloans Lake neighborhoods, the average price ranged from $416,000 to $490,000, with prices rising an average of nearly 12% while the number of sales was 23% under this time last year.
- Observatory Park averaged $864,200 in price, up 19.9% with 11.3% less sales.
- And in the suburbs, Greenwood Village was up 18%, and Ken Caryl Valley and Ranch was up over 15% in value.
In summary, the message becomes one of market stability. When the inventory continues to build, supply will do a better job of meeting demand and we should see a more balanced market allowing more buyers to take advantage of the low interest rates before rates begin rising sometime next year.
The Colorado real estate market performs quite differently than the national average. Even in an area the size of metro Denver, market trends can vary dramatically from neighborhood to neighborhood. When you are contemplating as large a financial commitment as the purchase or sale of a home, micro-market data on your neighborhood makes a large difference.
Fuller Sotheby’s International Realty compiles quarterly and year-end reports of micro-market statistics to help you make better real estate decisions. Follow the links below for direct access to Micro-Market Reports, or visit www.ColoradoMicroReports.com any time.
For 60 second market snapshot videos, please visit ColoradoMarketUpdates.com