2016 Front Range Residential Property Update

Our current market sounds like a broken record: extremely low inventory levels (about the same as last year at this time-currently just 10,206 active listings in the entire MLS), fantastic appreciation of 13.72% year over year (Sept 2015 -Sept 2016), and crazy-low median days on market of 10. (10 days on the market is actually up from 9 DOM a year ago…)

Let’s take a quick look back as a reminder about how fortunate we are in our local housing market. We went through a highly tumultuous time during the last 10 years, and the great recession was the hardest hit our Nation’s housing market has taken since the great depression. Consider that the average metro area home lost 33% of its value between the Summer of 2007 and January of 2009! In the Summer of 2011 we had a true glut of homes on the market- over 40,000! Today we have just 1/4 of that amount-and after a couple of years of this extremely low inventory environment it has become VERY challenging for move-up buyers and of course first-time buyers.

Prices and home equity levels have skyrocketed: since the worst times in January 2009 the median sale price of a home has more than doubled, going from $160,000 to $355,000! (Attached AND detached homes are included) That is price appreciation of over 16.25% per year since 2009! (Now you see why I tend to push an investment property or two as part of your portfolio in order to increase your chances of building wealth. Consider the real rate of return if you had only put 25% down on a rental property in 2009! Leverage is one of the best kept secrets about why real estate is a strong asset class.) The total rise in values since the high point BEFORE the recession in 2007 has been 47.9%. So if you had made the ‘mistake’ of purchasing at the top of the market, your home or investment would have still increased 5.32% per year.

So the state of our local housing economy is very strong indeed. If you or someone you know feels as if you have missed the boat, just remember that we likely have at least 2 years of solid appreciation ahead and interest rates are still VERY low. Plus, after seeing how quickly we rebounded since the last downturn it would appear that a long-term approach in the Denver-area residential market is a solid investment choice.

Here are some statistics for Jefferson County for the year to date (Jan-Sept):

  • Home sales (all types: detached homes, condos, townhomes) from $200,000-$400,000 averaged 100.5% of their ORIGINAL list price, and only 13 days on the market! (Just about identical to the same period in 2015)
  • Homes in higher price points have been selling VERY quickly: $600,000-$800,000 average days on market was just 66 (9% faster than the 72 days in 2015), and $1,200,000-$1,500,000 sales have only taken 140 days this year. (16.6% longer than the 120 days in 2015) *These are extremely fast marketing times for homes in this price range!
  • The least expensive sale was a 392 sq. ft., 1 bd, 1 ba cabin in Evergreen, which sold for $45,000. (2,806 sq. ft. lot, public water and public sewer)
  • The most expensive sale was in north Evergreen near Kerr Gulch, and sold for $3,000,000; 10,790 sq. ft. on 14+ acres.
  • The average home (all types) sold in September this year went up in value by 15.7% vs. Sept. last year! Average sold price was $401,220, and average days on market was just 30. (Median DOM was just 8!)

I made the mistake of predicting a year ago that our Seller’s market may have peaked! With the exception of slightly longer marketing periods for certain price points-the market has changed very little. The post-election affect on interest rates as well as the economy will be interesting to watch, but it would seem that rates will be slow to rise and ‘affordable’ payments will continue on median-priced homes. At some point affordability will become an issue as even Denver’s robust job economy can’t keep up with double-digit price gains.