By Larry Hotz, Senior Editor
Steve Murray is the Chief Executive Officer for Real Trends, the national real estate magazine that tracks market activity throughout the United States. He is one of the top authorities in the country on the current condition of various real estate markets and a respected forecaster of real estate and relocation future trends.
I was among the thousand or so folks who attended the Colorado Real Estate and Economic Forum hosted recently at the DTC Marriott Hotel by The Kentwood Companies. Steve presented an interesting analysis of the current real estate downturn and its prediction for sales to improve.
He noted that home sales in the Denver real estate market below $300,000 have been extremely brisk while high-end sales about $1 million are still languishing.
He explained that the real estate bubble was created because the number of homes sales as a percentage of total homes increased dramatically during the 2001 – 2005 time period. Historically, he noted that about 5% of all homes are sold every year. This figure was substantially higher during the bubble time frame.
More importantly, Mr. Murray and pointed out that home sales will continue to improve for the next several years beginning in 2009. He doesn’t expect any dramatic changes nationally, but noted that Denver is in a demographically superior condition to most of the rest of the country. Unemployment is lower here. And immigration into the state exceeds those who are leaving.
“We missed a huge bulge in areas like Las Vegas and Florida”, Murray noted. “Therefore, Denver will come out of this (recession) faster than those other cities. Already housing sales in California Florida Nevada and Arizona are booming.”
He explained that investors and consumers can recognize value when they see it. And these markets have now depreciated significantly so that the value proposition is in play for both investors and owner occupants.
This is already happening in Denver too. It’s common to have multiple offers when a foreclosure home under $200,000 in a good neighborhood first hits the market. Murry explained that this is a healthy sign for a recovering housing market. Increased activity at the bottom end of home prices ultimately “trickles-up” to higher priced homes. In the same way, the decline at the lower endof the market ultimately did “tickle-up to high priced homes. Those luxury homes were the last to be effected by the housing downturn which began in 2005 and are still suffering the most from the current downtown.
When you think about it, that makes sense. When a Seller can sell a $200,000 home, they are free to move-up to a more expensive home. Then, the Seller of a $350,000 can obtain necessary for that Seller to buy an even more expensive home. So, these increased sales at the lower end of the Denver market bode well for the future of the entire real estate market here!