By Charles Roberts and Lon Welsh
Second Quarter Denver Home Prices
The Denver real estate market had a great second quarter. If you compare the twelve months from July 2009 – June 2010 to the twelve months immediately preceding it, the average Denver home price increased 7.4%.
But, the devil is in the details. Some Denver neighborhoods experienced great price appreciation and some suffered price deflation. The following map shows how individual neighborhood fared.
As you can see on the attached map, there is lots of variation in Denver real estate prices from one neighborhood to the next. The 20% of the neighborhoods that appreciated the most are in green. The 20% that had the largest average price declines are in red.
Generally, the less expensive neighborhoods performed the best. Prices in these low cost areas had declined significantly in the last few years. When price hit bottom about 12-18 months ago, it is as if they hit a trampoline… prices have bounced up a lot since the bottom. When you look at the last major foreclosure crisis (1987 – 1992), we saw a similar bounce in the low end during the recovery.
The average price change in the last year is a great “rear view mirror” assessment of what has happened. Months of Inventory is a great “forward looking” indicator. If the buyers kept buying at the pace they have, how many months would it take for them to purchase all of the inventory currently active on the market?
Six months is considered a balanced market. The Months of Inventory has increased from 5.6 (April 1) to 6.2 (July 1). This suggests it’s becoming a bit more of a buyer’s market. That could be due to lower sales of lower priced homes since the end of the tax credit for first time homebuyers.
With the end of the tax credit, we expect that sales in third quarter of 2010 might ease a bit. Thus, the advantage will likely continue to accrue to the buyers for the rest of the summer selling season.