by Larry Hotz, All Denver Real Estate
Dr. Lawrence Yun, Chief economist for the National Association of Realtors, says Denver real estate market is better than most of the rest of the country. In fact, he sees the only cloud on the horizon to be “irrational pessimism” of buyers.
He pointed out in a recent speech to the Jefferson County Board of Realtors that Denver employment is increasing along with regional influx of population. Affordablity of mortgage is substantially better than other suffering markets like San Diego and most of the west coast. He further asserted that Denver has a lower price for homes and good availability of mortgage money for home loans.
Now, let’s be fair. He is paid by the National Association of Realtors to promote interests of Realtors, That is selling homes. He isn’t likely to be negative. Still, his points about the affordability of mortgages in Denver compared to other markets are correct.
I have long asserted that Denver’s population is growing. Employment is expanding. Rental vacancies are now below 5%. The influx of relocating population must live somewhere. Eventually, and perhaps sooner rather than later, this pent up demand will be felt in the real estate market. In fact, despite dire predictions, 2007 was a decent year with sales only slightly down and prices up slightly market-wide. There are bargains to be found but they tend to be in lesser neighborhoods.
Some areas of town have appreciated well. These are the better neighborhoods and often with the best schools. Downtown Denver has held it’s own with sales increasing along with prices. Affluent suburbs like Cherry Hills Village and Greenwood Village had a good year too.
Compared to San Diego, Denver real estate is doing well. San Diego has suffered a dramatic downturn in both the number of sales and home prices. Even in the better neighborhoods, foreclosures and “short sales” are the rule. Short sales occur when a lender accepts a lower amount than what is owed just to avoid foreclosing.
I had dinner Friday with Bob Wilson who is a San Diego Realtor and expert on foreclosures and short sales there. It helps that he is a MBA too. He has long been pessimistic about that market and hopes for recovery. But, his tune is changing.
“We may be turning the corner”, Bob said as we and our wives dined on the San Diego bay. “We have 12 buyers now actively looking to buy homes. That is very different. It seems that Buyer sense this market may be the best value they will see.”
Declining interest rates are lowering payments even more dramatically that the lower prices. So, affordability is much better now. There is no telling if it will stay that way long. So, even if a buyer doesn’t buy at the absolute lowest price, s/he may be buying at the lowest payment possible. Given price appreciation in Denver’s better neighborhoods, this could well be the best time to buy. Fact is, we never know for sure until after the market begins to rise. That usually takes 3-6 months after the fact.