by Lon Welsh, Aurora Broker
The average home price in Denver declined 3% between 2006 and 2007, from $312K to $303K. The first eleven months of 2008 versus the same period in 2007 declined an additional 13% to $269K. However, there is a lot of variation from one city to the next. The average price of a sold home in Golden is up 6% while Fort Lupton is down 18%.
- Denver Real Estate Market Through November 2007/2008 Source: Your Castle Real Estate, Metrolist for all Graphs
Average Metro Denver home price in $ thousands
So did the price of every house in metro Denver drop 12.6%? No! The average distress sales (foreclosure or short sale) dropped 6.7%. The average regular home sale declined 4%. The source of most of the decline is the mix of what has sold. Volume of distress sales is up 41% while regular home sales have declined 24% in unit volume. Since more inexpensive (e.g., foreclosure) homes are selling, this is the main driver of the price reduction.
The percentage of sales that were distress sales increased in every Denver suburb throughout the metro area in the last year. Overall, 44% of home sales were foreclosure or short sales so far in 2008. The ratio does vary quite a bit from one city to the next. Greenwood Village had only 11% while Commerce City had 75%.
Percentage of Home Sales that were Short Sales or Foreclosures
From 1/1/08 to 11/30/08.
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Home Sales Volume
Home sales volume is off 4% in 2008. November was a particularly rough month for the Denver market.
Home Sales Price
The average home sales price is off 13% in 2008. November was no exception.
Denver real estate prices by month, by year in $thousands.
Percent of Distress Home Sales
By Month, By Year. Distress = Short Sale or Foreclosure.
I think those foreclosures are going to start drying up which will probably depress volumes but help with prices a bit.
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It’s great to see an increase in average price in some areas such as Golden. It would be interesting to compare the price increases and decreases to their respective price changes before the subprime problems. I’d guess the biggest drops were some of the biggest gainers pre-subprime, but then again they might not be correlated like that.
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Dave,
Thanks for taking time to look at the blog. The run up in prices due to the easy sub-prime loans is mainly in the areas under $200K. I think your idea is dead on.
It’ll be interesting to see as the Alt-A and the option-ARM loans start to reset next year if more expensive areas like Golden are impacted.
Lon
Thanks for this awesome post. It is very useful for realtors like me. My business is not going well due to this economic crisis.