Wait a minute - this can't be right! Colorado home values are... rising??There's a whole education waiting to be had on the methodologies behind those reports that tell us the sky is falling on the housing market. (For an interesting dissection of the gloom and doom "Case-Shiller" index, also known as the "Bubble Market Index", see this recent article by Bernice Ross: PUT A GAG ON CHICKEN LITTLE )
The chart above is from the OFHEO - the government agency responsible for monitoring the financial health of mortgage giants Fannie Mae and Freddie Mac.
What's unique about this report? Well, since Fannie and Freddie only purchase conforming loans up to $417,000, the snapshot here reflects properties with loans of $417,000 or below where people actually had to go through some qualification process to get financed. It's a good representation of the core of our market.
Among Colorado properties with Fannie/Freddie financing, OFHEO reports year-over-year appreciation of 2.3%.
Hardly scintilating returns, but hardly the meltdown you've read about in the Denver Post, which recently reported that Metro area home values fell 10% last year, based on a drop in the median price (see my post from two weeks ago for more about this).
I'll say it again... yes, there is distress at the bottom of the market, which is also where most of the junk loans were made. Because of this, there's a lot more activity at the bottom of the market - hence, the drop in median price. There are winners (first-time buyers) and losers (low-end sellers competing with bank foreclosures). But the notion that our housing market is universally down is just wrong.
Inventory is falling, foreclosures are slowing, interest rates are low (but starting to creep up, due to $130 per barrel oil) and there are deals to be had, especially at the lower price points.
