I'll be the first to acknowledge that you should be suspect of statistics, but I've got good statistical news today for Denver and the entire state of Colorado from FHFA, the Federal Housing Financing Agency.FHFA is reporting that the Denver MSA ranked third among the 25 largest metropolitan areas last year with home price appreciation of 5.48%, ranking only behind Alexandria, Virginia (+10.55%) and Orange County, California (+6.38%). The FHFA report studies resale homes only, and is based on information taken from Fannie Mae and Freddie Mac's portfolio of loans.
In terms of state gains, Colorado ranked second with appreciation of 2.8%, trailing only Oklahoma, which showed gains of 3.5%. Nevada was the biggest loser, showing losses of more than 17% year-over-year.
Now back to the interpretation of these numbers. As I have said again and again in these posts, we are in the most segmented market I have seen in nearly 16 years as a real estate broker. Activity continues to be overwhelmingly titlted toward the lower end of the market (two-thirds of all sales last year were below $250,000, although homes under $250k make up only about one-third of the active inventory), and many single family homes in the sub $200k price range have seen appreciation of 10% or more in the past year (driven in large part by the first-time buyer tax credit).
Single family homes are performing much better than condos, while new construction remains near all-time lows as building operations have ground to a halt.
At higher price points, the market softens noticably, and by the time you reach the $400,000 range, the market is simply out of gas. Double digit appreciation at the lowest price points with significant values losses at the higher end... mix it all together and you get a net gain of 2.8% for Colorado, and 5.48% for Denver.
It's good news, because compared to the rest of the country, we are doing exceptionally well. But interpreting these numbers today takes considerable skill, because applying the value gains cited by FHFA across the board would simply be inaccurate.
For sellers, pricing your home correctly is critical to selling it for the best possible price. And for buyers, knowing how specific neighborhoods or subdivisions are trending in terms of values, NEDs, foreclosures and inventory is essential.
Buyers and sellers both must recognize that this is not the market of 2007. The psychology is different in so many ways. Buyers are ultra-cautious, and sellers are ultra-emotional. There's skepticism all around. There's not a lot of margin for error.
Now, more than ever, you need informed, skilled and competent representation.
