State of Real Estate in South Metro Denver
Column by Rohn Goldstein
You might have heard a bit about real estate and its continued struggles across the country, but all real estate is local. Based on that, the economics of real estate still apply. Interest and jobs still influence homeownership. While the U.S. unemployment continues to be at 9.1 percent, Colorado is 8.5 percent. The interest rates have been at historically low points, typically under 4 percent for 30 year fixed rate loans. What this means is that the affordability of homes in the area is exceptional. That should mean that the south metro area is exploding in new buyers but, unfortunately, that isn't the case. Why? Well, most assuredly it is due to a few factors:
1. While interest rates are low, the supply of money is also low. Financial institutions, in response to the risky loans offered a few years ago, have tightened lending standards and made it significantly more difficult to obtain loans. Until the government stabilizes or replaces Fannie and Freddie, money will remain difficult to obtain.
2. Consumer confidence is very low about owning a house today. Even though 75 percent of all Americans still say their goal is to own their own home, they are not confident we have hit the "low" point of the market.
3. Media continues to influence the recovery. National media continues to tell one side of the story and that side is not very good. What they are missing is the perspective of local markets. The South Metro Denver area has been flat, but has not had significant price decreases in most areas. You need to look at your own neighborhood to understand. Even with short sales and foreclosures, our areas have stayed fairly steady over the past few years.
Let me share an example. For Highlands Ranch, the following were the average prices for residential homes:
2005 $359,017, 2006 $361,927, 2007 $372,880, 2008 $372,329,
2009 $362,328, 2010 $358,684, 2011 $358,232; representing a 3% loss from high to low and a stabilizing and even growth in the past couple of years.
The opportunities in South Metro Denver could not be better than today. Whether it is for your own home or an investment, we know that the price adjustments have happened and the interest rates are extremely low. A $350,000 home at 6 percent just a few years ago would have a payment of $1,679 and the same house payment today at 4 percent would be $1,337. Wow, what a savings!
Here is what we know. South Metro Denver is a great spot to live, with quality schools, strong neighborhoods, wonderful parks and recreation and now, great values.