Last night, The Kentwood Companies sponsored a real estate and economic forum for our agents and clients. The speakers were nationally recognized experts in their respective fields, and had some extremely interesting comments to make about the U.S. economy, the Denver, Colorado economy and real estate trends. Over 1,000 people attended, and the local media was there as well.
I plan on presenting to you the highlights from each speaker, but will write one at a time. Today, let’s hear from Steve Murray, CEO of Real Trends:
The causes of the housing downturn are many, but the affordability index fell drastically in 2005. As housing became less affordable, homeowners were less able to pay for housing.
Another factor, of course, was easy-money mortgages. There were even mortgages called “ninja” mortgages. No income, no job or assets.
Housing is a “trickle up” marketplace. In Denver, we’re seeing the trickle up beginning already. Affordability is better and the lower end properties are selling well. This will eventually “trickle up” to the high end properties. In Denver, the high end is really slow this year. It’s the lower end that’s recovering first. We’re seeing that in many markets, the leading indicator of a recovery is the increase in entry-level home sales.
The increased sales of starter homes and the slow-down in high end home sales is resulting in depressed average prices. It appears as if prices are falling drastically when you look at the decrease in average price, but it’s largely influenced by the increase in lower priced home sales.
Typically, 5% of households in any marketplace will buy homes in a given year. This average helps inform us about what the market might look like next year, and how many buyers we’ll have enter the market.
The real estate recovery will be slow and steady. The markets that are recovering – like Denver – are recovering at the lower price points first. As affordability increases, and as inventory decreases, we’ll be seeing a much more balanced market.
For more information about Gretchen Rosenberg’s real estate listings, or the Denver real estate market visit www.gretchenrosenberg.com. This comprehensive real estate web site includes all available idx listings in Denver as well as state-of-the-art mapping and search software. Also included is relocation information for those people looking to relocate to the Denver area.