Aurora, Colorado 3Q 2008 Home Price Performance

The average home price in Metro Denver increased +2% in the full year 2005 to the full year 2006. Comparing 2006 to 2007, the average home price across the metro dropped 3%, to $303,000. The average price in the first three quarters of 2008 was $272,000 vs. similar period of 2007 was $308,000: an 11% decrease. These numbers will be slightly different than Metrolist, as they are just Denver Metro and don’t include outlying areas like Colorado Springs or Boulder.

Much of the decline is a mix issue. For example, sales volume of homes over 4,000 square feet has plummeted in the last twelve months. Middle-market homes have generally been steady in their sales volume. Very inexpensive homes under 1,000 square feet have greatly increased their sales volume. You can explain it to your clients like this: Imagine you own a car dealership and you sell Chevys and Cadillacs. If you sold 50 of each type of car last month, but then you sold 75 Chevys and 25 Cadillacs this month, the average price at your dealership would have dropped quite a bit. This would be true even if you didn’t change the price of the cars. This is what we mean by a mix of what is sold issue.

Our guess is that the buyers of the 4,000 square foot homes are sitting on the sidelines since very few people really need that much space - it is a decision that can be postponed. They are probably waiting for the bad news in the headlines to blow over and for the rates on jumbo loans to return to more reasonable levels. While they wait, the investors are snapping up bargain REO properties to use as rentals.

This market behavior is likely to continue for at least another nine to eighteen months. However, once the REO volume starts to decline a little, and the jumbo rates come down, we’ll see a reversal to the mix problem. Suddenly, the pent-up demand at the high end of the market will be unleashed, and we’ll finally start to run out of bargain basement REO homes. Using the car dealer analogy, we’ll be selling 25 Chevys and 75 Cadillacs each month. You can guess what will happen to the average prices – in some neighborhoods they will increase as fast as they have dropped in the last few years.

The attached chart shows different neighborhoods in our region. Each region has the neighborhood’s name and the percentage of sales in the last twelve months that were either short sales or bank-owned properties. The second line has the price change the twelve months from October 2007 to September 2008 vs. the twelve months immediately preceding. Next, you’ll see the average home price in the last twelve months and the average days on market (DOM) in the last twelve months. There had to be at least twenty sales in the last year for an area to be included. The numbers are more reliable in areas where there were more sales.

Get the insider's edge on what is happening in the Denver Real Estate market in my Real Estate Trends Blog:
http://activerain.com/blogs/lonwelsh

Source: Your Castle Real Estate analysis, MLS data

Aurora, Colorado 2Q 2008 Real Estate Trends

Recap of First Half 2008 Home Price Performance

The average home price in Metro Denver increased +2% in the full year 2005 to the full year 2006. Comparing 2006 to 2007, the average home price across the metro dropped 3%, to $303,000. The half of 2008 was $275,000 vs. the first half of 2007 was $306,000: a 10% decrease. These numbers will be slightly different than Metrolist, as they are just Denver Metro and don’t include outlying areas like Fort Collins, Colorado Springs, or Boulder.

The average price of a foreclosure dropped -6% to $168,000 in the first half of 2008. The average short sale was steady at $212,000. The average price of a non-distress sale decreased 5% to $352,000. Sales volume was down for single family homes. Foreclosure and short sale volume is up and non-distress seller volume is down.

Some areas did better than others. The attached chart shows different neighborhoods in our region. Each region has the neighborhood’s name and the percentage of sales in the last twelve months that were either short sales or bank-owned properties. The second line has the price change the twelve months from July 2007 to June 2008 vs. the twelve months immediately preceding. Next, you’ll see the average home price in the last twelve months and the average days on market (DOM) in the last twelve months.

There had to be at least twenty sales in the last year for an area to be included. The numbers are more reliable in areas where there were more sales.

The good news is the last four times the market had a change from a buyers market to a sellers market, or vice versa, it was preceded by a change in the DOM. DOM for homes declined in the first and second quarters of this year. Too soon to call it a trend, but it is a favorable sign. Another great indication of hitting the bottom: monthly prices in DSW and AUN have been relatively steady for seven months, after falling rapidly from 2005 to 2007.


Source: Your Castle Real Estate analysis, MLS data



Question or need more detail? Call Lon Welsh at 303 619 0633 or LonWelsh@YourCastle.org

(C) Copyright 2008 Your Castle Real Estate

Aurora, Colorado 1Q 2008 Real Estate Trends

Recap of First Quarter 2008 Home Price Performance
By Lon Welsh and Terry Wenze, Your Castle Real Estate.
The average home price in Metro Denver increased +2% in the full year 2005 to the full year 2006, from $309,000 to $317,000. Comparing 2006 to 2007, the average home price across the metro dropped 2%, to $311,000. The first quarter of 2008 was $278,000 vs. the first quarter of 2007 was $296,000: a 6% decrease. Note that prices in the first quarter are usually a bit less than the rest of the year. This is because families that tend to purchase larger, more expensive homes tend to move in the summer months when their kids are out of school.
The average price of a foreclosure or short sale dropped -3% to $188,000 from 2006 to 2007. The average price of a non-distress sale increased 5% to $370,000. Sales volume over the last twelve months is off -4% for DSF/ASF. Foreclosure and short sale volume is up +31%; non-distress seller volume is off 20%. This trend continued in the 1Q 2008; foreclosure volume was up another 15% at the expense of the non-distress sellers.
Some areas did better than others. The attached chart shows different neighborhoods in Aurora. Each region has the neighborhood's name and the percentage of sales in the last twelve months that were either short sales or bank-owned properties. The second line has the price change the twelve months from April 2007 to March 2008 vs. the twelve months immediately preceding. Next, you'll see the average home price in the last twelve months and the number of homes that were sold.
The good news is that the foreclosures are likely to peak in the next six to nine months. Many of the foreclosures were due to resetting rates on ARMs (adjustable rate mortgages). There are two reasons. First, according to Bank of America data, the volume of ARM resets is set to peak in March 2008. It often takes six months or a bit longer for an ARM reset to conclude in the sale of a foreclosed home. Second, the index rates that many ARMs use have declined lately. As a result, some borrowers that might have had a huge shock if their rate reset a year ago might get less of an increase today. For these reasons, we're likely to hit the bottom of this cycle this year.
There had to be at least twenty sales in the last year for an area to be included. The numbers are more reliable in areas where there were more sales.
Source: Your Castle Real Estate analysis, MLS data
Question or need more detail? Call Lon Welsh at 303 619 0633 or LonWelsh@YourCastle.org
(C) Copyright 2008 Your Castle Real Estate

Aurora, CO 4Q 2007 Real Estate Price Trends

Recap of Fourth Quarter 2007 Home Price Performance
By Lon Welsh and Terry Wenze, Your Castle Real Estate.

The average home price in Metro Denver increased +2% in the full year 2005 to the full year 2006, from $309,000 to $317,000. Comparing 2006 to 2007, the average home price across the metro dropped 2%, from $311,000. The average price of a foreclosure or short sale dropped in that time period -3% to $188,000. The average price of a non-distress sale increased 5% to $370,000. Sales volume over the last twelve months is off -4% for DSF/ASF. Foreclosure and short sale volume is up +31%; non-distress seller volume is off 20%. If you handle a lot of listing and the market seems slow, this is likely the reason why.

Some areas did better than others. The attached chart shows different neighborhoods in Aurora. Email me if you need a bigger picture at lonwelsh@yourcastle.org. Each region has the neighborhood’s name and the percentage of sales in the last twelve months that were either short sales or bank-owned properties. The second line has the price change the twelve months from 2006 vs. 2007. Next, you’ll see the average home price in the last twelve months and the number of homes that were sold.

There had to be at least fifteen sales in the last year for an area to be included. The numbers are more reliable in areas where there were more sales. For example, Eastridge had 495 sales –the numbers are likely to be very reliable. In Tollgate West, with only 54 sales, the numbers are more likely directional.

Less expensive areas generally didn’t do as well. For example, Aurora Heights (average home price $95K) saw a 23% drop in prices. More expensive areas generally did better. For example, Hampden (average home price $321,000) was up 6%. 82% of the sales in the Eastridge area were related to foreclosures, where in Hampden, only 13% were foreclosures. There’s a pretty strong relationship; where home prices are less expensive, there is more of a foreclosure problem, and that tends to drag down the prices.


Source: Your Castle Real Estate analysis, MLS data