SpencerBarron.com

A study released on October 31,2007 by S&P Case-Shiller shows Denver leading the country in price appreciation.  While the numbers are not staggering, Denver’s subtle growth marks a stark contrast from the drastic price drops of other cities across the United States.

  The study measures changes in price of a single home that is sold twice over a period of time.  The Case/Shiller method is considered to be one of the most accurate ways to measure valuation changes over time.

 Most of Denver’s price growth actually happened prior to 2000 while Denver’s economy was growing hand over fist.  Denver’s growth since 2000 has lagged behind other major cities that have garnered national attention as speculative buying and building pushed home prices to new highs.   When Denver’s economy suffered from the tech crash in 2001, many cities with diversified economies rolled on.  Cities across the country were reaching for new highs as Denver was finding it’s foothold. 

    Denver’s home values have not extended significantly past what the local populations can afford and are willing to pay.  That is why you haven’t seen the drastic price drops.  Are the prices high?  Could be.  The suburbs have shown some slowing becuase of competition from new construction.  Some parts of the cities didn’t have any justifiable reason for a growth in price since there were no improvements or changes in the areas.  Much of Denver has gone through a reniacance of sorts.  Small areas of commercial interest have been revamped to create value in the the surrounding neighborhoods.   The areas that haven’t seen this sort of investment and increased interest have faltered now that the going has gotten tough.  As a whole and without seeing a real reason related to the local economy, I don’t see any reason that Denver won’t at the very least keep pace with inflation. 

  In many other cities, home values have extended beyond what the local economies can support.  When that happens, the market slows down until the local economy can support the growth.   Without a growing economy and investments in the area, there is simply no good reason to see growth beyond that of inflation. 

  In the City of Denver there have been lots of changes.    Lots of investments in local businesses and a strengthening economy equate to a stronger demand for housing.  Just because a few home owners got in over their heads with loans they probably shouldn’t of got, should the rest of Denver residents lump themselves in with what’s being said about real estate from the rest of the country?  I don’t believe so. 

  It is far too early to tell how much Denver will continue to be affected by the continued negative media coverage but it is apparent that problems that are facing the rest of the country are not the same as the problems facing Denver.    It’s hard to believe that people in Miami, Los Angeles or Las Vegas could even think that their growth could be sustainable.

    Thus the old adage, “All real estate is local.”