Compared to many states, Colorado endured the bursting of the housing bubble relatively unscathed.
The state’s home prices only dropped 9.5 percent from the first quarter of 2007 through the first quarter of 2012, well below the price plummets of most other states.
As the market recovers, Colorado will likely find itself in the middle of the 50 states. The state’s home prices are forecast to recover at 3.7 percent over the next year or so, the 22nd-highest increase. Through the first quarter of 2017, its prices are expected to improve 2.4 percent per year, which would rank the state 42nd for improvement.
From early 2012 through early 2013, Colorados home prices have increased by 7.3 percent, with the median home price at $240,000.
In broader economic terms, Colorado added 47,900 jobs, a gain of 2.1 percent, in 2012. Economists predict the state will add another 42,100 new jobs through 2013.
According to a January article published in the Colorado Springs Business Journal (“Mostly good news for 2013 real estate market”), “the forecast looks mostly sunny for real estate investors in 2013, according to a series of speakers who gave presentations during the Institute of Real Estate Management’s Southern Colorado economic forecast.”
A spike in Gunnison County’s Crested Butte home sales is giving hope to many in the real estate industry.
Meanwhile, experts predict a 6 percent increase in construction through 2013, which, they say, will add to the 12,000 construction jobs created over the last two years.
The above, coupled with more speculative investment in Colorado real estate, would seem to lead to more demand.
Aspen experienced a robust year in real estate in 2012. It was, in fact, the strongest year for the industry in Pitkin County since 2007, just prior to the housing bubble bursting.
Real estate professionals project Aspen will see lower inventory and higher prices through 2013. According to a recent Frias Properties of Aspen blog post, “in the summer of 2009, there were roughly 475 condo units and 400 single family homes on the market for sale just in Aspen alone. Over the past three and a half years, the inventory of condos for sale has declined 66 percent to only 161 units currently for sale; and the inventory of Aspen single family homes has declined 54 percent to only 185 properties. The decline in inventory has been particularly acute among newer properties. The last building boom ended in 2008. Since then, there has been very little new construction of homes or condos. In 2012, there were sixteen homes that sold that were built within the past five years. Currently, there are only nineteen newer single family homes currently on the market which is roughly a one year supply. The market for newer condos and townhomes is even thinner. In 2012, there were only five sales of condos and townhomes that were built within the past five years. Currently, there are only nine newer units available for sale. Due to scarcity, it’s very likely that newer properties will demand a price premium going into 2013.”
The post, written by William Small, managing director of Frias Luxury Estates, continued, “it’s clearer now more than ever that the Aspen real estate market is beginning a new phase where scarcity of inventory and higher prices will be the norm. This new phase likely started at the end of the third quarter of 2012 with the final quarter of 2012 being one of the strongest in terms of overall volume the Aspen market has seen in several years. Due to the law of supply and demand, expect escalating real estate prices overall with the most significant price increases likely among newer homes built within the past five years and well located condos in general. New homes and condos just completing construction are likely to be in the highest demand, and therefore, likely to demand the highest prices per square foot.”
A column published by the Berkshire Group – Denver Real Estate Brokers, in January, read in part, “the 2013 real estate market outlook remains strong, but external factors could change the picture. Recent indications from the Federal Reserve Bank are that interest rates will now be pegged to benchmarks that reflect an improving economy. The lack of resale inventory will affect sales in the first part of 2013, as one cannot sell what one does not have. REALTORS® will begin to work hard to create inventory, aggressively encouraging owners to sell as opposed to waiting until owners become self-motivated, and builders are becoming more aggressive in their activities.”
A recent edition of Colorado’s Inside Real Estate News reported the following:
“Overall, Denver ranked 10th of the 20 MSAs in the country, as far as year-over-year appreciation.
“The overall increase for the 20 markets was 8.1 percent.
“(Kentwood Real Estate CEO Peter) Niederman noted for a long stretch of time, Denver was in the top five markets. In January 2012, for example, Denver was ranked No. 3 by
Case-Shiller, with a 0.2 percent, year-over-year gain.
“‘I’m glad we are no longer in the top five,’ he said. ‘This means there is a nationwide recovery, instead of just Denver and two or three other cities across the country. A rising tide raises all boats, as they say. This tells me we are seeing a housing recovery all across the country.’
“Phoenix, one of the nation’s hardest hit markets, let the nation in January, with a 23.2 percent year-over-year gain.
“‘Denver does not have these huge swings from peak to trough,’ Niederman said. ‘If we did, I would be worried about a bubble.’
“He said Denver may be in the second year of a seven-to 10-year improving market. Independent broker Gary Bauer, said the latest Case Shiller report “is good, positive news,” for the Denver-area market.
“‘It’s interesting that we’ve got a record (price appreciation) going back to 2001,’ said Bauer. ‘The other interesting thing is that a 9 percent gain puts us in the middle of the pack. Once again, Denver never had the tremendous highs or the tremendous lows of other markets.’
“He said the Denver housing market is ‘extremely strong with a lot of pent-up buyer demand. Homeowners are looking hard at putting their homes on the market and good share of them are doing that and listing their homes.’ However, that does not appear to be easing the incredible housing shortage.”