By John Rebchook, Rocky Mountain News
June 22, 2005
The average and median price of a single-family home sold and closed in the Denver area hit records this month, but that doesn't mean it's a bull housing market.
The average selling price of a single-family home rose to $310,798. The median selling price topped $250,000 for the first time, rising to $251,500. The median means that 50 percent of the homes sold for more and the other half sold for less. The average price of a home sold and closed is up 5.8 percent from a year before, and the median price is up 3.5 percent.
Despite the records set this month, the housing market is not on fire, as it has been on the East and West coasts and in other hyped-up markets such as Las Vegas, Phoenix and much of Florida.
With half a year's worth of data, metro-area real estate agents say the local housing market has been performing as expected: slow, steady gains, but still one that favors buyers over sellers.
The Denver area is not like other markets where investors are speculating on homes the way people poured money into the stock market five years ago, before the bubble burst.
"We're not like Las Vegas, where it is crazy," said Gary Bauer, an independent broker who prepared an analysis of the housing market Tuesday based on Metrolist data released during the last full week of each month. The remaining days of June will be included in July's report, but Bauer mathematically adjusts the months for the number of weeks in each month. That way, each month is comparable.
"In the first half of the year there have not been any big surprises," Bauer said. "It's been a nice, steady year that has neither been knocked to the left nor knocked to the right."
The rising prices primarily are due to the number of expensive homes being sold, not appreciation across the market, Bauer and other experts said.
"It's the mix of homes being sold, nothing more," Bauer said. "I anticipated the market to be up about 5 percent this year on average, and that is right where it is."
Steve McGuire, of RE/MAX Professionals, said about half the price increase is due to the mix.
"I think the real, true appreciation is between 2 percent and 3 percent," McGuire said.
Still, Larry D. McGee, a broker at Berkshire Group Realtors, said many first-time buyers are priced out of the single-family home market and increasingly will be choosing condos. The median price of a condo in June rose to a record $163,307, well below the median price of a single-family home.
John R. Lucero, owner of Newleaf Realty, agrees that condos will be the best option for many people buying their first homes. In fact, he is a bit surprised that the 12 condos he is selling at 1420 to 1430 Julian St. aren't selling faster.
The 825-square-foot units, with new kitchens, are on the market for $110,000 each.
"We'd like to sell them to all owner-occupants and not to investors," Lucero said. "We're trying to do affordable homes, where the mortgage payment equals what people are paying in rent in the neighborhood."
Sunny Banka, owner of Sunny Homes & Associates/Metro Brokers, said the first half of this year "has been on par with last year, but maybe a little bit better. We have not seen any huge increases or decreases."
Banka said based on conversations she's had with people hunting for homes and with agents in her office, all of the national hoopla about the hot housing market "has inspired people to buy" in the Denver area, even though the local market is not red-hot.
"But it makes it difficult for the sellers," who sometimes expect the sky-high appreciation that sellers in other markets have been enjoying, Banka said.
"Home prices haven't soared here like they have in other places in the country," Banka said. "They did that in 2000 and 2001, but not during the last couple of years."
Banka said she expects the market to improve gradually in the second half of the year, as long as interest rates stay reasonably low.
"And our economy is growing jobs, which is always good for the housing market," Banka said. "I think there are more buyers in the market, and more buyers drive up prices. The good homes are selling fast and are getting multiple offers."
Single-family prices set records
For the metro area:
$310,798 Average sold price of a single-family home. The median price was $251,500. Both are records.
$193,588 Average sold price of a condominium. The median price was a record $163,307.