Colorado 45th in Housing Appreciation

The big story in a lot of reporting on real estate prices is the slowdown in the national real estate market, and the Denver Post duly reported this news. 

Nationally, existing-home values rose at a quarterly pace of 1.17 percent from April to June, compared with a 2.2 percent quarterly pace from January to March. The deceleration was the sharpest of any recorded in the federal agency’s index since its start in 1975.

Ignore that statistic, however, because national statistics mean nothing in real estate where the watchword is “location, location, location.”  Far more grave is the Colorado specific news, and that involves a slump worse than the nation as a whole.  The state ranks 45th in housing appreciation in the year preceding the Spring 2006 quarter.  The news quashes any concerns that there might be a real estate bubble that has overvalued property in one or more major metropolitan real estate markets in the state. A Sluggish Market

Colorado underperformed the national average of 1.17%, a number so low it makes front page news, in real estate appreciation in the spring quarter of 2006 with a mere 0.96% real estate appreciation for the quarter, which is traditional a hot one for real estate sales.

In the last year (page 11-12), Colorado real estate prices have increased by 4.2% (compared to a national average of 10%), making it 45th in real estate appreciation among the 50 states and District of Columbia.  Only Kansas, Nebraska, Massachusetts, Indiana, Ohio and Michigan housing markets were more sluggish over that time period. 

Even More Local

The Office of Federal Housing Enterprise Oversight, which is the source of this information, also ranks individual markets within Colorado.

Two Colorado metropolitan areas were in the bottom twenty of the nation’s 275 metropolitan areas.

Homes in the Fort Collins-Loveland metro area have appreciated by just 1.22% in the last year, and actually fell by 1.63% in the Spring quarter of 2006.  The Greeley, Colorado metropolitan area has seen home prices fall by 0.35% in the past year, and by 2.63% in the Spring quarter of 2006. 

The only metropolitan areas with real estate prices falling more quickly than Greeley are Detroit, Michigan; Kokomo, Indiana; Anderson, Indiana and at the very bottom, the home of the University of Michigan, Ann Arbor.

The appreciation in the Boulder, Colorado market ranks 218th of 275 metropolitan areas with 3.55% appreciation in the past year.  Colorado Springs ranks 165th with 5.89% appreciation in the past year.  Denver ranks 237th with 2.72% in the past year.  The Grand Junction, Colorado market has been the stand out performer in Colorado in the past year, with appreciation of 14.14%, making it 66th in the nation in real estate, a development driven by the resurgence of the Western Slope oil industry.

There Is No Colorado Real Estate Bubble

It seems unlikely the Colorado, as a whole, at least, is currently in a real estate bubble, something usually marked by recent, unusually high price appreciation. 

In the past five years, Colorado real estate prices have increased by about 24%.  The average in the past five years for the nation as a whole has been 56%. 

In contrast, states often viewed as overvalued have had much more appreciation than the national average.  California real estate has appreciated 112% in the same time period.  The District of Columbia’s real estate appreciation has been 120%.  Florida real estate has appreciated 113%.  Hawaii real estate has gone up 111%.  Nevada real estate is up 105%.

The only states with more stagnant real estate markets in the past five years than Colorado have been Iowa (24%), Texas (23%), Nebraska (22%), Michigan (19%), Ohio (18%) and Indiana (17%).

Even looking back all the way to 1980, Colorado’s 263% real estate appreciation over this 26 year period, has been below the national average of 299%. 

The general trend holds up in localized housing markets.  In the past five years the Boulder, Colorado market has appreciated by only 20%.  The Colorado Springs market has appreciated by 29%.  Denver’s market (which includes Aurora) has apprectiated by 19%.  Grand Junction’s market has appreciated by 56% (the national average) in the past five years.

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