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Old 06-07-2013, 04:46 PM
 
45 posts, read 57,312 times
Reputation: 105

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It seems like Denver's home prices are quite high for the income levels, unemployment rate's and economic base.

I have heard about the prices of homes recently and it is shocking. Homes that are 3 bedrooms in nicer areas going for 500,000 dollars. Also asking prices well over 200 dollars a square foot over area of central Denver.

I hear conflicting stories about median home prices and would love see some concrete numbers but it seems to vary according to source and month from 250,000 to 280,000 dollars.

According to the Census the median household income is only $47,000 a year. The median home price was 243,000 dollars before the new bubble started.

I know the fact that in the Denver area the property taxes are very low and the interest rates are very low nationally.

But it seems like with Denver you have a combination of the large families, moderate unemployment that tends to stay just at the national average and a larger dependence on cars with very long commutes and high utility bills.

I have heard news stories on business reporters encouraging property investors to flood Denver. Also I have heard people who specialize in real estate talk about this is just the beginning of a great appreciation.

I just don't see how the fundamentals support it in Denver.
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Old 06-07-2013, 04:59 PM
 
Location: Littleton, CO
2,190 posts, read 2,170,631 times
Reputation: 6284
The people with the average household income aren't buying $500,000 houses most likely, they are probably living in the big surging apartment market here. Denver has one of the lowest apartment vacancy rates and more complexes are being built like crazy.
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Old 06-07-2013, 05:32 PM
 
336 posts, read 243,804 times
Reputation: 521
Since you've called it a 'new bubble' it appears you already have answered your own question

Decent 3 bedroom homes in the nicest areas of Denver have been going for 500k for about a decade. Prices over 200 dollars per sq foot is in line with the resurgence in central area living going on in many cities in the country (except rust belt and sun belt). Although the median price difference could be significant if you believe the high end numbers, but when you amortize it out the difference in median home prices even on the high end most people can absorb that cost.

That being said is it possible there is a bubble? Of course it is possible but you cannot say that definitively one way or the other. I think after what happened in the previous economic cycle people are more paranoid about another bubble occurring (we have seen this a lot on the forum recently), and I think a lot of that is just emotional.

In this quasi-educated persons opinion it's just scarcity which is an entirely different animal than a bubble. Due to institutional investors being scared to invest in residential for years, and people continuing to move to Denver during that time (often from more affluent areas) supply lagged behind demand and prices rose. Recent news is people are starting to sell again, and new starts continue to gain momentum which should at least stabilize the price if not bring it down a little. However I do not see an all out collapse in the next few years. I think it is much more likely we might see a slight correction in 1-2 years when supply catches up.
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Old 06-07-2013, 05:36 PM
 
Location: Berkeley in Denver, CO USA
6,859 posts, read 5,764,854 times
Reputation: 6923
Default Data are not always your friends

San Francisco
Median household income, 2007-2011 $72,947 (San Francisco County QuickFacts from the US Census Bureau)
Median house asking price $678K (Dept of Numbers)
Ratio is 9.3
Denver is $330K/47K = 7
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Old 06-07-2013, 09:25 PM
 
Location: Arvada, CO
9,054 posts, read 12,091,047 times
Reputation: 6597
2 years ago, no.

Now, yes.
__________________
Moderator for Los Angeles, The Inland Empire, the Washington state forums, & Co-Mod for the North Dakota forums
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Old 06-07-2013, 10:03 PM
 
Location: South Metro Denver for 25 years
8,633 posts, read 19,074,187 times
Reputation: 4340
now, no - 5 years from now, maybe. I don't have a crystal ball.
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Old 06-08-2013, 09:10 PM
 
Location: Littleton, CO
2,267 posts, read 2,106,069 times
Reputation: 3276
Remember, we are talking about median income and asking price, not the mean income and asking price.

Median income means half earn above $47,000 and half earn below $47,000. Median sales prices mean half of the prices are above $280,000 and half are below $280,000.

The data is inconclusive unless you can break it down into more specific groupings.
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Old 06-08-2013, 09:33 PM
 
Location: Berkeley in Denver, CO USA
6,859 posts, read 5,764,854 times
Reputation: 6923
Default Picky, picky

Quote:
Originally Posted by davidv View Post
Remember, we are talking about median income and asking price,...break it down into more specific groupings.
So fussy.
Bubble or not?
I think mini.
And, where do you get off demanding CONCLUSIVE data?
This is all about the "narrative".
We report, you decide.
Facts don't matter.
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Old 06-10-2013, 11:42 AM
 
Location: Cole neighborhood, Denver, CO
1,084 posts, read 884,295 times
Reputation: 1131
Yes, but we have a few years to go before it bursts. Timing is everything.
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Old 06-10-2013, 11:54 AM
 
Location: Denver - Barnum
51 posts, read 43,146 times
Reputation: 71
It's possible, but there's been a fundamental paradigm shift in real estate over the last five years away from some of the trends that created the last bubble. Nobody in their right mind would sign an ARM, there's an increasing trend of young buyers choosing homes they can actually afford (this depression has afforded a degree of humility), vancancy rates in rentals are at historic lows, while prices continue to climb, there's a huge influx of young professionals into the Denver area, real estate inventory is low, new construction is starting up again.

The next time there's a fire, will we be speculating about a water bubble?
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