Home prices in central Denver are overpriced

[denverian]

Salaries everywhere have been stagnant for at least 12 years, from what I can tell. The company I started work for in California in 1996 paid $12 an hour for entry level jobs. Back then, a 2 bdr. apartment was $700, a 2 bdr. condo was $110K, gas was $1.50 a gallon, groceries were cheaper, etc. Today, that same company pays $12 an hour for entry level customer service jobs. The 2 bdr. apartment is $1300, the condo has come down to around $300K, gas is over $4 a gallon, groceries are out of control...

[tfox]

I agree -- it's pretty terrible what's been going on. It's basically a supply-and-demand issue. The market values central Denver highly and there's only so many homes there, so high demand trumps supply. What percentage of Metro population lives in SFH in Central Denver, maybe 5%, with another 5% in condos? I personally doubt that prices will come down much at all in Central Denver, not unless the entire real estate market really nosedives. Even now there's still a lot of demand and not a lot of supply.

Also, the vast majority of the homes in Central Denver ARE small homes. back 70-100 years ago people were not accustomed to the big living areas that modern homebuyers are used to, so only the wealthy built homes that would be considered large by modern standards. Those homes are a minority of the housing stock out there and of course are highly prized -- even back in the "bad old days" in the 1980s those big mansions were still valuable.

Anyway, I'd suggest looking in some of the older suburbs like Old Englewood, Old Littleton, suburban areas in SE Denver and older parts of Aurora, older parts of Arvada, etc. There are a lot of nice neighborhoods beyond Denver city limits, most of which are valued much less than Denver itself. The "next Highlands, Wash Park" etc will probably be in the older, first suburbs.

[mobs2003]

Originally Posted by cobeachgirl

Yes, most homes we have looked at to purchase in the last 2.5 months are overpriced according to the recently sold comparable homes in the same area.
edit: I'm sure not ALL homes are overpriced, just the ones in our price range.

I totally agree with this statement. We've been looking in western Denver. I don't want to live in SW Denver either, but it is cheaper. But the houses that we've been looking at aren't flying off the shelf either, so they're obviously overpriced.
We put in an offer on a house, and the seller said no. But it's not like we pulled our number out of the air, we based it on recent home prices in that specific neighborhood and area. Sellers are just so unrealistic with their home prices. The appreciation seen during the 2004-2006 bubble is gone.
However, I understand that Denver didn't see the crazy run-up that other cities saw, so why do sellers think they can list so high?
Denver is seeing some appreciation. I have a friend who works at Freddie Mac, and he said that nationwide it's been about 14% depreciation, but that the Denver area saw something like a .25% appreciation. But that appreciation doesn't translate into 100K+ of appreciation in since 2006 in our price range (600-700).
So we too are very frustrated.

[tfox]

Sadly, I think that the era of the 1970s-1980s where the average joe could easily afford to be a homeowner may never return. We assume that this is the way it SHOULD be, but look at other countries and you realize that it may NOT be.

The U.K., for example, has generally lower salaries than the U.S. but housing prices are several times higher.

In a more extreme example, in India's largest city, Mumbai, housing prices in the city core are among the most expensive in the world, exceeding Manhattan or Central London, yet the average income in greater Mumbai is just over $1000USD/year. Sure, it's a bubble that's going to pop just like Tokyo in the 1990s, but are the prices going to decrease by 99.9% in order to make them affordable to the average Indian? Not likely.

It's sad and unfair but I think we've moved into a time where "the rich got richer..." and you know the rest.

[steveindenver]

The appreciation seen during the 2004-2006 bubble is gone.

There was no bubble in Denver during that time period.

But the houses that we've been looking at aren't flying off the shelf either, so they're obviously overpriced.

Not entirely true. There are many factors at work, one the largest being the harder time people are having getting a loan funded. There are fewer buyers on the market which contributes to listing times.

Sadly, I think that the era of the 1970s-1980s where the average joe could easily afford to be a homeowner may never return.

Actually, if you recall the run up in interests rates in the early 80's that was a tough time for anyone to buy a home. Anyhow many of the problems we have know are as a result of easy money and too many people owning homes.

The selfish American dream as it is sold is that everyone should have their own house. Reality check, until recently owning a home meant saving 20 percent of the down payment; a lengthy undertaking for most people that reinforced fiscal responsibility.

Lending money irresponsibly to people who by and large should still be renting is perhaps best exemplified in the metro area with Green Valley Ranch.