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Daily Camera At Home Perspective      3/20/09

Experts tend to agree. Denver’s housing market ranks as one of the Nation’s best!
By Karla Martin

The decline of the housing market has been a major point of discussion over the past many months. Now, however, we are beginning to see positive signs toward a recovery. While industry experts are not in total agreement on when the housing slump will end nationally, most tend to agree that the Denver metro area will lead the way.

John Burns Real Estate Consulting has been tracking housing data since 1981. According to a recent statement in their monthly Market Intelligence newsletter, “there has never been a better time to buy a home” since they began watching housing signs nearly three decades ago. They find housing affordability continuing to improve, and with The Fed’s hoping to kick-start the economy and battle deflation, mortgage rates have fallen to a near 40-year low – earning an “A+” for fixed rate mortgages.

In a report produced by John Burns, his consulting team indicated that the median income household needs only 27% of their income to qualify for the median-priced home, representing an all-time low. While you can take the gamble that prices and mortgage rates will continue to fall, and be more favorable next year, you might just as easily discover that you missed the opportunity of a lifetime. And if f you plan to invest for the long-term, waiting is a gamble you don’t need to take.

Statistics compiled by The National Association of Realtors indicated that home affordability has surpassed historical averages. The peak of the National home price to income ratio was 5 in June of 2005. The historic average is recorded as 3.7. Current home price to income ratio is listed at 3.3. Hanley Wood Market Intelligence defines the housing affordability ratio as the percentage of households that can afford the median priced existing home. The calculation uses industry standards of a 20% down payment on a 30-year fixed mortgage.

The Wall Street Journal studied 28 real estate markets around the country, looking at housing inventory, month's supply of homes on the market, annual home price change as of year-end 2008, the unemployment rate and the percentage of home mortgages that were past due. Then, The Genesis Group of Denver took this data and further analyzed each market’s ranking in each category and averaged them. They found that Denver has the most favorable outlook for housing.

According to Standard and Poors Case Shiller index of home prices, Denver had the best showing out of the 20 metropolitan areas analyzed from October to November, and ranked second only behind Dallas from November 2007 to November 2008.

The Denver metropolitan area is forecast to experience strong population growth over the next decade based on quality of life, a well-educated workforce and a favorable business environment. Markets where population growth is anticipated, such as Colorado, stand to recover much more quickly than markets where growth may be limited.

Bloomberg reported that PMI Mortgage Insurance Company rated Denver among the 10 metropolitan areas with the lowest risk of lowering real estate values.

The Genesis Group believes that the Colorado market is in an even better position to improve once the national economy begins its recovery. They say most economists believe this will happen in 2009. So, despite current unemployment rates and fears about the recession, local and national statisticians seem to be in agreement that Denver’s housing market will continue to fair better than most areas around the country.

Karla Martin is a Member of the Institute of Residential Marketing and a Homebuilding/Real Estate Marketing Strategist. 303-775-6427

k.martin@maands.com