Colorado’s Housing Market}

Submitted by: Frank Skirianos

Against all odds, the Colorado housing market has made its mark as a place that has gone against convention. When housing markets were booming elsewhere Colorado was slow, and when sales were sluggish for an odd variety of reasons Colorado boomed. That was until the nation’s financial crisis, which pulled the state into the housing bust.

However, there are strong indications that many of Colorado’s markets are beginning to move back to being unconventional, and that the bottom in much of the state may not be too far off. There are more than a few silver-linings in Colorado real estate. The number of homes selling is on a steady rise amid the fallout of the foreclosure epidemic.

The inventory of homes for sale remains relatively slim, accounting for a six month supply in Denver. Foreclosures make up the majority of sales with lower priced homes. As the mile high city dances to its own beat in the housing bust against the rest of the nation, home values are declining, but not at the rapid double-digit rates elsewhere. Despite a market that was caught in the worst foreclosure epidemic in history, home values are only slipping by single digits and are forecast to drop an average of 9.7% in 2009.

Foreclosures make up the majority of Denver’s sales volume as homeowners are unable to make higher mortgage payments due to adjustable rate mortgages. Outside Denver, in the suburb of Aurora sales had a run-up only to slow before bargain-hunters came in to buy up properties at some of the lowest prices in nearly a decade.

Aurora has been hit hard by foreclosures and was one of the first communities in the country to get federal funds to maintain vacant homes. Foreclosures are projected to increase throughout 2009 as more homeowners default on their mortgages, adding to an excessive inventory of homes on the market. Housing Predictor forecasts Aurora will see home prices deflate 10.6% in 2009.

Boulder is also seeing an increase in home-buyers’ activity, but hasn’t yet experienced an increase in sales, despite the federal government’s first time buyer’s $8,000 tax credit. Home values have topped double digit losses in Boulder, which has a long way to fall before its housing market re-inflates. Boulder is forecast by Housing Predictor to see average homes deflate 14.8% in 2009.

Grand Junction had been an exception in falling Colorado real estate values for the longest time, at least partially boosted by its natural gas fields. But with the value of natural gas off its’ high, drilling and exploration has been cut back triggering job layoffs. The economic fallout has forced businesses in Grand Junction into failure and increased foreclosures. Grand Junction is forecast to see housing values drop an average of 8.8% in 2009.

Near the native Alpines that help make this state a scenic wonderland, Colorado Springs is holding its own in the housing slump, despite an increase in foreclosed properties. Home prices have fallen modestly as the Colorado Springs area fairs much better than most of the state. Housing deflation is forecast to continue through the year hitting a lesser 7.4% in 2009.

During the boom many newcomers moved to Fort Collins to escape big city blues only to see the community grow. With fha remodel financing harder to get for a mortgage, Fort Collins housing sales slowed, sending the market’s home values lower and they’re forecast to remain that way over 2009 deflating 7.9%.

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