Posted by Damon L. Chavez on Monday, April 25th, 2016 at 8:52am.
|April 20, 2016 / Denver Post - Real Estate, by Aldo Svaldi|
Colorado's northern Front Range has the hottest housing markets in the country, with four metro areas setting records last month for gains in home prices.
Denver, Boulder, Fort Collins and Greeley all saw the median price of a home sold climb to a new high in March. Only three other cities in the U.S. had that distinction.
"March was very much dominated by the Colorado markets," said Daren Blomquist, a vice president with RealtyTrac, a real estate information provider in Irvine, Calif.
The double-digit home price gains have far outstripped income gains along the Front Range and can't go on indefinitely, he said, adding that he expects a correction in the coming months.
"The envelope is being pushed on affordability. At some point the constraints have got to kick in," Blomquist said. "I would expect to see that in the next year in the Front Range."
According to the RealtyTrac report released Wednesday:
• Boulder County's median price for homes sold in March hit $451,250.
• Metro Denver's was at $325,200.
• Fort Collins, including Larimer County, was at $295,000.
• Greeley, including Weld County, climbed to $257,500.
The other three metros where the median price hit a new high were Portland, Ore.; Austin, Texas; and Cincinnati.
RealtyTrac uses recorded sales deeds from 900 counties covering 80 percent of the U.S. population. Its report includes "off-market" sales by owners and banks, resulting in lower median prices than what the multiple-listing service shows.
The Denver Metro Association of Realtors, for example, measured a median sold price of $331,000 in March.
Just when it seems prices can't go any higher in Boulder County, they keep rising, said Kelly Moye, a broker with Re/Max Alliance in Broomfield and Boulder.
"As always in Boulder, a very limited supply and high demand gets us," Moye said.
Homes that list for $600,000 this spring will sell for $50,000 more than that, she said.
A similar pattern is emerging in Fort Collins, where infrastructure and land constraints cap new construction and put pressure on prices, said Bob Sutton, chairman-elect of the Fort Collins Board of Realtors.
"One of the issues with Fort Collins is a lack of new construction," he said. "We don't have a lot of places to build."
Greeley represented the biggest surprise of the four Colorado metros to set a record, given the big hit Weld County's economy is expected to take from the steep drop in oil and gas drilling.
While the worst might be yet to come, Sutton notes that workers displaced from the oil fields seem to be returning to jobs they held before. That has dampened delinquencies and foreclosures.
Sutton and Moye also point to a spillover effect. Homebuyers who can't afford to live in the city of Boulder are driving up prices in nearby Lafayette, Louisville and Erie. In turn, buyers priced out of those areas are targeting affordable communities on the western edge of Weld County.
While the run-up in prices is pinching homebuyers, sellers are seeing some of the biggest profits since December 2007, the official start of the last recession.
Nationwide, sellers in March got $30,500 above their original purchase price on average — a 17 percent gain. They did even better in Boulder and Denver, pulling down $155,750 and $96,200 respectively.
Boulder's average gain of 53 percent on a sale was the third- best in the country in March, after San Francisco and San Jose, Calif. Fort Collins ranked eighth and Denver ninth out of 125 metros tracked.
In theory, such big gains should motivate more sellers to cash out, but they struggle because they can't easily replace what they are giving up.
Moye said one client could have sold her townhouse in Lafayette and purchased a larger single-family home in Adams County, but instead she decided to refinance her mortgage and stay put.
Nationally, the median price of a home sold, both single-family and condo, reached $210,000, up 11 percent from a year earlier, according to RealtyTrac.
March was the 49th consecutive month of year-over-year gains in home prices nationally. Still, the median home price of a home sold remains 8 percent below the peak reached in July 2005.
About 17 percent of metros saw a year-over-year decline in the median price of a home sold in March, led by 7 percent drop in Washington, D.C., according to RealtyTrac.
After 47 months of increases, San Francisco's median price for a home sold dropped 2 percent, which Blomquist called a warning for Denver and other Western cities.
But Sutton countered that home price gains could run strong here for two or three years.