Average home prices in metro Denver made another big jump in July, increasing by 12.9 percent over the same period last year to $412,312, including both attached condos and townhomes and detached single-family homes, according to the latest data from the Denver Metro Association of Realtors.
The average sold price for a detached single-family home increased 12 percent year-over-year in July to $460,623 while the average price of condos and townhomes rose 12 percent to $285,531.
That number is the lowest for the month of July on record, but is a nearly 10 percent increase month-over-month from June, when 6,796 active listings were on the market.
The monthly increase offers a glimmer of hope in a market that hasn’t seen much relief from historic inventory lows and price highs for well over a year, said Anthony Rael, chairman of DMAR’s Market Trends Committee and a Denver real estate agent.
At the beginning of 2016, some in the residential real estate industry predicted, citing the unsustainable nature of double-digit price increases, that the rate of appreciation of Denver home prices would slow over the course of 2016.
But, according to July’s numbers, and figures for the rest of 2016 so far, that hasn’t happened.
“We would have loved to see appreciation slow,” Rael said, again noting that the rate of increase in metro Denver is unsustainable. “If we’re having this conversation about double-digit increases for a third year in a row, we’re going to reach a critical level.”
Denver’s home prices began appreciating years ago as the market emerged from the recession and the market has been dealing with an inventory shortage for more than two years. Prices started accelerating at double-digit rates in the last part of 2015.
The market saw a slight cooling in prices from June to July of about 1.9 percent, but that is mainly attributed to the seasonal nature of real estate, Rael said.
The most surprising statistic in July, according to Rael, is the number of homes sold in the metro area, which dropped by 17.6 percent year-over-year to 5,016.
Some of that decrease can be attributed to slowing in the number of homes sold as a result of higher prices and lower inventory, but Rael said that another factor might be at play.
“It could be tied to appraisals,” he said. “There’s a backlog of appraisals right now.”
August data, reported in September, will reveal whether the number of sold homes bounces back, but Rael suspects that vacations and staffing shortages in the appraisal business have contributed to a backup of under-contract deals leading to fewer homes sold in July.
Another housing price indicator, the CoreLogic Home Price Index, which measures appreciation, showed that prices in the Denver metro area increased by 10.2 percent over the year in June, compared with a national appreciation rate of 5.7 percent.
Irvine, California-based CoreLogic (NYSE: CLGX) compiles its index monthly using public records and real estate databases. The index is always a month behind the data received locally.
The Denver City Council is considering the establishment of the city’s first permanent fund for affordable housing, but council hearings on the matter have been pushed back to September.
Click here for details of the plan, which will be funded using a combination of increased taxes and new development fees.