Denver Housing Froth Going Flat
A couple of days ago, I linked to an article in Forbes Magazine that listed what they believe to be the ten most overpriced places in the U.S. Seattle was #1.
Portland was #2.
San Francisco was #7.
Denver was #9 on the list.
The New York Times [reg. req.] reported yesterday that housing the housing froth in Denver has been going flat. Sellers are having offer special incentives to sell their homes in what is quickly becoming a buyer’s market.
With economists warning that prices in hot markets cannot continue to rise as sharply as they have in the past few years, the experience of Denver’s homeowners may foreshadow what could happen if those markets start to cool. Denver’s circumstances are in some ways particular to the area, driven largely by job losses in the telecom sector, but they illustrate how a moderate slowdown could play out for homeowners in other parts of the country and stand as a potent reminder that galloping price appreciation is not the norm.
[...]
Optimists point to Denver as a model of an adjusting real estate market. “I think it’s a good example of when a market softens, what happens,” said David Lereah, the chief economist of the National Association of Realtors, a trade association. “You see double-digit price appreciation go down to 4 percent or even 1 percent, and then it starts coming back to a historical norm of between 4 and 6 percent. That’s very healthy. That’s wonderful. It beats inflation.”
But many analysts take a gloomier perspective, suggesting that the most heated markets could suffer more than Denver’s so-called soft landing. “I think Denver is a best-case scenario,” said John H. Vogel Jr., adjunct professor of real estate at the Tuck School of Business at Dartmouth College. In the case of markets like Naples, Fla.; Miami; and New York, he said, “I think you’ll see dramatic price decreases because I think the prices have become artificially inflated by trading and speculation.”
Speculation? You mean like people buying condos before construction has even begun?
If the ninth most overpriced market has started to tumble, how long can it be before the eight markets considered even more overpriced start to feel the pinch?
| Go to Home - Most Recent Posts