DENVER (CBS4) – There was a big milestone for the real estate recovery in Denver. Home prices broke a record in May for the first time since the market crashed.
The Standard & Poor’s/Case-Shiller 20-city home price index released Tuesday says prices were up nearly 10 percent from May of last year, and it’s the 17th month in a row of year-to-year price increases. According to Metrolist, the average home price in the Denver metro area in May was more than $308,000.
Nowhere in the Denver area is demand higher than here in the Highlands, but across the board prices are up, topping a high set seven years ago. Denver was the first to enter the housing crisis and it’s one of the first to emerge.
“Within hours or days of putting the sign in the yard the ‘sale pending’ or ‘under contract’ rider is up there,” said Gary Bauer with the Denver Metro Association of Realtors.
Bauer says its official — Denver has recovered from the housing bust that led to the Great Recession.
“These are big deal numbers,” Bauer said.
Denver and Dallas are the only two cities in the country that have now topped pre-recession prices as people bid on a scarce supply of homes.
“As long as you have low inventory, high demand, you have the opportunity for prices to increase higher than they normally would,” Bauer said.
He says when Denver started coming out of recession the sweet spot for home pricing in the Denver area was under $100,000. Today it’s $200,000 to $300,000. Even higher priced homes that once sat on the market for nearly two years are now selling in less than a year.
“I personally am not (worried about another housing bubble) because I think we have a strong market and I think we will adjust as we go through,” Bauer said.
It’s a combination of climbing mortgage rates and increased inventory he says will help moderate the pace of price increases, but it will take time.
In the last three months 2,500 new homes have come on the Denver market, even as prices hit a record high.
Another thing driving up prices has been a drop in foreclosed properties. A couple years ago 40 percent of sales in the Denver area were foreclosures. Today only less than 15 percent are, and the discounts on those properties aren’t nearly as deep either.