“If I buy now, will I be buying too high at the peak of home appreciation in Denver? And then, will the market crash?” Common question. This article, published in our fall newsletter by my company, Colorado Home Realty, provides a brief snapshot into Denver’s real estate history over the past 20 years. I’d say you’ve got a solid investment should you choose to buy!

“We got in the DeLorean and went “back to the future” to see if we could learn anything from what’s happened with prices in the metro Denver real estate market for the last twenty years. It’s fascinating.

In particular, we looked at the average single family home sale prices going back to June of 1996. We used the 12-month moving average, which is just a simple way of balancing out seasonal price swings so we can see the real trends.

Here is what we found:

June 1996 – Dec 2000

Single family home prices start out at $155,133 and rise to $240,691 as the 20th century comes to an end – an annual appreciation rate of 10.04%.

Jan 2001 – Aug 2006

Prices continue their upward march but at a slower rate of 4.69% per year. They end up at $314,911.

Sept 2006 – Feb 2008

Home values drift down a bit over this 18-month period and end up at $303,227.

March 2008 – Aug 2009

The big plunge occurs! The average price declines to $255,303 as part of the worst recession since WWII. The 15.8% drop is relatively mild compared to other real estate markets around the country.

Sept 2009 – Jan 2011

The market recovered two-thirds of its lost value by climbing to an average sale price of $282,948 just 18 months after bottoming out.

Feb 2011 – April 2012

A flat period where prices never vary by more than $4,000 and which ends up with the average price at $282,130.

May 2012 – June 2016

The market begins a strong upward push in almost a straight line and ends up at $411,283. The annualized rate of increase at 9.45% nearly equals that experienced in the last five years of the 20th century.

Takeaways

The last four plus years are not unprecedented for metro Denver real estate. Our annual appreciation rate of 9.45% is below the rate of 10.04% sustained over the five-year period from 1996 to 2000.

And remember … those last five years of the 20th century were not followed by a crash but by another five years of more modest growth in home values.

For the whole 20 years, single family home prices rose by 265%.

Will history repeat itself? Will the average single family home going for $1,089,899 in 2036 and have us looking back on 2016 as the era when houses were super affordable at just $411k?

Regrettably, the DeLorean had an unfortunate collision with a train before we could travel that 20 years into the future. We’ll have to wait and see what unfolds.”

For more related information, visit this blog, https://coloradohomerealty.com/metro-denver-real-estate-a-sure-bet/. Read how your odds of making money when you sold residential real estate in metro Denver over the last 20 years was almost 4 in 5 (78.2% to be exact)!