The recent data on the metro area’s real estate market has largely said the same thing: The once-troubled market is back to good health.
But the news isn’t all good. While almost every metric points to a market that continues to improve — prices are up, days on market are down and the number of sales is climbing, too — an average-priced home is still too pricey for a family with an average income.
Metro Denver, like many large metropolitan areas around the country, has seen home prices steadily rise in recent months, but wages haven’t kept pace.
Experts say the gap between what people make and what homes cost is to be expected in large part because home prices tend to recover from a down economy quicker than wages do.
“That’s not unexpected,” said University of Denver associate professor Ron Throupe. “In these kind of recoveries there is a slow growth in income.”
Throupe, who teaches at Franklin L. Burns School of Real Estate and Construction Management at DU’s Daniels College of Business, said the trend will likely continue for the foreseeable future.
“Once (incomes) get behind they tend to stay behind, but salaries will start to increase as the economy expands,” he said.
Wages will likely rise as the employment picture improves, Throupe said. When companies are getting 50 applicants per job opening, wages aren’t likely to climb. But when they start seeing fewer applicants for those open spots, Throupe said incomes will start to catch up with rising home prices.
According to the Colorado Association of Realtors, affordability dipped about 15 percent in the third quarter of 2013. CAR’s Affordability Index uses median sales price, prevailing interest rates and average income to measure local housing affordability. According to the group, index of 120, for example, means that the median household income was 120 percent of what is necessary to qualify for the median-priced home in the current market.
That index was at 124 for the metro area at the end of the third quarter, down 15 percent from the same time last year.
Still, most of the data is filled with good news for the real estate markets in metro Denver and around the state.
According to the S&P/Case-Shiller Home Price Index released Oct. 29, metro Denver home prices in August were up 10 percent compared to prices in August 2012.
And according to CAR’s data, Colorado had more than 28,000 sales of single-family homes in the third quarter, that’s a 19-percent spike compared to the same stretch last year.
New listings are up 15 percent and median sales prices statewide are up 9 percent to $260,000 for single-family homes and 10 percent to $171,000 for townhouses and condominiums.
And homes are selling quicker, too. Statewide, homes sit on the market for an average of 61 days before being sold. That’s down from 81 days last year.
“The main story in these new numbers is that in most places around our state the real estate markets have been steadily improving, creating what many analysts would call ‘normal market’ conditions,” CAR spokesman Anthony Rael said in a statement announcing the numbers. “Overall the news is very good for both buyers and sellers. Better inventory will provide buyers with more choices and improving prices should attract more sellers into the marketplace. One area of concern is the long-term impact that recent flooding and wildfires earlier this year may have on certain markets going forward.”
In metro Denver, the numbers have been positive, too. Homes sit on the market for just 39 days, compared to 63 days during the third quarter of 2012, and median sales prices are up almost 10 percent to $280,000.
In Aurora, local agents say the market is improving, too.
Linda Philpott, chairwoman of the Aurora Association of Realtors board of directors, said the market is certainly more active this year than it was last year.
Philpott, who has been in real estate in Aurora for 35 years and is the owner/broker at Westwind Realty, said sellers are seeing multiple offers on their homes and those offers are coming in quickly.
“Buyers who are interested in a property have to make a decision and put in an offer right away,” she said. “Or they won’t have a chance to get a property.”