Metro Denver property costs are rising at a document tempo in April – The Denver Submit
According to a closely watched house price index from 1987, the annual appreciation of home prices in the Denver metropolitan area and nationally accelerated at a record pace in April.
The S&P CoreLogic National Case-Shiller House Price Index rose 14.6% last year. The index rose 13.4% in March, accelerating its annual gains each month for 11 straight months. The index for Metro Denver rose 15.4%, beating the previous record gain of 15% in February 2001.
“The performance in April was really exceptional. The 14.6% increase in the National Composite is literally the highest value in more than 30 years of S&P CoreLogic Case-Shiller data, “said Craig J. Lazzara, global head of index investment strategy at S&P Dow Jones Indices, in the comments to the report.
House prices rose in all 20 cities covered, with 15 cities in the top decile of earnings and five cities – Charlotte, Cleveland, Dallas, Denver, and Seattle – setting new records for appreciation. The Phoenix, San Diego and Seattle indices’ annual gains surpassed 20% in April.
Sustained double-digit annual increases in the Case-Shiller Index for Metro Denver are not uncommon, but not as common, research from the Denver Post found. They took place from October 1993 to September 1994 and again during the dot-com boom from February 1999 to August 2001.
The only other time the Denver metropolitan area’s house price increase reached 15% in February 2001. On March 10 of the same year, the Nasdaq Composite Index peaked and began a decline that would destroy billions of dollars in share capital and spark a recession.
Metro Denver achieved growth of the order of 10% from February 2015 to March 2016 after the oversupply from the real estate crisis dried up. And in January of this year there was again double-digit growth.
Some experts have attributed the strong real estate price gains to demand triggered by low mortgage rates or changes in preferences during the pandemic, such as wanting to move out of cramped apartments and own a house with a garden. And long before that, the housing market had to struggle with insufficient supply.
“The biggest annual price hike of all time is the result of an ongoing housing shortage,” said Lawrence Yun, chief economist for the National Association of Realtors, in his comments on the report.
The NAR tracks changes in the price of homes sold, and the average increase in May reached nearly 24%, also a record. In the Denver metropolitan area, the average price of a single-family home sold last month reached $ 585,000, up 23.2% from May 2020, according to the Denver Metro Association of Realtors.
However, the NAR and DMAR measures are heavily influenced by the mix of homes sold in a given month. Yun said “an abnormally high number of upper-end home sales” skewed profits about the kind of appreciation a typical staying homeowner would get.
Because the Case-Shiller Price Index looks at sales of similar homes over time, it provides a more consistent, higher quality measure of what actually happens to appreciation.
Converted into an equity gain, the typical US homeowner gained 45,000 US dollars in assets in the past year alone, said Yun. In Seattle, where home prices are up 20.2%, the typical homeowner has made $ 120,000 in net worth in the past 12 months.