Real estate agents have been eagerly waiting on the day they could give their clients the green light on buying real estate. While there’s no exact way to predict the rock bottom of the real estate market, and how quickly the market will turn around, we have gotten to the point where we feel comfortable recommending that our clients get into real estate as soon as possible. For many eager homeowner hopefuls, this simple advice is enough to send them into a house hunting flurry, but for our researcher clients, we’ve compiled some facts and statistics to prove our point.

Home Prices in Relation to the Bubble – Homes are currently about 90% to almost 40% of the price that you would have found them just seven years ago. While these numbers may seem drastic, we are in no way suggesting that the peak of the market was in any way a realistic view of home prices. The real estate market will hopefully never overly inflate the way it did before the crash, and now homeowners and homeowner hopefuls are more aware of what a reasonable real estate market should look like. If you adjust for inflation the current home prices are approaching prices from 1997, which was before the subprime lending flooded the market. Some neighborhoods, however, will not see such drastic declines in price and may hold where they are. These are mostly wealthy neighborhoods that may never fully come back down to pre-bubble prices.

Home Prices in Relation to Construction Costs – One of the best ways to compare current home prices is to look at the current price to construct a house or to replace a house. Basically, look at the cost of materials and labor and compare what you can buy versus what you could build. At this point, many Denver Colorado homes for sale are selling for as little as $60-70/square foot, which, depending on land value and quality of construction, could be about a 50% discount compared to building your own home. We consider this a great way to look at home values, since it accounts for current prices, instead of looking at inflation and relationship to past markets.

Home Prices Compared to Annual Income – One of the last important factors to compare current home prices to is a household income, which is a vital figure to understand before purchasing, since you will be needing to make monthly payments. At the peak, some cities were seeing homes priced about 11 times the median family income, meaning people were living in homes that they would have never been able to afford if they had applied for the loan at the peak, and that families with similar incomes would not be able to buy from them. This number is finally back down to a more reasonable number, at 4 times the median family income.

About PorchLight Real Estate: PorchLight Real Estate Group has the most experienced and knowledgeable Denver real estate agents in Colorado. For more information about homes for sale in Denver CO or specific neighborhood homes please visit www.porchlightgroup.com.

Advertisements