- Zillow finds Denver home prices fastest appreciating in September.
- Zillow reports Denver condo prices 2nd fastest rising.
- Zillow: Denver rents most expensive between coasts.
Denver housing costs surged in September, with home prices and rental costs rising either the fastest or the second fastest in the country, according to another national report.
Single-family homes prices in Denver rose15.9 percent in September from September 2014, the biggest percentage increase of 35 metropolitan statistical areas tracked by Zillow.
The national average was 3.7 percent.
Denver condo prices were up even more, skyrocketing 19.7 percent, second only to the 20.1 percent increase in Dallas-Fort Worth.
The national year-over-year change for condos was 5.1 percent.
Denver also had the highest median housing prices and the highest median rent of any market between the two coasts.
The median price of a single-family home in the Denver area was $338,600, 86.6 percent higher than the national median price of $181,500.
The median rent in Denver was $1,964, topped only by California cities of San Francisco, San Jose, San Diego and Los Angeles and the East Coast cities of New York, Washington, D.C. and Boston.
Denver rents were 41.7 percent higher than the national monthly average of $1,386, according to Zillow.
Patty Silverstein, chief economist for the Metro Denver Economic Development Corp., the high rents and home prices “certainly speaks to the attractiveness to the Denver marketplace. There is still very strong demand for housing here.
“This is very good news if you are a homeowner,” added Silverstein, who also is principal of Development Research Partners in Littleton.
“The flipside, the negative, is the Denver marketplace is quickly becoming unaffordable for many families and individuals who might be considering moving to the Denver area or for people who are already here and are struggling to buy a home or afford rent,” Silverstein said.
She noted that wages locally have been rising about 3 percent annually.
“Obviously, housing costs, whether you are a renter or you want to buy a home, are increasing at a far bigger rate than incomes,” Silverstein said.
Many renters need roommates to afford to live in apartments, especially the new ones being constructed in and near downtown Denver, she said.
There also is a lack of entry level housing being built in the area, she said.
“Hopefully, legislatures in January will once again tackle construction defect litigation,” which, if reformed, would allow many more developers built condominiums, she said.
While a number of counties and cities have adopted their own rules to reduce the risk to condo developers of being sued, there is still a concern that those rules would be superceded by state rules, she said.
“I think that is still definitely an issue that is still being debated and I do not know of any resolution as far as that issue,” she said.
Silverstein said there was a hope that more affordable housing would be built along FasTrack light rail lines, but much of the housing being built or proposed along light rail line is out of reach for many renters or buyers.
Local housing consultant S. Robert August agreed that the state needs to reform construction defect litigation to pave the way for more affordable condo construction in the metro area.
He noted that homes are inspected by local municipalities as well as builders.
“Mistakes do happen, but most of them can be corrected,” said August, president of North Star Synergies.
“In my opinion, it is crazy that a builder to face treble damages,” for construction defects under the current law, he said.
August also said that local municipalities need to accelerate the permit processing
“Right now in Denver it can take six months to get a building permit,” August said.
That is keeping a lid on the number of permits being issued at a time when demand is going through the roof, he said.
“It takes longer for homes to come on the market and because of rising labor costs, when they are built, they cost even more,” August said.
Home prices also are being driven up because demand far exceeds the number of resale homes on the market.
REcolorado reported that there were 9,051 unsold homes on the Denver-area market at the end of September.
In September 1985, there were more than twice that many homes on the market, even though the population is about 55 percent higher today than it was 30 years ago.
Meanwhile, most renters would be financially better off buying than continuing to rent, he said, especially with mortgage rates hovering below 4 percent for a 30-year, fixed-rate mortgage.
“For some people with physical disabilities or lifestyle choices, renting might make more sense for them,” August said.
“But now is a great time to take advantage of mortgage rates that are still very low by historic standards,” August said.
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