Are Prices Back to 2007? Short Answer: No.

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by Osman Parvez

Hey Osman, is the market back?    No Mortimer, it's not.

From the Colorado Division of Housing Blog:

"According to the latest data from Metrolist®, home prices have returned to a level not seen since 2007. Despite lagging prices earlier this year, the housing market is finishing the year strong."

"The average sales price for properties during the month was $285,664, up 3 percent from October and 13 percent ahead of last year, according to the Metrolist report. "

As the elder George Bush famously once said,  "read my lips."    Average sale price across a wide region is IRRELEVANT.     What matters is the average price in YOUR location, for YOUR property type, and in YOUR price range.

Case In Point    

The high end remains flooded with inventory and prices are still dramatically low.    If you're a buyer in the $1MM plus range, you have plenty of selection and, with a good buyer's agent, you should have leverage to negotiate a substantial discount from asking.     If your agent tells you differently, get a better Realtor.

Here's an example (with chart) that a client recently asked me about:   7677 Portico (listing sheet).    

This house lost 34% of its value over the last 10 years, a total at least $700,000

Ten years ago, this luxurious house commanded $2.1MM.      That first seller lost $400k when he sold it five years later.     The second buyer thought they had a steal but sadly, they too have taken a beating at the hands of Mr. Market.   The asking price is only $1.4MM, a loss of $300K.    Once the dust settles from negotiation, the price should be much lower (assuming they hire a good buyer's agent).  

Did someone take a blow torch to this house?    Was there a terrible flood and the house is filled with black mold?      How could it possibly have lost $700,000 in value over a ten years?     Take a look at the photos and compare it yourself.  

The first thing you'll notice is that the listing agent is using the same old cover photo from 2007.       Look closely, the cloud formations are identical and no, it's not the same listing agent.    You'd think in this price range, the listing agent would at least take updated photos.    Anyway, let's look past that.

The interior shots - presumably updated - show a house that appears to be in excellent condition.   The disclosures for the house make no mention of disasters, no gangland style slaying,  nor poltergeists.    This house simply lost 34% of it's value over the last ten years.   The average selling price in the region is irrelevant.  

By the way, I think 7677 Portico Place is really quite stunning.  As an investment, the core issue remains the location and since you can't move the house (at a reasonable cost),  you're stuck with it.   If you were MY client, I'd ask you to imagine what it might feel like to lose $300,000 over the next five years.    If you were willing to consider somewhat less extravagance,  I can show you plenty of stunning properties in this price range with far less (proven) location risk.  

Meanwhile, the seller of 7677 Portico Place is throwing in all the furniture, rugs, art, accessories, stereo system, security system, and a fully outfitted game room.   Does that sound like they have some room to negotiate?   If you're qualified to purchase in this range and would like to see it personally, give me a call.   You can reach me at 303.746.6896.  I'd love to take you.


---Note: Our goal is to provide exceptional service to our clients. The ideas and strategies in this blog post are the opinion of the writer at the time of publication. Silver Fern Homes recommends careful and complete due diligence before buying or selling real estate or other investments. Consult with your professional advisers before making financial decisions. This article is not intended as legal, tax, or investment advice. Silver Fern Homes will not be held liable for investment choices derived from this article.