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Did Average Home Prices Really Top $500,000?

Did Average Home Prices Really Top $500,000?

Last month it was widely reported by local Denver news outlets that average Denver home prices had, for the first time ever, topped a half million dollars. This news was the headline story for a full day. But is it true?

Slicing and Dicing Statistics
As expected, Denver home prices jumped at the beginning of 2018 (Denver Real Estate News: Denver 2018 Outlook). But how high did they really go? There are so many different ways to slice the statistics of Denver housing, that it is conceivable any story can be told, with charts and graphs to support the tale.

Real estate agents and mortgage lenders follow a couple of statistics rather religiously; prices and interest rates. The news of topping the $500,000 mark for the average home in Denver came as a surprise to some, considering most agents say the average price in the Denver Metropolitan area is in the low $400’s.

Price Vs List 2017 2018The Numbers Keeper
There are several Multiple Listing Services (MLS) in Colorado, each serving a geographical area of the state. The Denver Metropolitan area is managed by RE Colorado. This MLS generally covers the front range from Longmont to Castle Rock, but some overlap to Fort Collins and down to Colorado Springs.
In terms of coverage, if a home is sold in the Denver area, RE Colorado will be the place to find it. Thus, pulling statistics for detached, single family home sales in Denver, RE Colorado will encompass all of the Denver metro area.

Talk About Being Average
Knowing where the data is coming from is step one. What data is relevant? RE Colorado provides statistics in two ways; the mean average and median average. The mean average takes all of the data and finds the exact center of the numbers, whereas the median finds the most number of occurrences of the same number. In this blog, the median is almost always used, as it represents the bulk of the data and loses the highs and lows.

As a very simplified example, if there are 10 homes and 8 of them are priced at $300,000 and two are priced at $700,000, the mean average will be $380,000, but the median average will be $300,000, as that is the price that shows up most in the list.

The Numbers
In December 2017, the median price for a detached home in the Denver Metro area was $400,000. Two months later in February 2018 that number had jumped a full five percent to $420,000. By comparison, the same sale price was $385,000 in February of 2017, or an increase of nine percent year over year.

Keep in mind, however, those numbers are for the entire metro area, which may include properties from Greeley to Pueblo. But RE Colorado allows us to pinpoint cities and neighborhoods. Looking at Aurora only, The February 2018 median sale price was $366,450, and the year prior was $318,000, a whopping 15% increase year over year. Head south to Parker and the numbers play out differently. February 2018 median prices came in at $488,000, a 3.6% increase over February 2017 at $471,000.

Is it possible that there are areas that are over $500,000? Sure is! Lone Tree had a median sales price of $851,500 in February 2018, from $624,500 the same time in 2017. A massive 36% increase in price.

Pull It Together
The message is prices are still on the rise, but the average has to come with much more clarity on the data it represents. In the city of Denver, detached single family homes had a median average of $447,000, a far cry from the $503,000 record as reported by the media.

While any story can be told through statistics, the shocking headlines of record sales prices can be a great disservice to Denver residents. Rising prices are giving Colorado residents heartburn to begin with. While current homeowners would like to sell, they fear they won’t be able to find a replacement home in this tight market, which simply compounds the issue.

Would be homeowners are getting the double whammy. Rising interest rates and higher prices can take them out of the market completely, leaving them with few options. In the end it is true, prices in the Denver area have jumped again, but we have a ways to go before we top the half million dollar mark.Is it possible that there are areas that are over $500,000? Sure is! Lone Tree had a median sales price of $851,500 in February 2018, from $624,500 the same time in 2017. A massive 36% increase in price.

Pull It Together
The message is prices are still on the rise, but the average has to come with much more clarity on the data it represents. In the city of Denver, detached single family homes had a median average of $447,000, a far cry from the $503,000 record as reported by the media.

While any story can be told through statistics, the shocking headlines of record sales prices can be a great disservice to Denver residents. Rising prices are giving Colorado residents heartburn to begin with. While current homeowners would like to sell, they fear they won’t be able to find a replacement home in this tight market, which simply compounds the issue.

Would be homeowners are getting the double whammy. Rising interest rates and higher prices can take them out of the market completely, leaving them with few options. In the end it is true, prices in the Denver area have jumped again, but we have a way to go before we top the half million dollar mark.

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