We hear this concern a lot. Buyers are reluctant to purchase a home because they fear they could be buying at the peak of the market and the home could start losing value right after they purchase. Some buyers think that they should wait until prices start dropping before they buy. This is probably a mistake. Somebody once said:
“You don’t wait and then buy,
You buy and then wait.”
Here’s how that applies in the Denver metro real estate market. Over the last 45 years there have only been 4 years where we saw an actual drop in home values. If buyers are waiting for prices to go down, they could be waiting a very long time.
Let’s suppose, however, that you were a buyer back in 2007 just before the biggest housing bust that the nation has ever seen. The peak of the Denver metro housing market was June of 2007. Soon thereafter we saw property values plummet as a result of the bank failures.
In June of 2007 the average home price in Denver metro was $310,761.*
Fast forward just 5 years and the value of that home had more than recovered. In June of 2012 the average home price was $320,054. Your home would be worth nearly $10,000 more than your ’07 purchase price. Remember to consider that you bought immediately before the worst housing crash in history.
Now let’s take this one step further. The average homeowner lives in their home for 8 years. If you held that 2007 property for the 8 year average you would have sold it in June of 2015. At that point the average sales price had grown to $423,632. The home would be worth $112,871 more than the 2007 acquisition. That’s a lot of money!
If you were more patient than the average American and held the property until June of last year, you could have sold for $544,210. Your initial 2007 investment would have earned you a cool $224,155 in appreciation.
*This average is for detached single family homes for the 6 counties of Adams, Arapahoe, Broomfield, Denver, Douglas and Jefferson.