It annoys me to read media reports about the state of the real estate markets around the country. Don’t get me wrong-I’m not about to complain that the “negative” media coverage has caused the soft market or been a direct catalyst in increasing the number of foreclosures.
What I don’t like is reading articles that base the state of the market in a given metropolitan area on averages or generalizations-such as, “the average price of a home has improved/declined,” or “the number of foreclosures has dramatically increased,” or “volume of sales has gone down.” This kind of media coverage gives the consumer broad statistics that don’t tell him the real story about the differences in specific areas within our market.
The best article I’ve read that paints a more accurate picture was written by Jeff Opdyke appearing in the Wall Street Journal on March 13, 2008. He states that within each city or local market, certain areas remain strong and in many cases are appreciating or holding steady while other neighborhoods within that same metropolitan area are seeing a lot of foreclosures and declining prices.
He says if you can’t pick the city you are moving to, you can at least be selective about the neighborhood you settle in-which can have a huge impact on the potential of your real estate investment. This is absolutely true of Denver’s market. Although we haven’t seen astronomical appreciation in even the most desirable areas in Denver over the past twelve months, particular neighborhoods remain in high demand with better homes receiving more than one offer. Time and time again, this is a big surprise to many buyers coming into the market who expect to negotiate very favorable price and terms with the seller. They are dismayed to find that their low offer is often ignored or rejected while the sellers receive a much better offer soon after.
If I were buying a house in today’s market, I would take a lot of comfort in knowing that certain neighborhoods stay strong through good and bad markets. If you hope to see that prices have gone downhill in the area in which you are looking to purchase, doesn’t that tell you that your investment could be subject to dramatic ups and downs in the market in the future? If you purchase in an area that holds its value, wouldn’t that be safer and more comfortable investment?
