The housing bubble is likely to burst in cities such as San Diego and Phoenix, which have seen home values increase rapidly over the last five years.
But Denver will avoid the pop because the city’s housing has appreciated at a much slower pace, said local economist Rick Pederson, speaking Tuesday at the Denver chapter of Commercial Real Estate Women’s monthly meeting at the Denver Athletic Club. About 80 people attended.
“The bubble will burst in cities that have had the most increase,” and Denver is not among them, Pederson said.
Since 1900, U.S. housing values appreciated about 3 percent a year until five years ago; since then, values have increased by 50 percent nationally, said Pederson, president of Denver-based Foundation Properties Inc., the general manager and co-investor of real-estate investment funds for its foundation, endowment and pension-plan partners.
The biggest influence on the housing market will be when baby boomers begin selling their homes. The next generation is more interested in mobility and as a result is more likely to rent than buy, he said.
Other factors influencing the economy include hurricanes and oil prices, Pederson said.
This year’s hurricanes already have pushed up the cost of building materials significantly, but the lasting effect of the storms will be an increase in government spending as coastal cities try to defend against them in the future.
Pederson predicts oil prices will affect the economy somewhat, but not to the extent the previous increases have because there is more global and local competition and the world has become more energy-efficient.
Staff writer Margaret Jackson can be reached at 303-820-1473 or mjackson@denverpost.com.
