Colorado home values rose at less than half the U.S. average last year, the fourth consecutive year the state has lagged the country.
Existing-home prices in the United States rose 13 percent last year, according to the Office of Federal Housing Enterprise Oversight.
Colorado home values, by contrast, rose 6 percent, ranking the state 44th on that measure.
Over the past five years, Colorado home values have risen 28 percent, compared with 57.7 percent gains averaged nationally. Prices more than doubled in California, Hawaii, Nevada and Florida.
While such fat gains might generate envy among local homeowners, Colorado’s more modest performance isn’t necessarily a bad thing, observers said, especially if housing markets suffer a slowdown this year.
“Six percent is better than inflation, and it can cover the sales commission,” said Mike Rinner, a senior analyst with the Genesis Group in Englewood.
A large inventory of homes for sale continues to keep downward pressure on the Denver metro market, which saw 2005 appreciation of 4.5 percent.
Boulder, Greeley and Fort Collins lagged the state average in 2005, even registering price declines in the fourth quarter over the third quarter.
Grand Junction and Colorado Springs, in contrast, were the strongest Colorado cities in terms of home-price appreciation. Grand Junction had a 13.8 percent gain, and Colorado Springs rose 7.7 percent.
The report shows that Colorado shares more with its slow- growing neighbors to the east than its mountain neighbors to the west, which lead the nation in housing gains and job growth.
The mountain states led all regions in the country last year with an 18.8 percent home-price appreciation, led by Arizona, which was first in the nation with a 34.9 percent jump.
Although Colorado is seeing respectable job growth again, it lags its mountain neighbors, said Vectra Bank Colorado economist Jeff Thredgold.
Nevada, Utah, Arizona and Idaho lead the country in job gains. But Thredgold predicts Colorado will move up this year as its economy keeps recovering.
Job growth and migration give speculators motivation to target certain real-estate markets, said Dawn McLaren, a research economist with Arizona State University in Tempe.
Real-estate investors aren’t driving up prices in markets like Nebraska and Michigan, which represent better bargains from a valuation perspective.
McLaren doesn’t see how the gain in home values can continue to outstrip the growth in personal incomes needed to make the rising mortgage payments.
Signs of a slowdown in housing began appearing in the fourth quarter even as home values continued to rise.
Home sales in January fell for the fifth month in a row, according to the National Association of Realtors, which predicts existing-home sales will fall 5 percent in 2006.
McLaren, who lives in Arizona, said she looks at her state’s 34.9 percent home-value gains last year with fear in her eyes, not as anything to celebrate.
“It is kind of nuts,” she said.
Staff writer Aldo Svaldi can be reached at 303-820-1410 or asvaldi@denverpost.com.
