Metro Denver has one of the tightest markets in the country when it comes to starter homes, according to a new study from Trulia.

“It is a double-edged story,” said Ralph McLaughlin, chief economist at Trulia in San Francisco.

It’s great news for sellers, but not kind to buyers looking to break into the housing market here. Trulia divided housing markets in 100 metro areas into thirds based on price. The bottom third was considered starter, the second third trade-up and the upper tier labeled premium. In a balanced market, each category would also command a third of the inventory available for sale. But that is hardly the case in metro Denver.

Only 16.4 percent of the inventory of homes available for sale in metro Denver in the first quarter were starter homes, versus 27.7 percent of homes for sale nationally. That’s the 12th-tightest starter-home inventory in the country in the first quarter.

But “starter home” is a relative term. In Denver, the median price for that category came in at $212,500, while in Colorado Springs it is $151,450 and in Oklahoma City only $70,000.

Trade-up homes, with a median price of $325,000 in metro Denver, represent 22 percent of the total available for sale. Premium homes, with a median price of $625,666, represent 61.5 percent of all homes available to buy in metro Denver.

The growing imbalance traces back to the housing bust, McLaughlin said. Lower-priced homes were more likely to go into foreclosure, be purchased by investors and end up as rentals.

Homes in the lowest-priced tier also are likely to carry a mortgage worth more than the sales price, which blocks a seller from listing.

McLaughlin estimates that about four in 10 metro Denver starter homes that could hit the for-sale market are rentals or face other sales obstacles, such as an underwater mortgage.

That has contributed to a sharper run-up in prices on the lower end of the market. Since 2012...Read the story in the Denver Post

 

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