May 31, 2023

Home values 38.5% above what might be expected

Metro Denver home prices are way higher than they would have been absent the pandemic,…

Metro Denver home prices are way higher than they would have been absent the pandemic, and while the premium is wide, it isn’t as extreme as it is in many other places, according to a monthly study from Florida Atlantic University and Florida International University.

Metro Denver ranks 37th out of the 100 largest metros in April with home values 38.5% above what would be expected based on the long-term trend, according to the study. The expected value for Denver is at $461,734 based on trends in the Zillow Home Value Index going back to 1996. Instead, it is at $639,316.

Colorado Springs’ gap is even higher at 45.9%, with an expected price of $333,261 and an actual home price index value of $486,182. That ranked as the 23rd highest premium.

In 15 metros, home prices are 50% or more above the level that would be expected given historical trends. Boise, Idaho, is the most overvalued metro at 72.6%, followed by Austin, Texas, at 67.7% and Ogden, Utah, at 64.7%. Las Vegas, Atlanta and Phoenix were the next three most overvalued markets.

Home values tend to cycle between periods of overvaluation and undervaluation, but eventually, move back toward long-term trends. During the housing bubble in the early ’00s, overvaluation approached 20% in metro Denver. From 2008 to 2016, home values in metro Denver ran at a discount to the trend. Smaller premiums came back in 2016, but those started to tighten again in 2019 and 2020.