13 March 2006

Denver Real Estate Overvalued 9.9%

The Office of Federal Housing Enterprise Oversight (OFHEO) thinks that Denver's housing market is overvalued by 9.9%. Prices in Grand Junction, Colorado are 36% too high, those in Greeley, Colorado are 19% too high, those in Boulder, Colorado are 15% too high, and those in Colorado Springs are 11% too high, according to the same study.

Many other markets are far worse. The office believes that housing prices in Las Vegas, Nevada are 39% too high, that they are 61% too high in Los Angeles, 61% too high in Miami, Florida, 60% too high in Atlantic City, New Jersey, 72% too high in Modesto, California, 86% too high in Merced, California, 96% too high in Naples, Florida, 51% too high in Oakland, California, 42% too high in Phoenix, Arizona, 73% too high in Riverside, California, 64% too high in Sacramento, California, 59% too high in Sarasota, Florida, 46% too high in San Diego, California, 39% too high in Washington D.C., 29% too high in New York City, and 26% too high in Seattle, Washington, to cite some other examples.

El Paso and Fort Worth Texas, which are about 17% undervalued, show the most potential to gain in value.

The bottom line is that while much of Florida, the urban Southwest, urban California and select Atlantic Coast markets are sitting on a gigantic real estate bubble that could burst as interest rates rise, that Denver is among the least overinflated large urban markets in the country. A few years of sluggish price growth have left it almost bubble proof.

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