Historical Data Makes Me Optimistic for Steamboat Springs Real Estate

January 20th, 2012

Historical Data Makes Me Optimistic for Steamboat Springs Real Estate.

Real estate is local. The market could be hot in Austin, Texas yet declining in Chicago, Illinois.  Much of this has to do with jobs.  In areas where we are seeing sustained employment growth, we also see a healthier real estate market. This is true for Silicon Valley in California where real estate is booming.

Jobs aside, there’s real estate data that I have reviewed that suggest real estate prices could rise in the near future and the two graphs below will help demonstrate why historical data makes me optimistic for Steamboat Springs real estate.

The first chart shows actual home prices and home prices adjusted for inflation. As you see, since 1890, home prices adjusted for inflation have been relatively stable fluxuating between $125,000 to $150,000 for over 100 years. In the real estate bubble we saw home prices spike in 2006. The rise in real estate values was unprecedented and irregular. Over the last few years real estate values have dropped and are now more in-line where they would have been had we not had the real estate bubble.

Home prices in the US 2

Historical Data Makes Me Optimistic for Steamboat Springs Real Estate

The next graph correlates with the graph above although using the Case–Shiller Home Price Indices . The Case–Shiller Home Price Indices is a division of S & P or Standard and Poors.  The S&P/Case-Shiller Home Price Indices are the leading measures for the US residential housing market, tracking changes in the value of residential real estate both nationally as well as in 20 major metropolitan regions.

home prices case shiller trends

home prices case shiller trends

Similar to home prices adjusted for inflation, if you draw a line following the Home Price Trends, Case–Shiller Home Price Indices are right in-line with home prices if  one takes out the real estate bubble or the rise and fall of real estate prices.

One might even say that prices are cheaper today than they might have been if we had never experienced the real estate bubble.

Even though there is historical data making me optimistic for Steamboat Springs real estate, there are a few factors that might supersede my optimism. The first of which is the shadow inventory in the shape of distressed homes. Many foreclosures have been trading at below market value and, in some cases, below replacement cost. This will continue to hold real estate values down in Steamboat Springs.

Secondly, and equally as important, are the continued issues with obtaining financing for the purchase of real estate and especially second homes and Steamboat Springs ski area condos. Yet these historically low interests rates make buying real estate very attractive today.

And lastly, employment and the overall economic conditions of our country.  Until we see a decline in unemployment and more stabilizing numbers in the economy, a rebound might be delayed.

Looking forward into 2012, I remain hopeful and believe that we will see several real estate markets improve in the coming year and leaving me more optimistic for an improvement in Steamboat Springs Real Estate Values.

Regards,

Charlie Dresen

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