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* * * Kelli Lanphere - Selling Denver's Top Neighborhoods Since 1984 * * *

Each year at about this time, I optimistically gaze into my crystal ball and then make predictions regarding the future of Denver real estate. In preparation for this, I generally reflect upon the events of the past year, analyze current market conditions, review year-end statistics and closely monitor key indicators as well as economic trends that influence the direction of our real estate market. That being said, I sincerely believe that our future continues to look bright - even though there continues to be a few storm clouds on the horizon!

First, a glance back at last year ' it's hard to believe that another year has come and gone! Just about a year ago today, I looked into my crystal ball and forecast the 2001 Denver real estate market as 'cooling in the short term and strong in the long term' - based largely on the high-tech shakeout, several key economic indicators and a slowing National economy. I hinted at the possibility of an upcoming 'buyers market' and predicted that 'a little sanity would return to our housing market'. It seems that my crystal ball forecast was right on target.

The year 2001 will be remembered as a year of change in many aspects of our lives ' including the seemingly unstoppable Denver real estate market. Prior to the tragic events of September 11, 2001, our national economy was already reeling from the burst of the technology bubble and headed toward a recession. Denver's economy had also experienced an economic 'slow down' and was teetering on the brink of recession. Along with Wall Street's continued woes, mounting poor earnings reports, job demand slow down, corporate layoffs, weakened consumer confidence and other negative national economic indicators, our Denver real estate market had also begun to showing signs of weakness. Bidding wars that previously pressured buyers into making snap decisions about the largest purchase of their lives had subsided. Overpricing properties were not selling. Foreclosures were rising. Market Inventory had begun to increase. Properties were taking longer to sell and, they were selling for less money. Our white-hot real estate market had begun to cool.

In spite of it all, our 2001 housing market still seemed to defy gravity through what has been the worse economic slow down we'd experienced in years. After five consecutive years of increased annual sales and phenomenal appreciation in home values, we saw sales decline by only 1.65 percent in 2001. The fourth quarter was largely responsible for our languishing market when sales plunged 11 percent. While sales numbers declined, housing inventory skyrocketed ' Single-family home supply finished up 30 percent higher than 2000. And, with more homes on the market and slower sales, appreciation dipped. Remarkably, even in a cooling real estate market, single-family home median values appreciated at 10 percent in 2001 - down only 5 percent from the previous year (15 percent in 2000). All things considered, 2001 was still an exceptional year for Denver real estate.

So, how will 2002 fare? Currently, it looks like we have about reached the bottom of the recession and now we're struggling to get out of it. The best analysis seems to suggest that perhaps by spring, we should start seeing signs that the worst is over. (Let's hope so!) But the road to recovery will likely be slow and, according to KiplingerForecasts.com, 'the economy will continue to rest on the shoulders of consumers'. Competing economic forces are plainly at work. On one side, recession and lay-offs should reasonably result in generally lower sales and softer prices. Alternatively, lower interest rates increase the pool of buyers who can enter the marketplace, increase the spending power of move-up buyers, and thus create additional demand.

First, let's look at mortgage interest rates. I seriously doubt that they will go much lower. While they will probably continu

Kelli Lanphere is a Broker Associate/Co-owner of Re/Max of Cherry Creek, Inc. She is also the contributing writer for the real estate section of The Cherry Creek Times and is recognized as a proven expert in residential real estate. The Cherry Creek Times is a monthly community newspaper serving our local neighborhoods (Cherry Creek, Denver Country Club, Hilltop-Crestmoor,Belcaro, Bonnie Brae,Washington Park, Congress Park, Park Hill, Mayfair & Lowry).

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