Does home price affect appreciation?
After looking at stats for 2014 and experiencing a pretty crazy market, I thought I should look at appreciation numbers and see if there is any predictability to the numbers.
Perhaps predictability isn’t the right word, but there is definitely a pattern to the appreciation numbers when comparing 2009 with 2014.
The average home price in central Denver for 2009 was $348,000 and the average for 2014 was $484,000 – this equaled a 39 percent appreciation overall, about 8 percent per year. If we look at neighborhoods with a higher average price than central Denver in 2009, the average appreciation was 31 percent (6 percent per year). For neighborhoods with a lower average price, the average appreciation was 57 percent (11 percent per year).
Looking at individual neighborhoods, the neighborhood with the lowest average price in 2009 saw the highest appreciation (101 percent) – the house prices doubled in five years. There were three neighborhoods that saw appreciation of 95 percent and higher, and these areas had 2009 price ranges between $128,000 and $242,000.
On the flip side, if we look at the lowest appreciation numbers, we’ll find three neighborhoods with five-year appreciation under 10 percent (1 to 2 percent per year), and those price ranges are $403,000 to $1.06 million.
There is more variation in the higher-priced homes, but overall, there seems to be a solid correlation between price and appreciation.
Below, you’ll see the five highest-priced areas and five lowest-priced areas, with corresponding data points.
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