Prediction Model Says Price Depreciation Coming to Colorado

Analytics firm Location Inc.'s Scout Vision algorithm measures housing markets by affordability, and finds that Colorado's Front Range market "has never been more misaligned."

In April 2017, the model said that the market would peak in Q4 2019, and home prices would drop 15.6 percent through to 2022. In an amended forecast, the model now says that there will be a 9.9 percent decline in that time, and that prices will peak in the second quarter of 2021, The Denver Post reports. As the economy shrinks, the net inflow domestic migrants will no longer be able to couch the market from dwindling value. “You need enough earned income in a market to support the costs of houses,” says Location Inc. CEO Andrew Schiller, “You can’t always support it from people carrying a black bag of money from other places.” Metro Denver's home prices are projected to fall 10.5 percent by 2022. 

A lot can happen in five years, not to mention five days. The model hasn’t calculated what last week’s spike in interest rates will do for affordability. The passage of larger drilling setbacks in November could blow up the predictions of a more resilient housing market in Weld County. And Boulder County has repeatedly defied predictions its housing market would fall.

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