According to a recent report of home price indexes, the Denver area saw an increase in home prices for February 2012 when compared to February of 2011. This increase of a little over 1% includes distressed properties (foreclosures and short sales). A short sale is when the bank allows the homeowner to sell the home for less than what they owe. When not including foreclosures and short sales the home price increase was a little over 1.5%.

The increase in home prices can be credited to the low amount of inventory that is currently on the market, as well as an increase in buyers. December of 2011 and January of 2012 both posted increases when compared to the same month of the previous year.

The Denver metro area’s home prices are once again better than the national average. When foreclosures and short sales are not included in the home price index, the national average posted a 1% decrease year-over-year for February. When distressed properties are taken into account, that number drops even lower to a 2% decrease. While the national home price index is still decreasing, the amount that the index is decreasing is at least slowing down, which is a positive sign and an important step to the housing market recovering.

Homeowners and buyers in the Denver area can expect home prices to keep increasing because the home price index there has already hit rock bottom. Mortgage rates are slowly increasing, so buyers are hurrying to take advantage of low interest rates while they’re still available.

The home price index increased by almost 1% for the entire state of Colorado when distressed properties were included in the numbers and increased by 2% when foreclosures and short sales were not included.

Many homeowners and real estate agents in the area are cautiously optimistic that the increase in home sales and a decrease in inventory will lead to a stabilizing of home prices.