Slack housing market in Denver area still better than most

By John Rebchook, Rocky Mountain News (Contact)

Tuesday, April 29, 2008

Denver home prices fell 5.5 percent over the 12-month period that ended in February, according to the closely watched S&P/Case-Shiller National U.S. Home Price Index.

Still, that's less than half the 12.7 percent drop overall among the 20 cities in the index.

Only five cities outperformed Denver during that period, including Charlotte, N.C., which was the only city to post a gain, at 1.5 percent.

The other cities that were stronger than Denver: Portland, Ore., with a 2 percent drop; Seattle, down 2.78 percent; Dallas, off 4.1 percent; and Boston, minus 4.6 percent.

Las Vegas and Miami continued to have the weakest markets over the past 12 months, dropping by 22.8 percent and 21.7 percent, respectively. Phoenix dropped 20.8 percent.

Denver showed a 1.1 percent decline from January to February, compared with a 2.6 percent drop for all 20 metropolitan statistical areas in the survey. From December to January, Denver showed a 1.5 percent drop vs. an overall decrease of 2.4 percent.

Seventeen of the 20 metro areas posted record annual declines, 10 of them in double digits.

"There is no sign of a bottom in the numbers," said David M. Blitzer, chairman of the Index Committee at Standard & Poor's. "Prices of single-family homes continue to drop across the nation. All 20 metro areas were in the red for the February-over-January reading."

Jim Nussbaum of the Kentwood Co., whose team sold about $35 million in homes last year, said the report shows the Denver-area is holding up well, compared with other parts of the country.

"We have been kind of treading water for several years," he said. "We did not have the dramatically rising prices like Florida and Las Vegas, and those areas are now dramatically coming down. Denver is not because we never had the run-up in prices."

The report has come under criticism recently from a number of local and national experts.

Lou Barnes, a principal of Boulder West Financial Services, said that among other factors the vast majority of the homes on the market today are distressed properties. Thus, the index portrays a skewed picture of the health of the market.

Anthony Downs, a senior fellow at the New York-based Brookings Institution, criticized the Case- Shiller report for similar reasons during a recent event in Denver sponsored by the Colorado chapter of the Urban Land Institute.

Barnes, in his weekly blog last week, compared the report to "yelling 'fire' " in a movie theater.

But he said recent rosy predictions that the "crunch is over and credit markets are improving" are equally as bad.

"Yelling 'fire!' is a bad idea, but so is telling the audience to stay seated when smoke is pouring through the ventilator," Barnes said.

Nussbaum said he has been seeing more activity recently among lower- to moderately priced homes, as opposed to ultra-expensive houses. "It's the same old thing," he said. "If you get it priced well, you get the activity."

rebchookj@RockyMountainNews.com or 303-954-5207