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Denver bucks housing trend

Loss in value among nation's lowest

By John Rebchook, Rocky Mountain News (Contact)

Published June 24, 2008 at 9:22 a.m.

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Diane Huttner, center, shows Debi Tepper a rooftop pool near Fourth Avenue and Broadway as Kevin White sits poolside.

Photo by Linda Mcconnell / Special To The Rocky

Diane Huttner, center, shows Debi Tepper a rooftop pool near Fourth Avenue and Broadway as Kevin White sits poolside.

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Denver-area homes lost an average 4.7 percent of their value in the 12-month period that ended in April, but outperformed most major U.S. metro areas.

The closely monitored S&P/Case-Shiller home price indices released on Tuesday showed an average 15.3 percent drop for the 20 metropolitan areas it tracks.

Only two cities, Charlotte, N.C., which lost 0.1 percent and Cleveland, with a 3.4 percent drop, fared better than Denver.

And from March to April, Denver area homes gained 0.8 percent, compared with a 1.4 overall drop for the 20 cities.

A separate report by the Office of Federal Housing Oversight said that nationwide U.S. home prices fell by only 4.6 percent.

The federal report did not break out individual cities, but it showed the Mountain region, which includes Colorado, losing 4.9 percent in April from a year earlier.

Lou Barnes, principal of Boulder West Financial, noted the two reports use different methods, but said the Case-Shiller report overstates the severity of the housing crisis.

"They are only capturing sales," Barnes said, while the federal report also tracks refinances.

"We know there are something like 1.4 million foreclosed homes for sale nationally," Barnes said. "By definition, those are distressed sales. And we know they tend to sell for 10 percent to 20 percent under the ordinary resale market. So Case-Shiller reflects the prices in a foreclosure-heavy sample."

Even the 4.7 percent drop for the Denver area doesn't address geographic niches such as Boulder County and Washington Park, which are still seeing appreciation, he said.

Prospective home buyers are being cautious, said Diane P. Huttner, a broker with Prestige Real Estate Group.

She said a large number of people are seeing negative reports in the media, and are reluctant to buy now, because they think prices are going to fall more.

"Then there are people who think this is a good time to buy and there are a lot of good choices in the market," said Huttner. On Tuesday, she was showing a 1,677-square-foot condo in the Watermark development near Fourth Avenue and Broadway, on the market for $779,000.

Huttner said she recently sold two homes in which the sellers cut their prices. Many homes "just sitting around" are priced too high, she said.

rebchookj@RockyMountainNews.com or 303-954-5207

Comments

  • June 24, 2008

    9:52 a.m.

    Suggest removal

    WarrenJimmyBuffett writes:

    Interesting headline when prices drop 4.7% YOY. Kind of like saying, "His 'F' grade was better, because he got a 52% on the test while the lowest 'F' was a 43%." I guess it is all relative, but an F is still an F. Just like a price decrease is still a price decrease.

  • June 24, 2008

    11:04 a.m.

    Suggest removal

    jacka writes:

    Denver metro home prices at 2004 levels according to Case-Shiller.

    http://www2.standardandpoors.com/spf/...

  • June 24, 2008

    11:12 a.m.

    Suggest removal

    fmikey writes:

    WarrenJimmyBuffett: The point, since you clearly missed it, is that the Denver market is relatively strong compared to others, that it has improved in the last month, and that things bode well for a recovery. While we can nitpick statistics, the overall issue is that things are not too bad here....
    I guess its always a question of whether the glass is half full or half empty, depending on your outlook on life...

  • June 24, 2008

    11:36 a.m.

    Suggest removal

    jlgraybill writes:

    Just be careful to indicate that anything's on a rebound based on these stats. If you look at the stats, after Month on Month decreases through March 2006, April - August 2006 had MoM increases. That was followed by MoM decreases from Sept 06 - March 07, and then MoM increases from April - August 2007. Then we saw decreases from September 07 - March 08, and now April 08 is showing an increase. See a pattern?

    I realize you can find anything you want in statistics, but just be careful in saying we're trending up. Yes, Denver is in an OK position compared to Florida and Arizona, but it's not great (an F is still an F), and it hardly looks like a recovery. Even if Denver posts MoM increases through the summer, be cautious on thinking that we're on the upswing of this dog. It'd be nice, but I think that's quite unlikely. FMikey, I'd be hard pressed to call the Denver market "relatively strong". There's nothing strong about what we're experiencing. "Relatively stable" compared to other markets is more accurate (and that's all due to the fact that Denver didn't see the explosions seen in some areas around the country). But it will be a while before Denver becomes strong again.

    Just my opinion.

  • June 24, 2008

    11:48 a.m.

    Suggest removal

    WarrenJimmyBuffett writes:

    fmikey,
    According to a recently released Harvard study, the historic ratio of income to home prices in Denver is about 3.0. Right now that ratio is at 4.5. If you think Denver is stabilizing and strong, you must sell houses, flip houses, make loans for houses, or have a huge ARM or HELOC. Denver home prices still have a long way to fall. Accept the reality or you will likely have a miserable five more years.

  • June 24, 2008

    1:41 p.m.

    Suggest removal

    robertzimmerman writes:

    "According to a recently released Harvard study, the historic ratio of income to home prices in Denver is about 3.0. Right now that ratio is at 4.5."

    Do you have a reference for that? I'd like to see it. Thanks.

  • June 24, 2008

    1:53 p.m.

    Suggest removal

    robertzimmerman writes:

    A CNN article seems to show us spot on a ratio of 3-1.

    http://tinyurl.com/3k4ftl

  • June 24, 2008

    3:37 p.m.

    Suggest removal

    underthebusinvestments writes:

    I think you can get alot of mileage out of this graph:

    http://bp0.blogger.com/_SfxDExxUukY/R...

    Remember, the sun is always shining when you're not under the bus!

    -Bus Driver

  • June 24, 2008

    4:21 p.m.

    Suggest removal

    WarrenJimmyBuffett writes:

    RZ,

    Here is the link. Lastest data they have is 4.5 ratio for Denver for 2006. Probably has dropped slightly since then. Anyway, a long way to go.

    http://www.jchs.harvard.edu/son/index...

  • June 24, 2008

    7:27 p.m.

    Suggest removal

    market_man writes:

    Anybody know why asking prices are going up so much lately?

    http://www.housingtracker.net/askingp...

  • June 24, 2008

    8:17 p.m.

    Suggest removal

    bluffan writes:

    Housing economists have estimated that for every 1% fall in home prices nationally, an additional 70,000-100,000 foreclosures will result. (If that estimate is correct, that's another 1 million-plus foreclosures coming down the pike.)

    To be sure, Denver isn't as bad off as Miami or Las Vegas. But make no mistake, falling home prices here are a net negative for the local economy and show that the housing market here is still a long way from righting itself.

    Think about it. If you bought a house in Denver a year ago with 10% down, you've already lost 50% of your equity. If prices fall by the same amount over the next year, you will have lost all of your equity.

    What we've seen is that regardless of what their mortgage situation is, homeowners start to bail as their equity stake falls toward 0%. With no equity, or even worse, negative equity, they have little incentive to stay put, pay the mortgage and ride out the downturn, especially if they expect prices to erode further.

    Until housing prices stop falling, there will be more pain for everyone.

  • June 24, 2008

    8:56 p.m.

    Suggest removal

    underthebusinvestments writes:

    market_man writes:

    "Anybody know why asking prices are going up so much lately?"

    Absolutely! Here is why:
    http://www.trulia.com/voices/Agent2Ag...

    and here is the result:
    http://www.rockymountainnews.com/news...

    Remember, don't get thrown under the bus!

  • June 25, 2008

    1:03 a.m.

    Suggest removal

    market_man writes:

    underthebusinvestments,

    I know that agents often take listings at a high price, then lower them. But if you look at most of the major cities on housingtracker.net they show significant price reductions, about 30% show little movement, and Denver is just about the only city to show strong growth recently. So there must be something going on in Denver that differs from the rest, right? Either the lower priced properties are being bought up, or people are raising their asking price. Just trying to make sense of why Denver stands out from the rest??

  • June 25, 2008

    7:49 a.m.

    Suggest removal

    jlgraybill writes:

    market_man,

    I think it's a combination of things. Part of that being that you're probably right that it has to do with the lower priced properties being bought up. I watch Foreclosures and Sales some, and we've seen a slight decrease in some of the Foreclosure properties and Sale Inventory over the spring. Most of the Foreclosures and homes which were bought were the lower priced properties. But while there's been a decrease to the number of lower priced properties, I'm seeing a constant level or even an increase with the inventory of mid and higher priced properties. So in addition to possible over pricing, it doesn't appear that mid and high level homes are moving very well.

    I don't know if that's a positive or not that Denver's showing these changes vs other cities. But based on what I'm seeing, I'd be hard pressed to say that we're seeing price increases. It's just a gradual change in the types of homes on the market, whether that's good or bad.