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Denver home prices not so dire

5% drop looks good compared with U.S.

Rocky Mountain News

Published May 27, 2008 at 5 p.m.

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Denver again fared much better than much of the nation as home prices dropped at the sharpest rate in two decades during the year ending March 31, a closely watched index showed Tuesday.

Standard & Poor's/Case-Shiller said its national home price index fell 14.1 percent for the 12-month period - the biggest annual drop since its inception in 1988 - but prices in Denver fell only 5 percent.

The narrower indices also set record declines. The 20-city index tumbled 14.4 percent, the most since that index was started in 2001. The 10-city index plunged 15.3 percent, a record in its 20-year history.

"There are very few silver linings that one can see in the data," said David Blitzer, chairman of S&P's index committee. "Most of the nation appears to remain on a downward path."

Nineteen of the 20 metro areas reported annual declines, with 15 of them posting record lows. Six metro areas lost more than 20 percent.

Las Vegas had the worst quarterly performance, falling 25.9 percent from the same period a year ago, followed by Miami and Phoenix. Only Charlotte, N.C., stayed above water, gaining less than 1 percent over the previous year.

In another report issued Tuesday, sales of new homes rose in April for the first time in six months, though the unexpected increase still left activity near the lowest level in 17 years.

The Commerce Department reported that sales of new homes rose 3.3 percent in April to a seasonally adjusted annual rate of 526,000 units. But the government revised March activity lower to show an even bigger drop of 11 percent to an annual rate of 509,000, which was the weakest pace for sales since April 1991.

Downward trend

More bad news on the housing market: Released Tuesday, the S&P/Case-Shiller home-price indexes showed home prices across the country fell 14 percent in March from a year earlier, representing the largest drop in the 20-year history of the indexes. Denver fared much better, dropping 5 percent.

* Here's information from 20 metro areas Case-Shiller tracks:

Metro area Year-over-year change

Las Vegas -25.9%

Miami -24.6%

Phoenix -23.0%

Los Angeles -21.7%

San Diego -20.5%

San Francisco -20.2%

Tampa, Fla. -19.6%

Detroit -17.9%

Washington -14.7%

Minneapolis -14.1%

Chicago -10.0%

Cleveland -9.5%

New York -7.4%

Atlanta -6.5%

Boston -5.9%

Denver -5.0%

Seattle -4.4%

Portland, Ore. -4.0%

Dallas -3.3%

Charlotte, N.C. 0.8%

Comments

  • May 28, 2008

    4:43 a.m.

    Suggest removal

    landsharkdenver writes:

    why don't you happen to mention that Denver ranked in the top 5 instead of "Denver home prices not so dire"

    It should be mentioned that the Denver market is dominated (70%+) of all new homes are constructed by large national builders and those builders have successfully reduced their home inventory over the past 2 years to levels that are approaching a balance (6 month supply) a home is considered inventory the day the permit is pulled, (and it takes approximately 6 months to build a home)so we don't actually have 6 months of completed homes waiting for buyers, we have 6 months of homes that will be sold over the next 6 month while they are being constructed.

    If you contact each builder you will find that there are not significant inventories of finished homes sitting at every development. There are individual developments in some markets with inventory, however overall the builders are running out of lots.

  • May 28, 2008

    7:46 a.m.

    Suggest removal

    DeimosJB writes:

    Landshark,
    You rightly point out that inventory is reaching an equilibrium and supply/demand constraints will see to it that prices subsequently normalize. However, this point is still some time in the future, as the market doesn't equalize instantaneously. All the Post is saying is that in the near-term past, as well as in the present, price pressure has been downward. The connotations from that are well-known, and people can use that information how they wish.

  • May 28, 2008

    9:53 a.m.

    Suggest removal

    Dinty writes:

    How about this? The RMN actually put a semi-positive slant on some economic data. There was an AP article yesterday that did the same. At this rate, Consumer Confidence might actually improve.

  • May 28, 2008

    10:14 a.m.

    Suggest removal

    boulder1259 writes:

    The AP wouldn't want a positive slant article with an election coming up... Do you remember the Bush v. Clinton race in 1992? The media painted a very dark picture for the economy, but magically, everything improved just a few days after Clinton was elected. The NY Times lead the charge by withholding positive information about an economic turnaround that happened several months prior to the November election.

  • May 28, 2008

    10:39 a.m.

    Suggest removal

    bluffan writes:

    To pat Denver's homebuilders on the back for controlling inventory and thereby give them credit for Denver's better than average showing in the housing data is naive.

    The big home builders -- here and everywhere -- built as many homes as they thought the market could bear. And when demand didn't live up to expectations, they used their mortgage divisions to pump up demand by qualifying thousands of home buyers who had neither the down payments or the income to warrant a traditional loan.

    The collusion between the builders and their mortgage divisions (most every builder has a mortgage arm, and requires buyers to at least submit a loan application through them) is at the root of what went wrong in the housing bubble.

    Home builders learned the overbuilding lesson after the last housing bust in the early 1990s. Most all now require a deposit before the first nails are hammered.

    Unfortunately, the replaced overbuilding with overfinancing, and the resulting debacle is just as bad, if not worse.

    There is a simple fact that seems to elude the previous commentors: Denver home prices haven't fallen as much as they have in other parts of the country because they didn't rise as much as others did during the big boom years of 2004-2006.

    Should it surprise anyone that Las Vegas -- where the median home price rose by 54% in 2005 -- should be suffering a 25% decline today?

    What goes up that fast tends to go down just as fast.

  • May 28, 2008

    12:20 p.m.

    Suggest removal

    athought writes:

    bluffan: Exactly right. The problem with Denver is that the 5 to 6% growth occurred year over year for a longer period of time. Using this analogy, prices will go down 5 to 6% year over year until real incomes (income growth - inflation) meets historical norms. I don't know when that will be as the Fed is forecasting inflation at 5-6% next year. Time to bring Volker back to put inflation back in its place. Unfortunately, an inflation rate of 5-6 percent means a short term funds rate of 8 or 9% to bring inflation back in line. Can the housing market withstand that? I don't think so as the megabuilders are still putting houses and condos on the market even when there is an 8 month supply in Denver. People can barely afford houses now at 5-6% so how can they afford them at 10 to 12%?!? If you ask me what I think of the economy next year, I've got one word. Pain.

  • May 28, 2008

    2:03 p.m.

    Suggest removal

    JoeRubberlips writes:

    This Case Schiller data is for resales of preexisting homes only.....it thus, is not affected by new home construction prices or inventories.

    If you look at the detailed table...Denver had the third best March'08 of the 20 cities in the index. Charlotte and Dallas have prices in March'08 higher than prices in Feb'08....Denver was down a mere 0.05%. Be careful....the media loves to merely quote the March'08 vs March '07 data....there's more to be learned in seeing the monthly (although 1 month doesn't define a trend, it would lead you to look for Charlotte/Dallas/Denver to be approaching the "bottom".

  • June 4, 2008

    12:18 p.m.

    Suggest removal

    oceanview78382 writes:

    I'm not from Denver but wouldn't mind a summer home there. I wss thinking something close to downtown, the prices aren't too bad, but I looked at the interactive Murder Map and umm now I know why there are so many vacancies.

    There must be a neighborhood close to downtown with a nice view of the city - that is reasonably safe. (Murder can occur anywhere, but reasonably safe is all I ask)

    Anyone know of such?