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Denver leads 20 metro areas with smallest drop in home prices

By John Rebchook, Rocky Mountain News (Contact)

Published February 25, 2009 at 12:05 a.m.

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Denver was the national leader of the pack for housing prices last year.

Yes, home prices in the Denver area dropped 4 percent during the 12-month period that ended in December. But that was the smallest decline of the 20 metropolitan areas tracked in the closely watched S&P/Case-Shiller Home Prices Indices released Tuesday.

Overall, the 20 cities fell by an average 18.5 percent.

It was the second piece of news in as many days that indicates the local real estate market is bucking a national trend of homes in a free fall, as the nation grapples with the worst housing crisis since the Great Depression.

On Monday, the Colorado Division of Housing reported that state foreclosure filings declined 2 percent in 2008 from 2007, the first drop since the state began tracking foreclosures six years ago. In the metro area, Denver County showed a 21 percent drop in filings.

Foreclosure sales were down even more, falling 16 percent, though many experts think that is largely due to temporary lender moratoriums on foreclosures.

While any decline in prices is "not happy news," the Denver-area housing market should hit the bottom no later than the end of third quarter of this year - and maybe as early as the end of the second quarter, said Rick Pederson, principal of Denver-based Foundation Properties, which manages more than $120 million in real estate investments.

Pederson, who has consulted on real estate and economic issues for corporations around the globe, said Denver's bottoming out will be "greeted with some disbelief" by many people, who are "guided by what they read in the New York Times or the Wall Street Journal," on distressed real estate markets.

"Denver was among the cities with the least run-up during the boom," said Karl Case, an economics professor at Wellesley College, and a founder of the Fiserve Case Shiller Weiss group that puts together the report with Standard & Poors.

In a phone interview, Case noted that from 2000 until the peak in August 2006, home prices in the Denver area rose by 40 percent, and have since given back less than 10 percent of the gains.

By contrast, other cities such as Miami and Los Angeles rose almost 200 percent to their peaks, but have since declined in value by almost 40 percent. And Phoenix and Las Vegas are down about 40 percent from their all-time highs.

"Denver is like Boston, and has not suffered quite as much as the Midwest or the Sun Belt in this downturn," Case added. "I do not have any reason to believe that (Denver) is going to get a lot lower."

"I am not at all surprised that Denver is doing better than the rest of the country," said Dee Chirafisi, a broker owner of Kentwood City Properties. "This is the best city to live in."

Chirafisi said Denver is making all of the right moves to ensure its long-term viability, with projects such as the FasTracks transportation plan and the redevelopment of Denver Union Station.

"These things will continue to help support property values," Chirafisi added. "This gorgeous sunshine and 70 degrees in February does not hurt either. I drove with the top down on my convertible today."

Pat Ayers, a broker with RE/MAX Cherry Creek, said she just finished an analysis of West Washington Park, and found that homes priced from $250,000 to $350,000 appreciated an average of 4 percent last year.

"There are pockets of foreclosures in the Denver area, but those are pockets," Ayers said, and not reflective of what is happening in central Denver neighborhoods.

"Financing is our big enemy today, especially for jumbo loans," she said. "People don't want to pay 2 percent more for jumbo loans," which are those for loans above $417,000.

A separate report released Tuesday by the Office of Federal Housing Enterprise Oversight, known as OFHEO, showed even better numbers than Case-Shiller.

OFHEO showed a 0.71 percent overall drop in home prices last year in a large swatch that encompasses Broomfield, Adams, Arapahoe, Denver, Jefferson, Douglas, Clear Creek, Gilpin, Elbert and Park counties. It also showed a 0.77 percent increase in the fourth quarter from a year earlier. And Boulder County showed a 2.99 percent increase in 2008 from 2007.

Lou Barnes, principal of Boulder West Financial, prefers the OFHEO data to Case Shiller.

"If you set out to measure troubled neighborhoods around the country, Case- Shiller is decidedly accurate, but it is not at all useful in giving you an idea of what is happening with the value of most homes," Barnes said.

Home values

Percentage change by city from January 2000 to December 2008

Atlanta: 13.87

Boston: 53.05

Charlotte, N.C.: 22.4

Cleveland: 5.21

Dallas: 15.63

Denver: 25.75

Detroit: -19.07

Las Vegas: 31.4

Los Angeles: 71.46

Miami: 65.01

Minneapolis: 27

New York: 83.5

Phoenix: 23.93

Portland, Ore.: 58.5

San Diego: 52.16

San Francisco: 30.12

Seattle: 60.19

Tampa, Fla.: 56.04

Washington: 76.34

Composite of 10 cities: 62.17

Composite of 20 cities: 50.66

Home prices post record annual rate of decline in Q4

U.S. home prices tumbled by the worst annual rate on record in the fourth quarter, two housing indexes showed Tuesday, and the slope of decline steepened in all but a handful of battered cities.

Nationally, home prices have receded to 2003 levels, and half of the metro areas in the 20-city Case-Shiller Home Price Index have lost more than 20 percent of their values from their peaks in 2006, including Las Vegas, Phoenix and Miami.

The Standard & Poor's/Case-Shiller U.S. National Home Price Index plunged more than 18 percent during the quarter from the prior-year period, the largest drop in its 21-year history.

Meanwhile, the Federal Housing Finance Agency said Tuesday that home prices dropped more than 8 percent in the quarter from a year earlier, its largest annual decline on record since 1991.

The reports, however, did offer a modicum of good news. The rate of year-over-year price declines slowed in Boston, Denver, Los Angeles, San Diego and Washington, according to the Case-Shiller index, while cities in Washington, North Dakota and Texas posted year-over-year quarterly gains, the government said.

Comments

  • February 25, 2009

    3:28 a.m.

    Suggest removal

    nyphotopro writes:

    While the national story showing that Denver has suffered less than other areas in the real estate bust, what I have learned over the last few years is that Denver's real estate "professionals" live in 'la-la land.'

    They always come out with the most glowing, positive, 'drive-the-prices-up' statements to the press, even when foreclosures were going up and up and up. I've got bad news for them: prices are down, down and going down because there are no buyers, there's no credit to be found, unsold inventory still is up, more foreclosures are coming and the employment situation is grim, grim, grim.

    I'm sick and tired of these 'fru-fru' talking heads trying to 'talk-up' prices so they can make more commissions. Let's just deal with reality the way it is and when the economy gets fixed, maybe real estate will get fixed.

  • February 25, 2009

    6:18 a.m.

    Suggest removal

    leavemealone writes:

    We have turned the corner for the better in Metro Denver.

    Early 2008......it still takes time to completely change course (Good or Bad).

    The normal listings, good condition, solid location, priced within market brackets......are selling within days!!!

    However, the property that is overpriced, poor condition & location....well, it's just sitting there.

    Sounds like a normal market to me.

    The days of slapping some aspen white paint on the walls & throwing down some FHA grade carpet are long gone.

  • February 25, 2009

    4:01 p.m.

    Suggest removal

    can_do writes:

    nyphotopro

    The problem with ignoring industry professionals is that you're left relying on journalists. They are professionals, but remaining neutral is their job. If you want a professional opinion, ask the pro directly.

    Of course, conflict-of-interest will frequently cloud people's judgment. However, by using common sense and diligent research, one can usually see through the fog.

    I prefer getting information from multiple reliable sources, on the ground, then drawing my own conclusions.

    I, respectfully, suggest you site some sources that:

    "prices are down, down and going down because there are no buyers, there's no credit to be found, unsold inventory still is up, more foreclosures are coming and the employment situation is grim, grim, grim"

    In Denver, are there really "no buyers...no credit," is "inventory still up," and what is your definition of grim?

    In defense of the "fru-fru talkers," they at least have verifiable support for their opinion.

    I look forward to your response.

  • February 25, 2009

    4:24 p.m.

    Suggest removal

    EP writes:

    can_do, I'll be diligently awaiting the response as well. Good points.

  • February 26, 2009

    8:23 p.m.

    Suggest removal

    jlgraybill writes:

    leavemealone and can_do: Ask the staff of the Rocky Mountain News how they feel about the market right now. Maybe you also didn't see that January existing home sales (including Denver) hit a low going back over 25 years. I'm not trying to be doom and gloom here, but I do have friends in Denver out of work who are worried about foreclosing. I have friends who would like to sell their homes (which they've had a number of years), and can't get any traffic or offers. We have not yet seen the worst in Denver I'm afraid, so this talk about turning a corner in early 2008 is just unrealistic to me. Home prices have dropped since then (Case Schiller, HUD, NAR), we have yet to see a year over year increase (or stabilization) of prices since summer 2006, more loan re-sets are on the horizon, and the moratorium on foreclosures is nearly over (which could dump the backed up inventory on the market). I don't have the stats, but with the 1.5% difference between Conventional and Jumbo loans is creating a huge void in purchases above $400-$500K. There are numerous articles discussing this lack of buyers. I have yet to see ONE article which shows a stabilization or increase (and no...slightly lower foreclosures in 2008 than 2007 doesn't count due to the Moratorium). I'm afraid that I don't see anything to show me that a recovery is a long ways off...especially since housing recoveries tend to take several years once a bottom has hit. I'm not sure if you two are realtors, but what facts do you have that show anything other than a continual slide?

  • February 27, 2009

    12:51 a.m.

    Suggest removal

    ryte writes:

    nyphotopro: it sounds like you've had a bad experience. But your passion does not make your assertions factual. While it is true prices have been going down for months it is not a fact they will keep going down -- no body knows for sure. An assertion that prices will go up is no less true than your assertion that prices will go down. It's also ture there are fewer buyers but not by a lot. It is not true that inventory is high. In fact quite the opposite. The Denver Metro area MLS reports that all of the following are down from the previous period: new listing, active listings, and months supply. At the end of January 2009 there were 7.7 months inventory which is just slightly higher than the historic average. Real estate professionals are not saying prices are going up. In fact they are saying now is a good time to buy because prices are low. Money is very much available for those with good credit and interest rates are near historic lows. Finally, you are counterdicting yourself by claiming that la-la-land profiessionals are making "drive the price up" statements when you have acknowledged that prices are going down.