Go to the mobile version of this Web site.

Login | Contact Us | Site Map | Paid archives | Electronic edition | Subscription Questions | Extras

Metro home prices fall but do better than in most cities

By John Rebchook, Rocky Mountain News (Contact)

Published January 27, 2009 at 9:14 a.m.

Text size  
A Sotheby's home sale sign stands in front of a house on East 17th Avenue in Denver.

Photo by Brian Lehmann / The Rocky

A Sotheby's home sale sign stands in front of a house on East 17th Avenue in Denver.

Related Links

More Real Estate

More stories »

The Denver-area housing market outperformed all but one market in the 12 months ended in November, according to a national housing report released Tuesday.

And in November, Denver-area homes lost only 1.1 percent, making it the best-performing city in the S&P/Case-Shiller Home Price Indices.

For the 12-month period as well as the month of November, all 20 markets in the index showed negative returns.

Home prices in the Denver area fell by only 4.3 percent in the 12 months ended in November; the overall drop for the index's 20 metro areas was 18.2 percent. Only Dallas, with a 3.3 percent decline, fared better than Denver.

"Sometimes I have to chuckle when we celebrate negative returns, but relative to other cities we are in much better shape," said economist Patty Silverstein, principal of Development Research Partners.

While the Denver area will lose jobs this year, Denver and the state will continue to outperform the nation, Silverstein told about 300 people at a real estate forecast breakfast Tuesday in Lakewood.

Silverstein said she expects "minor" increases in home sales activity this year from 2008 and perhaps even a slight increase in prices.

"Our marketplace is not overbuilt," Silverstein said. "We are building next to nothing. We are not plagued by an over-abundance of inventory like so many other places. And we never had the roller-coaster rise and fall of prices other places saw."

Chris Behrens, a principal of UrbanThrive Real Estate, called the Case-Shiller report "encouraging" and "good news."

Behrens said he has noticed that there seems to be a "core group of career professionals" selling real estate in Denver, while many brokers are leaving the business because they couldn't weather the tough economic climate.

"I get the impression there are fewer buyers looking around on their own," Behrens said. "There are buyers out there who think you can get some really great deals, and they are turning to a core group of knowledgable people to help them find and evaluate properties."

Denver's housing market is in far better shape than in cities in California and in Phoenix, Las Vegas and Miami, said Chris My- gatt, president of Coldwell Banker Residential in Colorado.

"These are catastrophically affected markets," Mygatt said.

Phoenix and Las Vegas were the two worst markets through November, losing 32.9 percent and 31.6 percent, respectively, according to Case-Shiller.

In some towns in California, homes that sold for $1 million two years ago probably are worth less than $600,000 today, Mygatt said.

Since January 2000, a typical home in Denver has appreciated 26.65 percent, while other markets have appreciated far more. For example, during that period, homes in Los Angeles have appreciated almost 76 percent; Miami, almost 70 percent; New York 87 percent; Seattle 66 percent; and Phoenix and Las Vegas are both up about 30 percent, according to Case-Shiller.

However, the free-fall in prices for many of the markets outside of Denver is expected to continue.

Despite showing a smaller drop than most of the nation, the Denver market is several months away from hitting bottom, said independent broker Gary Bauer, who prepares a monthly report on the Denver-area market.

"I don't think we're close enough to pinpoint the bottom yet," Bauer said.

Comments

  • January 27, 2009

    11:53 a.m.

    Suggest removal

    WarrenJimmyBuffett writes:

    How is losing value "showing strength?" Why isn't the headline "Denver area home values down 4.3% YOY?" That's all you need to know.

  • January 27, 2009

    12:14 p.m.

    Suggest removal

    market_man writes:

    Prices are actually up. It's the distressed sales that are skewing the average lower.

  • January 27, 2009

    1:06 p.m.

    Suggest removal

    reddog writes:

    WarrenJimmyBuffett... I agree

  • January 27, 2009

    1:14 p.m.

    Suggest removal

    c4l2a0 writes:

    It "shows strength" because it could have been 31%. I would say the characterization is accurrate. Some just like to criticize...

  • January 27, 2009

    1:19 p.m.

    Suggest removal

    jlgraybill writes:

    Market_man, how are prices up when most of the sales are distressed? Because of these distressed sales, I don't know anyone in Douglas County who is seeing price increases right now. The distressed properties aren't only "skewing the average", they're dragging home prices down. When buyers know they can get homes at a large discount (and will continue to be able to for the foreseeable future), they aren't willing to pay a premium to add to your theory of increasing prices. I will admit that there may be areas of Denver which are seeing stable or slightly increasing prices, or even outlying tiny pockets of neighborhoods and individual homes, but it is definitely not the case at a Macro level in Douglas County.

    It's like the Retail industry right now. Consumers are used to buying items at a discount, so charging full price (or raising prices) is not a successful option for the seller. And when Realtytrac mentions that only one third of foreclosed properties are actually on the market (including Denver), I don't see any "strength" to the market or situation. With the news getting worse and worse each day, and the effects of many of the layoffs still to be realized in Denver, there is no strength to this situation. It's horrid. I really feel for those who have to put their homes on the market right now, or who are out looking for jobs. Tell those people about the "strength" of the market, and see if you walk away in one piece.

  • January 27, 2009

    3:22 p.m.

    Suggest removal

    robbyr2 writes:

    Although I haven't been looking too far from home, the homes in my neighborhood that have been foreclosed on are no bargain. The $20,000 price cuts won't begin to make up for the repair costs.

    Realtytrac is in the business of selling information on foreclosures to investors. Their information has to be taken with a large grain of salt. They want to paint the picture as negatively as possible so the smart people buy homes to rent out.

  • January 27, 2009

    3:56 p.m.

    Suggest removal

    Diff writes:

    In my suburban area to the north west of Denver - I checked a house that just came on the market - the same model as mine and one of the more well taken care of homes in the area - the asking price was less than 10% above what I bought mine for in '99. and Down what my home appraised at just over two years ago by more than 15% - Two other homes in my area - both have been on the market for over 6 months and have each had recent price reductions of over 10% - I can't attach the word strength to these numbers - even if we are doing better that most other states!
    The only good news I heard recently is that December home sales bounced up from November. Maybe we are at or near the bottom of the real estate down turn anyway... ?

  • January 27, 2009

    8:28 p.m.

    Suggest removal

    kevin3 writes:

    If you want worts, go to Pheonix or Las Vegas!

  • January 27, 2009

    10:08 p.m.

    Suggest removal

    DonaldJohnson writes:

    Denver home prices fell 1.1% in November, or at an annual rate of 13.4%, and Denver was the strongest of of 20 major markets reported by Case-Shiller. In Phoenix, prices fell at an annual rate of more than 40%. One month's numbers don't make a trend, but it's worth noting that in November, Denver area prices fell faster than the 4+% they fell in the 12 months ended Nov. 30.

    Denver's prices are 127% of where they were in January 2000, which was substantially higher than they were in 1997 when the housing boom began. Historically, housing prices have been flat to slightly lower for decades after making major adjustments, according to Robert Shiller in "Irrational Exuberance," 2nd. edition. For example, housing prices generally declined from 1890 to 1940. And they were mostly flat, after adjusting for inflation, between the late 1940s and early 1950s and the mid 1990s. Because prices are still well above the mean, we could be in for further declines and decades of mostly flat prices, but no one knows for sure, not even the Realtors who misled home buyers into thinking homes are investments.

  • January 28, 2009

    12:46 a.m.

    Suggest removal

    market_man writes:

    Well, I misspoke. Prices are up for those who understand how to value a property and purchase it accordingly. I sometimes forget about the premium paid by the clueless because it doesn't factor into my equation.

    Anyway, now is a good time to buy cash flowing rentals. The valuation will not be better for another 30 years.

  • January 28, 2009

    8:13 a.m.

    Suggest removal

    jlgraybill writes:

    Yes market_man, the homes in Douglas and Adams and Jefferson counties are all being bought and valued by the "clueless". It has nothing to do with the fact that we choose to live in those areas because that's where our schools and jobs and lives exist.

    Douglas and Jefferson counties were relatively "strong" 10-12 months ago, but the declines of Aurora and Adams counties and other areas ended up affecting Douglas and Jefferson. To think that continual declines in the rest of the metro area will not affect prices in Denver is asinine. That's like saying the troubles of the US won't affect the rest of the world...oops, guess that's not quite true.

    Personally, I value my home because that's where we live, and so I don't need to sell at these depressed prices (and I still am ahead by quite a bit). But some people do need to sell (or foreclose), or are out looking for jobs, and they are in a tough situation. Maybe they were "clueless", and maybe they weren't, but the timing is not on their side in many areas regardless. Just because you're in your invincible Ivory tower, doesn't mean that everyone in the Denver metro area is in the same situation. Back to my main point...there is no "strength" in the current market as a whole, and if things continue down this road (layoffs, foreclosures, mortgage re-sets, etc) then eventually it's going to affect you in your Denver neighborhoods. If so, would that make you "clueless" as well?

  • January 28, 2009

    8:48 a.m.

    Suggest removal

    dencolo writes:

    robbyr2, you say:
    Realtytrac is in the business of selling information on foreclosures to investors. Their information has to be taken with a large grain of salt. They want to paint the picture as negatively as possible so the smart people buy homes to rent out.

    too bad this info is not from Realtytrac; it's from the S&P/Case-Shiller report and is quite reputable. Some people just can't handle good news.

  • January 28, 2009

    10:04 a.m.

    Suggest removal

    DJironic writes:

    "Since January 2000, a typical home in Denver has appreciated 26.65 percent"

    Where is this typical home? In my experience, the prices for homes actually in Denver have at least doubled or tripled in recent years - if they are in an even half-way decent neighborhood.

    As a matter of fact, the home we are now renting (having sold our last home) was purchased 10 years ago for $100K and was appraised last summer in the high $400Ks.

    That seems more typical - we've been looking for months for a new home to buy, and there is isn't much on the market, and what is out there hasn't come down much, if at all, and definitely no big price drops. It's hard to fork over $400-500K for something that was $100-200K only a few years ago.

    I would say it definitely depends what neighborhoods and developments you are looking at.

  • January 29, 2009

    1:41 p.m.

    Suggest removal

    realtrends writes:

    The implication that the Denver metro real estate market displays "strength" is dead on given the context of the current national economic conditions. The collapse in valuation levels in these other metropolitan areas is extremely relevant as many of them share similiar characteristics to ours. And so in comparing Denver to the others, it is an extremely positive to observe that we are not experiencing declines anywhere near the extent they are.

    Within each of these markets are neighborhoods that are fairing far worse (or much better) than what the Case Shiller index presents, for instance losing half or more of their "value" since the peak. Real estate is ultra-local. What is occurring in one neighborhood in Adams may be entirely different than what is occurring in the neighborhood right next door to it. All over the metro area I see some neighborhoods with constant or rising value levels, it just depends on the location you're looking at. This is the polar opposite to what is going down in the true "crisis" markets, where deflation rules.

  • January 29, 2009

    2:16 p.m.

    Suggest removal

    Quagmate writes:

    The following quote is the heart of the issue:

    "Chris Behrens, a principal of UrbanThrive Real Estate, called the Case-Shiller report "encouraging" and "good news."

    Behrens said he has noticed that there seems to be a "core group of career professionals" selling real estate in Denver, while many brokers are leaving the business because they couldn't weather the tough economic climate."

    The "core group" is propping up values like they have been doing since the late 80's and 90's. In conjunction with the banks who refuse to sell the property and Realtors who continue to over-value properties, Denver has become an island of property value. 76,000 homes listed for sale in Colorado, that says it all.