Denver soars to No. 1 in Home Value Increase -

Area leads nation with small gain in quarter that saw overall decline

By John Rebchook, Rocky Mountain News October 31, 2007

Denver squeaked out the No. 1 ranking in a national report on home prices released Tuesday. The closely watched S&P Case- Shiller Home Price Indices showed that Denver-area homes gained 0.3 percent in value from July to August.

Although a meager appreciation rate, it was good enough to make Denver tops in the nation during that period. The 20 cities ranked showed an overall average decline of 0.7 percent. From June to July, Denver homes rose in value by 0.8 percent, bested only by the 1 percent increase experienced by Detroit during that period.

"It looks like Denver may be one of the first markets in the turnaround mode. Maybe," said Maureen Maitland, an analyst and vice president at Standard & Poor's. Maitland said she would like to see more data before she's comfortable in saying that Denver's down cycle is over.
"However," she added, "Denver has had five positive months of price movement in a row." Maitland noted that Denver -real estate stumbled earlier than most cities in the country and in recent years didn't go through the double-digit price appreciation experienced by other formerly hot markets on the coasts and places such as Phoenix and Las Vegas. Nevertheless, the new-home market in the Denver area is still suffering through its worst period in more than a decade, according to a report by the Genesis Group.

Genesis said that there were 5,842 sales of new homes in the first half of the year, a 33 percent drop from the 8,758 sold in the first half of 2006. And 2006 was the worst year for new home sales in a decade.

There are pockets of robust price appreciation in Denver. Deviree Vallejo, of Kentwood City Properties, who on Tuesday was showing a prospective buyer a $1.15 million home in Cherry Creek North, said she has seen a huge appreciation of home prices in the Denver neighborhoods where she focuses. She said she is concerned, in fact, that values have risen too fast in some areas and aren't sustainable.

"We've seen appreciation in Highland at 13.5 percent and Cherry Creek North at 22 percent," Vallejo said. "What we want is appreciation at 7 percent to 10 percent." Tom Clark, executive vice president of the Metro Denver Economic Development Council, said he thought the S&P/Case-Shiller report would show Denver-area home values falling less than the rest of the country, not rising in value.

Denver's housing downturn started around 2001, and the area dodged "the 2006 housing bubble bursting in other parts of the country," Clark said.
In the past, he would have considered it bad news from an economic development perspective that home values were on the rise. "But now it's probably not a factor because homes in Phoenix, our No. 1 competitor, are more expensive than our housing," Clark said.

Carolyn Sandberg, a broker associate with Metro Brokers, said the report shows that Denver housing is at the "very, very tip of turning around." Rising adjustable-rate mortgages will mean more foreclosures through 2008, which will dampen appreciation at the low end of the market, she said, but are not affecting more-expensive homes. "There will be another year for buyers to buy," Sandberg said. "But a lot of people are going to wait until all of the doom and gloom is over, and they are going to end up paying more. "You need to buy when the market is down to get the best deal."

rebchookj@RockyMountainNews.com or 303-954-5207

More Good News About Denver Real Estate in the Rocky Mountain News

Home prices hint at turn

S&P report suggests Denver area may be starting to recover
By John Rebchook, Rocky Mountain News September 27, 2007
Fresh evidence suggests the Denver-area housing market may be in the early stages of recovery, even as the national housing market faces an even bigger slump.

From May to June, Denver homes showed a 1.3 percent appreciation in value, the highest of 20 metropolitan areas surveyed, according to the Standard & Poor's/Case Shiller Home Price Indices. Charlotte, N.C., was No. 2 at 1.2 percent.
And while Denver home prices dropped by 0.7 percent in July from July 2006, only five metropolitan areas fared better during that period, the survey showed. Overall, a composite of 20 major metropolitan areas experienced a 3.9 percent drop during that one-year period.

"We need to see if the trend continues," said S&P Vice President Maureen Maitland, referring to Denver. "What you have to do now is to watch for signs of a turnaround before calling anything,"

She said Denver has been beating the nation as a whole for four consecutive months. From June to July, for example, Denver's market appreciated by 0.8 percent, with only Detroit doing better at 1.3 percent, and all 20 areas dropping by an average of 0.6 percent.

The report is produced by S&P and Yale University economist Robert Shiller.
The nation as a whole is "in a bit of a housing crisis, and it is likely to get worse before it gets better," Maitland added.

Adjusting for inflation, housing prices nationwide have soared by 86 percent in the past decade. Some cities, such as New York, Los Angeles and Washington, D.C., saw larger jumps than other places in the country, including Denver.
The Denver-area housing market peaked in February 2001, with a 15 percent year-over-year appreciation, slightly higher than the nation as a whole, Maitland said.

"Many other markets across the country continued on an upward swing, and the Denver growth rate slowed down," she said. "Now, Denver seems to be going in an upward direction."

Economist Michael Kone, principal of Boulder-based Housingmetrics, said there is still "intense pain" for the lower end of the housing market in the Denver area, with a "huge bump" in foreclosures to come, as subprime mortgages adjust upward.

Colorado is on pace to see more than 37,000 foreclosures filed this year, a 30 percent increase over the record set last year. Colorado and the Denver area are among the top 10 worst areas in the county for foreclosure rates.
Expensive houses, Kone said, are doing much better in the metro area. Also, as always, there are pockets of strength.

The S&P/Case Shiller report also illustrates that housing is a bargain in the Denver area compared with many other places, said Mike Foster, director of land acquisitions for Century Communities, a private, suburban builder.
Not long ago, Denver was the most expensive housing market "anywhere in the U.S. without a beach," Foster said.

But because the Denver-area housing market has been flat for so many years, it will recover faster than other areas that, until recently, saw a huge run-up in prices, he said.

"Denver is a low-risk market," Foster said. "It will be easier for companies to relocate to our market than to relocate to other markets."
Independent broker Gary Bauer, who puts out his own monthly report based on Metrolist data, said that the S&P/Case-Shiller report is encouraging.

"Basically, it is saying what I have been saying for quite a while - Denver is counter-cyclical to the rest of the nation," Bauer said. "Is it all roses in the Denver marketplace? No. But it is not as bad as all of the doom-and-gloom talk, either."

The top-performing metropolitan area, according to the national study, was Seattle at 6.9 percent, followed by Charlotte, N.C., at 6 percent. Other cities faring better than Denver included Portland at 3.8 percent; Atlanta at 1.2 percent; and Dallas at 0.8 percent.

rebchookj@RockyMountainNews.com or 303-954-5207.