John Rebchook is a former Rocky Mountain News reporter with more than 30 years of experience in writing and communications... Money magazine naming Louisville as the best place to live in the U.S. has received a lot of well-deserved publicity, locally and nationally.
But the news in the magazine on the Denver-area residential real estate market is not so cheery.
On page 86, the magazine ran a list of top 25 metropolitan areas that includes a projection of how much farther single-family homes have to fall before they hit bottom.
For Denver, it projects another 15 percent. And Money contends it will not hit bottom until the first quarter of 2011.
When I first looked at it, I had to rub my eyes to make sure I was reading it correctly. I thought Money’s crystal ball was calling for another 1.2 percent price drop. But no, that was for Dallas, the city listed directly above Denver.
Money predicted only six metropolitan areas to have a steeper decline than in Denver. They are: Miami, 43.6 percent; Los Angeles, 25.7 percent; Las Vegas, 24.7 percent, Phoenix, 25.4 percent; New York, 22.3 percent; and Philadelphia, 15.6 percent.
Money put the median price of a single-family home in Denver at $193,000. That is curious in of itself, as the latest Metrolist numbers put the median price of a home at $237,500 at the end of June and $220,000 at the end of May.
But using the $193,000 figure, that would mean that the median price of a home in Denver in two years would drop by $28,950 to $164,050, before hitting bottom almost two years from now.
As Dennis Hipp and Charlie Carter of the old Perry & Butler Realty used to say: “That doesn’t pass the smell test.”
Anthony Rael, of Metro Brokers in Arvada, doesn’t buy it either.
“It sure doesn’t feel like it to me,” that the market needs to drop another 15 percent, Rael said. “In the last 10 days, I’ve written three contracts and they have been rejected – flat-out rejected. It seems like if you are not offering pretty close to full price and not asking for any concessions, you probably will not get the house, especially up to the $200,00 price range.”
Rael, who recently has closed or is working on deals in Erie, Franktown and Aurora, said he thinks “we have pretty much stabilized and are maybe a little on the upswing.”
Gretchen Faber, managing broker of Kentwood Co. at Cherry Creek, was puzzled by Money’s conclusion.
“We have got the lowest active inventory in quite some time and our days on market are shrinking,” Faber told me. “Those are all things that point to a recovery. It’s not going to be a rapid recovery. We might bounce around the bottom for a while.”
Faber said it is also important to talk about specific neighborhoods.
“Denver is so neighborhood-specific; neighborhoods are such specific microcosms,” she said. Are you talking about Bonnie Brae or Highlands Ranch? Commerce City or Hilltop and the Highland? Some of these areas are not going to lose 15 percent. No way. They did not last year, either. Maybe in some of the far suburbs, where they are still a little overbuilt, and have a little too much inventory, will we see some further price declines. It’s hard to make a blanket statement about a market, but overall I think we have a pretty stable market.”
