John Rebchook is a former Rocky Mountain News reporter with more than 30 years of experience in writing and communications... Home prices in the Denver-area fell by 1.2 percent in the third-quarter from the same period in 2008, which tied Dallas for the top spot in the country, shows a S&P Case-Shiller report released today.
The report shows that the U.S., overall, saw prices drop by 8.9 percent during that time period. And the 10 and 20 city composites in the report, fell by 8.5 percent and 9.4 percent, respectively.
“Neither Denver nor Dallas saw that meteoric rise in prices other cities did, so it is logical that they would not see the meteoric declines,” said Tom Cryer, a broker with the Kentwood Co.
Overall, the third-quarter report is a marked improvement over the 14.7% decline in the annual rate of return reported in the second quarter of 2009, and the 19.0% drop in the first quarter.
“We have seen broad improvement in home prices for most of the past six months,” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “However, the gains in the most recent month are more modest than during the seasonally strong summer months. Fewer cities saw month to month improvements in September than in August in both seasonally adjusted and unadjusted figures.”
Nationally, the U.S. National Composite rose by 3.1% in both the second and third quarters of 2009. Both the 10-City and 20-City Composites posted their fifth consecutive monthly increase with September’s report.
Steve Blank, a broker with Fuller Sotheby’s International Realty, said that the 1.2 percent decline in Denver is “freakishly good,” and better than he would have expected.
“I would say that things are pretty well bottoming out now, and if they are not at the bottom, they are close,” he said.
But he said that the market is only down by 1.2 percent because of price improvements at the lower-priced homes, as expensive homes are still hurting.
“There are some phenomenally good deals at the high-end,” Blank said.
However, there is some good news for buyers of luxury properties, he said. Just recently, lenders started making more competitive jumbo loans – that is, for mortgages of more than the conventional loans that top out at $417,000, he said.
“One lender offers what it calls “doctor loans,” he said. These loans are fixed for either 10 or 7 years and are amortized over 30 years.
“You can get them at in the 4.375 percent or 4.75 percent range,” Blank said. But you need a credit score of 740 or higher, and typically lenders want at least 20 percent down, he said. Thirty year fixed jumbo loans also are available in the 5.5 percent range, for extremely qualified buyers who put at least 20 percent down, although he said occasionally a lender will allow only a 10 percent down payment.
Diane P. Huttner, a broker with Prestige Real Estate Group, said the top ranking at Case-Shiller is wonderful.
“That is really good news,” she said. “That tells us something about our market.”
But she agrees with Blank and other Realtors that the top-end of the market is still “quite challenging.”
She said that she has noticed a number of expensive homes recently selling in the Hilltop and Cherry Creek areas for less than the mortgage amount, although she said one expensive home in Cherry Creek recently sold for a mere $15,000 below the asking price.
And she said she spoke to a builder about buying some land near the Preserve in Greenwood Village. The builder, who constructs homes priced above $2 million, said even if she gave the land to him, “no one wants to pay me what it would cost to build a home.”
But she said for someone wanting to move up, it may be worth it to sell their home for even a slight loss, because they can drive a great bargain for a luxury home.
Mike Rinner, of the Genesis Group, which tracks housing along the Front Range, also said that the most recent Case-Shiller ranking is good, and continues a trend seen for most of the year.
He said Denver and Dallas each have has seen seven months of consecutive improvements from the previous months this year. But some of that, especially in mid-year, was because of seasonality, he said. Even in overall down years, there are some month-to-month improvements for seasonal reasons, he said. No markets are showing consistent improvements from the same month in 2008, Rinner noted.
While that, with today’s report are encouraging, he said the market still faces more pain.
“I think it is going to stay negative, as far as price appreciation,” Rinner said. “We will be lucky if we hit zero (price appreciation) next year. In the third quarter of this year, foreclosures jumped 54 percent from foreclosures last year. And with more foreclosures, and fewer jobs, it is just tough to get a housing recovery. Housing demand is a function of employment.”
Still, for those able to buy today and hold on until 2012, will be rewarded, said Cryer, of Kentwood.
He said 2010 will not be that much different from 2009, and 2011 “will not be super. But in 2012, I guarantee you that you, me, my neighbors and everybody will wish they had bought those short sales and foreclosures in 2009. If you want a “lock it and leave it” lifestyle, and plan to retire in the next few years, now is the time to buy a condo in the Landmark. Look at the confleucen of events we have with low interest rates, a good supply of homes to choose from at the upper end, and depressed prices. It just takes one of those factors to go away to completely change the buying opportunity we have today.”
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Area Appreciation since 2000 September to October change 1-year change from October
U.S. 46.58 0.4% -7.3%
Atlanta 10.12% -1.0% -8.1%
Boston 54.7% -0.6% -2.8%
Charlotte 19.05% -0.7% -7.0%
Chicago 30.78% -1.0% -10.1%
Cleveland 4.97% -1.6% -3.5%
Dallas 19.90% -0.6% -0.6%
DENVER 28.91% -0.4% -0.1%
Detroit -26.93% 0.2% -15.1%
Las Vegas 04.7% -0.1% -15.1%
Los Angeles 68.43% 0.3% -6.3%
Miami 49.09% 0.4% -14.0%
Minneapolis 24.51% -0.5% -8.4%
New York 75.01% -0.0% -7.7%
Phoenix 9.26% 0.8% -21.8%
Portland 49.72% -0.5% -11.8%
San Diego 55.37% 0.4% -2.4%
San Francisco 35.81% 1.3% -2.6%
Seattle 49.26% -0.4% -12.4%
Tampa 40.27% -1.6% -15.2%
Washington, D.C. 79.71 -0.4% -2.8%
Composite-10 58.82% 0.0% -6.4%
Composite-20 46.58% 0.0% -7.3%
[...] Clark noted that the “annual declines in a majority of the S&P/Case-Shiller Home Price Indices have reached bottom, and the indices for Denver are close to a positive annual return. (For my earlier blog on the most recent Case-Shiller report go to this link.) [...]