The median price of a Denver-area home rose 14.4 percent in March, compared with March 2009, ranking it No. 3 when compared to 20 other metropolitan statistical areas tracked by the National Association of Realtors.
Denver was not on the list of 20 MSAs that NAR released data on median prices and sales in March, but at the request of InsideRealEstateNews.com, the trade organization supplied it with otherwise “unpublished” data on the Denver market.
The data shows that only San Diego, with a 20.4 percent increase in price, and St. Louis, at 19.8 percent, bested Denver.
“There may be some other unpublished data that would be in conflict,” with Denver being ranked No. 3, said Walter Molony, a spokesman for the NAR. “But Denver is one of the top ones.”
Positive national spotlight
“I think this is really good news,” said Gary Bauer, an independent broker, who tracks local real estate data based on Metrolist figures. His latest report showed a 12.2 percent increase in the median price in march 2009 to 2010.
“Clearly, what we have previously reported to you from Metrolist is consistent with what NAR is saying, although the numbers are slightly different possibly because of different way of calculating them or slightly different geographic areas being included,” Bauer said. “But I think that this is very positive, especially in light of the recent Forbes.com article,” which listed Denver as the second worst housing market, based on what it thought it was a rising inventory numbers based on Zillow.com, which local Realtors discredited.
“What I also think is very positive is that when you look at the homes that are under contract, but have not closed,” Bauer said. “We are going to have a very good April and a very good May for closings. And even when the tax credits go away at the end of this month, my gut tells me we are still going to hang in there.”
Mix, not appreciation, driving stats
The main reason that the median prices are up is because more sales are occurring at higher price points than in the spring of 2009, said Jeff Thredgold, the economist for Vectra Bank in Colorado.
“I would have to say that the Denver and Colorado markets are much more stable than they had been,” Thredgold said. “If you look at how things were a year ago, or 18 months ago, people did not know what tomorrow held. Now, the Colorado economy is much more stable, the U.S. economy is more stable and stronger, the stock market is doing much better, and mortgage rates still remain at very attractive levels. ”
Still, it would be a mistake to think the NAR numbers are showing home appreciation.
“This is not to say that the average home has gone up 14 percent,” Thredgold said. “They have been pretty much sideways. What we are seeing is that people are buying more homes in the $300,000 to $450,000 range than we were seeing, which is driving up the overall prices.”
As far as percentage changes in sales, the Denver-area market was near the bottom of the MSAs tracked by NAR.. The Denver-area sales rate rose by 9.2 percent, a far cry from the 45.6 percent in Portland, the No. 1 market by the sales metric. Portland’s home prices, however, remained down from a year earlier.
“That doesn’t surprise me,” Thredgold said. “Some of these other market were really crushed. People are now just starting to buy again, after that big run up in prices and the equally huge downturn. Denver never went through those big increases and big drops.”
Market heading for first real appreciation in 10 years
Jack O’Connor, an owner of RE.MAX Professionals, agrees.
“We have neither had the big appreciation, nor have we had the big declines,” O’Connor said. “What we are seeing is a solid market. Our inventory is not rising dramatically like it does in a typical spring, and ales are up. Those are all good things. while you don’t want to take a snapshot of one month and say this is the trend, I think if this continues for three months or so, you could have evidence that we are going to see the first real appreciation of homes prices in the Denver area for the first time in 10 years. I think we are going to see home appreciation from the very low-end all the way up to the $500,000 to $600,000 price range.”
End of tax credits could hurt
Economist Patty Silverstein, principal of Development Research Partners, said that not only are more expensive homes starting to sell in the Denver area, but demand is driving up prices at the lowest end, driving up the overall numbers.
“We still have more foreclosures entering the market than we would like, but our foreclosure problems started earlier than in most markets, so we are likely to come out of it faster than most markets,” Silverstein said.
However, she said that she is concerned that while the $8,000 tax credits for first-time home buyers, and the $6,500 tax credits for some existing home owners, could be boosting today’s market, at the expense of future sales
“you have to wonder how much of the sales activity here and all across the country are because of the tax credits,” Silverstein said. “I don’t know if this is a sustainable situation. I guess they are good as far as they go, but would prefer sales market based on fundamentals that could be sustained.”
MSA Median Price 2009 Median Price 2010 YOY % Price Change YOY % Sales Change
Atlanta $116,300 $113,600 -2.3% 7.0%
Baltimore $245,500 $236,800 -3.5% 18.9%
Boston $289,500 $329,800 13.9% 25.9%
Cincinnati $113,200 $124,100 9.6% 16.0%
Dallas $138,100 $144,600 4.7% 12.6%
DENVER $203,000 $238,200 14.4% 9.2%
Houston $145,500 $154,300 6.0% 11.0%
Indianapolis $107,500 $117,500 9.3% 11.0%
Kansas City $131,600 $137,400 4.4% 11.5%
Miami/Ft. Lauderdale $210,200 $218,200 3.8% 12.9%
Minneapolis $154,125 $165,000 7.1% 6.5%
New Orleans $156,300 $154,100 -1.4% -2.3%
New York $367,400 $379,900 3.4% 24.5%
Philadelphia $209,700 $209,300 -0.2% 19.6%
Phoenix $127,500 $144,500 13.3% 10.1%
Pittsburgh $108,700 $122,900 13.1% 26.3%
Portland $245,700 $238,700 -2.8% 45.6%
San Antonio $145,400 $143,700 -1.2% 29.7%
San Diego $326,800 $393,600 20.4% 4.0%
St. Louis $107,900 $129,300 19.8% 25.6%
Washington, D.C. $287,300 $298,900 4.0% 12.5%