Forbes writing another article on Denver

The Forbes.com reporter who wrote was has been perceived as a largely negative - and grossly unfair – take on the Denver-area housing market, plans to write another article about the local market for the national publication.

I just got off the phone with Francesca Levy, the author of the article titled the  America’s Worst-Selling Housing Markets, in which Denver ranked as the second worst. Only Milwaukee fared worst.

Levy told me that the article didn’t say that Denver had the second-worst housing market in the country, and she did not mean to imply that, although she could see how people were reaching the conclusion. She said it was based on  a “‘very narrow ” metric.  And that is the rub. She used data from Zillow.com, a large, giant aggregator of real estate information across the country.  Using information on Zillow’s Web site, she found more than 42,000 houses in a 10-county are listed for sale. That is more than double the number of homes listed for sale by Metrolist.

Zillow: One-stop shopping

Levy liked to use Zillow for comparing metropolitan statistical areas across the country, because it is so difficult to to find a group that tracks listings in MSAs nationwide. But what she didn’t know until this week, is that Zillow.com is constantly adding partners that supply it with information, making year-over-year comparisons just about worthless. “I didn’t know that,” Levy told me. “If I had known that, I probably wouldn’t have used that metric.”

Katie Curnutte, spokeswoman for Zillow,  issued a statement noting that the Forbes.comarticle used Zillow data through the end of January for the  entire Denver metropolitan statistical area, which includes 10 counties, under its “Homes For Sale on Zillow.”

“Another point, which I was quoted on in InsideRealEstateNews.com, is that changes in the number of homes listed on Zillow can be influenced by new partners, such as brokerages, who feed us listings,” Curnutte continued. “If we get more partners, the number of homes for sale on Zillow may rise because of this, rather than because of market influences. So the 27% increase over a year did, indeed, represent a 27% increase in homes for sale on Zillow; it may or may not have represented an increase in all homes on the market. Also important to note is that our data contains not just MLS listings, but FSBO listings and foreclosure listings…But probably the most important point I’d like to make is that looking at any one statistic in a vacuum will not give you an accurate picture of what’s happening in a market. It’s much better to look at an index that was designed to represent the overall health of an area. We have the Zillow Home Value Index for just that reason — it measures the median value of all homes in an area. In February 2010, the Denver metropolitan statistical area’s Index fell 0.4% compared to the same time period last year. This compares with a national change of -5.4%. Denver’s median home value peaked in May 2006, and since then, home values have fallen 10.8 percent. Compare that with the U.S. as a whole: Home values peaked in June 2006, and have since fallen 23.8 percent.”

Zillow info doesn’t “pass the smell test”

Melissa Olson, of Metrolist, which tracks Denver-area houses sold by Realtors, said it doesn’t make any sense that the the Zillow data would list more than twice the number of homes for sale as Metrolist, as the vast majority of homes sold in the Denver area involve Realtors. Metrolist showed 20,474 unsold homes on the market at the end of March. At the end of January, the same time period tracked by Forbes.com, there were 17,785 unsold homes on the Denver market, down 10 percent January 2009,  according to Metrolist. Also, many foreclosure sales in the Denver-area, as well as some new home sales, are handled by Realtors, so would be reflected in the Metrolist data, and conceivably are being counted more than once by Zillow. As Charlie Carter, a former executive at Perry & Butler, a former realty firm in Denver used to be fond of saying: “It doesn’t pass the smell test.” 

In addition, economist Patty Silverstein, of Development Research Partners, using the same 10 counties and the same methodology as Forbes.com, found an inventory of only 31,740 unsold homes on Zillow, through February, about a third less than reported by the online publication based on January statistics. That is perplexing, because if Zillow is constantly adding partners, one would expect her research to uncover more listings, not fewer.

“That is a good question,” Levy told me, when I bounced that off her. “Unfortunately, I don’t have a good answer.’

Levy said she has been barraged  by Realtors and others from the Denver area, some who have been quite angry. Even Mayor John Hickenlooper, at my request, weighed into the discussion, and wants either a retraction or an explanation from Forbes. (For Hickenlooper’s take on the Forbes.com article, please visit this blog.)

Just the facts, ma’am

One of the reasons that Levy is intrigued to write another article about Denver, is because the over-whelmingly, critics of her April 5 article have been very professional.

“There have been almost no personal attacks against me,”  Levy said. “Largely, the comments have been very constructive and quite meaty. That is helpful to me and makes me want to look at the Denver market more closely.’

In other words, stay tuned.

Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865

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