The Denver-area housing market is in positive territory for the first time in a year and a half, according to the closely watched Case-Shiller index released today.
Although the overall Denver-area housing market was up only 0.2 percent in January from January 2011, it is an important milestone, according to local real estate experts. It also was good enough for third place of the cities tracked by the S&P/Case-Shiller Price Indices. Other than Denver, only Detroit and Phoenix were in positive territory on a year-over-year basis in January.
“This is great news,” said Lane Hornung, CEO, president and co-founder of 8z Real Estate and COhomefinder.com. (8z Real Estate is a sponsor of InsideRealEstateNews.
“Although it’s not all that surprising considering I’ve been predicting for a while now that we’d see a positive on a year-over-year basis this spring. However, it’s nice to see it officially on the books.”
Hornung noted that this is the “first positive Case Shiller reading showing year-over year appreciation in 18 months, since way back in June 2010 which marked the end of the home buyer tax credit.”
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This is important consumer information, Hornung said.
“Perhaps the home buyers and sellers along the Front Range will finally realize that our market is performing much better than the national market,” Hornung said. “We are well into a housing recovery and many of our hyper-local neighborhood markets with very little inventory are already hot and seeing price gains.”
Chris Mygatt, president of Coldwell Banker Colorado, agreed.
“It is huge,” Mygatt said. “I think it is really an important tell-tale sign. I think it is one of many indicators right now and they are all pointing to a continued recovery and stability in the Denver housing market.”
Mygatt said the improving housing market is reverberating throughout the economy.
“It’s not just Realtors who are noticing a pick-up in sales activity,” Mygatt said. “I’m being told that there is an increase in furniture sales; I’m being told there is an increase in landscaping. It really is across the board. Although our strength is modest compared to recoveries of the past, I really do think there is a fundamental shift in consumer confidence and the local economy.”
Asked if he thinks Denver should anticipate a strong summer selling season, he hesitated in making a prediction.
“In the past, I have said the market would continue to pick up, and then something happened and the market stalled,” Mygatt said. “But this time, the recovery really does seem authentic. And recent statements by (Ben) Bernanke (the Federal Reserve chairman) to keep interest rate low to help the nation’s overall economy, is very positive. Rising rates would be a major negative for the real estate market.”
The overall year-over-year change for 19 market tracked by Case-Shiller in January, (usually there are 20, but Charlotte’s data wasn’t included) was a negative 3.8 percent. Only Detroit and Phoenix did better than Denver, with a 1.7 percent and 1.3 percent gain, respectively. Las Vegas had worst showing, falling by 9 percent on a year-over-year basis.
“Detroit and Phoenix were two of the hardest hit markets, so buyers are starting to see value in cities like those,” said Peter Niederman, CEO of Kentwood Real Estate. “When you look at the January numbers, those are based on contracts written in November and December. My prediction is that they month-over-month numbers from Case-Shiller will be really impressive when we get to see the February and march numbers. And I think on a year-over-year basis, they will be as equally as impressive.”
“Spring has sprung,” in Denver
Independent broker Gary Bauer said that the Case-Shiller report “is very positive news. For lack of a better phrase, ‘spring has sprung in the Denver market.”
He said there is a shortage of homes on the market and buyers are buying off the top.
“When new homes come on the market and if they are priced appropriately, they are selling very quickly,” Bauer said.
Justin Knoll, a broker associate with Coldwell Banker Residential Brokerage, said there is finally some urgency among buyers.
“The market is really at a fevered pitch,” Knoll said. “I work in the central Denver market, and we are seeing a lot of multiple offers. Appraisals are still lagging a bit. Appraisals are still catching up the improving market.”
Knoll agreed with Bauer that a well-priced home in an sought-after neighborhood hits the market, it is snapped up.
“The best properties are gone within days, not even weeks,” Knoll said. “There isn’t enough supply of homes on the market. I’m urging anyone who is even thinking of selling their home to put it on the market now.”
Bill Rodriguez, a loan originator at Residential Mortgage of Colorado, said that last year, 70 percent of his business was refinances, now it is evenly split between refinances and home purchases.
“It does depend where you are,” Rodriguez said. “Highland, for example, has been extremely hot. Typically, the hot neighborhoods are the ones close to downtown Denver, with some exceptions. Stapleton is an amazing example of appreciation. I hear from my Realtor clients that they will get two or three offers every time they put a home on the market in Stapleton. It’s not so much like that in the ‘burbs, with some exceptions. Highlands Ranch, for example, is a very strong market.”
Scott Webber, owner of Fuller Sotheby’s International Realty, said the Case-Shiller report will draw attention to the strength of the Denver-area market.
“It is nice to see a high-profile, national report validate what seems to be really going on right now in the market,” Webber said. “I think it is really great exposure and will help draw even more people into the market. We are seeing pockets of activity that reflect what is almost a seller’s market? When is the last time we used “seller’s market” to describe what is going on? In general, if you look at the overall market, you still have to describe it as a buyer’s market, but certainly there are pockets, especially below $1 million, where it is really, really hot.”
That does not seem to be the trend in many other cities across the country, he said.
“I am hearing that in a lot of other markets they are starting to see increases in transactions, but they are not seeing increases in prices. In fact, in a lot of markets they are still seeing prices falling. It just shows we are lucky we are in Denver.”
Las Vegas, for example, showed a one-year decline of 9 percent in January, according to Case-Shiller. Only Atlanta showed a bigger decline, tumbling 14.8 percent.
Indeed, overall, the national market is not nearly as healthy as in Denver.
“Despite some positive economic signs, home prices continued to drop. The 10- and 20- City Composites and eight cities – Atlanta, Chicago, Cleveland, Las Vegas, New York, Portland, Seattle and Tampa – made new lows,” said David M. Blitzer, Chairman of the Index Committee at S&P Indices. “The 10-City Composite was down 3.9 percent and the 20-City was down 3.8 percent compared to January 2011. Seven of the cities were down by 1.0 percent or more over the month. With the new lows, both composites are now 34.4 percent off their relative 2006 peaks.”
Price Range Single-family sales, YTD 2012 Single-family sales, YTD 2011 Percentage change
$0 to $99,999 1,212 1,879 -35.5
$100,000 to $199,999 6,878 6.879 -0.01
$200,000 to $299,999 7,907 6,124 29.11
$300,000 to $399,999 4,374 3,310 32.15
$400,000 to $499,999 2,210 1,615 36.84
$500,00 to $699,999 1,598 1,219 31.09
$700,000 to $999,999 667 512 30.27
$1 million to $1.99 million 332 270 22.96
$2 million and over 44 53 -16.98
Source: Gary Bauer, Metrolist
25,222 21,861 15.37
Area Benefits paid Borrowers helped to date Average Amount of Relief
U.S. $21.9 billion 278,416 $78,730
Alaska $5.2 million 88 $59,387
Arizona $985 million 13,011 $75,702
California $8.9 billion 80,079 $111,581
COLORADO $207.4 million 3,698 $56,076
Connecticut $184.6 million 2,861 $64,536
District of Columbia $26.2 million 348 $75,298
Florida $3.6 billion 46,998 $73,663
Hawaii $94.2 million 949 $99,226
Idaho $96.4 million 1,653 $58,321
Illinois $779.7 million 11,273 $69,168
Maryland $552.7 million 6,933 $79,721
Massachusetts $266.4 million 3,949 $67,457
Nevada $907.9 million 9,071 $100,089
New Jersey $599.6 million 7,841 $76,473
New York $625.5 million 7,223 $86,600
Oregon $199.8 million 3,134 s63,745
Rhode Island $73.2 million 1,099 $71,801
Utah $152.9 million 2,491 $61,418
Virginia $401.8 million 5,721 $70,242
Contact John Rebchook at JRCHOOK@gmail.com.