Case-Shiller: Denver up 2nd consecutive month

The latest Case-Shiller report shows the Denver area is far out-performing most markets in the country.

The Denver-area housing market posted its second consecutive year-over-year improvement in February, according to the closely watched Case-Shiller Index released today.

The S&P/Case-Shiller Home Price Indices, showed that Denver gained 0.5 percent in the year ending in February, more than double the year-over-year gain of 0.2 percent in January.

Denver also out-performed the nation by a wide margin in February.

The overall drop for the 20 metropolitan statistical areas in the index fell by 3.5 percent, with a number of cities hitting new lows.

Denver was the fourth-best performing market in February, only being bested by Phoenix, Detroit and Miami. Last Vegas suffered an 8.5 percent decline in February from February 2011. Only Atlanta, with a 17.3 percent drop, showed a bigger drop.

Lane Hornung, CEO, president and co-founder of 8z Real Estate and COhomefinder.com, said he thinks, if anything, Case-Shiller is under-estimating the strength of the Denver-area housing market.

Case-Shiller under-estimates Denver

” My suspicion is that home values are even stronger than this two-month-old Case-Shiller index indicates,” Hornung said. “The shift from a buyers’ market to a sellers’ market in many areas has been quite dramatic over the past few weeks. Prices are moving up.”

Of the top four cities, Denver is the only one that had not been horribly beaten-up during the recent housing depression, noted Peter Niederman, CEO of the Kentwood Real Estate Co.

“Really, those three market areas that did better than Denver had been hit really hard,” Niederman said. “People are are starting to see value in those market areas.”

Denver, by contrast, has been far more consistent and stable, Niederman and other said.

“I think Denver is the most consistent and stable market in across the nation,” Niederman said. “When Case-Shiller releases its March numbers, I think we will do even better. People will be pleasantly surprised by how well Denver does in March and April.”

Chris Mygatt president of Coldwell Banker Residential Colorado, shared Niederman’s perspective regarding how Denver stacks up against other major markets across the country.

“When you look at the three cities ahead of Denver – Miami, Phoenix and Detroit – arguably they were the toughest hit markets in the country. The only one missing is Las Vegas.

“But Denver was hardly hit compared to what other markets in the country experienced,” Mygatt continued. “To be No. 4 in the country speaks very highly of our local economy, our employment, our consumer confidence. And it speaks very highly of the desire of people in Colorado to own homes. That is great and very important to society. Home ownership builds strong communities, builds strong schools. Really, what the Case-Shiller report does is reaffirm what we have been saying and seeing in the market.”

Mygatt said that with a shortage of homes in the Denver area, home prices are starting to rise.

“I’m so pleased that homeowners have who have been suffering for so long are finally starting to get some relief,” Mygatt said. “But the improved market is even benefitting buyers. Buyers today have more stability and confidence in the market than they have for the past several years. Yes, it is more competitive when you are looking for a home. But if you are the only buyer out there, you are a nervous buyer. Now, people are recognizing a level of value and they are feeling better about their decision to purchases.”
Scott Webber, president and CEO of Fuller Sotheby’s International Realty, said the Case-Shiller reports “validates what is kind of a unique situation in Colorado and the Denver area. If anything, Case-Shiller may be under-estimating the strength of the recovery of the Denver market.”

Confluence of good news

Webber said several things are fueling the recovery.

“I have not heard many people talking about this, but we are dealing with three and four years of pent-up demand from buyers,” Webber said.

Also, buyers are still enjoying interest rates at or near historic-lows and fewer foreclosures than in the past.

“The market has largely been purged of real estate owned (REOs),” he said.

Another big piece of Denver’s increasingly strong market is the lack of construction of homes, he said.

“The inventory of new construction is non-existent,” Webber said. “Really, there are no new homes being added to the market. We have this flurry of activity and no new homes to sell, which is pretty unique. We only have 2.5 months of supply of unsold homes on the market and that is pretty incredible.”

Webber said the Denver-area market is “quickly moving from an extreme buyer’s market to a seller’s market. Obviously, that depends on the geography. The closer to the city the better and the farther away you are, the less that is true.”

In some area close to downtown multiple offers are becoming increasingly commonplace, he said.

“We had a pretty bizarre situation a couple of weeks ago,” he said. He said a home in Bonnie Brae was listed for about $800,000 and received several offers.

“One of the buyers who didn’t get it, offered the winning bidders $100,000 to assign the contract to them,” Webber said. “They didn’t accept it, because they really wanted that home and it is so hard to find homes in that price range in the area, they didn’t want to start the house-hunting process all over again.”

Independent Realtor Gary Bauer said the Case-Shiller report confirms that the “Denver market is a shining star. Everything looks good. Well-priced new listings are selling quickly. Increasingly, we’re getting reports of multiple offers. Prices are going up, but for the most part, not dramatically. Some people would like to see more price appreciation, but for a healthy market, you want to see a gradual increase in prices, not a huge spike.”

Housing hitting new lows in some markets

Nationally, the housing market was much more grim in February.

“While there might be pieces of good news in this report, such as some improvement in many annual rates of return, February 2012 data confirm that, broadly speaking, home prices continued to decline in the early months of the year,” said David M. Blitzer, Chairman of the Index Committee at S&P Indices. “Nine MSAs — Atlanta, Charlotte, Chicago, Cleveland, Las Vegas, New York, Portland, Seattle and Tampa — and both composites hit new post-crisis lows. Atlanta continued its downward spiral, posting its lowest annual rate of decline in the 20-year history of the index at a negative 17.3 percent. The 10-City Composite declined 3.6 percent and the 20-City was down 3.5 percent compared to February 2011.

“Due to delays in reporting for Mecklenburg County, we did not publish a January index level for Charlotte, N.C., last month. With this month’s report we have enough data to publish data points for both January and February. The unfortunate news is that it confirms that Charlotte is one of the cities that is still reaching new lows.

“Phoenix and Atlanta stand out this month in terms of their contrasting relative strength and weakness in the early 2012 housing market. At one end of the spectrum, we have Atlanta posting a double-digit, and lowest on record, annual rate at -17.3 percent. Atlanta has now recorded five consecutive months of double-digit negative annual rates and seven consecutive monthly declines. On the other hand, Phoenix has posted two consecutive months of positive annual rates, with its latest being 3.3 percent, and five consecutive positive monthly returns.”

Year	YOY Home Sales Growth	Homes sold per 1,000 population.
1986	6.8%	13.5
1987	-8.9%	12.3
1988	4.0%	12.8
1989	4.3%	13.3
1990	4.5%	13.8
1991	-1.8%	13.3
1992	25.1%	16.0
1993	13.8%	17.7
1994	5.1%	18.2
1995	-4.4%	17
1996	4.8%	17.4
1997	6.4%	18.1
1998	14.3%	20.1
1999	1.7%	19.9
2000	4.0%	20
2001	-1.8%	19.3
2002	0.2%	19.1
2003	0.1%	19
2004	12.6%	21.1
2005	-1.7%	20.6
2006	-5.4%	19.1
2007	-0.9%	18.6
2008	-3.9%	17.6
2009	-12.1%	15.2
2010	-7.7%	13.9
2011	1.5%	13.8
2012	17.5%	16
2013 (Projected)	4.8%	16.6