The Denver housing market received some good news today in a front page Wall Street Journal article.
An analysis of real estate data based on ZIP Codes, showed that Denver home values increases in April from the three previous months, were second only to those in Phoenix.
In Denver, 90 percent of the home values rose during the three-month period ending in April, up from 6 percent a year earlier, the newspaper reported. In Zillow, almost 94 percent of the homes rose in value during that time period.
“This is huge news,” said Peter Niederman, CEO of the Kentwood Co. “Denver never saw the high highs and never saw the low lows of other markets, but today is experiencing a really nice sweet spot. It’s the old tortoise and hare story. The first out of the gate is not alway the winner.”
Zillow used a “proprietary model, considering factors such as sales and appraisals, to determine the value off all homes in a given area,” the WSJ reported.
Denver bests Washington, D.C.
The analysis found that while the housing collapse was national, the recovery is uneven. Denver, by this metric, bested even markets such as Washington, D.C., which for a number of months showed housing appreciation, while other market floundered. But in the Zillow report, the nation’s capitol is up a mere 0.3 percent from a year ago, and about 40 percent of ZIP Codes showed a decline in values during the three-month period ending in April.
In the ZIP Code ranking, Denver also did better than cities such as New York, Los Angeles and Seattle.
A front page article in a national publication that puts the Denver housing market in a positive light is always welcome, and increasingly common, said independent Realtor Gary Bauer.
“I’ve lost track of the number of national articles about the turn around in the Denver market,” Bauer said. “Once again, this article shows our market is vibrant. Yes, the market has some holes in it, but every market has some holes in it. But we are moving forward and moving upward.”
Bauer said that Zillow, as a national aggregator of real estate data, provides a “great service to consumers.” On the surface, he thinks the Zillow report “seems to make sense. I think there are more ‘go-to’ ZIP Codes in the Denver metroplex than ZIP Codes where consumers are not drawn to because they are at the end of their lifecycle, or whatever term you want to use to describe an area that is not doing so well and is trying to turn itself around.”
The WSJ article said that sought-after areas that are drawing home buyers tend to be near public transportation and have good schools.
Lifestyle drives home buying
“More than anytime in history, lifestyle is the No. 1 reason why people are buying homes in the Denver area,” Bauer said. “Lifestyle is very personal and is different for everyone. It can be the walkability score for a neighborhood, how close it is to transportation or how close it is to good schools for my children.”
In a separate report released this week, Zillow said that Denver-area homes rose in value by 0.6 percent in May from April, slightly better than the average 0.5 percent increase from all homes in the 166 metropolitan statistical areas it surveyed.
However, on a year-over-year basis, Denver home prices rose by 2.8 percent, compared with a 0.9 percent decline for the nation. Denver ranked 10th out of the MSAs surveyed, in May from May 2011.Month-over-month, it was the third consecutive month improvement for the nation.
“It is promising to see consecutive months of national home value increases, especially during a period in which we’d expected more downward pressure due to foreclosures,” said Stan Humphries, the chief economist for Zillow, who will be a speaker this week at the National Association of Real Estate Editors’ conference in Denver. ”
Attention has now shifted to the tug-of-war situation with inventory, where buyers want to buy but sellers don’t want to – or can’t – sell,” Humphries said. “This inventory phenomenon, due to both the broader issue of negative equity that is keeping people in their homes and to rational seller behavior at a market bottom, will make for a more volatile housing recovery than what we initially expected.”
To read the entire article, please visit this Wall Street Journal link.
Have a news tip or a real estate story idea? Contact John Rebchook at JRCHOOK@gmail.com. InsideRealEstateNews is sponsored by Universal Lending, Land Title Guarantee and 8z Real Estate.
2nd is better than being last, but it all sounds very fuzzy to me. A study based on Zillow data?
What is so fuzzy, JohnD?
As best as I can tell, since I don’t have a WSJ subscription, is that it is a study of Zillow’s opinions of values (year/year) in different metro areas. These are sight unseen bot generated numbers based upon somewhat speculative estimates by Zillow of a given market. How is that not fuzzy?
As long as zillow’s methodology remains consistent, it does not mater if the values they use are off. They are just reporting a year over year rate of change. For example,if the aggregate value zillow uses is over valued by 5% in year 1, and the same methodology is used in year 2 making this value 5% over valued the rate of change will be the same as if they were underestimated by 5% in both years.
What year over year data are you using to discount zillow?
@John,
Your WSJ link leads to the gated version.
This http://online.wsj.com/article/SB10001424052702303410404577464752659322254.html is not.
@JOhn,
My mistake. My link does not work either.
You have to search on Google and then go from Google to the WSJ to see the entire article. So annoying, Rupert.
The complete Zillow report is at http://www.zillow.com/blog/research/2012/06/19/home-values-continue-to-rise-may-marks-third-consecutive-month-of-increases/
And, you can play with numbers at
http://www.zillow.com/local-info/
Contradicts the story in the Post about the rise in foreclosures/
@JOhn,
My mistake. My link does not work either.
You have to search on Google and then go from Google to the WSJ to see the entire article. So annoying, Rupert.
The complete Zillow report is at http://www.zillow.com/blog/research/2012/06/19/home-values-continue-to-rise-may-marks-third-consecutive-month-of-increases/
nd, you can play with numbers at
http://www.zillow.com/local-info/
Zillow’s breakdown by neighborhood’s YoY rate of change percentages seems reasonable to me.