Two national reports are forecasting Denver-area houses will be among the fastest-appreciating in the U.S. in the coming months.
A report released today by Clear Capital, headquartered in Truckee, Calif., projects that houses in the Denver-Aurora Metropolitan Statistical Area will appreciate an average of 3.9 percent by the end of 2012.
It ranked Denver No. 13 of the top 50 MSAs it tracked. It ranked the Seattle MSA No.1 with an anticipated 14.4 percent increase, followed by the Phoenix area at 10.4 percent
On a year-over-year basis, the Denver MSA already has gained 10.2 percent, ranking it No. 5, according to Clear Capital, while nationwide, homes lost 0.6 percent.
Only Phoenix, Columbus, Ohio, Minneapolis-St. Paul, Miami and Pittsburgh out-performed Denver.
Quarter-over-quarter, Denver gained 3.6 percent, compared with a 1.2 percent gain for the nation.
A separate report released last week by Veros Real Estate Solutions of Santa Ana, Calif., ranked Boulder and Denver-Aurora MSAs as two of the top five areas projected to be the strongest markets for the 12-month period ending June 1, 2013.
It anticipates Boulder homes to gain an average of 3.6 percent and Denver-Aurora 3.3 percent, for third place and fifth place, respectively. Colorado was the only state to have two MSAs in the ranking.
“That’s good,” said Peter Niederman, CEO of Kentwood Real Estate, when told of the rankings last Friday.
The Veros report projected that Phoenix-Mesa-Scottsdale in Arizona would be No.1, with homes growing in value by an average of 6.5 percent. “It is no surprise that Phoenix is No. 1, because home prices had fallen so far and they have become so cheap that people are finally deciding it is time to buy. I would much rather have Denver’s market. We never saw the high highs or the low lows. Slow and steady wins the race.”
Reno-Sparks in Nevada was listed as nation’s weakest market, projecting to fall by 5 percent in the 12 months ending next June.
Independent Realtor Gary Bauer, who has done some due diligence for a client looking to invest in Phoenix homes, agreed with the group’s assessment.
He also said he thinks the two reports are on target in picking Denver as a top housing market.
“Barring any unforeseen national economic disaster, Denver is the market everybody is looking at,” Bauer said. “We were the first in, first out, to use the FIFO accounting phrase. Everything is looking very positive with the one exception of the lack of homes for sale. Just about every month now our new listings are equal the number of homes that are placed under contract. We would have some problems if we the number of new listing slowdown dramatically. Right now, we still have tremendous interest from buyers.”
However, Jack O’Connor, the broker/owner of Denver 100 Real Estate, indicated the market has peaked in the short-term.
“The overall market will show a flattening number of transactions moving through the third and fourth quarters of 2012, as inventory rises in the upper price ranges faster than it’s absorbed,” O’Connor said.
He said that sellers at the higher price points, especially, “need to keep their expectations in check when they bring their homes to market.”
Robert McGuire, a broker with Your Castle Realty, said he thinks the forecasts by the two California groups “sound right. I think the market is definitely strong due to the lack of inventory, the lack of REOs (foreclosures) and short sales and stronger buyer participation as far as getting themselves pre-approved by lenders to buy a home. People are standing in line to buy homes that are priced correctly.”
However, for the markets he specializes in, he thinks their price appreciation projects are too conservative.
“I work in Denver’s inner-city neighborhoods like Park Hill, City Park and Washington Park,” McGuire said. “In those neighborhoods, prices are up anywhere from 7 percent to 10 percent. Even Montbello and Green Valley Ranch, where many of the homes are under $300,000 and even under $200,000, are seeing very strong price appreciation.
“When these reports are talking about a 3.9 percent or 3.3 percent increase, they are talking about the entire market, including the suburbs. When you are talking about Denver neighborhoods, the appreciation will continue to be much stronger, especially below $300,000.”
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