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Colorado home prices at record levels

Highlights:

  • CoreLogic releases March report.
  • Report shows Colorado set home price record.
  • CoreLogic owns Case-Shiller, which showed similar results for February.

Colorado home prices set a record in March, something only a handful of other areas in the country have achieved, according to a national report released on Tuesday. CoreLogic March 2014 HPI FINAL 050614-6The report by CoreLogic showed that Colorado, the District of Columbia, North Dakota, South Dakota, Texas and Wyoming in March all surpassed previous home price peaks.

Home prices reached a new high in Colorado, despite trailing the national average year-over-year percentage gains.

In March, Colorado home prices, when distressed properties are included, rose 9.0 percent, ranking it 18th in the nation. By contrast, nationally, prices rose an average of 11.1 percent. When distressed properties were not included, Colorado home prices rose by 7.0 percent, compared with a national average jump of 9.5 percent.

Nationally, home prices have been rising on a year-over-year basis for the past 25 months.

Colorado’s performance is something to cheer, said Peter Niederman, CEO of Kentwood Real Estate.

“That is good news,” Niederman said. “It’s another national site talking about Colorado in a positive light. It is outstanding.”

Independent broker Gary Bauer agreed.

“Clearly, CoreLogic is consistent with other data,” Bauer said.

“What this tells us is that Colorado’s housing market is coming back,” he added. “We do have some local hyper-markets in the state that are still having some difficulty, but as a whole, Colorado and the Denver area are doing a really good job. We have got buyers out there and we have sellers out there.”

Case-Shiller, which is part of CoreLogic, reported that home prices in the Denver-area rose by 9.1 percent in February, from February 2013. Bauer said Denver is in a better place than other cities, such as Las Vegas and those in California, where prices are rising by 20 percent or more.

“Denver is kind of in the middle of the pack of appreciation and that is right where we want to be,” Bauer said.

Nationally, the CoreLogic HPI Forecast indicates that home prices, including distressed sales, are projected to increase 0.8 percent month over month from March 2014 to April 2014 and by 6.7 percent from last March to March 2015. Excluding distressed sales, home prices are expected to rise 0.6 percent month over month from to April 2014 and by 5.7 percent year over year from March to March 2015. The CoreLogic HPI Forecast is a monthly forecast built on the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices by the number of owner-occupied households for each state.

“Nationally, it is interesting that home ownership, at 64.8 percent, is the lowest it has been in 19 years,” Niederman said. “Even though home prices are rising by double-digits in many markets, not as many people own homes as you might think would in such a strong market.”

It also somewhat surprising that despite a strong housing market, the apartment vacancy rate is hovering around 5 percent, he said.

“In the past, when you had a really strong housing market, a lot of renters would move out of apartment to buy homes and the vacancy rates in apartments would rise,” Niederman said.

Excluding distressed sales, home prices across the country are expected to rise 0.6 percent month over month from March to April and by 5.7 percent year over year from March to March 2015, according to CoreLogic.

Experts at CoreLogic were predicting an even stronger housing market. “March data on new and existing home sales was weaker than expected and is a cause for concern as we enter the spring buying season,” said Mark Fleming, chief economist for CoreLogic.

“Interest rate-disenfranchised potential sellers are adding to the existing shadow inventory, while buyers who can’t find what they want to buy are on the sidelines creating a new kind of ‘shadow demand.’ This supply and demand imbalance continues to drive home prices higher, even though transaction volumes are lower than expected,” Fleming added.

“Home prices continue to rise across the nation, but affordability, tight credit and supply concerns are becoming an increasing drag on purchase market activity,” said Anand Nallathambi, president and CEO of CoreLogic. “In many markets – especially major metro areas like Los Angeles, Atlanta and New York – home prices are being driven up at double-digit rates fueled by a lack of inventory and record levels of cash purchases.” Bauer noted that a lack of inventory has been a well-publicized problem in the Denver area. “Talk to any Realtor with boots on the ground and they will tell you they are getting back to basics to educate people what the value of their home is and why this could be a very good time to put your home on the market,” Bauer said.

Have a story idea or real estate tip? Contact John Rebchook at JRCHOOK@gmail.com. InsideRealEstateNews.com is sponsored by Universal Lending, Land Title Guarantee and 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.