- Case-Shiller releases April report.
- Denver homes show 8.9% YOY gain.
- Denver ranked 16 out of 20 MSAs
Home prices in the Denver area rose by 8.9 percent in April from April 2013, according to the closely watched Case-Shiller report released today.
Home prices also once again hit an all-time high in April, surpassing the record set in March, according to the latest S&P Case-Shiller Home Price Indices report, which tracks 20 metropolitan statistical areas across the country.
“Dallas and Denver gained 1.6 percent (from March) and continue to set new peaks,” said David M. Blitzer, chairman of the Index Committee at S&P Down Jones Indices.
Lane Hornung, president and CEO of 8z Real Estate, recently wrote a column noting that many consumers are surprised by the prices homes in their neighborhood are fetching.
“It’s one thing to hear that home prices are up 8 or 9 percent,” Hornung wrote in a column titled: “That house sold for how much?”
Hornung: Bringing It Home
“However, for many casual observers of the market, hearing the actual sales price of a familiar home illustrates what those appreciation rates mean in real world dollars and cents,” according to Hornung.
It is also making homeowners wonder if now is the time to take advantage of additional equity available in their home, he noted.
“There is no question that homes along the Front Range are worth much more today than they were a year or two ago. In fact, home prices in many Colorado markets are higher than they’ve ever been,” Hornung wrote.
April marked the 28th consecutive month that home prices were higher than the same month in the previous year, according to Case-Shiller, which tracks repeat sales of single-family homes.
Overall, the 20-Composite index of homes gained 10.8 percent in April from April 2013.
Denver’s 1.6 increase from March, tied with Dallas for sixth place on a month-to-month basis.
Denver handily beat the overall gain in April from March, as the Composite 20 overall monthly increase rose 1.1 percent.
“It is almost comical that prices are up almost 9 percent and we are in 16th place,” said Peter Niederman, chairman of Kentwood Real Estate.
If anything, Niederman would like to see the appreciation rate drop by about half.
“I think if our market was appreciating 4 percent to 6 percent that would be very healthy,” Niederman said.
The Denver-area market has experienced, “good, solid growth for about 2.5 years now,” he added.
Niederman: 2.5 years into 7-year Cycle
“It’s like on Jan. 1, 2012, someone turned on the switch,” Niederman said.
“I think we still have another five years of a strong market ahead of us, as real estate often experiences a seven-year cycle,” of overall rising prices, he said.
None of the 20 markets across the country topped 20 percent year-over appreciation, as they have consistently done during the past 18 months to two years.
That indicates that other markets across the country, which were hit harder by the recession than Denver, are recovering, but at a slower pace than they were previously, Niederman said.
Independent broker Gary Bauer said today’s Case-Shiller numbers confirm what he and other Realtors are seeing in the market.
“The market continues to remain strong,” Bauer said.
“We’ve got sellers slowly putting their homes on the market, with the number of active listing being up a bit.
“Buyers are well-informed and know exactly the price they are willing to pay to compete with other bidders,” he said.
Like Niederman, Bauer doesn’t want to see a long-term trend of homes rising close to double-digit territory, especially when the overall inflation rate is around 2 percent.
“That would not be good for the overall economy,” Bauer said.
Ty Dokken of Metro Brokers, said April’s Case-Shiller numbers “look like previous months,” noting that it shows prices “have passed the previous record.”
Only Denver and Dallas have prices that are higher than they in the pre-recession time of 2006 and early 2007.
“It is still competitive out there,” Dokken said about the Denver-area market.
“Cash is king,” he added.
Multiple Offers Continue
Also, buyers realize that they have to sharpen their pencils to buy the home of their dream.
“Buyers are not trying to low-ball sellers,” Dokken said.
He recently listed two homes and the next day each had received four offers.
“Of the four offers I received yesterday, even the first one came in over the listing price, which is kind of interesting,” Dokken said.
He said the prospective buyer must have assumed it was going to take more than the asking price to win.
The home, in Arapahoe County, was priced at about $425,000.
“When I looked at the comps, it was at the top of the price range,” Dokken said.
Dokken said he still is expecting mortgage rates to rise from their near historic lows.
“I think a lot of people are still pretty sensitive to interest rates,” he said.
“When they do go up, a lot of people are going to look back and realize they should have bought when they were still close to the bottom,” Dokken said.
“For people who are not living in the home they want to be in for the next 20 or 30 years, they really should buy now and lock in these rates,” he said.
Nationwide, Blitzer of the Index Committee at S&P Down Jones Indices, came to the same conclusion that Niederman das far as moderating appreciation.
“Although home prices rose in April, the annual gains weakened,” Blitzer said.
“Overall, prices are rising month-to-month but at a slower rate,” Blitzer continued.
“Last year some Sunbelt cities were seeing year-over-year numbers close to 30 percent, now all are below 20 percent:
- Las Vegas,18.8 percent;
- Los Angeles, 14.0 percent;
- Phoenix , 9.8 percent;
- San Diego,15.3 percent;
- And San Francisco, 18.2 percent.
Other cities around the nation are also experiencing slower price increases.
“While the annual numbers worsened, the monthly figures were seasonally strong. Five cities – Atlanta, Boston, Chicago, San Francisco and Seattle – reported monthly gains of 2 percent or more.” Blitzer said.
“Boston and Charlotte are less than 10 percent away from their peaks,” he continued.
Overall, the housing market still has legs, according to Blitzer.
“Near term economic factors favor further gains in housing: mortgage rates are lower than a year ago, the Fed is expected to keep interest rates steady until mid-2015 and the labor market is improving,” Blitzer said.
The nationwide housing market is not without its challenges.
“However, housing is not back to normal: prices are being supported by cash sales, low inventories and declining foreclosure and REO sales,” Blitzer said.
“First time home buyers are not back in force and qualifying for a mortgage remains challenging. The question is whether housing will bounce back before the Fed begins to tighten sometime next year.”
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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 Co. and 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.