The Denver metro’s housing market ended last year with a 1.2 percent year-over-year gain, the best showing in 2009, according to the closely watched S&P/Case-Shiller Home Price Indices released today.

However, the one-year change  in December was good for only fifth place of the 20 cities tracked in the index, as other cities also showed even larger one-year gains in December. San Francisco was No. 1 with a 4.8 percent gain. Dallas, San Diego, and Washington, D.C., also showed larger gains than Denver.  Las Vegas, by contrast, showed a 20.6 percent one-year drop.

Still, some local real estate officials said the jump is a good sign that the Denver housing market is on the road to recovery.  It was only the second time that Denver was in positive territory in 2009  from the same month in 2008. In November, the one-year change was 0.5%.

“Wow, that is huge,” said Mike Rinner, of the Genesis Group, which tracks housing along the Front Range. “I just stood in front of a crowd of 140 this morning and told them according to Case-Shiller we were up 0.5 percent and I expected that we would end the year at about zero. Boy, was I wrong.”

The Case-Shiller analyzes data from the same homes that have been re-sold, so it eliminates a bias of different homes in the sales mix, which can drive the average and median prices of homes up or down. For example, there have been so many distressed homes sold in Denver in recent years, that it drove the overall market down, while in more normal years, bigger homes entered the market, driving prices up.

Denver-area home market is healing

What the Case-Shiller study reflects the “healing” of prices at the lower-end, Rinner said.

“The greatest volume of home sales are occurring at the lower end,” Rinner said. “The values have been re-set as lower-end foreclosed homes hit the market, and there has been some appreciation from the lowest levels. If you look at the worst foreclosure markets in Adams, Denver and in Arapahoe counties, those markets have healed. Areas along the northeast corridor such as Green Valley Ranch and Montbello used to have the largest supply of unsold homes on the market, but now they have among the lowest,” as investors and owner-occupants have snapped them up at bargain prices.

By contrast, Rinner said not many sales are occurring in the higher price ranges and there is arguably a large over-supply of expensive homes on the market today.

But because of Case-Shiller’s methodology, it does not include the spec home constructed by a builder for $1.2 million, which never sold and is now going through the foreclosure process and likely will eventually be sold for $400,000 or $500,000, Rinner said.

“Also, at the upper end, owners are less inclined to take a hit, so they won’t sell it in today’s market if they don’t have to,” Rinner said. “So they are just sitting there until the market improves.”

Home values, not ranking, important

Rinner said that Denver’s drop in the ranking is not a concern. Because areas such as San Francisco have had such huge drops in the past, he said it is not a surprise that they may jump as they start emerging from the bottom.

Independent broker Gary Bauer said that the Case-Shiller showing reflects the price gains that have occurred in the Denver area during the past six months.

“It’s been a nice, steady upward movement,” Bauer said. “From my perspective, we were the first coming into it, and we will be the first coming out.”

But Bauer said he is a  ”little surprised that we dropped in the ranking. I didn’t realize that San Francisco is starting its recovery.”

Indeed, he is consulting with a person who three years ago bought a house outside of San Francisco for about $650,000. The owner then put another $300,000 into it. Now, he would like to sell it and move to the Dallas area to be closer to family.

But it’s not worth anything close to $1 million.

“Unfortunately, he bought at the wrong time of the real estate cycle,” Bauer said. “It’s worth maybe $650,000, max. I really don’t know what he can do other than just wait.”

Meanwhile, Bauer is working with a first-time buyer who hopes to take advantage of the $8,000 federal tax credit, which requires that the house is placed under contract by April 30.

“It’s a condo in northeast Aurora that the original owner bought for $143,000,” Bauer said. “We have it under contract for $90,000.”

Tax credit play role

But John P. Cochran, the Dean of the School of Business at Metropolitan State College of Denver, wonders if the tax credit for first-time buyers, which was extended in early November, may have skewed the numbers late last year.

“It’s hard for me, right now, to accurately interpret the numbers of November and December,” Cochran said. “People were uncertain whether the $8,000 tax credit was going to be extended, so there may have been some acceleration going on as we moved closer to that date when it might have expired. I’m guessing that may have caused a one-time bump.”

John Skrabec, the broker-owner of Live Urban Real Estate, said he thinks that the tax credit, which now requires a buyer to place a home under contract by April 30, did help the market late last year. Qualified current owners also have a $6,500 tax credit. The homes must be closed by the end of June to get the credits.

“I think that sales might be front-loaded to the first part of this year, because of the credits,” Skrabec said. “I am a little nervous about what is going to happen after they are gone.”

Still, he said the gain in the Case-Shiller report is an “encouraging sign.”

And he said it doesn’t bother him that some other markets jumped past Denver, although he was surprised that cities such as San Francisco and San Diego saw such big percentage gains.

“I think that is just the pattern that Denver has echoed over time,” Skrabec said. ‘We don’t usually have the biggest drops, but we don’t have the biggest increases, either. Our little chart doesn’t go up and down as some other cities.”

Also, he said that certain neighborhoods have shown much greater appreciation, from the bottom of the market, than the 1.2 percent overall gain reflects.

“Prices have gone up a lot in southwest Denver, in neighborhoods like Ruby Hill and Athmar Park,” Skrabec said. “They were beaten up pretty bad, and there has been a lot of investors fixing and flipping homes there. Prices have been going up. Most of the demand has been from the bottom up, and that’s all right. The market is gong to recover from the bottom up, not from the top down.”

And even higher-priced homes are moving in northwest Denver neighborhoods such as West Highland and Berkeley, he said. Neighborhoods such as City Park and Uptown, also are doing well. “But it’s still pretty tough outside of the city neighborhoods in the suburbs,” he said.

Denver housing up for 5 straight months

Chris Mygatt, president of Coldwell Banker Real Estate in Colorado, said that while the Case-Shiller report is a positive sign, he thinks the market is poised to recover even faster than its report shows.

“If you look at the MLS (Metrolist) data from January, it marked five consecutive months of average prices increasing in Denver,” Mygatt said. “We had not seen that in three years. That is in conjunction with the inventory down to 17,000, plus or minus, low interest rates, and the tax credits, we could be in store for a pretty decent rebound.”

Mygatt said he does not think there is much chance that the tax credits will be extended beyond their current expiration dates. But he thinks that will keep the government buying mortgage-backed securities to keep interest rates low.

Jeff Bernard, a broker with RE/MAX Alliance and principal of Bernard Real Estate Analytics, said his “hunch” is that San Francisco home prices rose so much is because wealthy foreigners took advantage of a weak dollar to buy houses there last year.

He said he thinks that Denver’s overall appreciation is probably caused by homes from $90,000 to $350,000, which have bounced from lower levels, which offset homes at the upper end that have been heavily discounted from their original prices. “I would imagine there would be a fairly large standard deviation if you broke the numbers down by price points,” Bernard said.

Still, Cochran said it is good news that home prices in Denver are moving in the right direction.

“Having a positive number is good, but certainly I have to look at it very, very cautiously as an indicator of where we are heading,” Cochran said.

Nationally, home values improve YOY

Overall, the 10-City and 20-City Composites continued to show improvement in their annual rates of return. In fact, all 20 metro areas and the two composites saw improvement in their annual returns compared to November’s data. Only three cities – Detroit, Las Vegas and Tampa – still showed double digit annual rates of decline as of the end of 2009. Miami, Phoenix and Seattle all moved above such rates with December’s report.

But the areas did not fare as well from November to December. Denver lost 0.8 percent, compared to a loss of 0.2 percent for the 20 cities in the index. Only three cities – Chicago, Cleveland and Dallas – showed bigger month-t0-moth declines than Denver.

“As measured by prices, the housing market is definitely in better shape than it was this time last year, as the pace of deterioration has stabilized for now. However, the rate of improvement seen during the  summer of 2009 has not been sustained,” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “In the most recent months we are seeing fewer and fewer MSAs reporting monthly gains in prices. Only four cities saw month to month improvements in December over November, when you look at the raw data. We are in a seasonally slow period for home prices, however, so it is not surprising to see better statistics in the seasonally-adjusted data, where 14 of the markets and the two monthly composites all rose in December. Similarly, the National Composite fell by 1.1% in the fourth quarter, but rose by 1.6% on a seasonally-adjusted basis.”

Metropolitan Area	November-December Change	1-Year Change from December
Atlanta	-0.7%	-4.0%
Boston	-0.1%	0.5%
Charlotte	-0.7%	-3.8%
Chicago	-1.6%	-7.2%
Cleveland	-0.8%	-1.2%
Dallas	-0.9%	3.0%
DENVER	-0.8%	1.2%
Detroit	0.0%	-10.3%
Las Vegas	0.2%	-20.6%
Los Angeles	1.0%	0.0%
Miami	-0.3%	-9.9%
Minneapolis	-0.5%	-2.3%
New York	-0.7%	-6.3%
Phoenix	0.5%	-9.2%
Portland	-0.3%	-5.4%
San Diego	0.1%	2.7%
San Francisco	-0.2%	4.8%
Seattle	-0.7%	-7.9%
Tampa	-0.6%	-11.0%
Washington, D.C.	-0.2%	1.9%
Composite-10	-0.2%	-2.4%
Composite-20	-0.2%	-3.1%

Month	1-Year Change	Rank
January	-5.1%	2
February	-5.7%	2
March	-5.5%	1
April	-4.9%	1
May	-4.6%	4
June	-3.6%	3
July	-2.9%	3
August	-1.2%	2
September	-1.2%	1
October	-0.1%	1
November	0.5%	3
December	1.25	5

Source: Standard & Poor’s, Fiserv

Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865.

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Developer Ray Pittman is the new chair of the Aurora Economic Development Council

Ray Pittman, founder and president of Denver-based Pittman Development Group, Inc., a  commercial development and investment company , has been named chair of the board of the Aurora Economic Development Council.

“In his tenure, Ray Pittman has been in the middle of some of Colorado’s most notable and prestigious developments and mixed-use projects,” said Wendy Mitchell, president and CEO of the Aurora Economic Development Council. “Ray’s first-hand development expertise makes him an excellent selection to lead the Aurora Economic Development Council in 2010 as chair of the board.”

He succeeds Jay Gershen, D.D.S., Ph.D., former vice chancellor for external affairs of the University of Colorado Denver and currently president of Northeastern Ohio Universities Colleges of Medicine and Pharmacy, who served as chair for 2009. Pittman will direct the board for a one-year term. This will be Pittman’s ninth year serving on the Aurora Economic Development Council board of directors.

Two dozen years of experience

Pittman’s background includes more than 24 years of experience in commercial real estate brokerage, services, acquisition and development. During this time he has managed some of Colorado’s largest and most prominent commercial and mixed-use projects.

From 2002 through 2006, Pittman was instrumental in creating the vision for High Point, a 1,800-acre mixed-use community near Denver International Airport located in both the city of Aurora and Denver. He oversaw all aspects of the project’s land assemblage, planning, zoning and initial development prior to its sale to LNR Property Corp in 2006.

Most recently, Pittman lead the formation of the new Pittman Pathfinder Colorado Opportunity Fund I, an equity fund targeting the acquisition of distressed real estate assets throughout Colorado. The fund completed its first acquisition of eight distressed residential real estate projects in December of 2009.

Other current projects include: Development of the three-building, 91,000-square-foot High Point OmniCenter project in Denver; acquisition of the two-building Parker Plaza South project; and a long-term development consulting assignment with International Speedway Corp. of Daytona Beach, Fla. to develop a new NASCAR speedway and stadium and related commercial development near Denver International Airport

Prior to founding Pittman Development Group, Pittman served as Colorado’s senior vice president and regional manager for Catellus Development Corp. in Colorado. In this role, Pittman  was responsible for overseeing all aspects of the development business, including acquisitions and dispositions, marketing, sales and leasing, project design, construction management, project financing and community and government relations.

Pittman graduated with high honors from the University of California, Santa Barbara and has completed additional course work in real estate and finance at the University of California, Los Angeles and Stanford University.

A partnership between business and government for more than three decades, the Aurora Economic Development Council champions Colorado’s most promising growth industries including aerospace and defense, bioscience, transportation logistics and energy, positioning Aurora and Colorado to win new jobs in an intensely competitive market.

Job creation name of the game

The council creates new primary jobs through innovative deal creation, strategic partnerships, and by advocating for economically sustainable public policy. A-List, one Colorado’s premier business event, and Accelerate Colorado, the only statewide advocacy group that conducts an annual business mission to Washington, D.C., are produced by the Aurora Economic Development Council for the benefit of the state’s leading industries and Colorado’s economic development.

The Aurora Economic Development Council board of directors consists of CEO-level developers, general contractors, bankers, attorneys, consultants, home builders, engineers, architects and representatives of the aerospace and bioscience industries and educational and hospital institutions. Political leadership from the city of Aurora, Adams County and Arapahoe County also serve on the board. Board membership is limited to 100 leaders that are strategically recruited to mutually benefit the Aurora Economic Development Council and its board members.

The organization’s strategic initiatives for 2010 include objectives in economic development and infrastructure, public policy, and marketing and branding.

Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865.

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In the seven-county area, there were 7,109 foreclosure filings in the third quarter, compared with 4,365 in the third quarter 2008. The biggest jump in each county – Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas and Jefferson – occurred in August compared with August 2008.

However, the jump in foreclosures was expected to some extent, because of a new state law that went into effect in August 2008. The law, HB 1402, requires lenders to send out letter to delinquent borrowers 30 days before foreclosure filings. That led to August 2008 foreclosure filings to be abnormally low. Overall, August filings were up 165 percent from August 2008.

‘It would seem that for year-over-year comparisons, the implementation of HB 1402 last year is certainly the most important factor in making that comparison,” said Ryan McMaken, spokesman for the Colorado Division of Housing.

“The September numbers from 2008 are also exceptionally low, and this seems to be related to the drop in totals brought on by 1402 as well,” he added. ” Looking at the numbers from earlier in 2008, monthly totals were up around 400 to even 600. They only really climbed to that level again in April of this year, and numbers have remained solidly high this year. So while the drop in August and September of last year does show an extremely large increase year-over-year, the numbers for July, August, and September of this year appear to be near the highest rates we’ve seen in the last couple of years.”

McMaken also noted that in the Denver metro area last year, the increase from September to October was more than 50% from 1,623 to 2,520. And in both 2007 and 2008, the fourth quarter experienced larger filings totals than the third quarter.

” Both facts lead us to not expect the fourth quarter to register significant drops in totals as compared to the third quarter,” he said

However, there also were jumps in September filings from a year earlier, although not as great as in August from August.

“I don’t think we will see any big decrease of any kind from here on out to the end of the year,” McMaken said.

In the first nine months of the year, there were 20,260 filings, a 5.4 percent increase from the 19,226 filings in the first nine months of 2008.

“I’m not surprised with the 5 percent increase,” McMaken said.

He noted that foreclosures also were expected to rise because lenders had declared voluntary moratoriums on pursuing last fall, which ended in the spring. Many lenders used that time to beef-up their departments to work with homeowners delinquent on their mortgage payments, he said.

And that segues into the bright spot in the foreclosure numbers.

“Lenders appear much more willing to work with borrowers on things like loan modifications more than they did in the past,” said Carol Snyder, public trustee for Adams County.

In the third quarter of this year, 746 homes went to the public trustee auctions, a 32.9 drop from the 1,113 foreclosure sales in the third-quarter of 2008.

“To me, that indicates that lenders are working with borrowers to let them modify their loans or refinance,”  she said.

“That is certainly what I am hearing and what foreclosure counselors are hearing,” McMaken said.

Some distressed borrowers, for example, are being offered 4 percent mortgages that are amortized over 40 years, allowing owners who were behind on their mortgages able to stay in their homes.

Tom Cryer, a broker with the Kentwood Co., last week said that lenders also may be reluctant to take possession of homes and put them on the market. He said that lenders may be hoping that the Obama administration will buy the homes or the delinquent loans from them at a better price than they they would flood the market with foreclosed homes.

“A lot of brokers walk around neighborhoods and we see vacant homes, which clearly are foreclosures,” Cryer said. “But these homes are not reflected in our numbers. If they were, the number of unsold homes on the market would be much higher.”

McMaken noted that the Treasury Department has bought up so many toxic loans that it has kept mortgage rates low, providing some relief to the housing market.

He said there are few signs that a a huge increase in demand is brewing that would allow the market to bail out the depressed housing market in the Denver area or across the nation.

And with unemployment growing and a wave of mortgage rates adjusting higher, many economists and observers expect another wave of foreclosures.

County	July 2008	July 2009	August 2008	August 2009	September 2008	September 2009
Adams	511	490	266	537	328	429
Arapahoe	454	590	167	554	348	555
Boulder	108	245	46	132	47	170
Broomfield	25	34	9	27	24	19
Denver	470	634	148	550	361	453
Douglas	176	222	111	284	53	234
Jefferson	352	390	151	301	210	359
Total	2,096	2,505	898	2,385	1,371	2,219
Percentage Change		19.5%		165%		61.8%

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Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865

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