Year-over-year home prices in the Denver area have risen each month since November 2009, according to the index, which was released on Tuesday and tracks 20 major markets across the nation. And each month the percentage increase has risen. In November, the 12-month change was 0.5 percent; 1.2 percent in December; 2.6 percent in January; and 3.6 percent in  February. The index of single-family home prices uses “matched price pairs” of thousands of homes.

Last year, Denver was often one of the top three cities tracked by Case-Shiller, as far as year-over-year changes. On occasion, it even was one of the top metro areas,  even though homes had slipped into negative territory – other markets were hammered far worse.

Denver No. 7

Denver’s performance in March, however, was only good enough for seventh place, as other markets, particularly in California, just shot the lights out. San Francisco, for example, was up 16.2 percent from March 2009. San Diego was up 10.8 percent, marking its 11th consecutive month of increasing home prices.

“California is such a yo-yo,” said Chris Mygatt, president of Coldwell Banker Residential Realty Colorado. ”Honestly, it is unusual for us to be No. 1, No. 2 or No. 3.  Denver is known  as a relatively stable marketplace. We don’t have the yo-yo pattern of collapsing and taking off again. Our numbers are being driven by unemployment, which is still a couple of points below the national average. There is something to be said for a steady, relatively affordable market.”

Denver a better bet than Vegas

Long-term data from Case-Shiller supports Mygatt’s thesis. Both the Denver and Las Vegas markets peaked in price around August 2006. At that time, Denver’s prices had risen about 41 percent from January 2000, while Las Vegas prices were up just under 135 percent during the same time period, according to Case-Shiller. Since January 2000 until March 2010, Denver prices are up an overall 25 percent, while Las Vegas prices are up a mere 2.6 percent.

“That really tells the whole story,” Mygatt said. “Basically, Denver home prices have kept up with inflation. And that’s not bad, for a home that you can enjoy living in. And when you think about it, if you bought a house 10 years ago for $100,000, you probably put no more than $15,000 down. Your house is probably worth $125,000 today, but your cash-on-cash return is much greater than that $25,000 in appreciation And that’s not a bad investment, especially when you consider that you enjoyed the tax breaks of owning a home. And investing in a home may seem especially attractive now, considering  how volatile the stock market is these days,

Part of the reason that the $1 million-priced home sales activity has been rising in the first four months of 2010 in the Denver area is because people have been taking some money out of stocks and putting them into homes. “They see they can get a really good deal in upper-end homes, and want to take advantage of that,” Mygatt said. “I think people will increasingly be looking at the huge ups and downs in the stock market, and invest it in upper-end homes. I’m going to be watching that $1 million and up market very closely in May. I think it will be crucial to see that market to continue to improve.”

No place to go but up

Tom Cryer, a broker with the Kentwood Co., said he is not surprised that Denver in March saw appreciation from a year earlier.

“Once again, we are working off a baseline in 2009 that was just awful,” Cryer said. “If you can’t beat 2009, we just aren’t doing our job. When the bar is as low as it was in 2009, we have to be better this year.”

Also, the $8,000 tax-credit for first-time buyers, which required that a contract be placed on a home by April 30, was still in effect in March, he noted. “I would say, let’s wait and see what happens when the tax credits are no longer a force,” he said. Mygatt, however, noted that mortgage rates near the lowest point in a half century, will pick up some of the slack of people who didn’t cash in on the tax credits. Zillow.com reported today that the average price of a 30-year, fixed-rate loan was 4.6 percent.  A major reason rates are so low is because of problems with the economy in Europe, as investors seek a safe haven in U.S. bonds.

Super-low rates offset tax-credit loss

“It was not that long ago when everyone was saying that rates were going to rise 100 basis points, 1 percent, because the Fed had ended its $1 trillion purchases of mortgage-backed securities,” Mygatt said. “But for a lot of people who missed the tax credits, the lower rates will provide an even bigger benefit. They couldn’t be coming at a better time.”

Cryer wasn’t surprised to hear that major cities in California are seeing double-digit increases. Colleagues in northern California have been recently telling him what a robust market they are seeing.

“I was talking to a relocation broker who is helping 100 people move from Chevron in California, and she said they are selling their homes in a week,” Cryer said.  “They are selling for lower prices than they used to sell for in 2007, but they are receiving multiple offers, if the homes are not too far of a commute. Also, the technology business and hiring is picking up in California. Last year, was the year when a lot companies decided they have to start getting upgrading their technology again.”

Recovery is real

Economist Patty Silverstein said that today’s Case-Shiller report shows that “here in Denver, the housing recovery is well under way. There is something to be said about our stability, compared with the ups and downs of other cities over the last several years.”Silverstein, principal of Development Research Partners in Littleton, agreed with others that the ‘big question mark” is how the housing market will perform now that the tax credits are gone. And while the ultra-low mortgage rates can reduce the cost of people buying homes, as well as putting money back into people’s pockets who are refinancing, she said they are also a grim reminder of what is often global, financial turmoil.

“That’s a little frightening,” Silverstein said. “As much as we like to celebrate the steps that we are taking into the recovery – and most of our indicators are either in positive territory or are moving toward positive territory – we must be aware that there are some dark clouds looming behind us.”

Housing still mixed, nationally

Nationally, “The housing market may be in better shape than this time last year; but, when you look at recent trends there are signs of some renewed weakening in home prices,” said David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “In the past several months we have seen some relatively weak reports across many of the markets we cover. Thirteen MSAs and the two Composites saw their prices drop in March over February. Boston was flat. The National Composite fell by 3.2% compared to the previous quarter and the two Composites are down for the sixth consecutive month.

“While year-over-year results for the National Composite, 18 of the 20 MSAs and the two Composites improved, the most recent monthly data are not as encouraging. It is especially disappointing that the improvement we saw in sales and starts in March did not find its way to home prices. Now that the tax incentive ended on April 30th, we don’t expect to see a boost in relative demand.”

From February to March, Denver home prices rose by 0.6 percent, compared with a 0.5 percent drop for the 20 metropolitan areas in the index. Only Cleveland, San Diego and Seattle performed better than Denver from February to March.

Metropolitan Area	Change from January 2000	Change from March to April	1-Year Change
Atlanta	2.85%	1.0%	-4.6%
Boston	50.98%	2.7%	-3.2%
Charlotte	10.44%	0.8%	-5.1%
Chicago	12.01%	1.7%	-8.1%
Cleveland	-1.12%	1.3%	-6.6%
Dallas	14.31%	0.9%	-4.7%
DENVER	24.0%	1.4%	-3.3%
Detroit	-37.99%	-2.8%	-9.3%
Las Vegas	-4.4%	0.5%	-3.2%
Los Angeles	69.07%	0.5%	-3.2%
Miami	38.6%	1.2%	-5.3%
Minneapolis	8.34%	2.6%	-11.7%
New York	64.96%	0.7%	-3.2%
Phoenix	0.4%	0.0%	-9.5%
Portland	34.5%	1.2%	-9.1%
San Diego	54.78%	0.2%	-5.1%
San Francisco	34.42%	1.8%	-5.4%
Seattle	36.56%	1.1%	-7.0%
Tampa	25.10%	-0.6%	-9.5%
Washington, D.C.	84.9%	2.4%	1.3%
Composite-10	53.64%	1.1%	-3.6%
Composite-20	39.87%	1.0%	-4.5%

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Year-to-date median prices of Denver-area homes sold each February from 1999 to 2010. Source: Gary Bauer

The Denver-area housing market showed signs of a continued recovery in February, according to reports released today.

“First time home buyers are back in the market, as well as investors,” said Gary Bauer, an independent broker who releases a monthly report based on Metrolist data, which reflects homes sold by Denver-area Realtors.

He added that the “inventory is up, pricing (is) up, mortgage rates (are) steady,” and, perhaps most important, “it’s Denver.”

Home prices are up well into the double digits from a year earlier – led by a 20% increase in the average price of a condo at $166,206, compared with $138,239 in February 2009. And the median price of a single-family home that closed last month, compared with February 2009, rose almost 15 percent to $220,750 from $192,000. The increase largely reflects  competition from investors and first-time home buyers bidding up low-priced homes, Bauer and others said.

Bidding Wars

David Simonson, a broker with RE/MAX Professionals, experienced that today.

He had a client looking at a home along the southeast suburban corridor priced at about $230,000.

“The home had been on the market for all of four days, and it already had four offers above the listing price,” Simonson said. “It’s completely a bidding war.”

And for homes priced at $150,000 or less, the bidding is even fiercer.

“For those homes, investors can’t pull out their checkbooks fast enough,” Simonson said. “If you look on the HUD Web site for foreclosures, as soon as people can make open bids on them, they disappear.”

Meanwhile, there were 4,414 homes placed under contract in February, up 5.5 percent from the 4,183 in February 2009, reversing the trend of most of 2009, in which under contracts lagged the same month a year earlier. Under contracts jumped 19.6 percent from the 3,690 home contacts in January, but a large month-to-month increase often is seen for seasonal reasons early in a year.

High-end housing picking up

Chris Mygatt, president of Coldwell Banker Residential Brokerage Colorado, said that savvy, well-heeled buyers are snapping up seven-figure bargains.

“I thought it was just great news all the way around, but especially at the high-end,” Mygatt said. “We super out-performed where we were a year ago. I think we had 32 home sales in the $1 million-plus range compared to 14 in February 2009. I’m cautiously optimistic. February is now the sixth consecutive month we have seen average prices increase.”

As far as the ultra-expensive markets, he said that some lenders are loosening their purse strings.

“Sometimes people are buying the loans down to $417,000 so they can get conventional loans, but we also are seeing some jumbo loans in the high 5 (percent) and low 6 (percent), which are really great rates when you’re talking about an $800,000 or more loan,” Mygatt said.

Not that they are easy to get.

“The lenders are looking for super-high FICO scores, big down payments, and other assets,” Mygatt said. “But I do think that the people who have the ability and the courage to buy at these prices, are getting super-extraordinary deals. We see it every day. And I think those people are going to look back a few years ago and be very glad they purchased in today’s market.”

But those homes still make up a small percentage of the overall market. In the first two months of the year, 51 homes and condos priced at $1 million or more have sold, accounting for 1.5 percent of the overall market.

“While we’re still not seeing a lot of activity in the high-end this year, it is much more than the previous year,” Bauer said. “We are starting to see a few more foreclosures and short sales in the high-end market. And while there are not a lot of jumbo loans out there, there is more money available for high-end purchases than before. And there is some pent-up demand growing for luxury homes. I think that is another example where Denver is a couple of steps ahead of the rest of the nation.”

Brian Chappelle, a founding partner of the Washington, D.C.-based Potomac Partners consulting firm, who was the keynote speaker at Universal Lending’s annual meeting today, said that from a national perspective, “all the news coming out of Denver sounds very encouraging.” About 200 people heard Chappelle speak on a wide variety of housing and mortgage industry topics at the Cable Center on the University of Denver’s campus. (Universal Lending is a sponsor of InsideRealEstateNews.)

Tax Credits Expiring

Bauer said that Denver-area buyers increasingly are taking advantage of the $8,000 federal tax credit available for first-time home buyers. There also is a $6,500-tax credit for qualified homeowners, planning to move up or down.

Chappelle said buyers who want to take advantage of the credits better do so quickly, because Congress is very unlikely to extend them. The credits require that a house be placed under contract by April 30 and closed by June 30. The credits initially were going to expire last November.

“I think there is a feeling in Congress that they are not getting much bang for the buck with the tax credits,” Chappelle said in an interview with InsideRealEstateNews, before his presentation. “They were very helpful at six months ago, but there is a feeling now that most of the people who will use the tax credit, would have bought a house anyway.”

Simonson, of RE/MAX, agreed.

“I think the March numbers will reflect some of the tax-credit activity, like February did,” Simonson said. “And I think when they are over, we will see a little drop off. But it will be a blip. I think most people who really wanted to take advantage of it, did so last year. Now, people will take advantage of it if they can, but I don’t think it is the driving force it was last year.”

Chappelle said the odds of Congress extending the tax credits were at 10 or 20 percent, at the most, especially if the housing recovery shows signs of recovering without them.

“Now, if housing were to fall off a cliff when they go away, Congress might do something, although I don’t know if it would be to extend the federal tax credits,” Chappelle said.

Rates to remain low

And that means interest rates will remain at their near-record lows, he said.

“There had been some fears that the Fed would stop mortgage securities a the end of March, and interest rates would shoot up,” Chappelle said. “I don’t see that happening. Congress realizes the only way the economy is going to recover, is if the housing market recovers. And the only way the housing market can recover, is if interest rates remain low.” He said the Fed can keep rates low, because there are no signs that inflation is an imminent threat.

Larry McGee, a broker with the Berkshire Group, noted that February’s statistics reflect “positive news” in year-0ver-year and month-over-month increases in average and median prices.

Inventory remains low

He does show some concern, however, on the small number of homes on the market. Bauer puts the unsold inventory at 19,359, down 3.5 percent from a year earlier, while McGee puts it at 18,669. The slight difference is because Bauer added a new category for homes created by Metrolist, called “pending” sales, back into the unsold inventory.

Either way, “this  is an extraordinarily small amount of homes available for the Denver market, especially considering the low number of new built homes being constructed at this time,” McGee said. Bauer said he was surprised there are not more homes on the market.

McGee said reasons for the low inventory include  ”high unemployment making it difficult to sell, a lack of financing available for home loans in the $400,000 to $1 million  market, a lack of equity for many home owners that must remain in place until a rise in market prices creates enough usable equity to allow a sale of the present home and a purchase of a more desirable one.”

A snapshot of sales activity by price, county

Source: Gary Bauer

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

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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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“I wish five years ago, I could have foretold where the market was going to be today,” Mygatt, 46, told me in a wide-ranging interview. “We all wish that. But no one could have.”

When Mygatt was named as president, Coldwell Banker had been on a buying spree, purchasing some of the best-known names in residential real estate, including Moore and Co, Van Schaack and Perry & Butler.

Five years ago, his Coldwell Banker had more than 2,000 agents in 21 offices, almost quadrupling in size from 2000.

For Mygatt it was a high-flying time, literally. A pilot who was taught to fly planes when he was a kid, for six months used to fly to work every day from the Jeffco Airport to the Centennial Airport, and then drive to Coldwell Banker’s office in the Denver Tech Center. At the time, he lived in Boulder.

“I’m not sure I saved any time, but it was wonderful flying above the traffic instead of being stuck in it,” Mygatt told me.

His grandmother taught him to fly when he was a kid and received his pilot’s license when he was 17.

“Growing up, I thought that was what grandmother’s did – fly planes,” he said.

Today, Coldwell Banker Colorado has about 1,400 agents, a 40 percent drop from its peak. And he has trimmed the number of offices to 14, a 33 percent drop.

Still, the Denver Business Journal in May ranked it as the largest brokerage firm in the area, with $2.8 billion in sales and 9,777 closings. And despite having substantially fewer brokers than at its peak, its market share is virtually unchanged.

“NRT, the company I work for, and the parent company of Coldwell Banker, was very visionary in forecasting the change in the business model for residential real estate,” Mygatt said.

One of the first things he did when he was at the helm, was to start consolidating its offices.

“The decision we made was to cutback on our bricks and mortar, while maintaining our high level of marketing, support and underlying philosophy of service to our customers,” Mygatt said.

At the time, when residential real estate sales were hitting all cylinders, he said his decision was met with puzzlement by his competitors.

“They thought I was crazy,” Mygatt said. “They thought now is the time to increase the number of your offices, not scale back. But that decision put us at least two years ahead of our competitors, maybe three years.”

Mygatt, who was born in Montana but raised in Boulder, started his real estate career in 1986, after leaving Colorado State University, just a few courses shy of getting his degree.

During college, he launched a limousine service with a friend, Dan Fowler.

“I was always planning to finish a semester and get my degree, but the limo service was a seven day a week, 24 hour a day business,” Mygatt recalled. “We took everything from runs to the airport to concerts at Red Rocks. We took everyone form business people and celebrities to just regular people.”

Dan’s father was Jack Fowler.

“Jack had been a legend in real estate in Boulder for decades,” Mygatt said. “The limo service business was so hard and consuming, and real estate looked to me like a lot more fun and a much better way to make a living.”

Mygatt got his feet wet in the business as an on-site condo salesman at a project in Boulder.

After two years, “I became a real, real estate salesman,” at what became Fowler/Better Homes & Gardens.

He quickly became one of the top agents at the company.

“I loved selling real estate,” Mygatt said. “It was so empowering to see young people buy their first homes. I was a young guy , and most of my clients were first-time home buyers.”

At the same time, “I was a seminar junkie,” he said. “I loved to take classes and attend workshops and read and learn more about real estate. I would come to the office and tell the other agents I just went to this class or took this course, and they should do it, too. After a while, Jack Fowler said to me, “Chris, you should be managing this office.”

He later was promoted to president of Fowler?Better Home & Gardens, growing it to 300 agents from 120.

“Now, I am just as thrilled living vicariously through the agents and their success,” Mygatt said. “It is such a great way to make a living.”

In 2000, he just Coldwell Banker as “the right-hand man,” for Kate Rossi, who had come from Pittsburgh to be president of the Colorado operation.

They began their buying spree, which included companies such as Moore and Co. with $1.5 billion in sales, Frontier with $1 billion in annual sales, and Perry & Butler, with $700 million.

“The companies were coming to us,” Mygatt said. “The business model was changing quickly and the astute company owners, going back to the early 200s, saw us as a real viable buyer.”

In a typical year, he said, a typical company will see a 27 percent or 28 percent turnover rate.

“What happened, as we bought companies, the less experienced and younger agents, tended to leave,” he said. “And now, of course, we’re seeing a record number of people leaving the industry. Some of the people leave to join competitors, but now more and more people leaving Coldwell Banker leave the industry completely.”

And Mygatt helped accelerate the weeding process in 2006, when he created the Agents Value Package.

“It was a very bold move,” Mygatt said. “What we did was charge very agent an annual fee of $1,000 (now $863), which included their E&O (errors & omission) insurance, covered the cost of their continuing education requirements, and took it one step further by providing very effective direct mail pieces that could be used to attract past clients.”

Each package cost Coldwell Banker $1,300 to $1,400.

Some of the agents however, balked at paying the money and quit.

That was fine by Mygatt.

“We didn’t mind subsidizing the cost to our good agents, but part of this was also to weed out under-performers,” Mygatt said. “We made a decision that it wasn’t important to us to have the biggest operation, but we wanted the most effective. In 2006, we had nearly 500 agents who had not had a closing in the past 12 months.”

Many of those agents quit, he said.

“They were the people who knew the cost of everything and the value of nothing,” Mygatt said.

Mygatt said the biggest change he has seen in the past five years is how Coldwell Banker markets homes.

“We used to spend a substantial amount of money on newspaper advertising, and now the amount we spent on newspaper ads is pretty close to zero,” Mygatt said, although he said some agents may still buy occasional newspaper ads.

And buyers, of course, no longer need to depend on Realtors to bring them MLS books to find a homes they like, since all of the information is online.

“You can find every home listed on the Web,” Mygatt said. “But it is still important for people to have an agent who knows the area what he or she thinks. Let’s say you want to buy a home in central Denver or Highland, you want an agent to tell you what he or she thinks of this street and what is happening in that specific area.”

Also, real estate regulations become more complicated every year, and the only way to negotiate smoothly through them is to have someone on your side who deals with them every day.

“If I am flying to Miami, I can go on the Internet and buy my exact seat, and I know exactly what it is going to be like, so I might as well just shop online to get the best price,” Mygatt said. “But for most people, buying their home is their biggest investment, and you want a professional guiding you through the process.”

Mygatt said there have been more changes in the past five years in real estate than their had been in the previous 25 years.

“And in the next two or three years, we are going to see more changes than we saw in the past five years. Real estate, historically, has been notoriously slow to move and make changes. But change is coming. What it is all going to boil down to is one thing – the skill and knowledge of a quality real estate broker.”

Chris Mygatt was named president of Coldwell Banker Colorado five years ago.

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