This report by Gary Bauer, using Metrolist data, shows far fewer homes on the market than Forbes.com. (Note: Single Family category includes single-family detached homes and condos, and Residential refers to only single-family detached homes.)

Denver Realtors and business leader, who have become  accustomed to favorable national press about the local  economy and real estate market, feel as though they have been blindsided by an article in Forbes.com that describes the local housing market as the second worst in the country.

Many experts said that the article, which ranked only Milwaukee below Denver, gives Denver an undeserved black eye.

“It absolutely gives us a black-eye,” said Tom Clark, executive vice president of the Metro Denver Economic Development Corp. and the Denver Metro Chamber of Commerce. “I glanced at the article last week and realized it was absolute bull crap.”

Unsold inventory exaggerated

One thing that irked real estate brokers that track the market closely is that the article claimed that there were more than 42,000 unsold single-family homes on the Denver-Aurora metropolitan statistical area. However, Metrolist data shows at the end of the March there were only 14,989 single-family homes on the market. Even when condos and townhomes are included, the number is less than 20,000. Indeed, most experts doubt that there are even 42,000 unsold homes in the entire state of Colorado.

“This article is so incorrect that it should be removed from the online publication,” said Jeff Bernard, principal of Bernard Real Estate Analytics, and a long-time Denver broker.

“Perhaps there was a completely different scope of parameters for data gathered by Forbes this year versus data gathered last year,” in which Forbes.comsaid Denver’s housing markets was one of the best in the country, added Bernard, a broker with RE/MAX Alliance. “It even leaves me wondering if they collected data on the right city. Or maybe they’re spiking their Kool-Aid before they run their analytics. Forbes is usually a pretty good read, but this article seems to be slithering towards irresponsible reporting. Forbes is usually a pretty good read, but this article seems to be slithering towards irresponsible reporting.”

Forbes claims inventory jump in Denver

The Forbes.com article, originally published on April 5, had this to say: “Before 2009, if any market seemed to be free from the rest of the country’s housing woes, it was (Denver.) But the city’s fortunes seem to have shifted: The recession hit Denver later, and only in the past year have sales slowed and inventory begun to pile up.” And the report, which it said was based on information from the National Association of Realtors, Zillow.com and Moody’s Economy.com, went on to say that “Denver doesn’t come to mind as a housing-crisis hot spot, but the city that once looked like it would escape the housing bust unscathed now shows signs of strain. More than 42,000 homes are on the market in the metro, 27% more than last year.”

Although it went largely unnoticed, in January, Forbes.comraised the specter that the Denver-area housing market was in trouble, even though at that time the S&P/Case-Shiller Home Price Index, which had just released its November statistics, ranked Denver as No. 1 of the 20 major housing markets it tracks.

“But real-time asking price data provided to Forbes by Altos Research, a Mountain View, Calif.-based real estate research firm, suggest the Mile-High city is taking a turn for the worse. In July 2009 listings showed a .5% decline from the year before, the first time the city posted a price tag decline since 2008. The slump has since worsened; in January year-over-year asking prices were down 3%, to $368,870.”

Larry McGee, principal of the Berkshire Group, said that today an out-of-state buyer who recently purchased a home in the Denver area, read the most recent Forbes.com article and is now questioning whether she made a mistake.

“It does hurt us when the national press makes statements like this that are false,” McGee said last Thursday, repeating and elaborating on his criticisms today. “I guess I do not trust Forbes anymore.”

Realtor believes Forbes is irresponsible

McGee sent a letter to his agents this morning and did not mince words.

“I am very angered by this latest example of journalistic prevarication,” McGee wrote. “Unfortunately, the media operates like other sharks, and is not generally willing to challenge a fellow shark, so we will probably have to live with this and counter with our own information. ”

 Last week, McGee’s wife,  Kristal Kraft, also a Realtor, Tweeted the author of the Forbes report.  “Your numbers aren’t even close. Very irresponsible reporting. Maybe you should check your source,” Kraft Tweeted the reporter.

Forbes.com stood by its reporting, with this response, also sent through Twitter: ”Checked #s, all correct. Data is for metro areas (a city and its surrounding suburbs). Appreciate the feedback.” Forbes.com has not responded to an e-mail from InsideRealEstateNews.com asking it to defend its information. Efforts to reach the author of the report were unsuccessful.

McGee said he is checking, but does not believe that there are even 42,000 unsold homes in all of Colorado, much less in the Denver area.

Gary Bauer, an independent broker who prepares a monthly report on the state of the Denver-area housing market, agreed.

“Where in the devil is somebody saying we have more than 40,000 unit for sale? I think it would even be a stretch to say we had that much unsold inventory from the Wyoming border to the New Mexico border,” Bauer said. “This article was an unfair swipe. I am not aware of any national report as being this negative to Denver in recent memory.”

Niederman says report ignores facts

 Peter Niederman, chief operating officer of the Kentwood Cos., e-mailed a letter today to the author of the Forbes.comarticle, filled with chief operating officer of the Kentwood Cos., e-mailed a letter today to the author of the Forbes.com article, filled with the most current statistics on the Denver-area market from Metrolist. The statistics, not only show Denver’s market is strong and healthy, but also shows that overall, Denver only has slightly more than a 5-month supply of homes on the market. A year earlier, it had more than a six-month supply, he said.

That is a sign of a market that is in balance between supply and demand, he said. He noted it is a seller’s market for lower-priced homes, while it is a buyer’s market for more expensive homes.

“I actually think we are in a very sweet spot with out single-family home supply,” Niederman said. “If anything, we could use some more inventory. But we don’t have any place near 42,000 unsold homes. We are enjoying a very healthy and stable market.”

Niederman said that perhaps the Forbes article was talking about the ‘shadow market,” of homes being held by banks or soon-to-be sold by banks, which some analysts believe could greatly increase the inventory of unsold homes in the Denver area.

“Reading the article, I did not get the impression she was talking about REOs or foreclosures,” Niederman said. Niederman sent an e-mail to Forbes.com, filled with information about the Denver-are market from Metrolist, which paints a much different and more bullish picture. But he received no response from Forbes.com. 

Shadow market can’t explain numbers

Clark, of the Metro Denver Economic Development Corp., said that he recently spoke to a home builders group, and some bankers and mortgage company officials said that banks may be holding a “significant number of houses” that they haven’t yet placed on the market. They don’t’ want to flood the market with homes and further erode the value of houses in the neighborhoods, as well as the homes they are trying to get off their balance sheets, he said. (For an earlier blog on the Denver-area shadow market, please visit this link.)

While that makes sense, he said he doesn’t think it is likely that banks are holding double or triple the number of homes being listed in the market.

And broker Bauer noted that banks increasingly are working with distressed borrower to keep the homes from going to foreclosure sales. Increasingly, lenders are trying to modify loans to keep borrowers in their homes, or failing that, are agreeing to short sales, where the bank accepts less than the mortgage amount.

“If (Forbes.com) is including all of the foreclosures, existing and pending, in their numbers, maybe would add another 2,000, 3,000 or maybe even 5,000 homes into the market – and that is a pretty big IF,” Bauer said.

Patty Silverstein, principal of Economic Development Research Partners and the economist for the chamber, also thought that the number of unsold homes quoted by Forbes.com seems way too high.

“The Metrolist data could be a little on the light side, and may be under-counting by a bit the number of homes on the market, or that could go on to the market,” Silverstein said. “Even so, I cannot fathom how they came to the 42,000 level.”

Silverstein said that while you never want to sugar-coat the data, it is an unfair black mark against the Denver area, when any part of the economy is made to look worse than it is.

“I think think this whole economic recovery is fragile enough, that consumers are very nervous,” Silverstein said. “When they hear negative reports like this one, it is like we are taking two steps back.”

Clark said that while the Forbes.com article is not good news for the Denver area, it won’t haunt the economy for the long-term.

“We got hit with some bad news from this one, but I guarantee you we will soon see another national report with good news, which will take the spotlight,” Clark said. “The bad news from this one won’t last very long.”

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

Related Posts:

• Forbes takes second look at Denver's housing market
• Niederman pushes for statewide MLS
• Under contracts plunge 41 percent following end of tax credits
• Denver No. 5 on Case-Shiller
• Exclusive: More than a million Denver-area home sales over 35 years

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

Related Posts:

• Spring home sales likely to surge
• Tax credits fuel banner March home activity
• Under contracts drop by 30%, but homes prices up
• Home sales drop in August
• July best month of year for home closings

“We are not aware of anyone else who is doing this,” said Tyrone Adams, spokesman for CAR. “The program already has been launched.  But it’s been sort of a soft launch.  We have about 10 members participating in it.  Now, we’re getting the word out to all 23,000 of our members to get them to participate.”

CAR has partnered with QSC Quality Service Certification program to help consumers make better, more informed decisions when choosing a real estate professional.

Independently validated service results, data and unfiltered customer comments will be available to consumers at an independent Website, www.QualityService.org, providing consumers with a source of valuable information  with their Realtor. To ensure the integrity of the process, every closed transaction is surveyed and only consumers who participate in a closed transaction participate in the survey process.

“Our goal is to offer each of our 23,000 licensed real estate professionals access to an optional suite of resources to enhance service delivery skills and to help bring greater assurance of consistent, reliable and accountable service to their real estate clients,” said Robert E. Golden, CAR’s CEO.

Customer feedback critical

The Quality Service Certification program brings a standard of service, an organized service delivery process, the offer of a written service guarantee, an independent quality measurement and customer feedback system and higher accountability that results in more consistent service and an improved value proposition for consumers, CAR said.

“In today’s business environment, real estate professionals want access to the best tools, resources and technology to help them deliver their very best service,” said Larry McGee, chairman of the CAR Professional Development task force.  ”Consumers want to make better, more informed decisions when researching and selecting a real estate professional to represent them. QSC offers resources and technology to meet the needs of consumers and real estate professionals, alike,” said Larry McGee, chairman of the CAR Professional Development task force.

Quality Service Certification, Inc. with headquarters in San Juan Capistrano, Calif. is a leading  resource for training, systems, technology and performance assessment in the real estate brokerage and mortgage origination industries.

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

Related Posts:

• CAR endorses rental insurance
• Hornung: Housing hotter than CSU shows
• Everitt Real Estate Center stands by its findings
• CSU-CAR study draws skepticism
• Realtors: Forbes unfair to Denver