R. Don Larrance, the CEO of Perry & Co., has been honored for more than four decades as a Realtor

R. Don Larrance, CEO of Perry & Co., has been honored for more than 40 years of consecutive membership in the National Association of Realtors.A surprise celebration at the company’s weekly sales meeting was held Wednesday. Barbara Lambert, CEO of the Denver Board of Realtors, presented Larrance with congratulations, appreciation and a 40-year pin from Vicki Cox Golder, President of the National Association of Realtors.  Larrance was designated as a “Realtor Emeritus,”  an honor seldom bestowed by the NAR.

“We are keenly aware that the long and faithful service, for which you are being honored, reflects myriad effort and activities on behalf of the Association or Associations of Realtors of which you have been a member,” said Golder, in her congratulatory letter. Larrance has been an active member of the Denver Board and NAR for more than four decades. Over the years, he has been the President of the Denver Board of Realtors, Senior Vice President of the Institute of Real Estate Management, where he also served as a teacher for 15 years, and a director for the Colorado Association of Realtors. In addition to these positions he’s also continued to serve on a variety of committees while building his own real estate practice and his local company, as President and Managing Broker of Perry & Co. Real Estate. He has been honored for this work by receiving the Denver Board of Realtors’ Realtor b of the Year Award, as well as, their Broker/Manager of the Year in 2004.

In typical modest fashion, Don told the assembled brokers that being honored for 40 years of consecutive membership was really all about them – for without the Perry & Co. staff and Realtors he wouldn’t have worked to build and sustain the independent company.

Perry & Co. is a locally-owned, privately-held real estate company serving metropolitan Denver with three offices and 65 agents, in Cherry Creek North, Cherry Creek East and Greenwood Village.

Contact John Rebchook at JRCHOOK@gmail.com

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Vote on MARS at the end of this blog

Tara Rogers firm, TMS Realty, is MARS-compliant.

Mars is the red planet, but MARS has some real estate professionals seeing red. The National Association of Realtors is working to fine-tune MARS – the acronym for Mortgage Assistance Relief Services Act – regarding real estate brokers, although some brokers already are cheering MARS.

The act, sponsored by the FTC, with relatively little fanfare, went into effect on Jan. 31 to help protect distressed homeowners from mortgage relief scams.  Only now, does it appear to have started appearing on the radar screen of many Realtors.

MARS lands on Realtors who do short sales

The 54-page MARS document defines “mortgage assistance relief service” to include “negotiating, obtaining or arranging a short sale of a dwelling.” A short sale is when a bank accepts less than the mortgage amount, and is seen as a less costly alternative to a foreclosure. There were more than 3,300 short sales in the Denver area last year.

Among other things, MARS:

• Outlaws charging advanced fees or passing along a short sale coordinator’s fee to homeowners prior to the seller receiving a written notice from the lender saying the offer is acceptable.
• Broker and others involved in the short sale process must disclose that they and their companies are not associated with the government.
• Consumers must be reminded that it is within their right to reject the offer.
• Mortgage relief companies are prohibited from making a false or misleading claims in about a dozen specific areas. Among other things, misrepresentations are not allowed regarding the likelihood of consumers getting the results they are seeking; the consumer’s payments and other obligations; and the amount of money a consumer will save by using their services. In short: Do not mislead consumers on any aspect of the process. All disclosures must be clear and prominent. It even goes as far to say that text advertisements must have the heading IMPORTANT NOTICE in bold font that is at least two-point type larger than other type in the document.
• Sellers cannot be advised to not contact or communicate with their lenders or loan servicers.

MARS also imposes record-keeping and compliance requirements. Indeed, one criticism has been that the FTC went a bit over-board with multiple disclosures.

There is no exception in MARS for real estate brokers, as there is in the Colorado Foreclosure Protection Act, although there is an exception in MARS for lawyers.

“This means real estate brokers working with short sellers or any seller in foreclosure need to understand and comply with MARS,” according to Damian Cox, a Denver real estate lawyer.

Indeed, violators of MARS could face fines of up to $11,000 per day.

Although it has been in effect for two months, the gravity of it is only now starting to sink in.

Consumers may be hurt

“It was adopted with no real fanfare,” said Cox. “It was intended to help consumers, but, unfortunately, I think it could hurt the ability to get a short sale done. I think it is overly broad. Realtors are starting to become more aware of it, and they should. It is a big deal.”

It’s a national rule and has had a national response.

Earlier this month, Jim Schneider, a Realtor in the Chicago area, criticized the National Association of Realtors for not making a bigger deal about MARS.

“They didn’t do much to rally the troops to change this ruling to make (it) something less difficult to implement; they issued their findings long after the ruling came into effect, and they haven’t exerted any effort to make the Realtor community aware that this exists. Trifecta!” Schneider wrote.

NAR looks to tweak ruling

However, Laurie Janik, an attorney with the NAR, this morning told InsideRealEstateNews that it she is  working with the FTC regarding required disclosures under MARS by real estate brokers who are working on short sale transactions.

“The rule is not a good fit,” for real estate brokers as far as some disclosure requirements, Janik said. “We are working with the FTC to get some additional guidance. The FTC has been most willing to engage in conversations with us.”

Some Realtors like MARS

But MARS already has its fans.

Bobby Burnett, principal of Keller Williams Realty-DTC, for example, thinks MARS is just what the industry needs.

“I think it is a good thing,” said Burnett, who expects to complete at least 100 short sales this year. He estimates short sales account for 50 percent to 60 percent of the activity by his Burnett Team at Keller Williams.

“No. 1, it has a prohibition of upfront fees, and I like that,” Burnett said. “You can get paid at the closing or after the lender has accepted the offer, but it is illegal to charge upfront fees. I agree with that.”

He also said that he likes the disclosure requirements, such as saying you are not representing the government and that consumers can reject offers.

“I was doing most of this stuff before,” Burnett said. “You know how much I hated these guys that were cheating people and double-selling properties. I hated those guys.”

Regulations inevitable

Ryan Lantz, who works with a number of companies that provide short sale services to brokers, as well as Realtors, months ago said it was inevitable the industry would face more regulations.

Lantz, co-founder and managing director of Claremont Information Systems, which developed Short Sale ProLogic, a software program that helps brokers identify short-sale listings and unsold homes in the shadow market, thinks that MARS is on the right track. He said outlawing upfront fees is a good move, for example.

“I think it is better for the consumer and the industry,” Lantz said. “I think that makes everyone 100 percent incentivized to get the deal closed. Some of the good companies out there are already dong that. PMH Financial, for example, has a fee structure that they only collect their fees at the closing.

“There are other good (short sale companies) out there that collect their fees upfront, and they are going to have to adjust,” Lantz said. “And the good companies will. They will adapt and it won’t be a problem. Some of the other companies, which depend solely on front-end fees, will go out of business. That is a good thing. We want to get the bad actors out of the business, which will be better for the good guys. Honestly, I don’t think this is going to have any impact on the market’s ability to get short sales closed.”

Tara Rogers is chairwoman of RealtyTMS, one of the biggest players is the short sale service field. She emphasized that RealtyTMS is completely MARS-compliant and will follow all of the rules set out by the FTC. She and her lawyers will continue to monitor the ruling.

Bad apples caused problems

“Unfortunately, there were several bad apples out there who were using predatory practices to take advantage of homeowners,” during a very vulnerable time, Rogers said. “We are taking the position that anything that gets rid of those predatory folks is a good thing. That will allow people to get the help they need from legitimate companies and Realtors.”

The act traces its roots to March 11, 2009, when President Obama signed the Omnibus Appropriations Act. A section of the act directed the FTC to seek comments to come up with new rules to combat mortgage fraud.

The ban on charging upfront fees, though, could have a downside for some short-sale coordinators who help brokers navigate the time-consuming and complex short-sale process, said real estate lawyer Cox.

“Upfront fees are now prohibited,” Cox said. “That is going to change the market. I think it could have a chilling effect on the completion of short sales.”

Cox said many brokers use short-sale coordinator firms that help brokers and sellers deal with the banks, when it comes to such things as finding the correct forms to fill out.

“These are the people who will sit on the phone for hours with the bank,” Cox said.

Many of these companies charge an upfront fee for their time and effort, while the broker only gets paid if the home is sold.

Most distressed consumers may suffer

He said he expects that some short-sale transaction firms will “cherry pick,” cases, and only take on the ones that seem almost certain to close. That could mean some of the most distressed homeowners – those with multiple liens on their houses, for example – will be forced into foreclosure.

“It is amazing to me that the government on one hand is encouraging short sales as an alternative to a foreclosure, but on the other hand is making it more difficult to accomplish them,” Cox said.

Colorado Attorney General John Suthers is not only a big fan of MARS, but played an important role in creating the act.

Colorado Attorney General John Suthers is a fan of MARS and played a pivotal role in shaping it.

Suthers and the Illinois Attorney General were the lead state attorneys who helped shape MARS in April 2010, when the FTC was considering comments from various groups. Comments by the National Association of Attorneys General group called the ban on advanced fees as the “linchpin” of the new rule.

MARS another tool for Suthers

“We support the FTC rule,” Suthers said through a spokesman. “We believe the rule complements the Colorado Foreclosure Protection Act,” and does not preclude any actions that his office can take under the Colorado act he said.

Suthers said he welcomes MARS as “another tool we have to pursue individuals or companies defrauding Colorado homeowners seeking foreclosure-relief services.”

Ron Woodcock, a broker with RE/MAX Southeast, who has completed more than 400 short sales during the past 22 years in Florida and Colorado, also supports MARS.

“I believe, overall, it is good legislation,” Woodcock said. “It is coming on the scene a little late, but is good legislation. Hopefully, it will help put the brakes on most of the scams out there where people are paying thousands of dollars upfront for mortgage modifications that never happen and were never going to happen, anyway.”

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Lawrence Yun, the NAR's chief economist, speaks to almost 800 at the Ramada Inn at Interstate 25 and East 120th Avenue.

Lawrence Yun, the chief economist of the National Association of Realtors, captivated and educated almost 800 Denver-area Realtors and other housing officials during a presentation on a wide-range of housing and economic topics.

He also confirmed that the Denver-area housing market is in better shape than most places, and is poised to recover at a faster clip.

Overall, he said in the Denver area on Wednesday, that the housing market  is likely to trade a “vicious cycle” for a “virtuous cycle,” in which supply and demand are much more in balance.

“Right now, the market is trying to get back to normal,” Yun said.

Topics he discussed during a 90-minute talk at the Ramada Plaza Hotel in Northglenn, included:

• Life after the expired tax credits
• Foreclosures
• The government’s $600 bond buying spree
• Risks of inflation and deflation
• Preserving the home mortgage deduction
• The shadow market
• Fannie Mae and Freddie Mac
• Timelines for a housing recovery

Yun also was bullish on the Denver area and Colorado.

“A long-term trend is that people want to move to Colorado,” Yun said at one point.

Yun was brought to Denver by the Denver Board of Realtors, the Jefferson County Association of Realtors and the  North Metro Denver Realtors Association. Additional sponsors were Land Title Guarantee, Metrolist and Bank of America. Yun also granted a 30-minute private interview to InsideRealEstateNews and independent Realtor, Gary Bauer.

At times you could hear a pin drop, as Lawrence Yun discussed many aspects of the housing market.

“It’s hard to imagine today, but as early as 2011, we could see some degree of a housing shortage,” Yun told InsideRealEstateNews. “I know it does not feel that way. We are out of the recession, but consumers don’t buy it. What is different this time, is that people are losing their belief in the future.”

But he noted that home-building in the Denver area, as well as from Boulder to Fort Collins, is at a 40-year low, at a time when the population continues to grow.

“Construction also has come to a halt in places like Detroit and Cleveland, but I would say they are going to be facing housing shortages, because those are out-migration states,” Yun said. “That is, people are leaving. The Rocky Mountain states, such as Utah and Colorado, tend to be in-migration states – that is people continue to move here, in addition to the normal growth rate and people graduating from high school.”

Still, there are challenges, he noted. In a typical year, there are about 400,000 foreclosures a year because of people losing their jobs, divorces, and health problems. The last few years, the county has suffered from about two million distressed properties entering the market annually.

“That is five times the normal amount,” Yun said. But he said that Denver, where the foreclosure cycle began earlier that most places of the country, is not seeing the foreclosure rates as many other spots.

Denver dodged over-building

“Denver’s foreclosure rate is about half the nation’s,” Yun said. “The other thing is that Denver is one of the few cities where over-building

Economist Yun used this slide to illustrate the shadow market.

occurred before the housing boom and bust. You did not see the huge overbuilding at a time when other markets such as Phoenix and Las Vegas were expanding rapidly.”

And homes in the Denver area are more affordable, because of softer prices and near historic low mortgage rates. A typical monthly mortgage in Denver has dropped $257 a month to $935 from $1,922 in 2005, he said. In San Diego, the difference is even more dramatic, dropping to $1,564 from $2,833.

Nationally, about a million jobs have been added to the economy, following two years of losing five million jobs each year. If the economy would add 400,000 jobs a month, it would take slightly more than two years for the housing market to return to a more normal one, he said. However, he said he expects more modest gains of 1.5 million jobs next year

Tax credits did their job

And although home sales in Denver dropped off following the end of the tax credits, Yun said that occurred nationwide, and was expected.

“The tax credits worked,” Yun said. “Nationally, it brought about one million buyers into the market, who would have not bought otherwise. Now, about 4 million people bought, who would have bought in any case, and for them it was an $8,000 bonus. We knew that housing sales would fall off when they ended, and they had to end. After all, who would buy a home in May, when they could get $8,000 back by buying in April? Consumers are smart and rational.”

The tax credits also helped reduce the supply of homes on the market, and helped stabilize prices, especially at the lower-end, he said.

Robo-signings to be resolved

Meanwhile, he thinks the banking industries problems revolving around faulty foreclosure paperwork will be resolved within the next couple of months.

“The banks were sloppy with paperwork and with things such as robo-signings, but they are remedying it,” Yun said. “At the end of the day, I do not think we are going to find too many homeowners who were facing losing their homes who are actually current on their mortgages. I was concerned at first that the government was going to force a moratorium on foreclosures on banks, which would have created an overhang of distressed homes on the market and slowed the recovery. But I don’t think that is going to happen.”

He also doesn’t think the homeowners who may not have made a payment in 18 months or so, but still haven’t lost their home to the banks, will be able to keep them because of problems with the paperwork.

“I don’t think many people think you should be able to stay in your home when you haven’t made a mortgage payment for 12 months or 18 months,” Yun said in the interview with InsideRealEstateNews. “A home is too valuable of an asset for banks to let that happen. I think they will work out all of the title and ownership issues. It would be utter chaos if people could keep their homes under those circumstances.”

However, he said that distressed homeowners are facing confusing choices when they are seeking a loan modification, and are being encouraged to let their home slip into foreclosure, to facilitate that. And if they do not get the lower payment, they may lose the home.

In addition, there is a certain “moral hazard” of rewarding people with lower rates who defaulted on mortgage payments, while others continue to pay their mortgages, he said. In some government-backed mortgage reduction programs, as many as 50 percent of the borrowers still end up defaulting on their loans, which also is troubling, he said.

Also, while mortgage rates are still hovering near records lows, a big part of that appears to be that banks are only lending to the best customers – those that have great credit scores and have almost zero risk of default. He said that FHA-loans made this year have the lowest default rates on record and “vintage 2009″ and “vintage 2010″ loans purchased by Fannie Mae and Freddie Mac have lower default rates than loans made in 2002, prior to the housing boom and bust. “Bad loans are almost always made in good times,” Yun said. He said that banks, accruing huge stockpiles of cash, must loosen underwriting. Lending was too loose during the go-go days that led to the crash, “and now the pendulum has swung too far,” he said.

Also, Fannie Mae and Freddie Mac have to return to their knitting, but should not be eliminated, as some have demanded, he said. They play an important role of providing a steady source of mortgage money. Before they were taken over by the government, they were acting like hedge funds, making risky bets on the housing market, he said.

No fan of $800 billion buying spree

But he is not a fan of the government’s plan to spend $800 billion in bonds, which was expected to drive down interest rates, but at least initially is causing them to rise.

“I was not really in favor in what they call quantitative easing, or QE2,” Yun said. “The government thinks it can just turn on the printing press and get a free lunch. But there are consequences.”

One of the potential consequences is inflation, he said. Consumers are not feeling it, but there has been rising inflation at the production side, as well as at the commodity level, as everyone has seen with gold seemingly hitting new highs almost daily.

“If cotton prices keep rising, at some point Wal-Mart will have to charge more for shirts,” Yun said. He said the government embraced QE2 was because of concerns about deflation, in which prices fall. That leads to consumers to wait for even lower prices, which causes prices to fall even more. Deflation has kept the standard of living in Japan at basically the same level for 20 years, he said.

Mortgage deduction safe

But one thing Yun does not see happening is the elimination of the mortgage deduction as a way to reduce the federal deficit. The chairman of a bipartisan White House committee recently raised that as a possibility.

“I’m not surprised that it was put on the table,” Yun said. “But the mortgage deduction has been embedded in American culture for generations. It has a great deal of support from taxpayers.The U.S. economy cannot recover if the housing economy does not recover. If the mortgage deduction is removed, it not only hurts people who own homes, but those who have paid off their mortgages and own their homes free and clear.”

He estimated that would lower the value of homes, even those without mortgages, by 15 percent. Although it may not be obvious at first blush that people without mortgages would be hurt, they will find that their homes are worth less if they try to sell or pass the mortgage-free homes to their children, he noted. Thew 15 percent drop is irrespective of other market forces, he added.

“I can’t see any politician supporting the destruction of wealth at the scale,” Yun said.

And while there may be as many as 1.5 million homes waiting to hit the market – the so-called shadow market – he said there has been plenty of investor appetite for those properties. The shadow market is typically described as properties owned by banks, or soon to be owned by banks, that are not yet on the market.

American Dream alive

But despite the recent turmoil in the market, he said he still thinks owning a home is the American Dream.

“When we survey renters, the vast majority of them still say they want to buy a home at some point,” Yun said. “Now, some young people might not want to buy at this time. They want to remain flexible in finding a job, they may not have married and started a family yet, or their careers are not yet where they want them to be.”

He also noted that the net wealth of most renters is a fraction of most homeowners, even after the housing crash. During the presentation, he suggested to Realtors that they show the graph he was displaying comparing the meager wealth of renters to owners to prospective buyers on the fence.

Not only has the American Dream of owning a home not gone away, but it is returning to its roots. Buyers today and in the future are signing on the dotted line because  they want to be near work, or near schools, or a place to raise their families.

“The great thing about owning a home, as you pay down your mortgage, it usually goes up in value and over time, you build wealth,” Yun said. “But people will not be buying homes with the idea they will be $10,000 wealthier (on paper) next year. Appreciation will be a side benefit.”

Yun’s Power Point

Contact John Rebchook at JRCHOOK@gmail.com

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Nationwide existing-home sales plunged to a 15-year low in July, falling 27.2 percent in July from June, and 25.2 percent from July 2009, shows a report released today by the National Association of Realtors.

The drop was similar to the 26.6 percent year-over-year drop for closings in the Denver area last month, which was reported earlier. Closings were down even more in the Denver-area in July compared with a year earlier, falling 28 percent. Denver-area home closings in July from June fell 19.5 percent.

Independent broker Gary Bauer, who prepares a monthly analysis of the Denver-area housing market based on Metrolist data, said that he thinks a lack of consumer confidence is the culprit both nationally and locally.

“We’ve seen a consistent drop in consumer confidence,” Bauer said. “When consumer confidence falls like it has been falling, long-term items such as buying a home are not on the radar screen. Maybe this is an indication that activity is going to continue to decrease for the remainder of the year.”

August outlook dim

He said that from his “individual perspective,” home showing and offerings dropped in August. Part of it is the normal seasonal impact, as with the start of school, moving close to a school is no longer helping to drive the market.

“I think August is not going to be a good month, but I am not ready to say it is going to be grim,” Bauer said. “The reason is I’m not going to say it is grim, because I have had conversations with people in the title industry and they said they are quite active. And a lot of their activity is not for refinancing.”

Beyond the latest report, Bauer is concerned by a comment by Thomas Hoenig, the chief of the Kansas City Federal Reserve.

Fed remark “irresponsible”

“If the American people are looking at the housing market to be their investment opportunity, I think they are making a mistake,” Hoenig said on Monday at a field hearing by the U.S. House Financial Service s Committee’s oversight and investigations subcommittee.

“That is irresponsible,” Bauer said about the comment. “Pretty much my first feeling is that something is coming down the line and they are not sure how to handle it. But I don’t think someone in that position should be making a blanket statement that if you are looking to invest or buy a home, you should not be doing it.” Former U.S. HUD Secretary Henry Cisneros, speaking in Denver today, noted that while he repects Hoenig and that homes primarily should be purchased as a place to live, and not as an investment, noted that Hoenig is almost always the lone dissenting vote of the Federal Reserve Board, and does not represent the direction the Fed is taking to help revitalize the housing market.

Lawrence Yun, NAR chief economist, said a soft sales pace likely will continue for a few additional months.

Low rates will drive demand

“Consumers rationally jumped into the market before the deadline for the home buyer tax credit expired,” Yun said. “Since May, after the deadline, contract signings have been notably lower and a pause period for home sales is likely to last through September. However, given the rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs.”

Cisneros said that he thinks the tax credits were still a good idea, even though some of the sales that would have included in the summer shifted to the spring. The credits also likely spurred some home buying that would not have occurred otherwise, he added. The housing market, which was especially vulnerable late last year and this spring because of weak demand, needed the boost of the tax credits, he said. Cisneros said that recoveries in the housing market led the country out of the last eight of nine recession.

NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, said there are great opportunities now for buyers who weren’t able to take advantage of the tax credit. “Mortgage interest rates are at record lows, home prices have firmed and there is good selection of property in most areas, so buyers with good jobs and favorable credit ratings find themselves in a fortunate position,” she said.

Contact John Rebchook at JRCHOOK@gmail.com

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Buyers wrote contracts on only 3,883 homes in the Denver area in May, a 41.3 percent drop from April, when consumers scrambled to take advantage of the federal home buying tax credits that required a house to be placed under contract by April 30. In April, a record 6,616 homes were placed under contract, while last month marked the worst May since 2004 when 3,529 homes were placed under contract, shows a report released today by independent broker Gary Bauer, based on Metrolist data.

Under contacts were also down 27.3 percent from May 2009, when 5,343 homes were placed under contract.

“They were record drops,” Bauer said. “They were the largest percentage drops from 1990 going forward for any month, both for the consecutive months and year-over-year comparisons.”

Sales fell with tax credits

Bauer and other experts agree that the drop was because the $8,000 tax credit for first-time buyers and $6,500 for qualified existing owners expired at the end of April and require that the homes close by the end of June.

“April was such a frenzy; the numbers were inflated by the tax credits,” Bauer said. “Realtors were working up to midnight on April 30 to get homes placed under contract.Buyers are making multiple offers on homes and sellers were dealing with multiple offers.”

Still, Bauer believes the tax credits were worth it.

“I think we did steal some future sales,” Bauer said. “But in my opinion, it was a worthwhile program. And it has ended while we are coming into the prime selling seasons of the year – June, July and August. I think we are going to have a good prime season, but not a great prime season.”

Deja vu all over again

Peter Niederman, CEO of the Kentwood Co., wasn’t surprised that under contracts fell so precipitously when the tax-credit deadline passed.

“I think I mentioned to you in 2009, when it looked the tax credits were going to expire in November, that November was the only month last year that reported higher sales on a year-over-year basis from 2008,” Niederman said. “In my opinion, that is what happened in April. You had this huge pent-up surge in April, so under contracts were anticipated to fall in May.”

He noted that at Kentwood, the number of showings dropped in May from April, but not as much as the under contracts dropped.

Niederman, in a letter in his upcoming Gallery, a glossy magazine that highlights expensive listings by brokers at Kentwood and Kentwood City Properties, quotes Lawrence Yun, the economist for the National Association of Realtors.

Tax stimulus worked

“The second round of surging sales from the tax credit extension looks as strong as the original tax credit,” according to Yun. “Evidently, the tax stimulus, combined with the improved consumer confidence and low mortgage interest rates, are contributing to surging sales. The housing market now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs.”

Niederman said he couldn’t agree with Yun more. And he is not dismayed that the market nose-dived in May, as far as under contracts.

“One month doesn’t make a trend,” Niederman said. Indeed, there were 24,510 homes placed under contract in the first five months of the year, a 4.9 percent increase from the 23,366 during the same period in 2009.

“If you want to look at where the trend is, you need to look at the year-over-year numbers,” Niederman said. “I am encouraged that we are about 5 percent ahead of where we were last year. When you look at the first five months of this year compared with the first five months of last year, we are still ahead of the game.”

Economist Patty Silverstein said that everyone knew that the tax credits would have an impact on home sales activity, but until today’s report, no one knew how big of an impact the market would experience.

“Obviously, from the under contract values, we lost some of the momentum we had in the market,” Silverstein said. “The market was sort of front-loaded. But we are now moving into the prime home sales season, and so we will know in the coming months how much we are moving into a steadier, sustainable pace.”

In fact, she said what is happening in the housing economy is not much different than what is happening in the overall economy.”If you are focusing on a little broader measure, and not just on the residential market, this whole economic recovery is going to see some fits and starts. The recovery, whether you are talking about the entire economy, or the residential market, is not going to be healed in just one year..”

Silverstein said she is more concerned about the 27 percent drop from May 2009 than the 41 percent drop from April. “That does kind of concern me,” Silverstein said. Indeed, May 2009 was not a stellar one for sales activity,with under contracts down almost 16 percent from May 2008. While this was the worst May in six years, there were other dynamics fueling the market in 2004, Silverstein said.  “Keep in mind 2004 was when those outrageous mortgage products started to come on the scene,” Silverstein said, fueling sales until the summer of 2008, when the house of mortgage cards collapsed the entire industry.

Realtors are people, too

Chris Mygatt, president of Coldwell Banker Residential Colorado, said the drop off in under contracts last month were “very predictable,” and the obvious culprit was the end of the tax credits.

But there also was a human factor in play that many people will overlook, he said

“People have to realize that real estate agents are people, too,” Mygatt said. “They have to manage their time like anyone else. They were extremely busy showing properties in April, evidenced by the fact that was the best April on record for under contracts. In May, the agents’ job was to get those contracts they wrote in April closed. So they were working with existing clients to get those homes closed before the June 30 deadline and did not have as much time to spend on drumming up new business. I think the June numbers are going to be very important. I think we may see a little bounce back in showings and under contracts in June.”

Mygatt was pleased to see the number of unsold homes on the market last month to rise 6.2 percent to 22,016 from 20,734 in May 2009, and increase by 2.1 percent from the 21,565 homes in April

Pragmatically, however, sellers would have been better served to have their homes on the market earlier, to take advantage of the tax credits.

“Yes, they should have, and that was what agents were telling them,” Mygatt said. “We did not have enough inventory in April, which was frustrating for buyers. But a lot of sellers just couldn’t get organized in time. If you aren’t involved in selling and buying homes all of the time, you don’t realize that it can easily take one or two months to get a home prepared to sales. You have to replace the carpets and paint it and clean up the clutter.”

Still, with the exception of May 2009, the current unsold inventory is the lowest May since 2002, when only 14,173 homes were on the market.

“That shows we do not have an excessive inventory of homes on the market,” Mygatt said. “We can easily absorb the extra homes on the market, without creating an imbalance between supply and demand and hurting pricing. We’re heading towards a more normalized market.”

Most metrics smoking

David Simonson, of RE/MAX Professionals, said the tax credit drove sales in the lower-priced part of the market. “It stimulated a lot of people looking in the $100,000 to $200,000 range into the low $300,000 range,” Simonson said. “Realistically, we are looking at a little wave – a little up, a little down. If you look at everything but the the under contracts, everything else was great.”

For example, the average price of a single-family home that closed last month was $273,285, about 4 percent higher than the $262,066 in May 2009, and the median price of a single-family home rose 4.5 percent to $230,000 from $220,000.

And the 4,365 home closings represented a 20.3 percent increase from the3,628 closings in May 2009 and a 4.2 percent increase from the 4,188 in April.

Also, the 2.1 percent increase in the supply of unsold homes in May from April, bodes well for the market, he said.

“I’m surprised in a good way,” Simonson said.

Market on upswing?

Jack O’Connor, a principal of RE/MAX Professionals, said that May marked the third consecutive month of continuing year-over-year increases in monthly sales. “Historically, three straight months of increased sold-data would signal a market on the upswing,” O’Connor said. “Since the tax credit artificially increased sales in April, watching this data over the next three months will confirm whether Denver is truly on the rebound, or if we are still bouncing along the bottom of the market.”

Meanwhile,  although job growth during the first half of the year failed to live up to expectations, Denver is now being widely cited as a city that will out-perform the national market in job growth and job stability for the next several years, O’Connor said.

Jobs key

“When there is a pool of jobs, people move to take advantage, which lowers inventory and drives prices up,” O’Connor said. “In this particular market, those buyers would have the additional advantage of buying at historically low conforming rates, at a time when average prices look comparatively favorable. That prompts properties to move and for appreciation to occur.”

O’Connor, who analyzed the market using a different methodology than Bauer used, found that there were 4,237 closed sales in the eight-county area in May, 10.4 percent higher than the 3,782 in May 2009.  O’Connor’s research also found that there is a 5.1-month supply of homes on the market priced below $500,000.  At current absorption rates, that would be considered a seller’s market, he said. By contrast, there is currently about a 30-month supply of unsold homes priced at more than $750,000, O’Connor said.

“The upper end phenomenon hasn’t been seen in 50 years,” O’Connor said. “It creates an unusual opportunity for a buyer that has been waiting to move up from a lower price range, to be able to get a sale at close-to full price on the seller side, and to pick-and-choose on the purchase side at very favorable interest rates.”

Year	Under Contract	Closed	Single-family Average Price
2010	3,883	4,365	$273,285
2009	5,343	3,628	$262,066
2008	6,338	4,664	$228,500
2007	6,353	5,081	$318,904
2006	6,459	5,010	$315,257
2005	6,735	5,013	$305,730
2004	3,529	5,241	$294,040
2003	2,773	3,914	$275,879
2002	3,247	5,140	$268,952

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

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Denver was not on the list of 20 MSAs that NAR released data on median prices and sales in March, but at the request of InsideRealEstateNews.com, the trade organization supplied it with otherwise “unpublished” data on the Denver market.

The data shows that only San Diego, with a 20.4 percent increase in price, and St. Louis, at 19.8 percent, bested Denver.

“There may be some other unpublished data that would be in conflict,” with Denver being ranked No. 3, said Walter Molony, a spokesman for the NAR. “But Denver is one of the top ones.”

Positive national spotlight

“I think this is really good news,” said Gary Bauer, an independent broker, who tracks local real estate data based on Metrolist figures. His latest report showed a 12.2 percent increase in the median price in march 2009 to 2010.

“Clearly, what we have previously reported to you from Metrolist is consistent with what NAR is saying, although the numbers are slightly different possibly because of different way of calculating them or slightly different geographic areas being included,” Bauer said. “But I think that this is very positive, especially in light of the recent Forbes.com article,” which listed Denver as the second worst housing market, based on what it thought it was a rising inventory numbers based on Zillow.com, which local Realtors discredited.

“What I also think is very positive is that when you look at the homes that are under contract, but have not closed,” Bauer said. “We are going to have a very good April and a very good May for closings. And even when the tax credits go away at the end of this month, my gut tells me we are still going to hang in there.”

Mix, not appreciation, driving stats

The main reason that the median prices are up is because more sales are occurring at higher price points than in the spring of 2009, said Jeff Thredgold, the economist for Vectra Bank in Colorado.

“I would have to say that the Denver and Colorado markets are much more stable than they had been,” Thredgold said. “If you look at how things were a year ago, or 18 months ago, people did not know what tomorrow held. Now, the Colorado economy is much more stable, the U.S. economy is more stable and stronger, the stock market is doing much better, and mortgage rates still remain at very attractive levels. ”

Still, it would be a mistake to think the NAR numbers are showing home appreciation.

“This is not to say that the average home has gone up 14 percent,” Thredgold said. “They have been pretty much sideways. What we are seeing is that people are buying more homes in the $300,000 to $450,000 range than we were seeing, which is driving up the overall prices.”

As far as percentage changes in sales, the Denver-area market was near the bottom of the MSAs tracked by NAR.. The Denver-area sales rate rose by 9.2 percent, a far cry from the 45.6 percent in Portland, the No. 1 market by the sales metric. Portland’s home prices, however, remained down from a year earlier.

“That doesn’t surprise me,” Thredgold said. “Some of these other market were really crushed. People are now just starting to buy again, after that big run up in prices and the equally huge downturn. Denver never went through those big increases and big drops.”

Market heading for first real appreciation in 10 years

Jack O’Connor, an owner of RE.MAX Professionals, agrees.

“We have neither had the big appreciation, nor have we had the big declines,” O’Connor said. “What we are seeing is a solid market. Our inventory is not rising dramatically like it does in a typical spring, and ales are up. Those are all good things. while you don’t want to take a snapshot of one month and say this is the trend, I think if this continues for three months or so, you could have evidence that we are going to see the first real appreciation of homes prices in the Denver area for the first time in 10 years. I think we are going to see home appreciation from the very low-end all the way up to the $500,000 to $600,000 price range.”

End of tax credits could hurt

Economist Patty Silverstein, principal of Development Research Partners, said that not only are more expensive homes starting to sell in the Denver area, but demand is driving up prices at the lowest end, driving up the overall numbers.

“We still have more foreclosures entering the market than we would like, but our foreclosure problems started earlier than in most markets, so we are likely to come out of it faster than most markets,” Silverstein said.

However, she said that she is concerned that while the $8,000 tax credits for first-time home buyers, and the $6,500 tax credits for some existing home owners, could be boosting today’s market, at the expense of future sales

“you have to wonder how much of the sales activity here and all across the country are because of the tax credits,” Silverstein said. “I don’t know if this is a sustainable situation. I guess they are good as far as they go, but would prefer sales market based on fundamentals that could be sustained.”

MSA	Median Price 2009	Median Price 2010	YOY % Price Change	YOY % Sales Change
Atlanta	$116,300	$113,600	-2.3%	7.0%
Baltimore	$245,500	$236,800	-3.5%	18.9%
Boston	$289,500	$329,800	13.9%	25.9%
Cincinnati	$113,200	$124,100	9.6%	16.0%
Dallas	$138,100	$144,600	4.7%	12.6%
DENVER	$203,000	$238,200	14.4%	9.2%
Houston	$145,500	$154,300	6.0%	11.0%
Indianapolis	$107,500	$117,500	9.3%	11.0%
Kansas City	$131,600	$137,400	4.4%	11.5%
Miami/Ft. Lauderdale	$210,200	$218,200	3.8%	12.9%
Minneapolis	$154,125	$165,000	7.1%	6.5%
New Orleans	$156,300	$154,100	-1.4%	-2.3%
New York	$367,400	$379,900	3.4%	24.5%
Philadelphia	$209,700	$209,300	-0.2%	19.6%
Phoenix	$127,500	$144,500	13.3%	10.1%
Pittsburgh	$108,700	$122,900	13.1%	26.3%
Portland	$245,700	$238,700	-2.8%	45.6%
San Antonio	$145,400	$143,700	-1.2%	29.7%
San Diego	$326,800	$393,600	20.4%	4.0%
St. Louis	$107,900	$129,300	19.8%	25.6%
Washington, D.C.	$287,300	$298,900	4.0%	12.5%

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Below is the article posted on Monday by Francesca Levy. She even mentions me in the piece, although I would not describe myself as a “critic.” Rather, I am messenger giving others a forum to voice their opinions. In this case, however, it was difficult finding someone supporting the conclusions of the first article.

Forbes article

“An April 5 article that ranked the Denver metro area’s real estate market as the nation’s second worst-selling elicited objection from the city’s real estate community. Some Realtors and real estate bloggers disagreed with the housing inventory numbers, provided by Zillow.com, that contributed to the rankings.

Many felt that Zillow’s numbers, which showed a 27% year-over-year increase in homes for sale on the site and an inventory of over 42,000 unsold properties, were inflated, because the site hosts multiple same-property listings, and transactions may not be recorded as quickly as they occur. This means properties could be on Zillow, but no longer on the market.

Zillow’s metric measured inventory from January 2009 to January 2010, the latest available when the article ran. Metrolist, a firm that collects and analyzes Colorado real estate data, shows a March 2010 inventory of 20,073.

Zillow.com confirmed that double counting was possible. Zillow spokeswoman Katie Curnutte says that Zillow’s numbers represent the homes for sale on the site, and that data from January will differ from any count that’s more current. She added that the company regularly takes on new partners who provide the site with listings, skewing year-over-year comparisons.

“It can be difficult to derive any assumptions about market conditions from the year-over-year numbers,” she says.

Zillow provided Forbes.com with year-over-year homes-for-sale numbers for each of the metropolitan statistical areas examined; each metro was scored by the same measures. Since Zillow has acknowledged that these numbers may have been artificially increased, Forbes.com has decided to limit the use of year-over-year homes-for-sale statistics from the data provider.

“Though Zillow’s numbers allowed us to compare the number of homes for sale across the country’s metros,” says Lucy Maher, executive editor, Forbes. “We recognize that these numbers may not have given us an accurate look at local inventories.”

In addition to the number of homes for sale on Zillow.com, used to measure inventory, the story looked at home price data from the National Association of Realtors; and sales rates from Moody’s Economy.com. The article looked at each of the country’s Metropolitan Statistical Areas with a population of more than one million.

Metrolist’s data looked at the housing market two months later. What’s more, it may not account for all foreclosures and new home sales. Still, Metrolist spokeswoman Melissa Olson says that those differences alone can’t explain why Zillow reported over twice as many homes for sale than Metrolist.

“In the Denver market, new home sales and foreclosure sales are not significant enough to make a doubling effect,” she says.

Critics including John Rebchook, who writes about local real estate in his blog InsideRealEstateNews.com, Krystal Kraft, a local Realtor who first raised her objections to the story via Twitter, and Denver Mayor John W. Hickenlooper also voiced their objections to Zillow’s data.

“It was hard for me to imagine we could have gotten into such a desperate environment without anybody noticing, and without me hearing about it,” says Hickenlooper. “When I first read the story I talked to brokers who said a year ago we had a six-month supply of homes and now we have a five-month supply, so we’re actually doing better.”

The National Association of Homebuilders, a lobbying group, reports that because of a lack of overbuilding in Denver during the housing boom, signs that home prices are normalizing and foreclosures falling below the national average, they anticipate that, on the whole, Denver real estate will steadily emerge from the recession.

“We don’t expect the Denver market to be either best or worst, but rather to be pretty middle of the pack, improving with a broad swath of United States housing markets,” wrote Donna Reichle, NAHB spokeswoman, in an e-mail. “Our forecast for the Denver housing market is for recovery continuing this year from the early 2009 bottom and gaining momentum through 2010 and beyond.”

Local response to article.

“I thought it was interesting,” Hickenlooper said Tuesday afternoon. “They didn’t go as far as describing the health of the Denver housing market as we might have liked or desired. But they did explain, and they were very open about, what the problem was.  I would have liked to have heard some more positive descriptions of our real estate market. But I have no complaints.”

Hickenlooper said it is difficult to measure if the first article caused any damage to the market.

“Anecdotally, you do hear about transactions that deals that didn’t close that might otherwise not have closed because of the article,” he said. By the same token, Hickenlooper said, it is difficult to know whether the second article will erase doubt from prospective buyers who were influenced by the first one. “The thing now is to put it to bed in an official way and put it behind us,” Hickenlooper said.

Peter Niederman, an owner of the Kentwood Cos., said he was pleased with the second article, ‘but I was hoping that she would go into detail about how great the Denver market is. The main thing that came out from her second article is that she realized that Zillow might double-count information and isn’t the best source of information on the local housing market. She admits it and was quick to do it, which is commendable.”

Niederman, however, said he wished she had pointed to statistics that showed the improving market. “We probably started the year with eight months of inventory, and now we’re at about five months,” Niederman said. “That is a very good place to be. Those are good numbers. I like the trend.”

Like Hickenlooper, Niederman said it is hard to quantify the impact of the first one, and the second article, for that matter. “You do hear rumblings that some deals might not have happened, or people have had second thoughts, of course,” Niederman said. ‘”If a real estate broker who may be working with a buyer who read the article, can now show him the second article, which provides some ammunition, or cannon fodder, to say this may be the best time to buy.”

Word getting out

Tom Clark, executive vice president of the Metro Denver Economic Development Corp., said he wants to get the word out about the second article.

“I think it is great,” Clark said. “We plan to give it wide distribution.”

He said that he was disappointed and surprised by the first article, because he had always held Forbes in high regard. “Whenever I was interviewed by Forbes in the past, it was always old-school, with the reporters calling me back to check their facts,” Clark said. “Of course, that was Forbes, the magazine, and not Forbes.com. But I would think that the same standards would apply.”

Clark said in this fast-paced information world, it may be tempting to use information from any source, without checking  its accuracy first.

“We have always been kind of suspect of Zillow, which is why we don’t use their information,” Clark said. Many Denver-area Realtors have said since the first Forbes.com article came out, that they frequently find that homes they have listed on Zillow remain there after they have been sold, giving credence to the notion that Zillow over-counts unsold homes on the market.

David Simonson, a broker with RE/MAX Professionals, said he is “excited” about the second article.  He said he has found Zillow to be “problematic” for years, and thinks using MLS statistics from Metrolist paints a much better picture of the market than Zillow does.  He said about two years ago, a  buyer almost backed out of buying a $600,000 house that had been appraised twice, because Zillow estimated its value at only $483,000.  Also, he said he has had problems with other brokers pretending on Zillow that they were listing homes in which he was representing the owners.

Somewhat surprisingly, perhaps, none of the buyers or sellers Simonson was dealing with were troubled by the first article. He said his clients shopping for expensive homes do their own extensive due diligence, while those at the lower-end find what a national publication says irrelevant.  ”I did get a few phone calls from people who were neither selling nor buying, who wanted to know how the MLS could get it so wrong,” Simonson said. “These are the people who glance at the headlines before rushing to work.  I explained to them that they got the “wrong one, wrong,” Simonson said. “I told them that Zillow is very user-friendly, but is not a good real estate-evaluation tool.  I told them the MLS is good data, with no leeway or emotion involved. It factually tells you what 20,000 Realtors in the Denver area are doing.”

Unintended benefit of first article

Larry McGee, principal of the Berkshire Group, said that the second article will not immediately reverse any damage done by the first one, such as people being spooked from buying homes or suffering buyer’s remorse.

“I do think the first article was bad,” McGee said. “I do appreciate the fact, personally, they reconciled the fact that they did have a problem. I do think they threw Zillow under the bus. I think we all know now that Zillow’s approach to listing active inventory is not very good for statistical analysis. They don’t vett the information, they don’t purge it, they get information from different sources, which  constantly changes. Zillow does serve a purpose. We probably list all of our active listings there. The problem is it is very hard for the typical broker to change the status once the home has been sold, so it languishes there for months.”

Now that Forbes.com has indicated it will not use Zillow’s year-over-year data for inventory comparisons, it should save other cities in the country suffering the problems faced in Denver, he said. “Since it looks like Forbes learned from the mistake it made in Denver, other cities probably won’t have to go through what we did,” McGee said.

But even the first article had an unintended positive consequence, McGee said.

“I think the best thing that came out of this is that a widely disparate group of people came together with no other interest than to make things right, came together,” McGee said. “Without any leadership, a sort of grassroots movement started and I was happy to have something to do with it. There is something extraordinary positive about that. That may even be more important than the article.

(To see what all of the fuss is about, please visit these blogs: Forbes writing another article on Denver,  Hick not buying Forbes’ take on Denver housing market, Forbes article criticized)

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

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Existing-home sales nationwide – including single-family, townhomes, condominiums and co-ops – fell 16.7 percent to a seasonally adjusted annual rate1 of 5.45 million units in December from 6.54 million in November, but remain 15.0 percent above the 4.74 million-unit level in December 2008, the National Association of Realtors reports today.

After a rising surge from September through November, existing-home sales fell as expected in December after first-time buyers rushed to complete sales before the original November deadline for the tax credit. However, prices rose from December 2008 and annual sales improved in 2009, according to the NAR.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – fell 16.7 percent to a seasonally adjusted annual rate1 of 5.45 million units in December from 6.54 million in November, but remain 15.0 percent above the 4.74 million-unit level in December 2008.

For all of 2009 there were 5,156,000 existing-home sales, which was 4.9 percent higher than the 4,913,000 transactions recorded in 2008; it was the first annual sales gain since 2005.

Lawrence Yun, NAR chief economist, said there were no surprises in the data.

“It’s significant that home sales remain above year-ago levels, but the market is going through a period of swings driven by the tax credit,” he said. “We’ll likely have another surge in the spring as home buyers take advantage of the extended and expanded tax credit. By early summer the overall market should benefit from more balanced inventory, and sales are on track to rise again in 2010. However, the job market remains a concern and could dampen the housing recovery – job creation is key to a continued recovery in the second half of the year.” (Editors Note: I said the same thing on a Channel 9 report aired on Saturday. For more on that report, please visit this link. )

An NAR practitioner survey shows first-time buyers purchased 43 percent of homes in December, down from 51 percent in November. Repeat buyers rose to 42 percent of transactions in December from 37 percent in November; the remaining sales were to investors.

The national median existing-home price3 for all housing types was $178,300 in December, which is 1.5 percent higher than December 2008. “The median price rose because of an increased number of mid- to upper-priced homes in the sales mix,” Yun said. It was the first year-over-year gain in median price since August 2007.

NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Arizona, said market conditions are challenging in some areas. “There’s a shortage of lower priced homes for sale in much of the country, resulting in multiple bids in some areas,” she said.

“Raw unsold inventory has been trending down. As the market heats up again this spring, buyers may need to be prepared to move quickly on a particular home – the best advice is to begin working with a Realtor now to be able to use the tax credit and benefit from the increased buying power in the current market,” Golder said.

Total housing inventory at the end of December fell 6.6 percent to 3.29 million existing homes available for sale, which represents a 7.2-month supply4 at the current sales pace, up from a 6.5-month supply in November. Raw unsold inventory is 11.1 percent below a year ago, is at the lowest level since March 2006, and is 28.2 percent below the record of 4.58 million in July 2008.

Distressed homes, which accounted for 32 percent of sales last month, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes in the same area. For all of 2009, the median price was $173,500, down 12.4 percent from $198,100 in 2008; distressed homes accounted for 36 percent of total sales last year.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.93 percent in December from 4.88 percent in November; the rate was 5.29 percent in December 2008.

Single-family home sales fell 16.8 percent to a seasonally adjusted annual rate of 4.79 million in December from a pace of 5.76 million in November, but are 12.7 percent above the 4.25 million level in December 2008. For all of 2009, single-family sales rose 5.0 percent to 4,566,000.

The median existing single-family home price was $177,500 in December, which is 1.4 percent above a year ago. For all last year, the single-family median was $173,200, down 11.9 percent from 2008.

Existing condominium and co-op sales fell 15.4 percent to a seasonally adjusted annual rate of 660,000 in December from 780,000 in November, but are 34.7 percent higher than the 490,000-unit pace a year ago. For all of 2009, condo sales rose 4.8 percent to 590,000 units.

The median existing condo price5 was $183,700 in December, up 1.0 percent from December 2008. For all of last year, the median condo price was $176,100, which is 16.1 percent below 2008.

Regionally, existing-home sales in the Northeast dropped 19.5 percent to an annual level of 910,000 in December but are 21.3 percent above a year ago. The median price in the Northeast was $241,700, up 3.2 percent from December 2008.

Existing-home sales in the Midwest fell 25.8 percent in December to a level of 1.15 million but are 8.5 percent higher than December 2008. The median price in the Midwest was $143,200, which is 1.8 percent above a year ago.

In the South, existing-home sales dropped 16.3 percent to an annual pace of 2.01 million in December but are 15.5 percent above December 2008. The median price in the South was $152,000, down 1.0 percent from a year ago.

Existing-home sales in the West declined 4.8 percent to an annual rate of 1.38 million in December but are 15.0 percent higher than a year ago. The median price in the West was $236,000, up 2.7 percent from December 2008.

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

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The median, or middle, price of a home jumped to $224.800 last month from $197,800 in December 2008. The percentage increase was the largest of at least other metropolitan statistical areas tracked by the NAR. Unlike the S&P/Case-Shiller report that will be released on Tuesday, the NAR report does not include only major markets. It also includes markets such as Pittsburgh and San Antonio, for example.

Sales volume, however, dropped by 10.2 percent in the Denver area.  Only Indianapolis, with a 13.1 percent decline, showed a bigger percentage drop, according to the data released by NAR.

Denver was not on the list, but the information it compiles for the Denver MSA was released to InsideRealEstateNews.com.

“I can give you unpublished data on Denver,” said NAR spokesman Walter Molony. He said the NAR publicly released month-over-month data on various cities depending on the sample size of the MSA and how comfortable NAR felt with the data. The NAR also noted that their data may show different results than local data because of geographic areas and housing types included. An earlier report by independent broker Gary Bauer, based on Metrolist data, showed a slightly smaller percentage increase in the median price of a single-family home sold. Bauer’s report showed the median price of a single-family home closed in December at $221,000, up 13 percent from December 2008.

Molony also cautioned about reading too much into monthly data for any metropolitan area.

“Month-to-month data can be quite volatile,” Molony said. “We prefer quarterly data. We will be releasing quarterly data on Feb. 11. That will be more in-depth and you should find that more valuable.”

When I told Chris Mygatt, president of Coldwell Banker Colorado, about the data, he noted that is a bit of a higher December vs. December 2008 gain, based on local Metrolist figures.

He said the increase last month was due to the mix of homes being sold. For most of 2009, so many distressed properties were being sold that they were driving down the overall average and median prices, he said.

“It is interesting,” Mygatt said about the NAR data. “We know in the last four months we have been seeing some increases in the average price of a sold homes.”

But he said that is a trend that may not last.

“If  you look at the big picture in Denver, we know that banks are sitting on a record number of homes that are not being listed on the market and are not currently being sold,” Mygatt said. “That has resulted in a decreasing inventory and when demand came on strong, we saw prices at the lower-end move up, along with some movement at the upper end.  What I really fear is when and how this  ”shadow market” of unsold homes held by the banks are delivered to the market. If they let them out one at a time, by dribs and drabs, it won’t have much of an impact. But if all of a sudden they drop thousands of homes on the market, we are going to be in trouble. That will cause a big drop in prices.”

Source: National Association of Realtors

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

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The report says that regional business confidence levels are increasing and the correction in housing may end – or at least stabilize.

Clark noted that the “annual declines in a majority of the S&P/Case-Shiller Home Price Indices have reached bottom, and the indices for Denver are close to a positive annual return. (For my earlier blog on the most recent Case-Shiller report go to this link.)

“Additionally, according to the National Association of Realtors (NAR), the Denver-Aurora-Broomfield metropolitan statistical area was among 30 areas that reported an increase in median home price between the third quarters of 2008 and 2009. The increase was also the first reported for Metro Denver in two years and contrasted with an 11.2 percent over-the-year decline in the nationwide median,” the report notes.

Metro Denver home sales rose 2.9 percent between September and October. October home sales were 7.6 percent below sales from October 2008, but this over-the-year gap in sales was the smallest reported since December 2008, according to the report. (For more on the Denver-area housing market in October, go to my previous blog.)

“Put another way, the pace of Metro Denver home sales is slowly strengthening and should reach a point early next year where monthly sales exceed those reported in 2009,” Clark said.

Slow improvements in home sales have also helped stabilize home prices in the Denver area. Denver. The October average sales price for single-family homes increased 4.6 percent over-the-year, and the average price for the first 10 months of the year moved within five percent of the average for the same months of 2008. The year-to-date average condominium price was down 7.1 percent in October, but condominium prices are also showing signs of gradual improvement.

Challenges certainly remain for housing markets, the report notes.

“The Mortgage Bankers Association’s most recent National Delinquency Survey shows roughly one in seven U.S. mortgages were past due or in foreclosure at the end of the third quarter, and overall delinquency rates continue to break records nationwide. In Colorado, closer to one in 10 home loans were delinquent or in foreclosure at the end of the third quarter. The state’s overall delinquency rate of 6.7 percent was the highest reported since at least 1990, Colorado still had the 10th-lowest rate in the nation.”

The report also notes that “unemployment has largely replaced subprime loans as the key driver of mortgage delinquency, although additional resets of adjustable rate loans are looming in 2010. Stronger trends in home sales and prices can only help with these challenges, though, and government programs including the now extended and expanded homebuyers’ tax credit should also help housing markets stabilize in the months ahead.”

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

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