Of the 9,734 homes sold and closed through April 30, 6,663 of them – 68 percent – were priced at $300,000 or below, shows an analysis of Metrolist data by independent broker Gary Bauer. The single biggest price band was from $100,000 to $200,000, with 3,040 sales, followed closely by the $200,000 to $300,000 range, with 3,028 sales.

Tax credits fuel sales

“That is a direct reflection of the tax credits,” which required qualified homes to be placed under contract by April 30 and closed by June 30, said David Binkowski, principal of Prudential Real Estate of the Rockies.

“Most of the first-time buyers were buying in that price range,” he continued. “It is pretty clear that is coming from the tax credit. Almost amazingly clear. It is pretty much a hard-core fact.” (For a detailed look at April’s activity please visit Tax credit seed record April.)

The Bauer study includes the smaller counties of Clear Creek, Elbert, Gilpin and Park, as well as Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas and Jefferson.

While a lot of prospective buyers did their best to take advantage of the $8,000 tax credit for first-time buyers and $6,500 for qualified current home owners, the Denver housing market will not fall off the cliff now that the deadline has passed, Binkowski said.

Rates and prices low

“Interest rates are still incredibly low and prices are still very good, so even without the tax credits, the market still presents a fantastic buying opportunity,” Binkowski said. “With the tax credits, buyers could have their cake with a cherry on top. Now, they can have their cake and eat it, too, but without the cherry.”

The average 30-year, fixed-rate mortgage averaged 4.72 percent, according to a Zillow.com survey released today, down slightly from 4.82 percent a week ago.

Binkowski said that while the tax credits were important to a lot of prospective buyers, and it may have convinced some to get off the fence, it was never the sole driving force to sign on the dotted line. He said some buyers missed the deadline because they could not find the right home, and he thinks most of them will stay in the market.

“And I think if the market does slump nationally without the tax credits, the government will come up with some other program,” he said. “The housing market is just too important to the economy to ignore.”

You’ll kick yourself if you don’t buy now

Tom Cryer, a broker with the Kentwood has often compared this time as the real estate cycle to the Denver-area of the late 1980s and early 1990s, before the housing market blasted off with rocket-like force.

Studying recent real estate data, reinforced that belief for him.

“It appears the bottom may be behind us,” according to Cryer. “It’s time to buy or kick yourself!”

Lydia Lin, principal of One Realty in Denver, said that while most buyers were well-prepared, some first-time buyers had unrealistic expectations. She said some prospective buyers, hoping to get the tax credit at the last-minute, had not taken the basic and necessary step of being pre-qualified by a lender. One woman she ran into at two open houses, had not even considered the Home Owner Association fees when she was considering her monthly cost of buying a home.

For some people, trying to buy a home caused an incredible amount of stress, especially when they came up short, she said.

Not everyone should be a home owner

“For buyers who were counting on the $8,000 as the only way they could afford to buy the house, they probably shouldn’t be buying anyway,” Lin said. “It’s probably not politically correct to say that, but I think it’s true. Those buyers are gone. But for those who were qualified to buy a home even without the tax credit, I thin they will take a breather and start looking again. Whether that breather will last a couple of weeks or a month, I don’t know. I do think the market is starting to feel like a regular market again.”

Bauer couldn’t agree more.

“It really is what I call a ‘normal’ market,” Bauer said. “During the last few years, most of the activity was at the very low end. But now we are seeing more activity at all price levels. Denver is and remains a very affordable housing market, as it has been historically.”

He noted that during the past couple of years, much of the activity had been focused on homes priced below $100,000. Now,  there were only 595 home sales in that price range.

“At any given week, there is only a week’s supply of homes in the zero to $100,000 range,” Bauer said. “There has been so much demand for homes in that price range, that it has driven prices up at the very low-end.”

County	$0-$300,000	$300,000-$500,000	$500,000 +	Total
Adams	1492	124	18	1634
Arapahoe	1362	308	111	1781
Boulder	390	313	203	906
Broomfield	113	64	23	200
Clear Creek	22	6	8	36
Denver	1440	452	192	2084
Douglas	620	489	173	1282
Elbert	59	31	10	100
Gilpin	20	6	-	26
Jefferson	1071	411	120	83
Park	74	9	-	63
Total	6663	2213	858	9734

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

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Last month’s  percentage increase in Colorado is smaller than the 68 percentage increase from December to January, when 1,072 households had received permanent loan modifications. 

In Colorado, the homeowners in the Denver-Aurora Metropolitan Statistical Area have received 1,660 permanent loan modifications so far. And 7,200 of the 11,700 households in Colorado who are participating in the trial program are from the Denver-Aurora MSA.  The Denver-Aurora  MSA accounts for 0.88 percent of the total HAMP activity. The Denver-Aurora area accounts for almost 70 percent of all of the permanent loans in Colorado.  Pueblo had the fewest number of homes in the program, with 312 in active trials and only 51  permanent loans.

Loan mods help housing heal

There are now enough homeowners in the Denver area with permanent loan modifications to help heal the local housing market, said Tom Cryer, a broker with the Kentwood Co.

“I am a free-market guy,” Cryer said. “And I do hate that this rewards bad behavior,” of borrowers not making the payments they promised when they took out the loan.

But Cryer said he thinks the vast majority of people who are trying to keep their homes today are doing their best  to be responsible and do the right thing under extraordinarily difficult circumstances. Many buyers took out loans they did not understand a few years ago, and have not been bailed out by rising housing prices, as they expected, he said. Instead, the $250,000 they paid for the home might only be worth $210,000 or less, at a time when they have lost their jobs or have otherwise suffered financially, he said.

“I think if you can do anything to keep people in their homes and encourage them to be productive and stable human beings, is well worth it,” Cryer said. “I think the unintended consequences of programs like this are less painful than some other ones. I think socially, politically and economically, it makes a lot of sense to keep people in their homes.”

Lowering foreclosure rates boosts neighborhoods

Cryer said if you have a neighborhood where 10 homes are facing foreclosure, and they owners can remain in their homes, the benefit goes far beyond those 10 families. It also means that if a neighbor is trying to sell a house, a foreclosed home is not being used as a comparable, which would drive down the prices of all the homes in the neighborhood. And that, in turn, will help local municipalities and local school districts preserve their property tax bases, he said.

The loan modifications will help stabilize housing prices, he said. And buyers in stabilized markets across the country will be willing to buy houses, while buyers will continue to stay away from markets still plagued by falling prices, Cryer said.

Lansing thrilled

Peter Lansing, president of Universal Lending, said he is “thrilled” by the number of loan modifications in the Denver area in Colorado. Overall, Colorado ranks No. 19 in the nation for loan modifications. (Universal Lending is a sponsor of InsideRealEstateNews.com.)

“I think it is great that more than 1,600 people in the Denver area have been probably saved from foreclosure, and we have another 11,000-plus in the system, who can potentially benefit.” Lansing said.

Lansing said one difficulty is loan servicers – banks and others whose traditional job has been to collect monthly mortgage payments and usually insurance and property taxes – now have the responsibility to determine who qualified for loan modifications.

“It’s very difficult for the servicers to triage the people who truly deserve help,” Lansing said. “Everyone, of course, would like to have a 2 percent mortgage payment. But just wanting to lower your payment is not a reason to qualify for programs like these.”

And both Lansing and Cryer worry that some people who have lost their jobs may not benefit from a loan modification, no matter how low their rates are dropped.

“Are you really doing anyone a favor if this is just delaying them losing their homes, anyway? I don’t think so,” Lansing said.

And Cryer said some homeowners are so deep underwater – that is, their loan is worth far more than their house – that they see no point in paying even a lower mortgage.

“Here is the anecdotal part,” Cryer said. “Suppose you have got a $200,000 mortgage and the home is now worth $170,000,” Cryer said. “Who cares if you are paying $1,500 a month or $1,000 a month? You are still paying on something that is totally upside down.”

Tough choices when you’re underwater

Also, because so many people are mobile, they have to weigh whether it is better to sell a home for a loss, or try to rent it out (for a loss) until the market improves. “I was just talking to a transferee who has been given a promotion by his company that requires him to move to Pittsburgh. Even though his company is paying his closing costs, he still will lose money on the house if he sells it. He’s trying to decide what to do.”

HUD counselors help

Shannon Peer, head of housing counseling at Brothers Redevelopment in Edgewater, has seen his earlier prediction that a huge percentage increase of conversions to permanent loans take place, even though the month-to-month percentage increase has slowed.

“Of course, we’d always like to see more permanent loan modifications, but 45 percent is still a big number,” said Peer, whose group runs the Colorado Foreclosure Hotline, 1-877-601-HOPE.

The number Peer said he will be watching closely is the number of households entering the trial program, which has not been growing as rapidly as the conversion to permanent loans.   “And as of June 1, there are going to be some new guidelines in place -people in the trial program are going to be basically have to be pre-qualified for the permanent loan modifications,” Peer said. “So it will be interesting to see what change that has on the numbers of people entering the process. I anticipate that we will continue to see big percentage increases from active trials to permanent loan modifications, especially now that there is a pretty big pool of people in active trials.”

Peer said that some critics have said that the number of loan modifications “is only a drop in the bucket”, and there are not enough of them to be helped. But I think more and more lenders are willing to do some kind of workout that is good for the borrower and the mortgage company.”

He said that many distressed homeowners who call the foreclosure hotline think that a loan modification is the only option. But he said a HUD-approved counselor can walk them through a variety of options, some that may be more realistic and be more appropriate for some individuals. And if a person has tried to get a loan modification on their own with no luck, he said counselors can often help them maneuver around “road blocks” with their lenders. “They can tell them about potential pitfalls and make sure they have all of the needed documents,” Peer said. There is no charge for HUD-approved counselors, such as those who respond to hotline calls.

“Every situation is unique,” Peer said. “That is why our counselors approach it one homeowner at a time.”

National snapshot

Nationally, 168,708 households have received permanent loan modifications, and another 91,843 have permanent modifications pending. At the end of February, 835,194 households were in trial modifications. So far, 88,663 modifications have been canceled. The median savings for those receiving a permanent modification is $518.88 a month, or 36 percent of the median before-modification payment.  So far, the more than 1 million households in either the active trial stage or who have received permanent modifications have saved more than $2.7 billion.

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

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The total sales since 1975 is the equivalent of  all of the homes in Denver, Colorado Springs, Aurora,  Lakewood, Littleton and Arvada – and then doubling them.

And the $200 billion represents more than 10 times the Colorado state budget. Another way to look at it: The $200 billion is equal to the annual GDP of Israel.

“Isn’t that staggering? It really paints a picture of just how big the residential real estate industry is,” said Tom Clark, executive vice president of the Metro Denver Economic Development Corp. “Basically, we sold all of our houses – twice. It’s like the old adage from our parents: Buying a house is the best way to create wealth.”

And even if home prices only slightly exceed the inflation rate, as they have in the Denver area, it’s still worthwhile, Clark said.

“It is a form of forced savings,” Clark said. “And when you look at the magnitude of it for the Denver area over a long period of time, it is just incredible.”

Inflation-adjusted numbers staggering

When adjusted for inflation, the total dollar volume is about $277 billion, according to the  analysis based on data from independent broker Gary Bauer and Tom Cryer, of the Kentwood Co. Their numbers, based on Metrolist statistics, represents mostly previously owned  homes sold by Realtors. It would not include homes sold by builders that did not use Realtors, or for sale by owner properties. But the numbers likely represent at least 85 percent of the sales in the metro area over more than three decades.

While the 42,070 home closings last year represent a 12 percent drop from the 2008 – the biggest year-over-year percentage drop since 1982, when home sales fell by 15.3 percent from 1981 – if you take a longer view, home sales represent some big numbers. Last year marked the third largest year-over-year drop since 1975. The largest was in 1980 from 1979, when sales dropped by almost 23 percent.

Trickle rate of homes huge

“Wow,” said Bauer, when informed of the findings. “That is pretty amazing. It indicates once again the value of the real estate market. And when you take into consideration that the current “trickle” rate from real estate is about four times, it really has had an $800 million impact in 35 years.”

Consumers clueless on housing’s impact

Bauer said he does not think most consumers have any idea of the size of the housing economy and its importance to the Denver area economy.

“I think the focus is when you are in the transaction and when you are contemplating that transaction,” Bauer said.

Cryer agrees that the residential real estate is extremely crucial to the health of the overall economy.

“The residential real estate market is the swizzle stick that stirs the economy,” Cryer said. “I don’t know who originally said that – I think I first heard it during the housing bust of the late ’80s – but it is really true. When you stop selling houses, you stop selling refrigerators, and that means some guy working in a factory in Indiana that makes refrigerators loses his job. It doesn’t take long for that trend to occur. It just goes on and on. It touches just about every aspect of the economy.”

Cryer said the “question that haunts him,” as whether the Denver area is going to fall to about 30,000 closings each year, or rebound to the 50,000s, where it was a few years ago.

Mike Rinner, of the Genesis Group, which tracks housing along the Front Range, said the InsideRealEstateNews analysis is “pretty cool.” He said he plans an even more in-depth analysis, which would use a variety of historical to project exactly where the local housing market is in the real estate cycle and when it can expect to rebound from its slump.

“It’s interesting when you think about it,” Rinner said. “We’re talking about some really big numbers over 35 years.”

For related blogs, please visit these links:

Denver a better bet than Las Vegas

Historic look at home prices

Denver home sales drop by $1.75 billion

Sources: Gary Bauer, Tom Cryer

* Dollar volume and total numbers are rounded.

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That’s because in 1975, the average price of a single-family home and condo in the metro area was $34,722, shows research by Tom Cryer of the Kentwood Co. Cryer and independent broker Gary Bauer provided me with historical information on home prices in the Denver area, based on Metrolist data.

But when I adjusted the home prices for inflation, the average price of a home in 1974 in 2009 dollars equates to $152,361.  By comparison, the average price of a blend of all homes sold by Realtors in the Denver area last year was $242,413.

If you look at home prices at the end of last year, the last time they were lower was in 2001, the average price of all homes stood at $257,394. But if you look at the average price adjusted into   2009 dollars, the last time prices were lower was in 1998, when the average inflation-adjusted price was $246,570.

It’s the mix

Yet, it is not as simple as that.

The homes reflect all of the homes sold; Metrolist does not “pair” like homes as the much-watched S&P/Case-Shiller report does, which tracks the same house over time.

In most years, because of size and price drift from new homes entering the resale market, one would expect that that Metrolist data would show higher prices than Case-Shiller. Case-Shiller’s latest data shows home prices in Denver have slightly out-performed inflation since 2000.

But as has been widely reported, during the past couple of years, most of the sales action in Denver and elsewhere  has been in lower-priced homes – typically distressed properties.

Bauer’s research found that 34.25 percent of the median-priced homes sold last year were priced below $101,000, compared with 25.24 percent in 2007. That almost a 36 percent increase in sales of the lowest-price homes.

The flip-side is that only 1.92 percent of the homes sold last year in the Denver area had a median price of $500,000 or more, about a 37 percent drop from 3.02 percent in 2007. The trend in 2008 was very similar to 2009.

I asked Byron Koste, director of the CU Real Estate Center in Boulder, if he thought buying a house was a good investment.

Homes, not just an investment

He pointed out that while over time a house may not be the greatest investment vehicle, it has a utility that other investments, such as stocks, lack.

“The nice thing about a house, is you can enjoy it,” Koste said. “We can’t enjoy a stock that way. If we each took $250,000 and one of us bought a stock and one of us bought a house, the person owning a stock, on a good day, can call you up and say: “You dummy, look what my stock did.” Of course, after 2001 and 2008 (bad years for stocks), the homeowner can call up the stock investor and call him a dummy.”

Koste said if you want to improve the odds of making money on your house, buy a ‘well-located, unique property. If you are buying one of hundreds or thousands of the same kind, you are rolling the dice that it is not going to go down anymore. You can call it an investment if you are smart about it.”

Or as one very wealthy Denver investor I know says: “I make my money when I buy buildings, not when I sell them.”

While buying a house with the idea of making a mint is not a great idea, there are some other advantages such as Uncle Sam’s tax write-offs, it’s a forced savings for Americans who are notorious about putting money away, and they tend to be highly leveraged.  For example, in 1984 my wife and I bought a Denver home for $84,000.  We sold it in 2007. When I adjusted our purchase price for inflation and home improvements (which I also adjusted for inflation), I estimate we made about an 84 percent profit. (I also bought the home for about 12 percent less than the average price of a home sold and closed in 1984.)

I looked at instead of buying my house, I had bought GE stock. The inflation-adjusted price of a GE stock in 1984 (accounting for splits and dividends) would have been $3.07, while it would have been $35.13 in 2007.

On the other hand, I didn’t have $84,000 to spend on GE stock or anything else. I didn’t even have the $3,000 or so for the down payment. I borrowed that from my parents and paid them back.

Still, I have no regrets about investing in the house instead of putting GE.

As Byron said, you can enjoy a house, and we did.

For related blog, please go to these links:

Denver: At least it’s not Vegas

Denver home prices drop by $1.75 billion

Sources: Gary Bauer, Tom Cryer

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To put that into perspective, you could have bought 7,244 average-priced homes and condos in the Denver area last year with that $1.75 billion, increasing the sold volume by 17 percent. Or, you could have used that money to pay cash for 78,760 Subaru Outbacks or purchased about 1.6 million ounces of gold.

Since 1991, that marks only the third time that the dollar volume had not risen from the previous year, according to historic data supplied to me by independent broker Gary Bauer. Last year also was the third consecutive year that Denver’s sales volume dropped. In 2007, sales volume dropped by about $2 billion from 2006.

Sales volume dropped slightly less than 3 percent in 2006 from 2005. By contrast, the year-over-year drop in 2009 and 2008 were each just under 15 percent.

Last year, just under $10.2 billion in homes sold. You would have to go back to 1999 to find a year when the dollar volume was lower. But if you adjusted for inflation (don’t worry, I did it for you), you actually have to go back to 1997 to find a year when the dollar volume was lower.

Historically, dollar volume tends to rise each year, even if the previous year wasn’t a particularly strong year for home sales.

That is because as new homes are re-sold, which tend to be bigger and more expensive, they are added to the mix, and drive up overall prices.

Of course, that all changed with the foreclosure crisis, as well as the difficulty of getting jumbo loans for expensive homes, and a drop in demand for the houses, as consumers change their priorities on major purchases such as homes, as well as the worst economy since the Great Depression.

In short, the mix of homes on the market has changed. And with home sales, as with margaritas, the mix is crucial.

Last year, there were only 480 homes sold and closed in the Denver-area that sold for more $1 million or more, according to an analysis by Tom Cryer, a broker with the Kentwood Co. Homes costing at least seven figures accounted for only 1.19 percent of the sales market last year. And perhaps even more startling, there is now almost a three-year supply of $1 million-plus homes on the market, according to Cryer. Overall, there is only a 5-month supply of unsold homes on the market, Cryer’s research shows. And for homes priced below $200,000, there is slightly less than a three-month supply of homes on the market, Cryer said.

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Broker Tom Cryer of the Kentwood Co. believes that we're heading into an era of "rational apathy," replacing "irrational exuberance" of the previous decade.

Forget the age of “irrational exuberance,” a phrase coined by then Federal Reserve chairman Alan Greenspan in 1996, and later popularized by economist Robert Shiller in a book bearing the same name.

Instead of irrational exuberance – the notion that assets like stocks and homes move  in only one direction, and it ain’t down – we are witnessing the era of  ”rational apathy,” according to Denver real estate broker Tom Cryer.

“Here’s my prediction for the next decade: Think Affordable, Think Self Sufficiency, Think Homegrown, and Think Down the Street,” Cryer, a broker with the Kentwood Co., wrote on his blog, explaining where he is coming from with the two-word description of an age in which McMansion envy will seem  so 2006.

I was in Santa Fe last week, and after talking with  about the S&P/Case-Shiller report (yes, the same Shiller who made irrational exuberance a household phrase), Cryer said that we need to come up with another moniker to capture the new direction of the housing market and economy.

“Rational apathy” born

Moments after we got off the phone, the CFL light bulb went off in Cryer’s head, and the phrase “rational apathy” was born.

“That’s a very cute idea,” said Tom Clark, executive director of the Metro Denver Economic Corp., when I told him about it.

“I think that rational apathy absolutely covers all the bases,” Clark added.

Jim Haynes, president of Behavior Research Center Inc. in Phoenix, said that his company has not specifically looked into data addressing Cryer’s thesis.

“But I think there is no doubt that most of the signs, including the stuff you read  and anecdotally from people being interviewed on talk radio and things, there was a hard lesson learned and a lot of people are taking it to heart,” Haynes said.

He doesn’t know if rational apathy will capture the public’s fancy, as irrational exuberance did.

“But probably in many ways it is fairly descriptive,” Haynes said. “If it makes you not interested in doing what your friends and neighbors and brother-in-law tell you to do,  that is probably a good thing. I think it may have many applications.”

Apathy? Who cares?

Economist Patty Silverstein, principal of Littleton-based Development Research Partners, doesn’t like the word “apathy,” in Cryer’s word-duet.

“When I heard the word apathy, I think of not caring,” Silverstein said. “But I agree with the premise of spending within our limits.”

Jeff Bernard, a broker associate with RE/MAX Alliance and principal of Bernard Analytics, also liked the idea behind the words, but felt strongly that apathy doesn’t capture the mind-set of consumer’s in today’s economy.

“It captures your attention pretty quickly,” Bernard said about Cryer’s creation. “But I would say people are not apathetic, as much as they are pragmatic. But “rationally pragmatic” is a bit redundant.”

After giving it some thought, Bernard sent me an e-mail describing his own short description of what he thinks the future holds.

“Perhaps merging two famous quotes from different times by changing Alan Greenspan’s “irrational…” to “rational” and then using Dr. Mohamed Abdulla El-Erian’s now famous quote “new normal” gives you a ”rational new normal.”  Bernard said.

On the fly, Silverstein coined her own two-word catch phrase.

“I guess it is more of a new frugality,” she said. “I think that is what would characterize where we are heading the next few years.”

But whether you call it “rational apathy” or “new frugality,” Silverstein is not sure the concept has legs.

“People will be much more frugal for a few years, but you have to wonder how long it will last,” Silverstein said.  ”It’s human nature to figure out the “new greed” once again.”

New greed.

Now there’s a two-word phrase that is more economical way of saying that “greed is good,” the mantra of the Monopoly money go-go days following Michael Douglas’ portrayal of slimy tycoon Gordon Gekko in the 1987 movie Wall Street.

“I have to agree with Patty’s take on that,” Clark said. “I do not think we can  make it through a decade of  frugality.”

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

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Only 3,444 Denver-area homes were placed under contract last month, a 29.9 percent drop from the 4,910 homes placed under contract in October, shows a report Tuesday by independent broker Gary Bauer.

That is the largest percentage drop in November from October since at least 1990, shows an analysis of historical data by InsideRealEstateNews.com. While under contract activity typically drops off for seasonal reasons in November from October, in most months it falls by 15 percent or less.

“We stole buyers in October from November,” as first-time home buyers rushed to try to close their homes before the end of last month, the previous deadline for the $8,000 tax credit for qualified first-time home buyers, said Tom Cryer, a broker with the Kentwood Co.

In early November, President Obama signed legislation continuing and expanding the credit to $6,500 for some current home owners .

“First-time home buyers were positively worried that the credit was gong to end, so they were rushing to do transactions in August, September and early October,” Cryer said. “Once they found they were going to have the tax credit extended for (about) six months, they backed off. I personally have had a number of  my first-time home buyers say let’s keep looking until we find the perfect home, instead of settling for something less.”

Bauer agreed.

“Most of the first-time buyers would also get FHA-type loans, and under normal circumstances, they typically take 45 to 60 days to close,” Bauer said. “So technically, many of them were finding themselves in sort of a limbo by mid-October. They knew by Oct. 15 they were really pushing it to close by the end of November. We lost some of that momentum when the tax-credit was extended.”

And the number of under contracts also was down 5.3 percent from the 3,637 placed under contracts in November 2008. The under contracts last month were at a five-year low. The last  November when fewer homes were placed under contract was in 2004, when only 2,786 homes were placed under contract.

David Simonson, of RE/MAX Professionals, was heartened that closings were up 23.3 percent  in November from November 2008. There were 3,599 closings last month, compared with 2,920 in November 2008.

Closings, which reflect sales that took place earlier in the year, were down 9.1 percent from October, when there were 3,958. (For more on closings, please read this blog.)

Meanwhile, there were only 18,061 unsold homes on the market last month, a 17 percent drop from the inventory of 21761 homes in November 2008.

That marks the lowest unsold inventory for any November on record.

“I thought it was going to be even lower, in the 17,000s,” Bauer said. “I’m talking to a lot of people, in a wide-range of price ranges, who have taken their homes off the market and plan to put them back on next year. I think we’re going to see a huge surge in home listings starting in January.”

The average price of single-family homes closed in November rose to $265,498, a 9.45 percent increase from the $242,557 average price in November 2008, and a 1.4 percent increase from $261,771 in October.

The median, or middle price – considered a more accurate assessment of the market than average prices, because the median isn’t as easily as skewed by a few expensive sales – also rose in November from November 2008.

The median price of a single-family home last month was $218,000 in November, 11.8 percent higher than the median price of $195,000 in November 2008. However,  the median price was down 1.8 percent from October’s overall median price of $222,000, according to Bauer’s data.

Much of that has to do with the mix of homes being sold, Bauer said.

“There is only a 10-day supply of homes priced under $100,000 on the market,” Bauer said.

He said that in January, 38 percent of the homes in the Denver area that sold and closed were priced under $150,000. The percentage of the homes in that price range selling has since dropped to 21 percent, he said.

And houses at the high-end of the market are being sold, as owners slash their prices.

“I’m seeing a number of sales of significantly depressed prices in Cherry Hills and Greenwood Village,” Cryer said. “Our market has done very poorly all year in the seven-digit price range, and we’re starting to see that break. ”

Last month, he said his office has placed under contract seven properties priced at more than $1 million. And one home that had been priced at more than $4 million at one time, sold last week at an auction for $1.6 million.

“You don’t need to many homes that had been priced at $6 million selling for $4 million, to start to move the overall average price,” Cryer said.

And Cryer said that jumbo loans, those above conforming rates of $417,000, have become more readily available in recent months “if you have stellar credit and work histories, with credit scores of at least 720. And you can expect to put down at least 20 to 25 percent.” It also helps if you have a relationship with the bank, he said.

In the first 11 months of the year, 39,111 homes have closed, a 12. 3 percent drop from 44,603 in 2008.

Fewer home sales represents almost a $2 billion drop in home sales.

“In the first 11 months of this year we have had $9.4 billion in home sales, while last year at this time we had $11.2 billion,” Bauer said. “And in 2007,  it was $13.2 billion. So we are down almost $4 billion in two years.”

The impact of the reduced sales volume ripples throughout the economy, note brokers such as Bauer and economists.

November Under Contracts

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

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The report shows that the U.S., overall, saw prices drop by 8.9 percent during that time period. And the 10 and 20 city composites in the report, fell by 8.5 percent and 9.4 percent, respectively.

“Neither Denver nor Dallas saw that meteoric rise in prices other cities did, so it is logical that they would not see the meteoric declines,” said Tom Cryer, a broker with the Kentwood Co.

Overall, the third-quarter report is a marked improvement over the 14.7% decline in the annual rate of return reported in the second quarter of 2009, and the 19.0% drop in the first quarter.

“We have seen broad improvement in home prices for most of the past six months,” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “However, the gains in the most recent month are more modest than during the seasonally strong summer months. Fewer cities saw month to month improvements in September than in August in both seasonally adjusted and unadjusted figures.”
Nationally, the U.S. National Composite rose by 3.1% in both the second and third  quarters of 2009. Both the 10-City and 20-City Composites posted their fifth consecutive monthly increase with September’s report.

Steve Blank, a broker with Fuller Sotheby’s International Realty, said that the 1.2 percent decline in Denver is “freakishly good,” and better than he would have expected.

“I would say that things are pretty well bottoming out now, and if they are not at the bottom, they are close,” he said.

But he said that the market is only down by 1.2 percent because of price improvements at the lower-priced homes, as expensive homes are still hurting.

“There are some phenomenally good deals at the high-end,” Blank said.

However, there is some good news for buyers of luxury properties, he said. Just recently, lenders started making more competitive jumbo loans – that is,  for mortgages of more than the conventional loans that top out at $417,000, he said.

“One lender offers what it calls “doctor loans,” he said.  These loans are fixed for either 10 or 7 years and are amortized over 30 years.

“You can get them at in the 4.375 percent or 4.75 percent range,” Blank said. But you need a credit score of 740 or higher, and typically lenders want at least 20 percent down, he said. Thirty year fixed jumbo loans also are available in the 5.5 percent range, for extremely qualified buyers who put at least 20 percent down, although he said occasionally a lender will allow only a 10 percent down payment.

Diane P. Huttner, a broker with Prestige Real Estate Group, said the top ranking at Case-Shiller is wonderful.

“That is really good news,” she said. “That tells us something about our market.”

But she agrees with Blank and other Realtors that the top-end of the market is still “quite challenging.”

She said that she has noticed a number of expensive homes recently selling in the Hilltop and Cherry Creek areas for less than the mortgage amount, although she said one expensive home in Cherry Creek recently sold for a mere $15,000 below the asking price.

And she said she spoke to a builder about buying some land near the Preserve in Greenwood Village. The builder, who constructs homes priced above $2 million, said even if she gave the land to him, “no one wants to pay me what it would cost to build a home.”

But she said for someone wanting to move up, it may be worth it to sell their home for even a slight loss, because they can drive a great bargain for a luxury home.

Mike Rinner, of the Genesis Group, which tracks housing along the Front Range, also said that the most recent Case-Shiller ranking is good, and continues a trend seen for most of the year.

He said Denver and Dallas each have has seen seven months of consecutive improvements from the previous months this year. But some of that, especially in mid-year, was because of seasonality, he said. Even in overall down years, there are some month-to-month improvements for seasonal reasons, he said. No markets are showing consistent improvements from the same month in 2008, Rinner noted.

While that, with today’s report are encouraging, he said the market still faces more pain.

“I think it is going to stay negative, as far as price appreciation,” Rinner said. “We will be lucky if we hit zero (price appreciation) next year. In the third quarter of this year, foreclosures jumped 54 percent from foreclosures last year.  And with more foreclosures, and fewer jobs, it is just tough to get a housing recovery. Housing demand is a function of employment.”

Still, for those able to buy today and hold on until 2012, will  be rewarded, said Cryer, of Kentwood.

He said 2010 will not be that much different from 2009, and 2011 “will not be super. But in 2012, I guarantee you that you, me, my neighbors and everybody will wish they had bought those short sales and foreclosures in 2009. If you want a “lock it and leave it” lifestyle, and plan to retire in the next few years, now is the time to buy a condo in the Landmark. Look at the confleucen of events we have with low interest rates, a good supply of homes to choose from at the upper end, and depressed prices. It just takes one of those factors to go away to completely change the buying opportunity we have  today.”

Area	Appreciation since 2000	September to October change	1-year change from October
U.S.	46.58	0.4%	-7.3%
Atlanta	10.12%	-1.0%	-8.1%
Boston	54.7%	-0.6%	-2.8%
Charlotte	19.05%	-0.7%	-7.0%
Chicago	30.78%	-1.0%	-10.1%
Cleveland	4.97%	-1.6%	-3.5%
Dallas	19.90%	-0.6%	-0.6%
DENVER	28.91%	-0.4%	-0.1%
Detroit	-26.93%	0.2%	-15.1%
Las Vegas	04.7%	-0.1%	-15.1%
Los Angeles	68.43%	0.3%	-6.3%
Miami	49.09%	0.4%	-14.0%
Minneapolis	24.51%	-0.5%	-8.4%
New York	75.01%	-0.0%	-7.7%
Phoenix	9.26%	0.8%	-21.8%
Portland	49.72%	-0.5%	-11.8%
San Diego	55.37%	0.4%	-2.4%
San Francisco	35.81%	1.3%	-2.6%
Seattle	49.26%	-0.4%	-12.4%
Tampa	40.27%	-1.6%	-15.2%
Washington, D.C.	79.71	-0.4%	-2.8%
Composite-10	58.82%	0.0%	-6.4%
Composite-20	46.58%	0.0%	-7.3%

.

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Home closings nationally are up 10.1 percent from October and a whopping 23.5 percent from October 2008, according to the National Association of Realtors. By comparison, home closings were down 7.6 percent in the Denver area from a year earlier and were up only 2.9 percent from September.

But I would consider this a bullish sign, if I were either looking to buy a home, sell a home, or if I were in the business of selling homes.

The reason is mathematical.

Everything reverts to the mean. That is, whether you are talking about stocks or housing, things have a way of settling down to whatever is  “normal” for that market, despite short-term spikes up or down.

What I think that is going to mean (no pun intended)  is that home sales are going to pick up in Denver and fall nationally.

And don’t forget, Denver’s economy often is counter-cyclical to the national economy.  That  economic-sword cuts both ways – we’re often down when the nation is up, and vice versa.

Another reason to bet on Denver’s housing market recovery is that it and Colorado have one of the best “balanced energy economies” of traditional and  alternative energy companies in the nation, as Tom Clark, of the Metro Denver Economic Development Corp., points out. The  Denver-area should become a magnet for high-paying jobs in the alternative energy sector,  especially since the Golden-based National Renewable Energy Laboratory, the nation’s premier renewable energy research outfit,  is in our backyard.

Also, mortgage rates remain near their historical lows, if you have the credit and work history to qualify. That mortgage rate window won’t stay open forever.

Still, there are storm clouds dampening Denver’s housing market. A declining workforce even as unemployment rates drop, is not encouraging. The area, and much of the country, is bracing for another wave of foreclosures due to more people losing their jobs. And lenders may have thousands of foreclosed homes waiting in the wings that have not yet been put on the market,  creating a shadow market, as I reported earlier.

Kentwood Co.  broker Tom Cryer says this reminds him of 1989, a prime time in Denver to find bargain-basement-priced homes. He thinks people who don’t buy today, will wish they had by 2012, when he thinks a  Denver-area housing recovery will be well on its way.

I don’t think I would bet against him.

Contact John Rebchook at 303-

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