What is the Denver market doing at this time?

This is a question I get asked a lot and one of great importance to home buyers and home sellers. Although things have slowed down since the expiration of the tax credit, rates are still extremely low, which increases buyer's purchasing power. Also, with rates being so low, buyers can save much more than the federal tax credit over time, which was valued at $8,000. Denver is still faring better than many cities in the country, but I believe in the next few months, sellers may need to be more willing to negotiate if they would like to sell their homes as we move into the fall and winter months since the Denver market is slightly cyclical.

Home prices in the Denver-area rose by 1.8 percent in the year ending in June, according to the closely watched S&P Case-Shiller report released today. Denver ranked No. 9 of the 20 metropolitan statistical areas tracked in the S&P/Case-Shiller Home Price Indices. Overall, the 20 MSAs rose by 4.2 percent.

Market rebounds
In June 2009, the Denver area housing market showed a 3.6 percent drop from June 2008, according to Case-Shiller. Despite the drop a year ago, that was good enough for third place out of the 20 MSAs, showing how much the market has changed during that 12-month period.
That is true about the entire country’s housing market, noted David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “Even with concerns about near term developments, we recognize that the housing market is in better shape than this time last year,” Blitzer said.

National outlook
“The monthly composites cover June and the national index covers the second quarter, when the government’s program for first time home-buyers was winding down,” noted Blitzer, of Standard & Poor’s.
“While the numbers are upbeat, other more recent data on home sales and mortgages point to fewer gains ahead,” said Blitzer. He noted that California’s cities “have moved from some of the hardest hit to three of the four leading cities based on year-over-year gains. Among the other hard hit cities, the news is also a bit encouraging – Las Vegas, however, remains among the weaker cities.” And 17 of the 20 MSAs and both composites “saw home prices increase in June over May – LasVegas was down 0.6%, Phoenix and Seattle were both flat. Through the second quarter, 15 of the 20 MSAs and both Composites have positive annual growth rates, and no market is registering a double-digit decline. The worry starts when you remember that the Homebuyers’ Tax Credit has expired, foreclosures are still at high levels, and July data on home sales and starts were very, very weak. The inventory of unsold homes and months’ supply data were particularly troubling. If this relative weakness in demand continues, it will likely filter through to home prices in coming months.” San Francisco showed the biggest one-year percentage gain, rising by 14.3 percent. San Diego was No. 2 at 11.2 percent. Phoenix, showed a 6.0 percent gain, while Las Vegas, declined by 5.2 percent.

Long-term, Denver’s housing market has gained about 29.19 percent from January 2000, compared with an overall appreciation of just under 48 percent for the 20 MSAs. Denver’s long-term appreciation is very close to the inflation rate during that period. Washington, D.C., showed the most appreciation, with home prices rising an average of 85.77 percent from January 2000. Detroit continued to be the only MSA to lose value over the long-term, with homes values falling by almost 30 percent since 2000.