How is the Denver real estate market compared to other metro areas?

The Denver-area housing market ended 2010 as the best-performing housing market between the coasts, shows the closely watched S&P/Case-Shiller Home Price Indices released today.

Denver-area homes on average lost 2.4 percent in December from December 2009, shows the report that tracks 20 major metropolitan statistical areas. The decline was the same as the overall drop for all 20 cities and Denver was the seventh best performing city in the index on a year-over-year basis. Washington, D.C. was No. 1, with homes rising 4.1 percent. San Diego, the only other city in positive territory, showed a 1.7 percent increase. San Francisco, Los Angeles, Boston, and New York also did better than Denver. From November to December, Denver showed a 0.7 percent drop, compared to a 1 percent drop for all 20 cities.

Denver in a good place

“It really sounds like a pretty good win for Denver,” said Peter Niederman, CEO of the Kentwood Co. “It sounds like Denver fared pretty well. I think Denver is in a pretty good spot right now. We’re seeing good traffic and showings, although they are not turning into contracts as much as we had hoped to see. Still, traffic is a leading indicator. And we are seeing traffic at all price points. I still hold to my prediction that when the year is over, we will be up 3 percent to 5 percent from last year. The first quarter and second quarter will be kind of hard to compare to Q1 and Q2 of last year, because we had the tax incentives in the first part of 2010, while we don’t have them anymore.” More than anything, what will help Denver and the nation’s housing market is job growth and a drop in the unemployment rate, he said. “When there is job growth, people will feel like there is more security in their jobs,” Niederman said. “Until then, we will kind of bounce around at the bottom. Sometimes we will drift a little bit lower and sometimes we will drift a bit higher.”

National view weak

From a national perspective, David M. Blitzer, chairman of the Index Committee at Standard & Poor’s, was not very bullish.
“We ended 2010 with a weak report,” Blitzer said. “The National Index (at Case-Shiller) is down 4.1% from the fourth quarter of 2009 and 18 of 20 cities are down over the last 12 months. Both monthly Composites and the National Index are moving closer to their 2009 troughs. The National Index is within a percentage point of the low it set in the first quarter of 2009. Despite improvements in the overall economy, housing continues to drift lower and weaker.

“Unlike the 2006 to 2009 period when all cities saw prices move together, we see some differing stories around the country,” Blitzer continued. “California is doing better with gains from their low points in Los Angeles, San Diego and San Francisco. At the other end is the Sun Belt – Las Vegas, Miami, Phoenix and Tampa. All four made new lows in December. Also seeing renewed weakness are some cities that were among the last to reach their peaks including Atlanta, Charlotte, Portland and Seattle, where news lows were also seen. Dallas, which peaked late, has so far stayed above its low marked in February 2009.”

The report shows that the 10- and 20-City Composite indices remain above their spring 2009 lows; however, 11 markets – Atlanta, Charlotte, Chicago, Detroit, Las Vegas, Miami, New York, Phoenix, Portland, Seattle and Tampa – hit their lowest levels since home prices peaked in 2006 and 2007. More markets hit new lows in each of the past three months.

“Looking deeper into the monthly data, 19 MSAs and both Composites were down in December over November,” Blitzer said. “The only one which wasn’t was Washington DC, up 0.3%. With December 2010 index levels of 99.73 and 99.48, respectively, Cleveland and Las Vegas have the dubious distinction of average home prices now below their January 2000 levels. Detroit was the only market that was in that group prior to December.”