Denver home prices show annual increase for 1st time in 3 years

Tuesday, January 26, 2010

Case-Shiller Index: Denver home prices show annual increase for 1st time in 3 years

Denver Business Journal - by Mark Harden

For the first time in three years, home prices in the Denver area showed a year-over-year increase in the latest S&P/Case-Shiller Home Prices Index.

The closely-watched report from Standard & Poor’s, released Tuesday, reported home sales prices for November 2009. Out of 20 U.S. cities in the latest Case-Shiller Index, Denver was one of just four that showed a year-over-year increase in prices.

Denver-area home prices rose 0.5 percent between November 2008 and November 2009. The last time Denver saw a year-over-year price increase was in November 2006, according to a Denver Business Journal analysis of Case-Shiller data; it had 36 straight months of year-over-year price declines after that.

As recently as early 2009, Denver was showing year-over-year home price declines of 5 percent or more, peaking at a 5.7 percent drop in February 2009.

But despite the good news in the latest index, Denver still has a long way to go before home prices reach their previous summer 2006 highs. Denver prices now are at about the same level as they were in early 2004, according to the DBJ analysis of Case-Shilling data.

During the current downturn, Denver prices reached a low point in February 2009, when they bottomed out at levels not seen since mid-2001.

Nationwide, only Dallas and San Francisco saw larger year-over-year price increases in the latest Case-Shiller report, at 1.4 percent and 1 percent respectively; San Diego saw a 0.4 percent rise.

On the other hand, price declines in the 12 months ending last November were greatest in Las Vegas (down 24.5 percent), Phoenix (down 14.2 percent) and Tampa, Fla. (down 13.2 percent). The average for the 20 cities in the latest report was a 5.3 percent decline for the 12-month period.

Month over month, the Denver area saw a 0.5 percent decline in prices in November from the previous month. That followed a 0.4 percent monthly drop in October and a 0.5 percent decline in September. Before that, prices rose month over month for six straight months.

Nationwide, home-price data, although showing improvement, presents a “mixed picture” in most markets, said David Blitzer, chairman of the index committee at Standard & Poor’s.

“While these data do show that home prices are far more stable than they were a year ago, there is no clear sign of a sustained, broad-based recovery,” Blitzer said in a statement.

The Case-Shiller index is compiled by comparing matched-price pairs for thousands of single-family homes in each market. Standard & Poor’s and Fiserv Inc. publishes it.

mharden@bizjournals.com

Friday, December 25, 2009

Denver real estate fares better than most

Denver Business Journal - by Paula Moore

Times were tough for metro Denver commercial and residential real estate businesses in 2009, but not as bad as in many other U.S. cities.

The constricted debt market remained one of the biggest problems for all real estate businesses, including commercial developers and homebuilders. Lenders, partly because of new federal regulations, kept a tight rein on debt financing.

In the residential arena, sales of high-end homes slowed to a trickle this year. But the federal government’s $8,000 first-time homebuyer tax credit did what it was supposed to — stimulating sales of both newly built and existing homes in lower price ranges.

The tax credit and low mortgage rates drove most home sales.

“For Denver’s housing market, 2009 was a year of so many industry changes, from short sales to new loan and appraisal rules,” said Leeann Iacino, president/CEO of Re/Max Professionals: Colorado’s Most Prestigious Real Estate Co. “It was a year for not only the real estate professionals to retool their business, but also for the consumer to really understand all the changes.”

Iacino merged her company, Prestige Real Estate Group LLC, with Re/Max Professionals Inc. in April to survive the housing downturn. “We’ve been profitable since then,” she said.

Looking at commercial real estate, some tenants shopped around for new space, but many opted not to move because of instability in the job market and the economy at large, brokers said.

There were few large sales of office buildings, shopping centers and warehouses, but there was a steady trickle of sales in the $10 million to $20 million range. With property values down, brokers advised property owners not to sell unless they had to.

Many cash buyers sat on the sidelines much of the year, waiting for asking sales prices to hit bottom, but became more active as the year wore on. In what’s likely to be the metro area’s biggest apartment property sale of ’09, CB Richard Ellis Investors LLC — CBRE Investors for short — paid $55 million cash for The Metro apartments near Coors Field in mid-December.

Big sale in Q2

But even in the second quarter, metro Denver managed to have one of the country’s largest office-building sales for the period, when HRPT Properties Trust (NYSE: HRP) of Newton, Mass., bought the 667,000-square-foot Seventeenth Street Plaza high-rise in downtown Denver for $134.3 million.

“Denver is doing less worse than other cities and regions around the country, some of which are almost hopeless,” said Greg Morris, president/CEO of Denver-based Fuller Real Estate. “That’s just not the case in Denver. It all stems back to job growth.”

Morris and other experts believe the first half of 2010 will be challenging for commercial real estate, but that market will stabilize in the second half of the year. Real estate investors are already positioning themselves to make purchases in the new year.

There were still plenty of problem commercial loans and home mortgages this year, but in the latter part of ’09, lenders were more open to loan workouts to avoid foreclosures.

Despite those efforts, Colorado had a record 12,468 home foreclosure filings in the third quarter, according to the Colorado Division of Housing. But the amount of completed residential foreclosures was down 8 percent in the state for ’09’s first three quarters year over year.

More home foreclosures expected

Residential brokers expect more home foreclosures in 2010, partly because many adjustable-rate mortgages (ARMs) will come due in the fall.

The Denver area had relatively few commercial foreclosures this year, exceptions being the 1860 Lincoln office building in downtown Denver and the Ritz Carlton, Denver hotel’s condo component and athletic club space. But a wave of commercial loans are expected to come due next year, which could cause a spike in commercial foreclosures.

“The velocity of troubled loans should be more dramatic in 2010, but I don’t think we’ll see the level of commercial foreclosures some are projecting,” said Mark Lucas, managing director for Chicago-based Jones Lang LaSalle Inc.’s (NYSE: JLL) Denver-area operation. “We’ll see loan workouts continue to be the first preference of lenders.”

JLL’s metro-area office added a dozen brokers this year and beefed up its distressed real estate services. The firm also hired one of the Denver area’s top commercial real estate executives, Ann Sperling, to be COO of the company’s entire Americas division, after Sperling was let go by Catellus Development Group earlier in the year.

Catellus is part of Denver-based ProLogis (NYSE: PLD), one of the world’s largest owners of distribution centers.

ProLogis, after launching a major retrenchment in late 2008 to deal with the challenges of the soft global commercial real estate market, had raised $5.5 billion by fall.

Those funds were used to chip away at the company’s $11 billion debt and return to development mode.

To keep stimulating the housing market, the U.S. Congress extended the first-time homebuyer tax credit in November, and added a $6,500 credit for existing homeowners interested in buying a home. Both credits expire April 30, 2010.

Efforts to refine the complicated short-sale process also were put in place this year, and are expected to continue in ’10. Short sales are those whereby mortgage lenders allow homes to be sold for less than what’s due on their loans to avert foreclosure.

Sales of high-end homes — those priced at $600,000 and more — are expected to tick up slightly in the new year.

Some area homebuilders think the metro-area housing market appears to have hit bottom and is on its way back up. Frank Walker, vice president at Denver-based Oakwood Homes LLC, expects his company to increase metro-area sales 20 percent next year.

Low-priced neighborhoods show biggest percentage price gains

InsideRealEstateNews.com

Colorado's RE News Source

Low-priced neighborhoods show biggest percentage price gains

This 1,147-square-foot home in Athmar Park recently sold for $158,000, according to public records

Homes sold in the 80223 ZIP Code rose 37.6 percent in the third quarter, compared to the third quarter of 2008, making it the top-performing area in the metro area, according to data from a California-based company.

The data released by La Jolla-based DataQuick, tracked tracked real estate data in more than 100 ZIP Codes in Adams, Arapahoe, Boulder, Denver, Douglas and Jefferson Counties.

DataQuick tracks both new and resale single-family homes and condo sales by the median price, price-per-square-foot and sales volume.

The biggest year-over-year price gains were found in 80223, which includes part of Athmar Park and the historic Baker neighborhoods. (Editor’s note: I did not include homes with fewer than 50 sales in the third quarter, because if there were only a few sales, the data may have been skewed. For example, in 80019 in Aurora, the median price rose by 117.9 percent, but there were only 17 sales in the third quarter.)

One home in Athmar Park, for example, last month sold for $158,00, according to public records That is a 17.9 percent premium from the $134,00 paid for it in 2007, and a 24.7 percent premium from the 2004 sales price of $177,900, according to records.

Marilyn Van Steenberg, owner of Buyer’s Best Choice Real Estate, said the data appears to be right on the money.

“I think it is probably a pretty good indicator of what is happening in the market,” Van Steenberg said. “The $8,000-tax credit has brought out a whole lot of first-time home buyers. If something is priced below $200,000, it goes in a heart-beat. That is, if it is in decent shape. By that I mean it maybe just needs new carpets and some paint.”

The problem, she said, is “I’m finding that a lot of homes priced under $200,000 are not decent. A lot of them have really been trashed. The good houses in that price range are in short supply and are gone in a hurry.”

Adams was the only county to show overall appreciation year-over-year in the third quarter.

The overall median price in Adams County rose 5.3 percent in the third quarter from a year earlier to $160,000. That was the lowest median price of all the counties. And the median per-square-foot price of $102 also was the lowest of all of the counties. Of the 17 ZIP Codes tracked in Adams County, the median price of 12 of them was below $200,000.

However, Adams County also showed the biggest percentage drop of all of the counties. The 1,966 closings in the third quarter was down by 21.3 percent.

One reason the number of sales likely dropped in Adams County, despite the abundance of low-priced homes, is because of the large number of short sales, in which the lender accepts less than the mortgage amount in a sale.

“Short sales are very long and drawn out,” she said. “If someone wanted to buy a home and move in quickly, a short sale is not for you. Every lien held against the property typically takes at least two or three months to resolve , and almost all of the homes have at least two liens. I won’t bring any of my buyers short sales.”

She said one of her agents has been listing a short-sale property for the past 18 months, and during that time five different contracts for it have collapsed.

“There are really three separate markets in Denver: Bank-owned properties, short sales and regular seller-owned sales,” she said. “To really get a handle on what the traditional market is doing, you have to subtract bank-owned and short-sales from the market. But if you have a seller-owned property, whether it is being sold by the owner or listed by a Realtor, it’s tough because you have to compete against all of the bank-owned and short sales out there. And the short sales are the toughest to sell. At least when the bank owns it, you can get a decision.”

For a look at all of the ZIP Codes in the Denver area, go to this link.

Related links (some are just tables) :

Boulder most expensive homes in area.

Conifer sales volume up by 44%

Lowest priced ZIP Codes

ZIP Codes showing biggest sales drops

ZIP Codes with lowest price per square foot

ZIP Codes with most sales

ZIP Codes with least expensive homes

Most expensive ZIP Codes on a per-square-foot basis

City	ZIP	Median Price	YOY % Increase
Denver	80223	$150,000	37.6
Denver	80246	$227,000	35.3
Denver	80204	$149,900	39.3
Denver	80237	$215,000	26.5
Denver	80239	$117,250	22.4

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County	3rd Quarter Median Price	YOY Percent Change	Price Per Square Foot	Sales	Percent Change in Sales
Adams	$160,000	5.3%	$102	1,966	-21.3%
Arapahoe	$190,000	-1.6%	$115	2,781	-17.0%
Boulder	$290,750	-1.4%	$173	1,388	-16.1%
Denver	$193,500	-0.8%	$170	3,947	-11.2%
Douglas	$291,000	-4/6%	$132	1,692	-15.0%
Jefferson	$220,000	-3.1%	$148	2,322	-8.0%

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Source and for more information: DataQuick.com DataQuick offers a variety of service to the real estate industry.

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