Case-Shiller: Denver No. 3


This 4,836-square-foot home in Aurora sold for $417,000 last year, the top of the price point where home sales where increasingly sellers are getting full-priced offers.

The closely watched Case-Shiller index ranked Denver’s housing market No. 3 of the 20 major market it tracks, in a monthly report it released today.

The Denver-area housing market fell by 0.2 percent in November 2011 from November 2010, with only Detroit and Washington, D.C. performing better during that period, according to the S&P/Case-Shiller Home Price Indices. Detroit gained 3.8 percent and Washington, D.C. rose by 0.5 percent during that time period.

“Once again, we maintained our position in the Top 5,” said independent broker Gary Bauer. “It shows the resiliency of this market. Detroit has no place to go but up, while Washington will stay up there because of what it is.”

November marked the 17th consecutive month Denver showed a year-over year drop, but it also was the lowest percentage drop during the time period. The last time the Denver-area showed a lower drop was in July 2010, when home prices fell by 0.1 percent.

Denver in November vastly out-performed the 20 MSAs, which showed a composite drop of 3.7 percent.

From October to November, Denver prices fell by 0.5 percent, tying for second place with Charlotte and Miami. Phoenix was the only city in positive territory on a month-over-month basis, rising by 0.6 percent. Overall, the 20 MSAs fell by 1.3 percent from October to November.

On a seasonally adjusted basis, Denver was No. 2, showing a 0.4 percent gain. Only Phoenix performed better, with a 0.6 percent gain, the same as it did on a non-seasonally adjusted basis. The overall drop for the 20 MSAs was 0.7 on a seasonally adjusted basis.

Lane Hornung, CEO and co-founder of 8z Real Estate, a sponsor of InsideRealEstateNews, noted that the Denver-area housing market is bucking the national trend of still substantial declines.

Hornung: Ignore national headlines

“Because our market is decoupling from the national market and actually one of the markets leading a slow motion recovery, I don’t spend too much time on the national headline and am more interested in the performance of the Denver MSA,” Hornung said. “I was a bit surprised that the Denver non-seasonal index fell from October to November. That just did not jive with the strength we saw in the market two months ago. However, this disconnect was cleared up when I took a look at the seasonally adjusted index which increased and confirmed what we already experienced in the field. On both a non-seasonal and a seasonally adjusted basis, the index is within 0.2 percent of last year and the overall trend for prices in our market is up.  I look for a positive year-over-year figure for Denver in the coming months.”

Bauer agrees with Hornung’s prospects for this year.

A snapshot of Denver housing by Case-Shiller

“If you talk to “experts” or consumers, there is a belief that 2012 is going to be better than 2011,” Bauer said. “No one is predicting dramatic gains – this is not going to be a gang-buster year by any stretch of the imagination – but just a slow, steady increase.”

Gloomy national housing outlook

Nationally, however, even historically low mortgage rates and overall economic growth were not enough to pull the overall housing market out of its doldrums, said David M. Blitzer, Chairman of the Index Committee at S&P Indices.

“Despite continued low interest rates and better real GDP growth in the fourth quarter, home prices continue to fall,” Blitzer said. “Weakness was seen as 19 of 20 cities saw average home prices decline in November over October.

He noted that Phoenix was the only MSA to be in positive territory on a month-over-month basis, adding that it was “one of the hardest hit in recent years. Annual rates were little better as 18 cities and both Composites were negative.”

Blitzer added that nationally, home prices are lower than a year ago.

“The (national) trend is down and there are few, if any, signs in the numbers that a turning point is close at hand,” Blitzer said. “The crisis low for the 10-City Composite was April 2009; for the 20-City Composite the more recent low was March 2011. The 10-City Composite is now about 1.0% above its low, and the 20-City Composite is only 0.6% above its low. From their 2006 peaks, both Composites are down close to 33% through November.

“Atlanta continues to stand out in terms of recent relative weakness. It was down 2.5% over the month, after having fallen by 5.0% in October, 5.9% in September and 2.4% in August. It also posted the weakest annual return, down 11.8%. In addition, Atlanta, Las Vegas, Seattle and Tampa all reached new lows inNovember.”

Niederman says Denver poised well

But Peter Niederman, CEO of Kentwood Real Estate, like Hornung of 8z Real Estate, said it more important to focus on the Denver- area numbers, than the national performance.

Niederman likes what Case-Shiller reported for Denver.

“In my opinion, I think these numbers are phenomenal,” Niederman said. “The are very strong numbers. ow, a month never makes a market. But with Case-Shiller reporting 11 months of the year, with Denver solidly and consistently in the Top 5, what bodes well.”

He said that Denver is clearly stronger than most of the 20 MSAs tracked by Case-Schiller, which gives him confidence that Denver will be one of the first markets to emerge from the housing downturn.

“We’re going to be one of the first out of the starting blocks,” Niederman said.

At the same time, he thinks Denver will get some help from some national economic data points.

“In the first four weeks of this year we have seen some calmness in the financial markets,” Niederman said. “We have not seen any big downswings nor any big upswings. If we can see some more jobs created and more people going back to work, we could start to see an increase in consumer confidence, and that will be great.”

The low supply of unsold homes in the Denver area also should help homes regain some value, he said.

“We are increasingly hearing that homes the conforming market, those at $417,000 and below, are more frequently getting full-priced offers and on some occasions even a bit higher than than the full-price, when there are multiple offers,” Niederman said. “There are people who want to get into the market, but they can’t because they have no equity. They might be 5 percent or 10 percent underwater and they don’t want to bring a check to the closing table. If their home prices could rise enough so they have a little bit of equity, these people sitting on the sidelines could get into the market.”

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John Rebchook

John Rebchook has more than 30 years of experience in writing and communications. As the Real Estate Editor for the Rocky Mountain News, he wrote about residential and commercial real estate for 26 years. He has won numerous awards for business stories and columns that he wrote, both as an individual and part of teams. In addition to real estate, he also covered economic development, banking and financing, the airlines, and cable TV for the Rocky. In addition, he was one of the original freelance writers for, covering commercial real estate for the Internet publication.

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