The Denver-area housing market showed a 6.7 percent year-over-year gain in September, the largest percentage jump in almost 11 years, according to the closely watched Case-Shiller report released today.
The last time the Denver area showed a greater year-over-year percentage jump was in November 2001, when the market enjoyed a 7.6 percent increase.
In August, prices rose by 5.5 percent on a year-over year basis.
Despite the big jump, five markets outperformed Denver, taking Denver off the top five list, breaking what had been a 16-month consecutive streak of being in the top five of the 20 metropolitan statistical areas tracked in the S&P/Case-Shiller Home Price Indices.
That is actually good news, said Peter Niederman, CEO of the Kentwood Real Estate Co.
Earlier, Niederman had predicted Denver would lose its place in the top five ranking, as other markets improved.
“I am OK with that,” Niederman said. “We have been a market leader and it is a good sign that other markets are starting to catch up. Now, we are seeing a larger breadth of improvement across all markets. It is great we live in Denver and we have enjoyed being in the limelight. We continue to do well. We are now seeing a larger, deeper breadth of improvements across all markets. You can’t have a true, sustainable recovery without a number of MSAs improving. That is what we are now seeing.”
Phoenix led the nation, with a 20.8 percent, year-over-year jump. It was followed by Minneapolis, with an 8.8 percent increase; Detroit, 7.6 percent; San Francisco, 7.5 percent; and Miami, 7.4 percent.
Overall, the 20 MSAs were up 3 percent, year-over-year. From August to September, Denver saw a 0.4 percent gain, compared with a 0.3 percent overall gain for the 20 MSAs.
Niederman, and other brokers, said that Denver’s market has been spared the deep ups and downs of other markets.
Economic Patty Silverstein agreed and said that is healthier than experiencing huge swings.
“Phoenix has been a crazy roller coaster over the last couple of years,” said Silverstein, the chief economist for the Metro Denver Economic Development and principal of Development Research Partners.
“In Phoenix, their prices skyrocketed and then plummeted and now are skyrocketing again,” Silverstein said. “In Denver, we have seen good, steady increases in our home prices. Even when home prices all across the country were declining, we were declining by a smaller amount. Our home prices have demonstrated more stability and that is important. While some homeowners may love to get these huge increases like in Phoenix, it is really serves the overall market and the individual homeowner better to have a steady and more stable changes in prices.”
Independent broker Gary Bauer said that Phoenix is coming back so strong because investors have been flocking there, driving up prices.
He wasn’t daunted that Denver fell off the top five list.
“Whether we are three, four, five or six, Denver is consistently a strong player for the size of our metroplex,” Bauer said.
He said the Denver-area housing market has been strong throughout 2012 and he expects that to continue through the rest of the year, bucking the normal, seasonal downturn.
“All signs are that our market is going to continue to be strong well past the traditional home selling season,” Bauer said.
Steve Blank, a broker with Fuller Sotheby’s International Realty, said depending on the neighborhood, he has been seeing appreciation between 3 percent to 13 percent.
“It is all very localized,” Blank said. “It depends on the neighborhood and the price range. All the low and mid-price range homes are selling fast.”
More than anything, the Denver-area market needs more homes to sell, he said.
“We are fighting for inventory,” Blank said. “Our inventory is still down 30 percent to 35 percent from a year ago. I think a year ago, we were down 40 percent to 45 percent, so we are moving in the right direction. We still need more inventory.”
Blank said the market, overall, is “somewhere between a healthy market and a seller’s market. We are no longer a buyer’s market, for sure.”
Nationally, the housing market is on solid ground, according to David M.. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices.
“Home prices rose in the third quarter, marking the sixth consecutive month of increasing prices,” Blitzer said.
He noted that 17 of the 20 cities gained from their levels of a year ago.
“We are entering the seasonally weak part of the year,” Blitzer said. “The headline figures, which are not seasonally adjusted, showed five cities with lower prices in September versus only one in August; in the seasonally adjusted data the pattern was reversed: one city fell in September versus two in August. Despite the seasons, housing continues to improve.
He noted that Atlanta has “finally reversed 26 months of annual declines with a 0.1 percent annual rate increase.
At the other end of the spectrum, Chicago and New York were the only two cities to post annual declines of 1.5 percent and 2.3 percent respectively and were also down 0.6 percent and 0.1 percent month-over-month.
“Thirteen of the 20 cities recorded positive monthly returns; Boston, Charlotte, Chicago, Cleveland and New York saw modest drops in home prices in September as compared to August; Tampa and Washington D.C. were flat. With six months of consistently rising home prices, it is safe to say that we are now in the midst of a recovery in the housing market,” Blitzer said.
Niederman watched Blitzer being interviewed on TV early this morning.
He said that Blitzer said the cities that topped the list with eye-popping percentage gains were not necessarily showing employment gains. Rather, consumer confidence appeared to correlate with the big gains, Blitzer said.
Also, many cities such as Phoenix and Detroit that had been hit hard by foreclosures are bouncing back strongly, Blitzer said
Niederman said the biggest threat to the Denver housing market are macro issues outside of local control.
“We have something like 34 days before Congress has to come to an agreement on the budget to prevent the economy from falling off the fiscal cliff,” Niederman said.
“There are concerns about tax increases and eliminating deductions. So there are headwinds out there. We will just have to see how all of these things play out.”
MSA Change from January 2000 October-November (non-seasonly adjusted) 1-Year Change from November
Atlanta -3.32% 0.1% 7.6%
Boston 53.74% -0.9% 2.3%
Charlotte 15.41% -0.3% 5.1%
Chicago 13.35% -1.3% 0.8%
Cleveland 0.68% -0.8% 1.8%
Dallas 20.55% -0.1% 5.7%
DENVER 34.50% 0.4% 7.8%
Detroit -19.67% -0.3% 11.9%
Las Vegas 0.56% 0.4% 10.0%
Los Angeles 75.58% 0.4% 7.7%
Miami 51.13% 0.8% 9.9%
Minneapolis 26.41% 1.0% 11.1%
New York 62.86% -1.1% -1.2%
Phoenix 24.16% 1.4% 22.8%
Portland 42.13% -0.2% 6.7%
San Diego 63.58% 0.9% 6.7%
San Francisco 46.23% 1.4% 12.7%
Seattle 42.53% 0.5% 7.4%
Tampa 33.77% -0.2% 6.8%
Washington, D.C. 89.11% -0.6% 4.4%
Composite-10 58.28% -0.2% 4.5%
Composite-20 45.82% -0.1% 5.5%
[table "252" not found /]
Have a story idea or real estate tip? Contact John Rebchook at JRCHOOK@gmail.com. InsideRealEstateNews.com is sponsored by Universal Lending, Land Title Guarantee and 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.