Case-Shiller: Denver homes up 9.9%


  • Case-Shiller reports a 9.9% YOY gain in Denver home prices.
  • Last time Denver gained more on an annual basis was in August 2001.
  • Experts would like to see appreciation slow, but don’t fear a bubble.

 The Denver-area housing market showed a 9.9 percent year-over-year gain in February, according to the closely watched Case-Shiller report released today.


That is the best yearly gain in almost a dozen years, according to the S&P/Case-Shiller Home Price Indices.

The last time the yearly gain was at 9.9 percent was in September 2001and the last time was higher was in August 2001, when it stood at 10.7 percent, according to Case-Shiller, which recently was purchased by Core Logic.

This home recently was listed for just under $400,000 in a market that is starving for supply. under $400,000 in a maket that is starving for supply.

” This home recently was listed for just under $400,000 in a market that is starving for supply.

Overall, Denver ranked in the middle of the 20 metropolitan statistical areas tracked by Case-Shiller. It also marked 15 consecutive months of improving year-over-year gains for Denver.

“We just missed cracking 10 percent and hitting double digit appreciation,” said Lane Hornung, founder and CEO of 8z Real Estate.. “Inventory levels have only grown tighter since February, so I would expect to see similar appreciation rates in the coming months when Case Shiller numbers for March and April are published.

He said  many consumers are finally waking from their “real estate slumber,” which is good news for the market.

“They are realizing that home prices are up, their home may be worth more than they thought, and now may be a good time to sell and take advantage of low interest rates on the buy side,” Hornung said.

The average for all 20 MSAs was 9.3 percent and it was 8.6 percent for 10 of the MSAs, which includes Denver. Nationally, that was the best showing in almost seven years and the strongest the market has been since the housing crash.

In January, the year-over-year appreciation was 9.2 percent.

Prices in the Denver area now are near where they stood in the fall of 2007, before the national real estate collapse.

“These are pretty nice numbers,” said Peter Niederman, CEO of Kentwood Real Estate.

“It is interesting that we have not seen this type of year-over-year increases since 2001,” Niederman said.

“We have incrementally outperformed 10 of the 20 market and that is OK.”

If anything, Niederman said he would like to see the appreciation slow.

“Having almost a 10 percent, year-over-year increase is not sustainable,” Niederman said.

“It is good, short-term, in that some people who had negative equity now will be able to sell their homes,”

he said.

“Long-term, it is not sustainable. I would rather see a 4 percent to 6 percent increase.”

Sonja Leonard Leonard, owner of Leonard Leonard & Associates, said consumers are paying too much for homes.

“It is shocking,” Leonard said.

“I have been doing this for 33 years and I know when people are overpaying,” she said. “They are really overpaying right now.”

She recently listed a home in the Capitol Hill area. The owner wanted to list it for $385,000, but Leonard decided to push the market and list it for $419,000.

“We received over 10 offers in excess of $440,000,” Leonard said.

Leonard said group psychology appears to be at work.

“People are such sheep,” Leonard said. “When everybody else is buying, they figure they need to buy. When everyone is afraid to buy, people are too frightened to buy.”

Historically low interest rates, coupled with strong demand and the lowest inventory levels on record are pushing up prices, according to a number of people who observe the market closely.

“We know these interest rates aren’t going to stay this low forever and that is creating a sense of urgency,” Niederman said.

However, he said the inventory, or the lack of it, may not be as big of a problem as would appear at first.

“Yes, Realtors would like to see more homes on the market,” Niederman said.

“However, part of this is being masked by the sales velocity,” he said. “We probably have as many active listings coming on the market as ever, but they are selling very quickly. Our sales velocity is absorbing the new homes coming on the market very quickly.”

Prospective buyers are frustrated by the lack of choices, said Chris Mygatt, president of Coldwell Banker Residential in Colorado.

“Buyers are feeling frantic and like they are pushed into the market,” Mygatt said. “It is like you have got to make a decision soon, or the market will leave you behind.”

To a certain extent that is true, as he said people who wait may be forced to pay more down the line. At the same time, Mygatt doesn’t think Denver is in danger of dealing with a bubble market.

“No, because we are still not at the level of where we would be if we had seen 3 percent or 4 percent annual appreciation over the past five years,” Mygatt said.

Other parts of the country, however, are in bubble territory, Mygatt  said.

For example, Phoenix saw a 23 percent year-over-year increase and Las Vegas experienced a 17.6 percent jump in annual prices.

“Will they never learn? They had these huge increases, followed by these huge drops and these huge increases,” Mygatt said.

“The Case-Shiller report shows that Denver is not one of these glitzy, trendy markets that experiences huge swings, up and down,” Mygatt said.

“Denver is much more of steady, sustainable market,” he said.

San Francisco saw an 18.9 percent year-over-year increase, which makes that market unaffordable for many consumers with good jobs and good credit histories, Mygatt said.

“I really feel sorry for people in San Francisco,” Mygatt said.

“That was not an inexpensive market before and these kind of increases make it almost impossible for someone who doesn’t already own a home to get into the game,” Mygatt said.

“I certainly would not want to start seeing 15 percent or 18 percent annual increases in Denver,” he said.

“One of the great things about the Denver area and Front Range is that we also have a great quality of life and wonderful outdoor recreational opportunities with reasonable housing prices.”

Independent broker Gary Bauer also said he does not fear a bubble at this time in the Denver market.

“To me, the Case-Shiller report is extremely positive,” Bauer said.

“As we are going into the spring selling season we alway see that early bump in appreciation,” he said. “I also find it extremely positive that we are in the middle of the pack.”

He said the biggest increases in value are occurring in areas with low inventory and high demand.

“It is not across the entire market,” Bauer said. “Hopefully, we will start to see some more inventory come on the market. But in the majority of the market we can still meet the needs of and handle buyers pretty well.”

Dave Pike, the chairman of the Denver Metro Association of Realtors, also doesn’t think the Denver market is in bubble territory.

“We are selling homes today for $120,000 that sold for $160,000 in 2004 and 2005,” said Pike, a principal of the Mahoney Pike Group with Coldwell Banker. “People who today are buying these lower-priced townhomes and such, expect that in 2015  they will be back to 2005 levels.”

It also is important to take a long-term view when it comes to buying a home.

“I use the yardstick of having a kid who is just graduating from high school,” Pike said. “The question I ask is where will prices be 10 years from now, or eight years from now, when he is buying his first starting home?”

Also, today’s buyers are some of the most qualified ever, as it is still difficult to get a loan, unlike the easy money days that contributed to the crash, he noted.

Pike said he worries more about the high default rate among people who received help on their mortgages from the federal government than a bubble in Denver.

“It just shows you that if you can’t afford a $1,000 a month mortgage payment (if you are a bad credit risk) you won’t be able to afford an $800 a month payment, either.”

Nationally, the housing market is showing a strong recovery of the dark days of the Great Recession, when many observers could see no light at the end of the tunnel.

“The two headline composites posted their highest year-over-year increases since summer 2006,” said David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices.

“This marks the highest increase since the housing bubble burst,” Blitzer said.

“After more than two years of consecutive year-over-year declines, New York reversed trend and posted a positive return in January. The Southwest (Phoenix and Las Vegas) plus San Francisco posted the highest annual increases; they were also among the hardest hit by the housing bust. Atlanta and Dallas recorded their highest year-over-year gains.

“Economic data continues to support the housing recovery. Single-family home building permits and housing starts posted double-digit year-over-year increases in February 2013. Despite a slight uptick in foreclosure filings, numbers are still down 25 percent year-over-year. Steady employment and low borrowing rates pushed inventories down to their lowest post-recession levels.”

In the Denver area, the bull market for houses is probably not over, although hopefully it will not continue to experience close to double-digit price appreciation, Niederman said.

“One month does not make a market,” Niederman said. “I think we are in the second year of a seven-year to 10-year cycle of an improving market. That is a good place to be.”

Metropolitan AreaChange from January 2000January-February Change1-Year Change
Las Vegas
Los Angeles82.04%1.0%14.1%
New York62.00%
San Diego64.25%0.6%10.2%
San Francisco48.23%0.5%18.9%
Washington, D.C.86.57%-0.5%6.9%

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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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  1. I made a friendly wager with a fellow real estate professional in Q-4 of 2008. I predicted a sharp drop in the ratio of resident homeownership versus home rentals that would be owned by investors. At the end of 2008 home ownership was ~70% of all single family attached and detached homes. In 2012 that ratio fell to ~64% of single family homes owned by resident homeowners, and the statistical trends support a further drop in that metric.

    We often fall into the trap whereby we only see what we believe, where the much more logical approach is to believe that which we see. So, what are we seeing right now in the residential real estate market? Much of the recent aggregate residential real estate recovery nationwide has been the handy work of banks and hedge funds, the same firms whose speculation in residential real estate mortgages caused our market crash in the first place. In fact, it is estimated that in 2012 these highly capitalized investors accounted for nearly 30% of all residential home purchases.

    I recently spoke with an economist about this current “recovery” in the residential market and he commented as follows: “It’s pretty simple: That which is not sustainable won’t be sustained.” It’s important to understand that it’s the internal structure of the recovery that will determine if this is a healthy recovery, or fuel for another market correction. When highly capitalized investors (hedge funds) purchase homes we have a marketplace of increasing absentee landlords This new market of absentee landlords (slumlords) will attempt to squeeze all profit from the residential rental market while ignoring the much needed deferred maintenance all homes and apartments need, then we will see another type of market crash.

    This new financial model does make current housing metrics look like a recovery. But is the internal structure of the recovery sustainable? We shall see…

    • @Jeff Bernard. This a Colorado Real Estate Website, not an national real estate website. I do not have first hand knowledge about the national market, and do not believe most of what I read about the national market. I do know/believe that very few, if any, Denver Metro area homes are being purchased by Hedge Funds. Please name the Hedge Funds that are buying in the Denver Metro area, so that I can search their names on Assessor and Recorder databases to see how many homes they have bought in the Denver metro area. Absent my direct confirmation that Hedge funds are buying a significant number of homes in the Denver Metro area, I will give your quoted but un-named economist as much credibility as I gave the ‘shadow inventory’ parrots that were around 9-18 months ago.

      • Thanks for your reply, John D.

        Of course we both know the Case-Shiller Index contains both local and national metrics. Additionally, I’m confident that there is a symbiotic relationship between the local metro Denver real estate market and the aggregate national real estate market. Banks will respond to our marketplace with skepticism if an adverse national market downturn happens within the next few / several years. Thus, this could result in metro Denver experiencing some adverse (and unfair) consequences if problems occur from this activity. We clearly did experience a downward correction resulting from the subprime mortgage debacle. This issue involves many of the same players that caused that problem, so I think being vigilant of the issue is sensible investment planning.

        Nonetheless, I agree with your observation about the metro Denver market; that is not as much of a target as the “sand states” of California, Arizona, Nevada, and Florida. Consequently, the local effect, if any occurs, will be much more sedate than the above mentioned states. However, I think if you look back on REO purchases you will find Blackstone did have a financial presence in the metro Denver area.

        All the best to you.

        • “However, I think if you look back on REO purchases you will find Blackstone did have a financial presence in the metro Denver area.”
          I searched RE recording records for Arapahoe, Jefferson, Denver and Adams counties and found zero transactions for variations of ‘the blackstone group’ or ‘blackstone group’ and found zero transactions going back more than 30 years. The only transactions involving ‘blackstone’ are by individuals with the last name of Blackstone. Obviously I am missing something. Please give me a few addresses of Denver metro REO SFRs that Blackstone has owned in the past few years.

          • If you failed to find search results specific to the Blackstone name then it’s logical that the company made a purchase under a specific entity other than Blackstone, which is the way most large companies purchase real estate. John, Blackstone is one of the largest real estate companies in the world, and it has wholly owned subsidiary real estate companies in Colorado. It’s a pretty good bet that the company has considerable Colorado real estate holdings. I have personally received LOIs on my commercial properties from one of Blackstone’s subsidiary companies, IndCor. So, if you want to research Blackstone’s Colorado real estate holdings you will probably need to use tools that possess greater analytics than a simple residential name search within a few county records.

          • I don’t think it matters wether the buyers is Blacksotone, Colony Captial or Joe the plumber spending his IRA money, speculating on sub 5 cap rates will create distortions in the market and eventually crowd out historically organic buyers.

  2. I love you guys! You are on it and this is the most insightful website out there in regards to the Denver Real Estate Market, not only due to the articles but Dave, JohnD and DJ bring it up a notch! Thank you and keep it up.

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