Case-Shiller: Home prices up 8.2%


  • Case-Shiller releases May report.
  • Denver home prices up 8.2% YO.
  • 20-Composite cities up 9.3%.

Home prices in the Denver area rose 8.2 percent in May, setting a new peak for prices, according to the closely watched Case-Shiller report released today.

Denver tied for 14th place out of the 20 metropolitan statistical areas tracked in the S&P/Case Shiller Home Price Indices.

May marked the 29th consecutive month that Denver booked a year-over-year improvement, although it trailed the overall 9.3 percent gain for the 20 cities.

Nationally, that gain disappointed some analysts, who expected prices to rise more.

In Denver, the 8.2 percent improvement was the lowest year-over-year gain since November 2012, when Denver home prices rose 7.8 percent from November 2011.

A number of local experts, however, were not only pleased with Denver’s gain, but would welcome a lower rate of appreciation.

Denver tied with Boston and Phoenix on year-over-year basis.

On a month-to-month basis, Denver home prices rose 1.3 percent from April, besting the overall return of 1.1 percent for the 20 cities tracked in the index.

All real estate is local

“No doubt, the national headlines will trumpet ‘Home Prices Slow,’ or even more shrilly, they’ll scream ‘Home Prices Fall!’ said Lane Hornung, president of 8z Real Estate.

“Back in the real world of our local markets, however, it’s worth noting that we quietly set another record for home prices in the Denver metro area,” Hornung continued.

“Quite simply, home prices are higher than they’ve ever been,” Hornung said.

Separately, Denver-based MDC Holdings Inc., parent of Richmond American Homes, announced in the second quarter that the average price of a new home it sold at the end of the second quarter in Colorado was $402,500, 9.76 percent more than the $366,700 average price of $366,700 at the end of the second quarter of 2013.

However, in April prices showed gained almost 9 percent on a year-over-basis, according to Case-Shiller, which tracks the repeat sales of the same home.

“No question that the year-over-year rate of appreciation is moderating, dropping sharply from 8.9 percent to 8.2 percent in just one month,” Hornung said.

“That said, prices are still rising and market activity appears to be poised for a strong second half of the year as job growth continues and interest rates remain low,” Hornung continued.

It is also crucial to remember where the Denver housing market was not that long ago, he said.

“For a little broader perspective, when you look back two years, Denver home prices, as measured by Case Shiller on a seasonally-adjusted basis, are up an eye opening 18.7 percent,” Hornung said.

Peter Niederman, CEO of the Kentwood Co., shared Hornung’s assessment of the Denver market.

8 percent is awesome

“If you give me any decade, and I told you that on a year-over-year basis that our prices rose by 8.2 percent and you did not know how any other cities were doing, you would assume were in one of the top five MSAs in the country,” Niederman said.

“That we are up by 8.2 percent and were ranked 14th tells you the strength of the national market,” Niederman said.

Niederman noted there is still only about a two-month supply of unsold homes on the Denver-area market, a sign it is still a seller’s market, in which demand outstrips supply.

He said he would like to see a moderation of appreciation, which he said is being driven by an improving economy, rising consumer confidence, faith in the Denver area’s prospects and still low interest rates.

“I worry that rising prices will mean that first-time home buyers will not be able to afford to buy a home here, corporations will not want to relocate their companies here because of expensive housing and retirees will not want to take advantage of our 300-plus days of sunshine and retire here,” Niederman said.

“I would like to see prices rise 4 percent to 6 percent in a relatively short order,” he said.

Chris Mygatt, president of Coldwell Banker Residential Brokerage Colorado described the latest Case-Shiller report as “really solid news,” for Denver.

Denver is stable

“One word that really jumps out to me and that word is ‘stability,’” Mygatt said.

He said that he is pleased that Denver is not experiencing the double-digit appreciation found in major cities in California and elsewhere in the country.

“We continue to have a lack of inventory in Denver, which is driving up prices, but we are not seeing the excessive movements in sales prices that some other cities are experiencing,” Mygatt said.

“That is very encouraging for the Denver-area market,” Mygatt said.

Independent broker Gary Bauer noted that the Case-Shiller report reflects the market “as we are getting ready for the prime selling season,” he said.

Now, the market is experiencing a “little bit of buyer demand cooling,” which is typical for seasonal reasons at the end of July, he said.

“The market has become very creative as far as getting buyers and sellers together,” Bauer said.

“We are still not seeing as many homes entering the market as we expected, so we still have a lack of inventory,” he said.

“Overall, the strength of our market continues to amaze me,” Bauer said.

Door could close on first-time home buyers

Mark Eibner, of Metro Brokers, said that while the Case-Shiller shows “all good numbers for Denver,” he said the market remains challenging for some prospective buyers.

“It is bad if you are a first-time home buyer trying to get into the market,” he said.

Some parts of Aurora, for example, where home prices in recent years have been hovering in the $160,000 to $170,000 range, now are trading for $210,000, he said.

And “fix and flip” homes in places like Littleton that were purchased in the $200,000s are being sold for $375,000, he said.

A lot of firs-time home buyers would love to buy a $200,000 home in Highlands Ranch, but can find nothing that they can afford, he said.

There is demand from people downsizing who are selling $1 million homes and buying ranch-style homes in the $400,000 range, he said.

“That Denver is under-performing the 20 cities in Case-Shiller with 8.2 percent increase is kind of bizarre,” he said.

“The only reason that places like San Francisco, where prices already are high, are seeing such big jumps is because they are minting money out there with all of those technology jobs,” Eibner said.

One person who moved to the Silicon Valley area from Highlands Ranch and currently is living in an 1,100-square-foot “dive,” recently bought a dishwasher, range and other kitchen appliances from a home that Eibner is fixing and flipping because it was far less expensive than buying new appliances in California.

“It’s just crazy in California,” Eibner said. “Could you imagine paying $700,000 for a starter home in San Francisco?”

Nationally, as Hornung said, not everyone was thrilled with the home market’s performance in May.

National Snapshot

“Home prices rose at their slowest pace since February of last year,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices.

“The 10- and 20-City Composites posted just over 9 percent, well below expectations,” Blitzer continued.

“Month-to-month, all cities are posting gains before seasonal adjustment; after seasonal adjustment 14 of 20 were lower.

“Year-over-year, nine cities – Las Vegas (16.9%), San Francisco (15.4%), Miami (13.2%), San Diego (12.4%), Los Angeles (12.3%), Detroit (11.9%), Atlanta (11.2%), Tampa (10.2%) and Portland (10.0%) – posted double-digit increases in May 2014.” Blitzer said.

“The Sun Belt continues to lead with seven of the top eight performing cities,” he said.

“Eighteen of 20 cities had lower year-over-year numbers than last month; San Francisco and San Diego saw their year-over-year figures decelerate by about three percentage points,” Blitzer said.

Overall, housing has been a mixed bag, he said.

“Housing has been turning in mixed economic numbers in the last few months,” Blitzer said.

“Prices and sales of existing homes have shown improvement while construction and sales of new homes continue to lag,” he said.

“At the same time, the broader economy and especially employment are showing larger improvements and substantial gains,” Blitzer said.

Metropolitan AreaPercentage Change
from January 2000
April-May1-Year change
Las Vegas33.331.1%16.9%
Los Angeles121.851.0%12.3%
New York72.531.0%4.8%
San Diego101.850.5%12.4%
San Francisco94.281.6%15.4%
Washington, D.C.109.611.0%5.8%
[table "299" not found /]

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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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    • Dave,

      Haven’t you heard? DJ says prices will go on forever. Yes, upward pricing is boundless.

      I do agree with you this is a bubble.

      35% of Americans are being chased by debt collectors. So, THEY’RE not going to get new loans. Labor participation is at 40 year lows…net worth is dropping…as is median income…

      With all that, why WOULDN’T prices rise unconstrained by earthly bonds? Well, because the nameless DJ says so.

      • This cycle is unfolding exactly as I have predicted. Michael Clarkson sounds bitter. Perhaps he didn’t take my advice? Anyway, you know have a chance to listen and make money. Commodities and precious metals, gold and silver specifically, will sky rocket when inflation takes hold. So now you know MC, you can thank me later, but I just assume you won’t prepare for what’s coming, right?

        • DJ,

          Not bitter. I have to laugh at you. Silver? Gold? Log cabins & canned goods? Didn’t I see you on Preppers?

          Good luck with that. People like you are a one trick pony. You have one streak of luck and you think you’re Trump.

          I concede, I don’t how much gas this has left. But I don’t think it’s much more.

          • Of course you fail to understand what is happening to the dollar and how it will affect your investments. I’m trying to provide some prudent advice, but your ego won’t allow you to listen. Trump is a lousy investor, so no I do not think I’m Trump.

          • @DJ-

            “Of course you fail to understand what is happening to the dollar and how it will affect your investments.”

            The dollar decline vs. what? The Fed is taking it’s foot off the gas and many commodities have been crushed these daysi(i.e. wheat, OJ, corn, ect.) Gold have have done ok but is more geo-politics than inflation.

          • Why did gold/silver drop 30% during the same period when the FED printed the last $2T of the $4T total during QE?

          • I guess my question would be, what is going to be different in the context of gold and silver the next round of QE you predict?

          • There are lots of factors that come into play, but right now we have a fake recovery on borrowed time and money. Once again, we have another FED induced bubble. When this one finally ends, it will be the mother of all recessions. That will force the FED to reverse course and print like there’s no tomorrow. At some point during this new massive QE, the dollar will not be able to take the pressure, foreigners will get rid of dollars, it will no longer be the reserve currency of the world, and massive inflation within the US will be the end result. Beyond that the crystal ball gets hazy, but you had better be prepared for a new world monetary system, because it’s coming.

        • @DJ-

          “Commodities and precious metals, gold and silver specifically, will sky rocket when inflation takes hold.”

          Why will the FED print when ” inflation takes hold?” Seem counter intuitive? Most people would say if “inflation takes hold” the FED will raise rates, raise interest paid on reserves and shrink the balance sheet using reverse repos, selling assets and letting maturities runoff. I’m confused with your previous post? One you say the economy will tank(deflation) and the fed will print leading to higher gold and silver and the other you’re saying inflation will take hold and gold and silver will rise? Can you be more specific?

  1. I know I sound like a broken record, but this market doesn’t make sense. Average price of $402,500? That means a qualifying income in excess of $100k. I don’t have my spreadsheet handy, but that’s like a $115k -$125k qualifying income.

    That is a top 8% income. I have said it once. I will repeat it. This market in Denver makes no sense. When you have the median income that doesn’t qualify for the median home price, something smells wrong.

    Granted there are other factors, but when prices spike, it’s right before a bubble. In real estate’s instance, it’s because the conveyor belt of lower priced transactions drop out of the mix, and the product mix sold goes up the value chain (from buy-ups).

    I go back to my prior chart where
    * 5 homes – $100k
    * 5 homes – $200k

    The lower priced homes sell: Median/Average (same for this exercise) price – $100k.

    Next month, only the $200k homes are left: Median/Average (same for this exercise) price – $200k.

    It looks like a 100% increase in price…but it’s more a product mix issue.

    At the risk of this being my “White Whale”, I can only say…”Call me Capt. Ahab.”

      • DJ,

        First, my math is correct. My predictions were correct. Your assertions are nothing but blather, which you never back up with support, just platitudes

        All you do is shout, “Houses will be going up 3000% a month…forever.”

        I have explained the Economics of the situation. You dismiss it. Well, you shout, “The median price will be $1 Gazillion.” You are a fool.

        You hide – like an internet troll – anonymously, which your choice. A weak choice, but your choice.

        I will tell you know, the Economics don’t support this rise. A bubble will come. I feel it’s overdue. I was right about 2007/8, and I am right about this.

        Care to explain how the average price is supported by the median income in the region? Of course you won’t. And when things fall apart – which they will – you will crawl back into your hole.

    • While I agree with “doesn’t make sense”, how do you explain:
      Hong Kong
      Vancouver, BC
      southeast England

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