Wow! Case-Shiller: Denver No. 1 again, with 10% gain



  • Case-Shiller releases its February repot.
  • Home prices up 10%, YOY.
  • For the 1st time ever, Denver was No. 1 for two months in a row

By John Rebchook


That was the typical reaction of local real estate experts when they learned that Denver home prices rose 10 percent in February from February 2014, according to the closely watched Case-Shiller index released today.

For the first time ever, Denver was ranked No. 1 of the 20 large metropolitan statistical areas tracked by the S&P/Case-Shiller Home Price Indices.

February also marked the 24th consecutive month of price appreciation in the Denver market.

The last time Denver’s housing market showed greater appreciation was in August 2013, when prices rose by 10.1 percent. That was only good enough for 13th place.

Lane Hornung, found a synonym for “wow” to describe Denver’s ranking.

Kaboom!,” Hornung, CEO of 8z Real Estate, the sponsor of InsideRealEstateNews.

“Ten percent. We’ve hit double digits,” Hornung said.

He expected Denver homes to reach double digits again this spring.

“But this is earlier than even I would have guessed,” Hornung said.

The 10 percent year-over-year gain was twice the 5 percent appreciation rate, which was the average for the 20 markets tracked by Case-Shiller.

And the 1.4 percent gain in February from January was only topped by San Francisco’s 2 percent month-over-month again.

“The jump from 8.4 percent last month to 10 percent this month was massive, confirming that our appreciation is accelerating,” Hornung said.

And rising prices aren’t over, he predicted.

“Expect to see continued gains,” Hornung said.

One positive sign, he and other said, is that more homes are coming on to the market.

“The number of new listings coming on the market this spring is increasing, in line with typical seasonal patterns,” Hornung said

“Perhaps more telling, new listings were up slightly, a couple percent, compared to last year. Not much, but moving in the right direction,” Hornung said.

“Of course, the number of sales is also increasing, and at an even faster pace. But for active buyers, it sure helps to see new listings, even if they immediately get snapped up. More inventory please!”

Peter Niederman, CEO of Kentwood Real Estate, did use the interjection “Wow!” to describe Denver’s No. 1 ranking.

“Wow, again,” Niederman said.

“This is absolutely crazy,” Niederman said. “This is nothing short of spectacular. It just goes to show that people want to transact in real estate in Denver.”

Still, there are concerns with double-digit appreciation.

Sales velocity out-pacing inventory

“In the short-run, this is great,” Niederman said. “But in the long-term, it does cause problems. We want Denver to remain affordable for all buyers. I worry that double-digit, or near double-digit appreciation is not sustainable and not good for the market.”

He said a lot of people are not aware that a lot of homes are going on the market each month.

“We’re getting a fair amount of inventory, but the sales velocity has outpaced the inventory coming on the market,” Niederman said.

However, he doesn’t fear that bubble conditions are forming in Denver.

“For anyone concerned about a bubble, I would say I do not see it. I do not see it, yet,” Niederman said.

A housing market, he said, is a “three-legged stool,” composed of median household income, housing prices and interest rates.

“I can’t say this is the perfect storm, because prices are out of whack,” Niederman said.

Denver definitely has the “wow” factor with the latest Case-Shiller ranking, said Chris Mygatt, president of Coldwell Banker Residential Brokerage in Colorado.

However, he is apprehensive about such “explosive appreciation,” such as the 10 percent year-over-year gain.

“Denver has always done a good job of providing sustainable, more modest appreciation,” Mygatt said.

“We have this incredible lack of inventory and we need more inventory to release some of this pressure on rising prices,” Mygatt said.

Mygatt: Realtors should show clients lower-priced alternatives to Denver

The truth is, many people can no longer afford a median-priced home in the Denver area, especially in neighborhoods near downtown Denver, he said.

Real estate agents, he said, can play a role in encouraging first-time home buyers to consider more affordable communities such as Dacono, Hudson, Erie, Frederick or Firestone.

“A lot of buyers think they still need to buy in Denver proper,” Mygatt said.

“Frederick and those other communities are the tomorrows, while Denver is the today. In may cities, people are accustomed to driving an hour or an hour and ten minutes each way to work.

“Part of a real estate agent’s job is to help young, first-time to get into the market. Then, as they work their way up the career ladder, they can move into other homes. That is how a lot of people have built wealth in the United States. We desperately need more inventory of $175,000 to $185,000 homes in the metro area and get these young people out of apartments, where they are paying $2,000 a month.”

Independent broker Gary Bauer said Denver’s ranking by Case-Shiller is a cause of both celebration and concern.

“It’s just awesome. The Denver market is amazing,” Bauer said.

He said the housing market is still “frenzied” with multiple offers still common, especially in homes priced below about $350,000.

Buyers and Realtors, meanwhile, are coming up with “creative” ways to win bidding wars, such as waiving appraisals, he said.

Still, he would have preferred that Denver was not No. 1.

“My personal opinion is that I would love to stay in the 5 to 10 range,” Bauer said.

“Being No. 1, at the end of the day, has some issues relative to home affordability and sustainability. Affordable housing is an issue we have to address.”

National snapshot

Meanwhile, it is not just Denver that experienced a strong February.

The latest Case-Shiller report shows a strong national housing market, according to David M. Blitzer, Managing Director of the Index Committee at S&P Down Jones Indices.

“Home prices continue to rise and outpace both inflation and wage gains,” Blitzer said.

“The S&P/Case-Shiller National Index has seen 34 consecutive months with positive year-over-year gains; all 20 cities have shown year-over-year gains every month since the end of 2012.”

Denver and Dallas are the only two cities that have surpassed their housing peaks, he noted.

“Nationally, prices are almost 10 percent below the high set in July 2006,” Blitzer said.

Las Vegas fell 61.7 percent peak to trough and has the farthest to go to set a new high; it is 41.5 percent below its high,” Blitzer said.

“If a complete recovery means new highs all around, we’re not there yet.”

Indeed, earlier this month, Anthony Rael, a broker with RE/MAX Alliance, said he has some Denver-area clients have sold their homes and bought homes in Las Vegas to take advantage of the high prices here and the relatively low prices in Las Vegas.

“They cashed in their Denver housing chips to buy a home in Vegas; of course, then they have to live in Vegas,” Rael said.

Blitzer said you need to look back long before the housing boom and bust to get the best picture of the U.S. housing market.

“A better sense of where home prices are can be seen by starting in January 2000, before the housing boom accelerated, and looking at real or inflation adjusted numbers.” Blitzer said.

Based on the S&P/Case-Shiller National Home Price Index, prices rose 66.8 percent before adjusting for inflation from January 2000 to February 2015; adjusted for inflation, this is 27.9 percent or a 1.7 percent annual rate,” he continued.

“The highest price gain over the last 15 years was in Los Angeles with a 4.3 percent real annual rate; the lowest was Detroit with a -3.6 percent real annual rate.

“While nationally, prices are recovering, new construction of single family homes remains very weak despite low vacancy rates among both renters and owner-occupied homes,” according to Blitzer.

Have a story idea or real estate tip? Contact John Rebchook at is sponsored by 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.

[table "323" not found /]
Metro Area% of homes rising in value in May% of homes rising in value May 2014.Small home 1-year value change in May.Medium home 1-year value change in May. Large home 1-year value change in May.
San Francisco65974.8%4.0%3.5%
Los Angeles46941.3%1.0%0.4%
New York40580.2%0.3%0.0%
Washington, D.C.3457-0.2%-0.4%-0.7%
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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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