9.4 percent gain for Denver homes, Case-Shiller reports.
9.4 percent gain for Denver ranks it No. 3 by Case-Shiller.
6th consecutive month that Denver is No. 3
Denver home prices rose 9.4 percent in July ranking it No. 3 in the closely watched Case-Shiller index released today.
It was the sixth consecutive month that Denver was No. 3 in the S&P Dow Jones Indices and CoreLogic report.
As has been the trend this year, Portland, with a 12.4 percent year-over-year gain, and Seattle, at 11.2 percent, were the only cities to top Denver’s 9.4 percent gain.
The 20 major cities tracked by Case-Shiller showed an overall year-over-year gain of 5.0 percent in July.
On a month-to-month basis, Denver home prices rose 0.9 percent. That tied it for second place with Chicago. Only Portland, which booked a 1.2 percent gain from June, appreciated more.
The overall month-to-month gain for the 20 cities was 0.6 percent.
Data from Case-Shiller dispels some earlier media reports that showed Denver home prices falling.
“The month-over-month decreases in median home price we saw this summer are more indicative of a change in the mix of the market than they are of price falling,” Hornung explained.
However, the Case-Shiller report does not have the statistical bias of a number of other reports.
“Because it is based on paired home data, the Case Shiller index is a much more accurate measure of home prices that is not susceptible to shifts in the market mix,” Hornung said.
Media reports misleading
“Buyers who saw these headlines and are sitting on the sidelines waiting for a big drop in home prices are going to be waiting for a while, as in years,” Hornung said.
“I agree with David Blitzer of Case Shiller who said, “There is no reason to fear that another massive collapse is around the corner,” Hornung siad.
Peter Niederman, CEO of Kentwood Real Estate, noted that he had just returned from a national HomeServices of America leadership meeting. HomeServices is the Warren Buffett owned company that bought Kentwood earlier this year.
“Denver is clearly a standout among other parts of the country,” Niederman said. That was was re-affirmed by the 9.4 percent gain for the city reported by Case-Shiller, he said.
He said he thinks Denver continues to do well. That is because so many people are moving here and the unemployment rate is so low.
Those are trends he expects to continue.
“Home prices have moved up substantially during the past five years, and when you look at the compounded near double-digit returns, that is incredible,” Niederman said.
The shortage of homes on the market and the demand continues to drive up prices. The concern and challenge for Denver is that it must try to remain affordable as possible for everyone from the first-time buyer to empty nesters, he said. The area also faces growing pain of increased traffic and congestion, he noted.
He said that some estimates show that Denver could absorb another 70,000 homes.
He said he expects interest rates to remain low, even, if expected the Fed raises its rates by 0.25 percent in December.
The last time that happened, 30-year mortgage rates actually dropped, he said.
“If the Fed, if expected, does raise rates in December, I expect it will have little to no change on long-term mortgage rates,” Niederman said.
One macro force that could impact home values is the unusual Presidential race, he said.
“What happens in the election could be a headwind,” Niederman said.
Denver destination city
Independent broker Gary Bauer said Denver’s strong ranking by Case-Shiller is another feather in the city’s cap.
“Congratulations Denver,” Bauer exclaimed.
The No. 3 ranking shows that “Denver is a destination city. More people continue to come to Denver and thus we have more buyers.”
And despite the limited inventory in the Denver-area market, Denver is not experiencing the double-digit gains of Seattle and Portland, which is good, according to Bauer.
He said he thinks Denver’s housing market will continue to perform strongly in 2017.
Nationally, home prices are up more than twice the inflation rate, which is less than 2 percent.
“Both the housing sector and the economy continue to expand with home prices continuing to rise at about a 5 percent annual rate,” according David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices.
“The statement issued last week by the Fed after its policy meeting confirms the central bank’s view that the economy will see further gains,” Blitzer continued.
Fed rate hike coming
Blitzer agrees with Niederman that a rate hike probably is in the cards.
“Most analysts now expect the Fed to raise interest rates in December,” Blitzer said.
“After such Fed action, mortgage rates would still be at historically low levels and would not be a major negative for house prices,” he said.
He noted that the S&P CoreLogic Case-Shiller National Index is within 0.6 percent of the record high set in July 2006.
“Seven of the 20 cities have already set new record highs,’ he said.
“The 10-year, 20-year, and National indices have been rising at about 5 percent per year over the last 24 months. Eight of the cities are seeing prices up 6 percent or more in the last year. Given that the overall inflation is a bit below 2 percent, the pace is probably
sustainable over the long term”
He added that the run-up to the financial crisis was marked with both rising home prices and rapid growth in mortgage debt, but that is not the case today
“Currently, outstanding mortgage debt on one-to-four family homes is 12.6 percent below the peak seen in the first quarter of 2008 and up less than 2 percent in the last four quarters,” Blitzer said.
|Metro Area||Change from January 2000||1-Month Change||1-Year Change|
|May||14 (tied with 2 cities)||8.2%|
|July||9 (tied with 1 city)||6.7%|
|October||1 (tied with S.F., Portland||10.9%|
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