Denver Housing Market Looks UP
Resales are increasing and the inventory is decreasing, but median prices continue to fall.
By Margaret Jackson The Denver Post October 8, 2008
Increasing sales and declining inventory in Denver's resale housing market offered another encouraging sign that the metro housing sector could be turning a corner. Data released Tuesday showed that 4,265 homes were sold in September, up 14.1 percent from September 2007. The inventory of unsold homes declined 21.1 percent to 23,923 for the same period. But while activity in the market may be picking up, median home prices continue to fall. The median price for a single-family home dropped nearly 12 percent to $216,150, compared with $245,000 in September 2007. The price was down about 4 percent compared with August, when the median price was $225,000.
Economist Patty Silverstein of Development Research Partners said the Home sales data - buyers, sellers and prices whittling away of the inventory is a key ingredient to pricing improvement. But she noted that while September sales are up compared with a year ago, year- to-date sales are still down 4.7 percent to 37,401. "We need to see year-to- date sales increase," she said. "That will give the other ingredient. That's when we'll see median prices start to firm up and get back into a growth situation."
But Mike Cox of Re/Max Professionals Inc. said the median home price is merely a reflection of the people who are choosing to be in the marketplace at any given time. "A lot of the lower-end stuff is what's moving right now, partially because of credit reasons and partially because buyers' confidence is very low with all the shake-up going on," Cox said. "If all of a sudden we saw a bunch of people with $500,000 homes in the marketplace, then that number would go up."
Part of the reason more homes sold in September is because it's taking longer to close, said Gary Bauer, an independent real-estate consultant. Many homes could have been put under contract in July or August but took until September to close, he said. In the wake of the foreclosure crisis sweeping the nation, lenders are being more cautious about whom they're giving mortgages to. "Before, it was out of the norm if you didn't close in 30 days," Bauer said. "Now, it's the norm if it takes you longer than 30 days."
While experts offered mixed interpretations of Tuesday's housing data, the figures follow other positive indicators that show the metro market is improving and is outpacing many other U.S. cities. Last week, the Standard & Poor's/Case-Shiller 20-city housing index showed home prices nationally tumbling by the sharpest annual rate ever in July, and though the monthly rate of decline is slowing, there is no turnaround in sight.
The overall index fell a record 16.3 percent in July from the year-ago month, the largest drop since its inception in 2000. But metro Denver home values declined just 4.7 percent through the year that ended in July. It was the third-smallest decline, after Charlotte, N.C., and Dallas, among 20 areas surveyed. Between June and July, metro Denver home values increased 0.8 percent, down from a 1.5 percent monthly gain between May and June, according to the index. It was the fourth consecutive month that the Denver area showed month-over month gains. Colorado's foreclosure rate led the nation in 2006, but the state has moved lower in the rankings as foreclosure activity accelerates in other states. In July, foreclosure filings fell 9.1 percent from a year earlier, placing the state eighth with a foreclosure rate of one in 390 households. Amy Bachelder Bayer, broker-owner of PorchLight Real Estate Group, said all indicators point to a recovering market. "I think that we've hit our bottom and we're on the way back up," she said.