Home Prices Drop to 20-year Low! 3-Part Blog Entry (Part 2)

The Denver Market

The data - the S&P/Case-Schiller Index of Home Price Indices - shows just how local real estate markets are.  So, let's look into it more.

Though the overall market is down 8.9% (see article here), the local markets show many different stories.  In the inimitable words of Secret Agent Maxwell Smart, "Would you believe...?"

Though the data is national in scope, permit me to focus on Denver for the benefit of my clients.

Would you believe that Denver is:

• In the top 1/3 (~35%) of the 20 major markets for 2007?
• In the bottom 20% for the period from 2000 - 2007?
• That the trend from the bottom 20% to the TOP 1/3 is positive news for Denver?

Let's take a look at the data: the S&P/Case-Schiller Index of Home Price Indices show that the coasts are hurting - a lot. 

Data source: S&P/Case-Schiller Index of Home Price Indices

http://www2.standardandpoors.com/portal/site/sp/en/us/page.article/2,3,4,0,1145923002722.html

Original interpretation of data from S&P/Case-Schiller Index of Home Price Indices by Michael Clarkson

As you see, Denver is #7 of the 20 major markets tracked.  Though there was an overall 4.5% price loss this past year, it pales in comparison to the major markets on each coast.

• Miami - Down 17.5%
• San Diego - Down 15.0%
• Los Angeles - Down 13.7%
• Even the always exorbitant San Francisco - Down 10.8%

Only 3 - that's right THREE - major markets were up:

• Charlotte - Up 2.3%
• Portland - Up 1.2%
• Seattle - Up 0.5% (close to zero appreciation, but still positive)

Taken by itself, one would be inclined to think that Denver is a bad place to buy, losing 4.5% in value.  I disagree. I think Denver is a great place to buy and sell real estate.

Why?  Well, the data I have seen for the past several months, combined with lowered rates indicate that the local market is improving.  Reinforcing that is are two studies offered through the National Association of Realtors® which can be found and downloaded from my website. http://www.milehighhomehunter.com/ .

• Market Study - http://www.milehighhomehunter.com/Denver_20_Housing_20_Market_20_Overview.html
• Pricing Study - http://www.milehighhomehunter.com/Price_20_Outlook.html

The raw data I see in the MLS - which is published on my blog at http://www.milehighmls.com/ - shows an improving market.

• A couple of months of smaller (and shrinking) listing inventories; though February should bring more listings.
• A continued pace of purchases - accelerated by rate reductions - which is higher than the trailing 12 months' average
• Under contract activity largely exceeding the trailing 12 months' average homes sold. Meaning, more homes are selling each month, than sold the prior 12 months' average.

Now, one would expect previously discouraged sellers to jump back into the market as the winter wanes and activity picks up.  So, there is likely to be some short-term supply/demand imbalances, however, the longer-term trends tend to indicate strength rather than weakness.

To see those entries on my blog relating to the improving Denver markets, click here:

• February 2008 - http://www.milehighmls.com/2008/02/mile-high-home-hunter-denver-market_03.html
• January 2008 - http://www.milehighmls.com/2008/01/denver-metro-market-trend-analysis_8418.html
• December 2007 - http://www.milehighmls.com/2007/12/denver-metro-market-trend-analysis_1142.html
• November 2007 - http://www.milehighmls.com/2007/11/denver-metro-cities-state-of-market_10.html

So, the improving local market and it's comparative strength to other markets would indicate Denver is in a lot better shape than: Detroit, Miami...and even Los Angeles.  Plus, you CANNOT beat the Colorado lifestyle!    

So, if you were going to buy, would you prefer a market in the top 1/3 in the US or in the bottom 1/3? 

If you don't believe it yourself, just ask yourself: Why would ConocoPhillips invest in the StorageTek/Sun Microsystems campus if the market were so bad? Why would ConocoPhillips bring nearly 1000 employees here? (See story here)

The big money sees Denver as the place to be.