Thursday, April 15, 2010

Denver home prices up 2.6 percent in January

Denver area home prices rose 2.6 percent during January compared to a year earlier. According to the Janaury 2010 Case-Shiller home price index of 20 cities, Denver experienced the sixth largest increase in home prices. The city with the largest increase was San Francisco at 9.0 percent, followed by Dallas at 4.1 percent. Las Vegas showed the largest drop in home prices with a decline of 17.4 percent. Prices in detroit and Tampa both fell 7.4 percent.

Month over month comparisons for Denver showed a price drop as prices fell 1.3 percent. Prices also fell from November to December with a drop of 0.8 percent.

The growth in home prices for Denver comes at a time when, nationally, new home sales have hit record lows, and major servicers such as Bank of America have begun to engage in large reductions in principal for some mortgages. For more than 18 months, Denver has been part of a small number of major cities that have shows resistance to major price declines.

January price statistics provided by the Colorado Association of Realtors earlier this month showed a year-over-year price increase of 16.2 percent. The Realtor data includes only properties listed in the Metrolist sales database, and thus excludes new home sales any properties not sold with a Realtor. However, the upward movement in January prices for both the Realtor and case-Shiller data indicates that the demand for housing strengthened in January.

Nationally, data through January 2010, released yesterday by Standard & Poor’s for its S&P/Case-Shiller1 Home Price Indices, show that the annual rates of decline of the 10-City and 20-City Composites improved in January compared to December 2009. In fact, the 10-City Composite is unchanged versus where it was a year ago, and the 20-City Composite is down only 0.7% versus January 2009. Annual rates for the two Composites have not been this close to a positive print since January 2007, three years ago.

As of January 2010, average home prices across the United States are at similar levels to where they were in the autumn of 2003. From the peak in June/July of 2006 through the trough in April 2009, the 10-City Composite is down 33.5% and the 20-City Composite is down 32.6%. The peak-to-date figures through January 2010 are -30.2% and -29.6%, respectively. Los Angeles and San Diego showed slight improvements in actual index levels from the previous month to the current month. All other metros and the two composites showed a slight drop from their December 2009 levels. Of that, four markets – Charlotte, Las Vegas, Seattle and Tampa – posted new index lows as measured by the current housing cycle where, depending on the market, we saw peaks in 2006 and 2007.

The peak-to-current declines for these MSAs are -13.8%, -55.8%, -24.6% and -42.0%, respectively. On a relative basis, Washington DC, Los Angeles and New York have held up the most, with each of those markets still 70% above their January 2000 levels. Las Vegas, which once stood 135% above its January 2000 level, is now showing price increases about 4% above that same level. Detroit remains that one market whose average value is below 2000, approximately 28% below that value.