Thursday, June 2, 2011

Core Logic: Colorado Home prices fall 5 percent in April

Core Logic's Home Price Index (HPI) for Colorado was down 5.04 percent from April 2010 to April 2011. Nationally, the index fell 7.5 percent, and it fell 4.47 percent in the Denver-Aurora-Broomfield metro area during the same period.

Comparing year-over-year changes in the HPI in all states and the District of Columbia, Colorado experienced the 25th largest decline in the home price index. Annual changes in the HPI ranged from -15.2 percent in Idaho to +4.2 percent in North Dakota.

The first graph shows the year-over-year changes for the past 24 months in the US, Colorado and the Denver metro area. Over the past two years, the general trend in all three areas has been shaped by the home buyer tax credit, which was introduced in 2008 and expired in April 2010. Clearly, home prices climbed throughout the duration of the tax credit period, but has declined since its expiration.

During most months in the past two years, the Colorado and metro Denver HPI have performed better (from a property owner's perspective) than the national HPI. The national HPI has declined more than the local HPIs in each month since August 2010.

Core Logic also separates distressed properties to provide insight into the effects of foreclosures and short sales on local home prices. As the second graph shows, when distressed properties are removed from the overall HPI, the percentage changes tend to be closer to positive territory. This has especially been the case since the end of the tax credit, and in metro Denver at least, when distressed properties are excluded, the year-over-year change is actually above zero in April for the first time in 11 months.

Core Logic provides separate data for single-family attached properties as well. This would presumably include townhouses, duplexes, and other similar properties. The conventional wisdom has long been that these properties are most susceptible to downward pressure on prices than in the case in single-family detached properties. That is indeed the case in this data, since it is clear that price declines in the past two years have been substantially larger in single-family attached properties when compared to the same changes in all units.

Since the end of the tax credit, the year-over-year change in attached units has been larger in recent months than it was during the initial drop in prices following the 2008 financial panic.

This data for April suggests that home prices are continuing trends evident in recent first quarter data from Case-Shiller and the Federal Housing Finance Agency.