by Larry Hotz, All Denver Real Estate
Even though home prices in some parts of the Denver area fell in February over the year ago period, Denver home prices held up at the fifth best level in the country according to the most recent Case- Schiller report.
The report tracked home prices in 20 cities across the United States over the last year.it found that prices dropped an average of 12.7% during that time. Denver prices dropped an average of 5.5%.
Steve Holben, a local custom home builder, takes exception to the methodology used in the report and claims the Denver market is actually better than reported by Case Schiller.
Holben says: “Once again we will be blasted with this Case Schiller report that seems to be the only source of information (certainly the national) media looks to. As I’ve said before, I’ve read all 40 pages of the Case Schiller methodology (You can too. Just Google Case Schiller and read the methodology section) and for Denver they include properties from as far away as 100 miles, Park, Clear Creek, Gilpin and Elbert counties.”
He adds: “Additionally, nobody at Case Schiller has ever laid eyes on the subject properties. As I’ve tried to point out to the media, this methodology would not be accepted by anybody doing real, professional real estate valuation, and I don’t think the public is being correctly served by this information. I believe it is incumbent on people in the industry to properly inform prospects about this shortcoming of data that they use to form their buying decisions, and to pressure the media to better balance their real estate reporting.”
I have mentioned in previous posts that home price stability is very dependent on the location within Denver. It is certainly true that foreclosures and short sales have depressed prices especially on the north and east sides of the Denver metropolitan area. However, relocation buyers are often surprised that home prices are relatively stable and even appreciating in some of Denver’s better neighborhoods and suburbs.
Last week, Elizabeth Hotz showed a property that only been on the market two todays. The buyers wanted to submit an offer until they found out that four other offers were being made. So, that home ended up selling for more than the listed price.
This latest Case Schiller report clearly shows home depreciation has occurred in markets which had enjoyed the highest appreciation. Denver experienced only modest appreciation prior to the housing downturn and the credit crisis.
The availability of mortgage money may well be the single most important factor in determining the future for home appreciation in Denver and across the nation. During the last three months home loans have become increasingly more difficult to obtain.
Although, conditions and now are no worse than they were in the 2000 – 2001 period, as home loan mortgages becomes somewhat easier to obtain, more buyers will likely come into the marketplace. I suspect that’s when we’ll know the housing downturn has hit its bottom and it ready to recover. Demand will drive the market again. It always does.