September 3, 2008 2:28 PM

Report: Homes price down 9.4 percent in Denver

The price of homes in the Denver metro area fell 9.4 percent in June from June 2007, according to a report from a New York firm that tracks the 25 largest housing markets in the U.S.
Despite the drop - far bigger than other national and local reports show - Denver ranked No. 9 in the nation, according to the RPX Monthly Housing Report by Radar Logic Inc.
And some local experts are critical of the report.
"It's garbage in, garbage out," said Lou Barnes, principal of Boulder West Financial.
"The problem with price analysis is that it is over-weighted with distressed properties," Barnes said "The sales data is as accurate as far as it goes. But the question is: How is the market that is not for sale doing?"
The RPX Monthly Housing Report tracks the price per square foot in the biggest 25 markets, and uses a different methodology that other groups, such as S&P/Case-Shiller, the Office of Federal Housing Enterprise Oversight, and Metrolist, said Michael Feder, president and chief executive of Radar Logic. .
The price per square foot for a home in the Denver area in June was $137.68, according to the RPX report, while the composite for all the areas was $232 per square foot. Eleven of the markets had lower prices per square foot than Denver.
Radar Logic tracks the price per square foot housing prices mostly for institutional clients trading forward contracts and options on residential properties on Wall Street.
The housing derivatives market was only created a year ago, and is still thinly traded. Last year, only $1.5 billion in housing derivatives were traded, said Feder.
By contrast, a single stock can have more than $1.5 billion in trades in a day, or even in a few hours.
Still, the entire equities market capitalization is about $16 trillion, compared to $22 trillion for houses, Feder said.
Other groups that follow the housing markets do not track as much data as Radar Logic, which can account for the differences, he said.
For example, his data includes new homes sold by builders that are being discounted to unload standing inventory, which others do not track, he said. And Case Shiller does not include condos or new homes, he said, while OFHEO omits expensive homes with jumbo mortgages.
He agrees with others that the large number of foreclosures in Denver and across the U.S., are driving down prices across the board.
Feder said in some California cities, "motivated sellers" of foreclosed properties are offering them at a 40 percent to 50 percent discounts from market prices.
Chris Mygatt, president of Coldwell Banker Residential in Colorado, said while the data is interesting, it does not reflect what is going on in popular neighborhoods.
"I would suggest that this information is heavily skewed by all of the properties in places like Aurora and Adams County," Mygatt said. "If you would take out all of the REOs (real estate owned homes sold by lenders), you would have a much different picture. Homes aren't losing value in the popular neighborhoods where people want to live. Anyone who thinks they will wait to buy a home in Washington Park, will be paying more a year from now."

Posted by John Rebchook at 2:28 PM | Comments (0)