October 31, 2007 6:47 AM
We're No. 1 in housing prices - but new homes still slumping
Coming on the heels of losses in the World Series and on Monday Night Football, we'll take all the victories that present themselves.
And Denver is - just barely - No. 1 among a 20-city survey of home prices, having gained 0.3 percent in housing valuation from July to August, reports John Rebchook.
Although a meager appreciation rate, it was good enough to make Denver tops in the nation during that period. The 20 cities ranked showed an overall average decline of 0.7 percent.From June to July, Denver homes rose in value by 0.8 percent, bested only by the 1 percent increase experienced by Detroit during that period.
"It looks like Denver may be one of the first markets in the turnaround mode. Maybe," said Maureen Maitland, an analyst and vice president at Standard & Poor's.
Maitland said she would like to see more data before she's comfortable in saying that Denver's down cycle is over.
"However," she added, "Denver has had five positive months of price movement in a row."
Maitland noted that Denver -real estate stumbled earlier than most cities in the country and in recent years didn't go through the double-digit price appreciation experienced by other formerly hot markets on the coasts and places such as Phoenix and Las Vegas.
So here's the other shoe dropping:
The new-home market in the Denver area is still suffering through its worst period in more than a decade, according to a report by the Genesis Group.Genesis said that there were 5,842 sales of new homes in the first half of the year, a 33 percent drop from the 8,758 sold in the first half of 2006. And 2006 was the worst year for new home sales in a decade.
There are pockets of robust price appreciation in Denver.
Deviree Vallejo, of Kentwood City Properties, who on Tuesday was showing a prospective buyer a $1.15 million home in Cherry Creek North, said she has seen a huge appreciation of home prices in the Denver neighborhoods where she focuses.
She said she is concerned, in fact, that values have risen too fast in some areas and aren't sustainable.
"We've seen appreciation in Highland at 13.5 percent and Cherry Creek North at 22 percent," Vallejo said. "What we want is appreciation at 7 percent to 10 percent."
Got a home on the market? Is its value holding? What section of the city?
October 31, 2007
8:29 AM
Oh Wise One writes:
The Dhimmicrat(ic) spin- "The sky is falling, the economy is sinking, there are too many bad loans, my life sucks.... "
October 31, 2007
8:53 AM
Hank writes:
Maybe we are closer to a housing bottom than most folks think. The global economic boom just produced a Q3/07 GDP gain of 3.9%, much better than expected. Exports are blowing the doors off and surging must faster than imports. That's all great news for jobs, incomes, consumption and the entire economy. And that can't be bad for housing.
If excessive inventories can be worked lower and faster than generally expected, the housing swoon might be over sooner than generally expected. If the fed gives us another rate cut today, then maybe housing could be adding to 2008 GDP, not subtracting from it.
October 31, 2007
10:35 AM
Anonymous writes:
Just one more thing for Republicans to whine and moan and bleat about, while offering no viable solutions of their own.
October 31, 2007
11:36 AM
history buff writes:
Colorado's economy is usually out of sync with the rest of the nation. It looks like Colorado will reach its housing bottom sooner than other states. Foreclosures and bankruptcies surged in Colorado before most of the other states, although the value of homes didn't fall as much as in Florida, Arizona and Nevada, which have seen the most depreciation in housing prices. The rest of the nation will surpass Colorado in foreclosures and bankruptcies because it appears we were one of the first states where the bubble burst.
There still are a record number of adjustable rate mortgages that will adjust to a higher interest rate after the first of the year. Colorado still has its share of mortgages that will require higher payments, so we may not be out of the woods yet.
Housing prices are based on sales, so you have to consider what houses are selling. What I have seen is that upper end houses are maintaining their values. Many averaged priced houses are sitting on the market. The article doesn't say how the index is calculated. In Colorado, the senior mortgage has to bid in the amount that is owed at the sale. If foreclosure sales are included, it cuts both ways. First mortgage holders may be required to bid more than they would like to, in some instances. But in other instances, the junior mortgage may not attempt to redeem its lien, even if the house may be worth more than senior's bid.
October 31, 2007
1:20 PM
Steve the builder writes:
Denver's historical appreciation rate as expressed over statistics over the last century show a reliable and sustainable annual appreciation rate of between 2 & 3%. There have been periods where it was stratospheric and periods of stagnation. But is always seems to go back to the 2 to 3% range over time. When you take into account the leverage a mortage provides, this 2 to 3% represents a return on equity (assumed 15% here) of between 13 & 20%. Any wonder why a home is considered the best investment a family can make??
November 14, 2007
7:28 AM
Ruth the Mortgage Lender writes:
Most people do not pay cash for homes. Instead, they get a mortgage to assist them in their purchase. Therefore, it's imperative to factor in a comparison of interest rates when determining whether or not NOW is the time to buy a home. Current interest rates are about 1% lower than the historical averages. What does that translate to in buying power for the same monthly $$$? In the example of the home referenced in this article, the home buyer would have to put an additional $75,000 cash down to have the same monthly payment should interest rates go back up to the historical average! (Looking at a $250,000 price range, the buyer would be required to put $25,000 down.) So while waiting for higher home appreciation, you run the risk of higher interests rates.
To add to the author's comment: You need to buy now when the market AND INTEREST RATES are down!