Denver was the national leader of the pack for housing prices last year.
Yes, home prices in the Denver area dropped 4 percent during the 12-month period that ended in December. But that was the smallest decline of the 20 metropolitan areas tracked in the closely watched S&P/Case-Shiller Home Prices Indices released Tuesday.
Overall, the 20 cities fell by an average 18.5 percent.
It was the second piece of news in as many days that indicates the local real estate market is bucking a national trend of homes in a free fall, as the nation grapples with the worst housing crisis since the Great Depression.
On Monday, the Colorado Division of Housing reported that state foreclosure filings declined 2 percent in 2008 from 2007, the first drop since the state began tracking foreclosures six years ago. In the metro area, Denver County showed a 21 percent drop in filings.
Foreclosure sales were down even more, falling 16 percent, though many experts think that is largely due to temporary lender moratoriums on foreclosures.
While any decline in prices is "not happy news," the Denver-area housing market should hit the bottom no later than the end of third quarter of this year - and maybe as early as the end of the second quarter, said Rick Pederson, principal of Denver-based Foundation Properties, which manages more than $120 million in real estate investments.
Pederson, who has consulted on real estate and economic issues for corporations around the globe, said Denver's bottoming out will be "greeted with some disbelief" by many people, who are "guided by what they read in the New York Times or the Wall Street Journal," on distressed real estate markets.
"Denver was among the cities with the least run-up during the boom," said Karl Case, an economics professor at Wellesley College, and a founder of the Fiserve Case Shiller Weiss group that puts together the report with Standard & Poors.
In a phone interview, Case noted that from 2000 until the peak in August 2006, home prices in the Denver area rose by 40 percent, and have since given back less than 10 percent of the gains.
By contrast, other cities such as Miami and Los Angeles rose almost 200 percent to their peaks, but have since declined in value by almost 40 percent. And Phoenix and Las Vegas are down about 40 percent from their all-time highs.
"Denver is like Boston, and has not suffered quite as much as the Midwest or the Sun Belt in this downturn," Case added. "I do not have any reason to believe that (Denver) is going to get a lot lower."
"I am not at all surprised that Denver is doing better than the rest of the country," said Dee Chirafisi, a broker owner of Kentwood City Properties. "This is the best city to live in."
Chirafisi said Denver is making all of the right moves to ensure its long-term viability, with projects such as the FasTracks transportation plan and the redevelopment of Denver Union Station.
"These things will continue to help support property values," Chirafisi added. "This gorgeous sunshine and 70 degrees in February does not hurt either. I drove with the top down on my convertible today."
Pat Ayers, a broker with RE/MAX Cherry Creek, said she just finished an analysis of West Washington Park, and found that homes priced from $250,000 to $350,000 appreciated an average of 4 percent last year.
"There are pockets of foreclosures in the Denver area, but those are pockets," Ayers said, and not reflective of what is happening in central Denver neighborhoods.
"Financing is our big enemy today, especially for jumbo loans," she said. "People don't want to pay 2 percent more for jumbo loans," which are those for loans above $417,000.
A separate report released Tuesday by the Office of Federal Housing Enterprise Oversight, known as OFHEO, showed even better numbers than Case-Shiller.
OFHEO showed a 0.71 percent overall drop in home prices last year in a large swatch that encompasses Broomfield, Adams, Arapahoe, Denver, Jefferson, Douglas, Clear Creek, Gilpin, Elbert and Park counties. It also showed a 0.77 percent increase in the fourth quarter from a year earlier. And Boulder County showed a 2.99 percent increase in 2008 from 2007.
Lou Barnes, principal of Boulder West Financial, prefers the OFHEO data to Case Shiller.
"If you set out to measure troubled neighborhoods around the country, Case- Shiller is decidedly accurate, but it is not at all useful in giving you an idea of what is happening with the value of most homes," Barnes said.
Home values
Percentage change by city from January 2000 to December 2008
Atlanta: 13.87
Boston: 53.05
Charlotte, N.C.: 22.4
Cleveland: 5.21
Dallas: 15.63
Denver: 25.75
Detroit: -19.07
Las Vegas: 31.4
Los Angeles: 71.46
Miami: 65.01
Minneapolis: 27
New York: 83.5
Phoenix: 23.93
Portland, Ore.: 58.5
San Diego: 52.16
San Francisco: 30.12
Seattle: 60.19
Tampa, Fla.: 56.04
Washington: 76.34
Composite of 10 cities: 62.17
Composite of 20 cities: 50.66
Home prices post record annual rate of decline in Q4
U.S. home prices tumbled by the worst annual rate on record in the fourth quarter, two housing indexes showed Tuesday, and the slope of decline steepened in all but a handful of battered cities.
Nationally, home prices have receded to 2003 levels, and half of the metro areas in the 20-city Case-Shiller Home Price Index have lost more than 20 percent of their values from their peaks in 2006, including Las Vegas, Phoenix and Miami.
The Standard & Poor's/Case-Shiller U.S. National Home Price Index plunged more than 18 percent during the quarter from the prior-year period, the largest drop in its 21-year history.
Meanwhile, the Federal Housing Finance Agency said Tuesday that home prices dropped more than 8 percent in the quarter from a year earlier, its largest annual decline on record since 1991.
The reports, however, did offer a modicum of good news. The rate of year-over-year price declines slowed in Boston, Denver, Los Angeles, San Diego and Washington, according to the Case-Shiller index, while cities in Washington, North Dakota and Texas posted year-over-year quarterly gains, the government said.
