Denver Real Estate Market Snapshot

National Housing

The national housing market received some good news from two housing reports last week.  According to the Census Bureau, the number of housing starts and permits climbed significantly in August.  The National Association of Realtors reported that sales of previously owned homes jumped 7.8 percent compared to last year.  Home builders remain upbeat with the National Association of Home Builders confidence index climbing to its highest point since June of 2006.  Home builders started construction on new homes at a rate of 750,000 per year, which is a 24.5 percent bounce compared to last August.

The housing market continues to make strides toward a recovery.  The chief economist for the National Association of Realtors, Lawrence Yun, stated that there is a better balance between home buyers and sellers in the market now.  If the current pace of home sales continues, there is a 6.1 month supply of homes on the market, which is down from 8.2 months from last year.  The current low inventory will provide some support for home prices.

One other pillar in the foundation to the housing recovery is the historically low mortgage rates.  The Federal Reserve announced in mid-September that they would continue buying mortgage backed securities to the tune of $40 billion a month until the labor market improves— dubbed QE3.  The Fed’s QE3 program should provide a temporary foundation for housing keeping mortgage rates low for the remainder of the year.  The Fed signaled that they are going to keep rates low through 2015.  As of September 26, 2012 30-year fixed rate mortgage rates in Colorado hovered around 3.22 percent, according to Zillow Mortgage Marketplace.

According to S&P’s press release, home prices nationwide continued to show some signs of growth:
“Home prices increased again in July,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “All 20 cities and both Composites were up on the month for the third time in a row. Even better, 16 of the 20 cities and both Composites rose over the last year. Atlanta remains the weakest city but managed to cut the annual loss to just under 10%.

Shadow Inventory
There has been a lot of chatter about the housing markets next hurdle is shadow inventory.  According to a report by JP Morgan Chase, the shadow inventory of distressed mortgages and foreclosed homes dropped by 1.2 million in the first half of the year.  The report predicts that shadow inventory will drop to over 4 million down from the apex of 6 million in 2010.  The analysts at JP Morgan forecast “the rapid decline should prevent downward pressure on home prices going into 2013.”

Colorado Housing
The Case-Shiller report for the July 2012 home price index revealed that Denver home prices grew at the highest rate since January 2002.  The Denver home price index rose 5.4 percent compared to last year.  This was the seventh year-over-year increase in a row for Denver.  Case-Shiller reported that Denver ranked number four out of the twenty cities that experienced increases in the home price index that Case-Shiller monitors.  In comparison to the other twenty metropolitan areas that Case-Shiller tracks, Denver did not experience the real estate bubble that other metropolitan areas experienced.  The chart below compares the Denver area to the other 20 cities that Case-Shiller tracks.  The Denver area had an increase of 5.4 percent, compared to the 1.2 percent increase in the 20-city Case-Shiller composite.

Central Park (formerly Stapleton) Home Sales Stats

Below is the latest data from Metrolist Multiple Listing Service (MLS).  The data below includes the sale of homes, condos, and townhomes in Denver’s Central Park (formerly Stapleton) neighborhood for August 2012 compared to last year.  The data does not include all of the new construction sales.  According to MellisaData.com, there were 47 homes sold in August of 2012 for an average price of $427,000.  MelissaData.com noted that 46 homes sold in August 2011 for an average sales price of $402,000.