March 4, 2010 by Mimi Miller.

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Six economic indicators move in a positive annual direction in Metro Denver, up from one last month
Economic indicators for Metro Denver showed promising signs of improvement in March, according to data compiled by the Metro Denver Economic Development Corporation (Metro Denver EDC) in its Monthly Economic Summary for March 2010.

Nine indicators – including the indicator for foreclosures – moved positively for the month, compared to seven indicators in the prior report. Six indicators moved in a positive annual direction, compared to one indicator in the prior month’s report.

Recent residential real estate data suggest housing markets are shifting due to a variety of influences. The extension of the homebuyers’ tax credits in late 2009 removed a sense of urgency for buyers, therefore, existing home sales nationwide and in Metro Denver have slowed.

“Many buyers still hoping to receive the credits are now returning to the market, though, and brokers say the pace of home sales should accelerate in the coming months,” stated Patty Silverstein, chief economist for the Metro Denver EDC and president of Development Research Partners.

Increased sales volume should help home prices, which are stabilizing – and even rising – in some markets. The Denver-Aurora-Broomfield MSA, for example, was one of 24 metro areas to report an increase in median home price between 2008 and 2009.

As home prices continue to stabilize, mortgage delinquency rates should gradually subside. Data from the Mortgage Bankers Association show the nationwide delinquency rate declined in the fourth quarter of 2009, and Colorado’s rate ranked ninth-lowest in the nation. Significant delinquency challenges remain, though, as roughly one in 17 Colorado home loans was at least 90 days past due or in foreclosure in the fourth quarter.

Foreclosures are an even greater concern in California, Nevada, Arizona, Illinois, Michigan, and Texas – all key economic development competitors with Colorado.

“These six states alone represented 60 percent of U.S. properties with foreclosure filings in January,” said Silverstein.

The nationwide median home cost for 2009 ($173,200) was down nearly 12 percent over-the-year, while the median in the Boulder MSA ($346,000) fell by just 3.8 percent. Price trends were stronger in the Denver-Aurora-Broomfield MSA, where the 2009 median price of $219,900 represented a slight, 0.3 percent increase from the 2008 median. The Denver-Aurora MSA was one of 24 metropolitan areas to report an increase in median home price between 2008 and 2009, and the region’s median price ranked 26th-highest in the nation. The Boulder MSA’s 2009 median home price ranked 11th-highest overall.

Data from the Mortgage Bankers Association’s National Delinquency Survey for the fourth quarter of 2009 show Colorado’s rate of mortgage delinquency – 6.91 percent – ranked ninth-lowest in the nation.

Clearly, residential markets are facing a combination of early momentum and continued challenges. High unemployment and policy changes in the months ahead – including an end of the Federal Reserve’s financial support for mortgage-backed securities and the expiration of the homebuyers’ tax credits – will bring additional hurdles. Ideally, residential markets will build momentum in the coming months that can sustain a recovery as the policy environment changes.

The benchmark revision for national-level employment data shows the nation’s total employment loss from the start of the recession through December 2009 was nearly one million jobs higher than the data initially suggested.

The Colorado Department of Labor and Employment is currently conducting its annual benchmark review of the state’s employment and unemployment data. Statistics for the month of January and revised data for prior years will be released on March 10. A supplement to the March Monthly Economic Summary will be issued following the data release.

The Monthly Economic Summary provides a snapshot of metro area economic activity, as well as its relationship to national and regional economic trends. Key highlights include:

Consumer Sector
•The Conference Board’s U.S. Consumer Confidence Index fell abruptly between January and February as consumers’ assessment of present conditions – specifically, business conditions and the labor market – fell to the lowest level reported since 1983. Consumer confidence in the Mountain Region was little better, although consumer outlooks have improved from lows reported at the same time last year.

•Metro Denver retail sales followed a typical seasonal trend and declined between October and November. The November sales total, however, represented a significant slowdown in an over-the-year sales decline that had persisted for the past twelve months.

•The January average occupancy rate for Metro Denver hotels (51.1 percent) was slightly above last year’s rate. January’s average room rate was nearly six percent below the average from January 2009.

•December 2009 passenger traffic at Denver International Airport was 1.7 percent lower than the year-ago traffic level. Airport traffic for all 12 months of 2009 declined 2.1 percent over-the-year as businesses and households limited their travel.

•The three major national stock indexes ended February with gains from the prior month, but all three indexes still showed a negative year-to-date return. By contrast, the Bloomberg Colorado Index rose 2.2 percent year-to-date in February. The state’s energy and media companies reported some of the largest market gains.

Residential Real Estate
•A decline in Metro Denver home sales between December and January was roughly consistent with seasonal trends, but total January sales were 4.7 percent lower than the sales total reported one year earlier. Despite the slower sales activity – which was partly expected given the late-year surge in tax credit-driven home purchases – average sale prices showed signs of improvement.

•Metro Denver foreclosure filings in January fell more than five percent from filings reported in January 2009. Filings declined over-the-year in four of the region’s seven counties but increased in Boulder County, Jefferson County, and the City and County of Broomfield.

•The pace of Metro Denver building permit activity changed little between December and January, although January permits for all property types rose 21 percent from the number reported one year earlier. The gain was due to a year-over-year increase in single-family detached home permits, as January permits for the remaining property types fell below year-ago levels.

Commercial Real Estate
•According to CB Richard Ellis’ fourth quarter MarketView report for Metro Denver, large corporations drove what little office market activity occurred in 2009. Brokers expect a similar trend in 2010 because large corporations – as opposed to small or local businesses – are more likely to have access to capital and credit in a still-difficult lending environment. With the overall demand for space still limited, however, brokers say the wide gap between asking rates and signing rates will persist this year. As a result, office market development will remain stalled. Despite these challenges, CB Richard Ellis brokers expect Metro Denver’s dynamic economy and favorable balance of supply and demand for office space will help the region’s market recover ahead of markets elsewhere.

•A fourth quarter report by Grubb & Ellis expects large tenant transactions to dictate Metro Denver’s office market conditions in 2010. Grubb & Ellis brokers say 2010 should mark the bottom of the market, however, and lease rate spreads should begin to normalize by the end of the year. Notably, the Grubb & Ellis report shows negative office market absorption in 2009 represented the smallest recession-related loss reported in Metro Denver over the past two decades.

•A fourth quarter report by Grubb & Ellis shows Metro Denver industrial market vacancy rates – while low compared to rates for other property types – have risen thanks to two recession-driven trends. The collapse of the housing market put pressure on construction-related tenants early in 2009, and a pronounced decline in consumer activity strained retail warehouse tenants later in the year. The report notes, however, that the absence of industrial construction should help the market rebalance comparatively quickly. Grubb & Ellis brokers expect flex space leasing trends will remain weak in 2010, although properties near the National Renewable Energy Laboratory, Lowry, and Fitzsimons could move more quickly.

•A recent report by CB Richard Ellis notes that Metro Denver’s industrial market – while still facing considerable challenges – has less of a debt burden than other property types and industrial markets nationwide. As a result, CB Richard Ellis brokers expect the region’s market may not experience the same increase in distressed transactions that brokers expect to see in other markets this year. Because lease rates are significantly below levels that would promote development, though, brokers expect industrial market construction activity will remain subdued in 2010.

•A fourth quarter report by CB Richard Ellis suggests the downturn in Metro Denver’s retail market slowed as 2009 ended. Vacancy rates remained high and average lease rates continued to decline, but the somewhat slower erosion of market fundamentals that occurred in the fourth quarter suggests the retail market may at least stabilize in the coming months. Brokers note, however, that the retail market tends to lag other property markets and the rest of the economy, so a retail recovery is likely to take time. The report also suggests that retail construction and investment activity will be slow to rebound.

*A full report is available to Metro Denver EDC investors.

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March 3, 2010 by Mimi Miller.

Mortgage Banking Industry Threatened
By John Rebchook, on March 3rd, 2010
A portion of mortgage reform working its way through Congress that has received little publicity in the mainstream press, could have the unintended consequence of driving up the cost of 30-year mortgages, and driving out of business almost a third of the companies that make home loans.

Mortgage bankers and brokers in Colorado are among the most vocal opponents of the “risk-retention” requirement proposed in the Restoring American Financial Stability Act.

The idea is to require lenders to have some “skin in the game,” in an attempt to curtail lenders from making inappropriate, risky loans, a leading cause of the foreclosure crisis that swept the country starting in 2007.

Proposal goes too far

But the proposal goes too far by requiring lenders to retain up to 10 percent of the loan value for every mortgage they make that is sold into the secondary market, for as long as the loan in outstanding, according to a broad-range of critics. That would mean mortgage bankers and brokers – among other lenders – would need to have billions of dollars on hand, something they are not set up to do, opponents contend. (See chart below for an example of the impact to mortgage lenders.)

“To require a 5 percent or 10 percent risk retention, really penalizes independent mortgage bankers,” said Mike Rosser, who started in the Denver mortgage business since 1965.

“Most of the FHA loans that are being done, and have been done, are by the independent mortgage bankers,” added Rosser, now principal of an Aurora-based consulting firm, the Mortgage Investment Co. Inc. “This will be very bad for homeowners who want to get an FHA loan because they will have far fewer choices of where to go.”

HUD already polices lenders

Rosser said many in Congress do not realize that the U.S. Department of Housing and Urban Development, which owns FHA, “already has a very strong auditing program, a mortgagee review board, they do quality audits all of the time, and have a certain amount of capital requirements to get into the FHA business. So this is really redundant.”

Some lenders point out that the so-called toxic-loans of the past – such as options ARMs and other subprime loans- no longer are being made, while the plain vanilla 30-year mortgages have been packaged and sold as securities for decades, without causing the problems of the discontinued loans that were made without strict underwriting guidelines.

Skin in the game

Peter Lansing, head of Universal Lending, one of the largest privately held mortgage banking companies in Denver (and a sponsor of InsideRealEstateNews), said that Congress “wants us to have some financial skin in the game,” which is why it is considering the risk retention requirements.

“It’s if the industry took a loan, threw it over their shoulder, and took no responsibility actions was a good loan for their borrower,” Lansing said.

But despite the recent financial calamity involving so-called toxic loans, the lending industry has done very well when it properly underwrites conservative loans based on a borrower’s assets, appraisal, income, credit scores and work history, and debt to income ratios. In fact, a report completed this week, shows that borrowers of risky loans are more than three times likely to default than traditional loans. (For a separate story on that report, please go to this link.)

Congress may be unaware of consequences

Lansing said he does not see this as a Democratic or Republican issues.

“I honestly think that Congress has not thought this through,” Lansing said. “What Congress is proposing is ‘over-medicating.’ Congress does need to guard against future abuses which happened in the past. I don’t want to carry this too far, but just like building codes are stricter in the U.S., so if we have an earthquake, it doesn’t have the same devastation as we have seen in some other countries, with less stringent building standards. But we don’t need is over-medication, which will actually be devastating to consumers and mortgage lenders.”

Public in the dark

He said that while people in his industry are aware of it, he said most of the public doesn’t have a clue it is being proposed or its impact.

“This would be very bad for the consumer,” Lansing said. “No mortgage lender has the type of capital needed to put in an escrow account or something like that. The only way to raise the money is to charge the consumer. On a $200,000 loan, if they only required another 5%, that would be an extra $10,000. That’s obviously not going to work.”

Peter Mills, which last September helped found the Community Mortgage Banking Project, a Washington, D.C.-based coalition created to represent the interests of independent mortgage companies, agreed with Lansing.

“The problem is it does not distinguish between high-risk loans and well-underwritten loans,” Mills said. “It is a very blunt instrument, which would affect everyone across the board.”

Mills said the Senate version would require a 10 percent risk retention amount and the House version a 5 percent retention. But he said even a 1 percent retention would be too much. For a lender making about $1 billion a year in loans, in three years it would need to put aside more than $50 million in funds at even a 1% risk retention rate, by his group’s calculations.

Lenders protest proposal

The Community Mortgage Banking Project and the Community Mortgage Lenders of America, last November sent a letter signed by 87 mortgage lenders across the country to the Senate Banking Committee. Eight of them were from Colorado. Only Michigan had as many lenders sign the letter.

“We are very active on this issue in Colorado,” Lansing said. In addition to Universal Lending, the letter was signed by executives from America’s Mortgage in Wheat Ridge; Cherry Creek Mortgage in Greenwood Village; Clarion Mortgage Capital in Greenwood Village; First National Bank Mortgage in Fort Collins; Ideal Homes Loan, Englewood; Pinnacle Mortgage Group, Lakewood; and Unifirst Mortgage, Grand Junction.

“Under the risk retention requirement in the draft bill, independent mortgage bankers- which accounted for almost one-third of all home mortgages in 2008 – would be forced out of business,” according to the letter to Christopher J. Dodd and Richard C. Shelby, the chairman and ranking member of the Senate Banking Committee, respectively.

Community banks, credit unions impacted

But it wouldn’t stop there.

Community banks and credit unions also would “face liquidity and balance sheet constraints that would limit their lending capabilities,” according to the letter.

The impact of a “poorly designed” risk retention requirement would consolidate the market into the hands of a few major lenders, according to the mortgage bankers.

“This is an ironic result in a bill that is trying to mitigate systemic risk and too-big-to-fail concerns,” the mortgage lenders contend.

Bank Monopolies Feared

Mortgage bankers are facing off on the issue with traditional banks, which have money on hand from short-term investments such as checking and saving accounts and CDs. In a statement, the American Bankers Association said that lenders with secured deposits already have enough capital on hand and should be excluded from the risk retention requirement, although it oppose some other parts of the proposed legislation.

“The big banks could certainly live with this,” said consultant Rosser.

But Lansing, of Universal Lending, isn’t so sure.

“Yes, large financial institutions could be better able to handle these requirements,” Lansing said. “But last year, something like $2.75 trillion in mortgage loans were made in the U.S. Is any bank in the country big enough to absorb those kind of costs and handle that kind of volume?”

Also, Lansing said that consumers would lose if only a few banks were making home loans.

“What Congress, unintentionally would be doing is creating a situation where maybe only three or four lenders in the country would make all of the home loans,” Lansing said. “What Congress would be doing is creating monopolies. I’m not against regulation. I think our industry needs, good, sound regulations that make sense. For example, I think some kind of risk retention probably is appropriate when making high-risk loans. But I am against monopolies.”

The Mortgage Bankers Association, which represents about 280,000 people nationwide, strongly opposes the measure, saying it would have “dire consequences” for mortgage markets.

The provision would “unnecessarily stem competition, reducing choices and increasing the costs of credit for consumers,” according to the group. “At the same time, smaller community banks and even larger depositories would be constrained from lending – and available funds for home financing would be reduced by countless billions of dollars – to meet reserve requirements,” according to the MBA.

Grassroots group shares concerns

And the American Homeowners Grassroots Alliance, which in the past has butted heads with lenders on many issues, worries that the risk-retention requirement will require more more responsible lending, “it may also somewhat limit the availability of mortgage loans for qualified borrowers and thereby slow the housing market’s economic recovery.”

It urged the banking committee to avoid this unintended consequence.

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February 26, 2010 by Mimi Miller.

appraisal rules cause chaos
The code of conduct was intended to protect lenders and borrowers from faulty appraisals, but has caused delays and higher costs.
By Marcie Geffner of Bankrate.com

The new “code of conduct” that was supposed to protect lenders and borrowers from faulty appraisals has caused higher costs, delays and considerable chaos in home sales and loan refinances.

Mortgage brokers, appraisers and real-estate agents are up in arms over the new rules, which dictate how lenders select an appraiser when they originate certain home loans. Few borrowers care much, if at all, about how appraisers are hired or paid, but those borrowers whose loans have been delayed or derailed due to the new rules may take a very keen interest, indeed.

At the center of the controversy is the Home Valuation Code of Conduct, which outlines appraisal-related practices that lenders must follow with respect to so-called conventional or conforming loans that they want to sell to Fannie Mae or Freddie Mac.

The practices are intended to reduce the incidence of appraisal fraud and prevent inappropriate pressure being placed on appraisers to inflate home valuations. The code, which became effective May 1, does not apply to FHA loans, which are insured by the Federal Housing Administration, or VA loans, which are guaranteed by the U.S. Department of Veterans Affairs. (Fannie Mae and Freddie Mac have both posted FAQs about the code.)

New rules protect borrowers from inflated appraisals
David Feldman, president of First American eAppraiseIT, an appraisal software and management company in Irvine, Calif., says the code is “very good for borrowers” because the new practices will help to ensure that home valuations will be “less inappropriately influenced.”

“(Homebuyers) don’t want to pay too much, and they want to pay the right price,” he says. “For refinances, if you were hoping for a ‘higher value,’ prior to the code, if there was any pressure, you might have gotten it or not. Now that will be lessened, so it protects borrowers from themselves.”

Bing: Read the new appraisal rules
That may prove beneficial, yet the code also has created other, unintended consequences in these areas:

1. Accuracy. The accuracy and credibility of an appraisal should be the borrowers’ chief concern. Appraisal management companies, which now perform more than half of the appraisals nationwide, contract with tens of thousands of appraisers but typically assign jobs only to several thousand, who complete their work “quickly and with good quality and good service,” Feldman says.

John Stafford, a loan officer with Reliant Mortgage in Dallas, takes exception to such claims. He says there are two types of appraisers: the “slapdash” kind, who base their valuations on the first comparable sales they can find, and the more competent kind, who “work very hard to get the absolute best value, but fair value within the regulations as they are.”

Borrowers should be concerned, Stafford says, because “a lackadaisical effort on an appraisal can easily create a value that is 10 percent lower than it should be.” An artificially low value can kill a home purchase transaction if the appraisal doesn’t support the sale price or derail a loan refinance if the appraisal results in a higher loan-to-value ratio and, consequently, a less attractive interest rate.

2. Timeliness. The timeliness of an appraisal is also a prime concern for borrowers because they typically need to meet the time frame of a purchase-contract contingency or interest-rate lock.

Rob Carter, a real-estate agent with ZipRealty in Washington, D.C., says the code has introduced much more uncertainty into the appraisal process.

“We are all used to knowing when the appraisal is going to get done and what the outcome is going to be,” he says. “It’s a little frustrating when you don’t know.”

Feldman disputes the notion that the code has caused delays.

“The turnaround has not been affected even a twitch,” he says.

3. Cost. Borrowers are also naturally concerned about the cost of an appraisal. Stafford says appraisals have become more expensive as a result of the code because lenders had relied more heavily on automated valuation models, or so-called drive-by appraisals, which required only a confirmation that the home hadn’t vanished from the property. Now, he says, lenders are more inclined to require a full appraisal, which is more costly.

Moreover, borrowers may now be required to pay for an appraisal upfront, which means they’ll be paying out-of-pocket for that expense even if the loan doesn’t close. Borrowers also may have to pay for a second appraisal if the first proves problematic or they want to switch their application to a different lender. The code allows appraisals to be transferred, but lenders aren’t required to facilitate that and must make sure an incoming appraisal complies with the code.

A related issue is whether appraisers should be better compensated for their services. Feldman acknowledges they’re paid significantly less for jobs they’re assigned through appraisal management companies, but he believes their pay is a “cultural question” that shouldn’t concern borrowers.

“Should borrowers pay more so appraisers can make more and therefore be happier?” he asks. “Or is this a new model that appraisers make less per order, although they may become more efficient, so at the end, they may be OK?”

Cultural questions aside, there’s no debate that appraisal management companies have gained market share as a result of the new rules. Some of these companies are independent; others are owned in whole or in part by lenders or title insurers. These companies schedule the jobs and keep as much as half of the fee for their services.

4. Disclosure. Borrowers may like a new rule that requires the lender to supply a copy of the appraisal to the borrower three days before the loan closes. That right may be waived, though not at closing.

Lenders are careful to comply with this rule, Feldman says, because an inability to demonstrate that they did so will void their certification of the loan to Fannie Mae or Freddie Mac.

That may give comfort to the two mortgage companies, but the code offers no recourse to the borrower if the appraisal isn’t handed over on time and, thus, causes a delay in closing.

How to cope with new appraisal rules
Borrowers are well-advised to have a frank conversation with a loan officer, mortgage broker or real-estate agent before they apply for a loan, since they no longer can rely on behind-the-scenes “value checks” to find out whether an appraisal is likely to return a high enough value for the proposed transaction.

Feldman advises borrowers to check into sale prices of comparable homes, online home valuations and news reports of home value trends before they apply for a loan, as difficult as that research may be for individuals not schooled in such matters.

“The hard part for homeowners (is) to be as realistic as they can, so they don’t waste their time and just get disappointed,” he says. “A good lender or mortgage broker will guide you.”

Carter advises homebuyers not to waive the appraisal contingency in a purchase contract, because that may be their best protection against an inflated sale price, perhaps as a result of an overly exuberant bidding war.

The code itself calls for an “Independent Valuation Protection Institute” to operate a compliance-and-complaints hot line and promote “best practices for independent valuation.” That may sound like a good idea; however, this institute has yet to be established.

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February 24, 2010 by Mimi Miller.

Case-Shiller: Denver No. 5 in December
By John Rebchook, on February 23rd, 2010
Month 1-Year Change Rank
January -5.1% 2
February -5.7% 2
March -5.5% 1
April -4.9% 1
May -4.6% 4
June -3.6% 3
July -2.9% 3
August -1.2% 2
September -1.2% 1
October -0.1% 1
November 0.5% 3
December 1.25 5

Source: Standard & Poor’s and Fiserv for 2009

The Denver metro’s housing market ended last year with a 1.2 percent year-over-year gain, the best showing in 2009, according to the closely watched S&P/Case-Shiller Home Price Indices released today.

However, the one-year change in December was good for only fifth place of the 20 cities tracked in the index, as other cities also showed even larger one-year gains in December. San Francisco was No. 1 with a 4.8 percent gain. Dallas, San Diego, and Washington, D.C., also showed larger gains than Denver. Las Vegas, by contrast, showed a 20.6 percent one-year drop.

Still, some local real estate officials said the jump is a good sign that the Denver housing market is on the road to recovery. It was only the second time that Denver was in positive territory in 2009 from the same month in 2008. In November, the one-year change was 0.5%.

“Wow, that is huge,” said Mike Rinner, of the Genesis Group, which tracks housing along the Front Range. “I just stood in front of a crowd of 140 this morning and told them according to Case-Shiller we were up 0.5 percent and I expected that we would end the year at about zero. Boy, was I wrong.”

The Case-Shiller analyzes data from the same homes that have been re-sold, so it eliminates a bias of different homes in the sales mix, which can drive the average and median prices of homes up or down. For example, there have been so many distressed homes sold in Denver in recent years, that it drove the overall market down, while in more normal years, bigger homes entered the market, driving prices up.

What the Case-Shiller study reflects the “healing” of prices at the lower-end, Rinner said.

“The greatest volume of home sales are occurring at the lower end,” Rinner said. “The values have been re-set as lower-end foreclosed homes hit the market, and there has been some appreciation from the lowest levels. If you look at the worst foreclosure markets in Adams, Denver and in Arapahoe counties, those markets have healed. Areas along the northeast corridor such as Green Valley Ranch and Montbello used to have the largest supply of unsold homes on the market, but now they have among the lowest,” as investors and owner-occupants have snapped them up at bargain prices.

By contrast, Rinner said not many sales are occurring in the higher price ranges and there is arguably a large over-supply of expensive homes on the market today.

But because of Case-Shiller’s methodology, it does not include the spec home constructed by a builder for $1.2 million, which never sold and is now going through the foreclosure process and likely will eventually be sold for $400,000 or $500,000, Rinner said.

“Also, at the upper end, owners are less inclined to take a hit, so they won’t sell it in today’s market if they don’t have to,” Rinner said. “So they are just sitting there until the market improves.”

Rinner said that Denver’s drop in the ranking is not a concern. Because areas such as San Francisco have had such huge drops in the past, he said it is not a surprise that they may jump as they start emerging from the bottom.

Independent broker Gary Bauer said that the Case-Shiller showing reflects the price gains that have occurred in the Denver area during the past six months.

“It’s been a nice, steady upward movement,” Bauer said. “From my perspective, we were the first coming into it, and we will be the first coming out.”

But Bauer said he is a ”little surprised that we dropped in the ranking. I didn’t realize that San Francisco is starting its recovery.”

Indeed, he is consulting with a person who three years ago bought a house outside of San Francisco for about $650,000. The owner then put another $300,000 into it. Now, he would like to sell it and move to the Dallas area to be closer to family.

But it’s not worth anything close to $1 million.

“Unfortunately, he bought at the wrong time of the real estate cycle,” Bauer said. “It’s worth maybe $650,000, max. I really don’t know what he can do other than just wait.”

Meanwhile, Bauer is working with a first-time buyer who hopes to take advantage of the $8,000 federal tax credit, which requires that the house is placed under contract by April 30.

“It’s a condo in northeast Aurora that the original owner bought for $143,000,” Bauer said. “We have it under contract for $90,000.”

But John P. Cochran, the Dean of the School of Business at Metropolitan State College of Denver, wonders if the tax credit for first-time buyers, which was extended in early November, may have skewed the numbers late last year.

“It’s hard for me, right now, to accurately interpret the numbers of November and December,” Cochran said. “People were uncertain whether the $8,000 tax credit was going to be extended, so there may have been some acceleration going on as we moved closer to that date when it might have expired. I’m guessing that may have caused a one-time bump.”

John Skrabec, the broker-owner of Live Urban Real Estate, said he thinks that the tax credit, which now requires a buyer to place a home under contract by April 30, did help the market late last year. Qualified current owners also have a $6,500 tax credit. The homes must be closed by the end of June to get the credits.

“I think that sales might be front-loaded to the first part of this year, because of the credits,” Skrabec said. “I am a little nervous about what is going to happen after they are gone.”

Still, he said the gain in the Case-Shiller report is an “encouraging sign.”

And he said it doesn’t bother him that some other markets jumped past Denver, although he was surprised that cities such as San Francisco and San Diego saw such big percentage gains.

“I think that is just the pattern that Denver has echoed over time,” Skrabec said. ‘We don’t usually have the biggest drops, but we don’t have the biggest increases, either. Our little chart doesn’t go up and down as some other cities.”

Also, he said that certain neighborhoods have shown much greater appreciation, from the bottom of the market, than the 1.2 percent overall gain reflects.

“Prices have gone up a lot in southwest Denver, in neighborhoods like Ruby Hill and Athmar Park,” Skrabec said. “They were beaten up pretty bad, and there has been a lot of investors fixing and flipping homes there. Prices have been going up. Most of the demand has been from the bottom up, and that’s all right. The market is gong to recover from the bottom up, not from the top down.”

And even higher-priced homes are moving in northwest Denver neighborhoods such as West Highland and Berkeley, he said. Neighborhoods such as City Park and Uptown, also are doing well. “But it’s still pretty tough outside of the city neighborhoods in the suburbs,” he said.

Chris Mygatt, president of Coldwell Banker Real Estate in Colorado, said that while the Case-Shiller report is a positive sign, he thinks the market is poised to recover even faster than its report shows.

“If you look at the MLS (Metrolist) data from January, it marked five consecutive months of average prices increasing in Denver,” Mygatt said. “That is in conjunction with the inventory down to 17,000, plus or minus, low interest rates, and the tax credits, we could be in store for a pretty decent rebound.”

Mygatt said he does not think there is much chance that the tax credits will be extended beyond their current expiration dates. But he thinks that will keep the government buying mortgage-backed securities to keep interest rates low.

Jeff Bernard, a broker with RE/MAX Alliance and principal of Bernard Real Estate Analytics, said his “hunch” is that San Francisco home prices rose so much is because wealthy foreigners took advantage of a weak dollar to buy houses there last year.

He said he thinks that Denver’s overall appreciation is probably caused by homes from $90,000 to $350,000, which have bounced from lower levels, which offset homes at the upper end that have been heavily discounted from their original prices. “I would imagine there would be a fairly large standard deviation if you broke the numbers down by price points,” Bernard said.

Still, Cochran said it is good news that home prices in Denver are moving in the right direction.

“Having a positive number is good, but certainly I have to look at it very, very cautiously as an indicator of where we are heading,” Cochran said.

Overall, the 10-City and 20-City Composites continued to show improvement in their annual rates of return. In fact, all 20 metro areas and the two composites saw improvement in their annual returns compared to November’s data. Only three cities – Detroit, Las Vegas and Tampa – still showed double digit annual rates of decline as of the end of 2009. Miami, Phoenix and Seattle all moved above such rates with December’s report.

But the areas did not fare as well from November to December. Denver lost 0.8 percent, compared to a loss of 0.2 percent for the 20 cities in the index. Only three cities – Chicago, Cleveland and Dallas – showed bigger month-t0-moth declines than Denver.

“As measured by prices, the housing market is definitely in better shape than it was this time last year, as the pace of deterioration has stabilized for now. However, the rate of improvement seen during the summer of 2009 has not been sustained,” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “In the most recent months we are seeing fewer and fewer MSAs reporting monthly gains in prices. Only four cities saw month to month improvements in December over November, when you look at the raw data. We are in a seasonally slow period for home prices, however, so it is not surprising to see better statistics in the seasonally-adjusted data, where 14 of the markets and the two monthly composites all rose in December. Similarly, the National Composite fell by 1.1% in the fourth quarter, but rose by 1.6% on a seasonally-adjusted basis.”

Metropolitan Area November-December Change 1-Year Change from December
Atlanta -0.7% -4.0%
Boston -0.1% 0.5%
Charlotte -0.7% -3.8%
Chicago -1.6% -7.2%
Cleveland -0.8% -1.2%
Dallas -0.9% 3.0%
DENVER -0.8% 1.2%
Detroit 0.0% -10.3%
Las Vegas 0.2% -20.6%
Los Angeles 1.0% 0.0%
Miami -0.3% -9.9%
Minneapolis -0.5% -2.3%
New York -0.7% -6.3%
Phoenix 0.5% -9.2%
Portland -0.3% -5.4%
San Diego 0.1% 2.7%
San Francisco -0.2% 4.8%
Seattle -0.7% -7.9%
Tampa -0.6% -11.0%
Washington, D.C. -0.2% 1.9%
Composite-10 -0.2% -2.4%
Composite-20 -0.2% -3.1%

Source: Standard & Poor’s, Fiserv

Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865.

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February 23, 2010 by Mimi Miller.

Denver, CORank: 37
Home price forecast: -7.8%
(one year, forecast through March 2010)
City stats
Population:
(2006) 2,408,750
Median family income:
(2008) $71,800
Home prices
Median home price:
(2008) $255,000
Affordability index:
(2008 median home price/family income) 3.6
Prices peaked in: 2006:Q1
Total climb during the boom:
(2000 to peak) 35.2%
Total decline so far:
(Peak through 2008) -9.5%
One-year change:
(Q4 2007 to Q4 2008) -4.3%
Forecast
Price change :
(from peak to bottom) -19.9%
When they’ll hit bottom: 2010:Q3
At bottom, prices will drop to levels last seen in: 2000:Q3
Notes: The 100 largest markets determined using 2006 Census population figures; metro areas are generally labeled by the largest city in that area. Price data are for single-family homes through the third quarter of 2008, the most recent data available. Forecast change from first quarter 2009 to first quarter 2010. Figures for Q42008 are estimated
Sources: Fiserv Lending Solutions, Moody’s Economy.com, Dutchess County Association of Realtors, Illinois Association of Realtors, Real Estate Center at Texas A&M University.

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February 16, 2010 by Mimi Miller.

Avoid Burnout by Declining the Monkey!
by Jennifer Allan
The other day I had a three-way conversation with two agents who are in the middle of career crises. Both are trying to decide whether to stay or go, interestingly, for opposite reasons. AgentFriend1 has too much business and is burning out and AgentFriend2, well, doesn’t. Have too much business, that is. And she’s burning out, too.

We talked about the causes of their “burnout.” Both agents confessed that they become deeply involved in their clients’ personal situations and get sucked into the emotional drama of it all. Which isn’t uncommon in our business; after all, we ARE deeply involved in the whole situation: if our seller doesn’t have enough equity to properly price; if our buyer’s loan changes and they have to come up with an additional 5% down; if our listing doesn’t appraise and the deal crashes … yes, these events DO affect us both financially and emotionally.

But you can draw a line and preserve your sanity. Terry Watson calls it “the Monkey.” In his live shows, he describes how we wrongly let others put their monkeys on our backs, even though we have our own monkeys to deal with, thank you very much! We real estate agents are really good at accepting our clients’ monkeys as our own.

And you know what? Our clients are HAPPY to give us their monkeys and then blame us when things go wrong. Further, we accept that blame, which puts us in a position where we have to apologize for our inability to solve a problem that wasn’t ours to solve.

Here’s an example. The seller owes $415,000 on his home. The market value is no more than $395,000 and that’s pushing it. In order to break even, the seller needs at least $430,000. The seller “doesn’t want to do a short sale,” so he looks to his agent for another solution. What solution does the agent come up with?

•Price at $439,900 and hope for a miracle

•Reduce her commission to nothing and price at $420,000 (and hope for a miracle)
Of course, there are other solutions, but we monkey-acceptors want to please, so these are the ones we propose. (And then we’re miserable because we have an unsellable product, but that’s another story).

Here’s another example. You interview for a tenant-occupied listing. The seller doesn’t want to inconvenience the tenant, so he asks for a 24-hour showing requirement; day-time showings only; that you attend all showings, and a 60-day possession. You want to please the seller, so you agree, knowing what he’s asking will make the properly unmarketable … and you miserable.

Do too many of these deals and I think burnout IS an inevitability.

Of course, it’s tempted to advise “Well, just thank the %$SOB^# very much for the opportunity, and walk away!”

Sure, that’s an option. But there’s a better way, a way to respectfully decline the monkey and move forward without alienating someone who could be a wonderful client and future referral source. Stay tuned for more!

Published: February 15, 2010

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February 15, 2010 by Mimi Miller.

Underwater mortgages halt some move-up buyers
Updated 4d 23h ago | Comments 280 | Recommend 12 E-mail | Save | Print | Reprints & Permissions |

Enlarge By Eileen Blass, USA TODAY

By Stephanie Armour, USA TODAY
Chris and Candice Basso would like to move up to a larger home this spring, taking advantage of a federal tax credit worth up to $6,500 for repeat home buyers.
But even a big tax credit won’t be enough to lift them into a bigger, better home.

The Centreville, Va., couple are trapped in a two-bedroom townhouse that’s worth less than their unpaid mortgage. They face the same predicament with a condo that they own and rent out. Unable to sell either property for what they owe and with their equity wiped out, a new mortgage is out of the question.

Chris Basso fears it may be years before they can buy a bigger place — a real concern, because Candice is scheduled to give birth to their first child in August, and their townhouse already feels cramped. “I’ll have a teenager by the time housing values come back up and I can get out of my house,” says Basso. With a baby coming, “We’re trying to figure out where to fit all the furniture. We still scour the home listings every day just to see what we could afford now. It’s heartbreaking to seewhat we could get today with our housing dollar now, but we’re stuck.”

Stuck, like millions of other homeowners, also underwater on their mortgages, thanks to sinking home prices. The plight of people such as the Bassos is a big worry for the housing industry as the crucial spring season nears, when nearly a third of the year’s sales are made.

Despite the tax credit — which expires April 30 — and 30-year fixed mortgage rates that are still hovering around 5%, it’s an open question whether enough move-up buyers will enter the market this spring to bolster housing’s fledgling recovery and energize a broader economic rebound.

“For a well-functioning market, you have to have that trade-up buyer,” says Mark Zandi, chief economist at Moody’s Economy.com.

Zandi estimates that more than 15 million homeowners are underwater — about one in five, he says. First American CoreLogic, using a different methodology, estimates 10.7 million residential properties had negative equity at the end of September, or almost one in four, by its reckoning.

Either way, a substantial number of homeowners are financially unable to enter the home-buying market just now. “Trade-up buyers are normally a big chunk of the market,” Zandi says. “We’re going into (the spring market) with less steam.”

Move-up buyers made up 53% of 2009’s shrunken market, down from about 60% in recent years, according to the National Association of Realtors (NAR). If theydon’t return in larger numbers, the inventory of mid- to high-price homes will remain high — dragging down home values overall.

Congress recognized the importance of move-up home buyers when it renewed and expanded last year’s popular first-time buyers credit to cover people who have bought homes before. Under the credit’s rules, people who owned the home being sold or vacated as their primary residence for five-consecutive years in the past eight are eligible for a credit of up to $6,500 on the purchase of a replacement home.

The deadlines are tight: Purchase contracts must be signed by April 30, and closings have to occur by June 30.

The NAR estimates 1.5 million homeowners will take advantage of the credit, but there’s no way to tell how many deals would have occurred without the credit.

Underwater homeowners aren’t the only ones unable to benefit from the credit. Many potential buyers in higher-price markets such as New York, Boston, Hawaii and San Francisco won’t qualify because their incomes are too high. Under the income limits, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

“Here in New York and a lot of major metro areas, they will blow that income cap,” says Edward Ades, a vice president with mortgage brokerage Universal Mortgage.

Some real estate professionals say buyers who expected to benefit from the tax credit are frustrated when they discover they aren’t eligible.

“A lot of people think it will be great, and then they look into it and find out they won’t get it. A lot of these people are young professionals,” says Janice Leis, a broker in Boca Raton, Fla. “It’s like false advertising. They get out with their hopes up, and they get their hopes dashed.”

Good times for first-timers

The past year has been good for first-time home buyers. The collapse in home prices, low interest rates and last year’s first-time buyers tax credit made buying a home more affordable than it’s been in years. But for people who bought homes at or near the market peak in 2005, moving out and up to more expensive houses has been harder.

Local market figures bear this out: Sales of entry-level homes are booming, while sales of pricier homes are sliding.

In the Los Angeles metro area, sales of entry-level homes at a median price of $248,737 soared from 28% of transactions in November 2007 to nearly 46% in 2009, according to Zillow.com.

Buyers are flocking to snatch up homes in that price range, which include 900-square-foot homes in the heart of the city with palm trees in the front yard, and two-bedroom, 890-square-foot condos in the beachside neighborhood of Playa del Rey.

“At the low end, there is absolutely activity,” says Carol Grogan, with Prudential California Realty. “It’s amazing. If it’s under $500,000, especially if it’s a house, there’s high demand. It’s crazy.”

But sales of mid- and high-price homes have dropped sharply. From November 2007 to November 2009, homes at a median price of $408,417 have slid from 37% of transactions to about 32%.

Homes priced at a median of $707,543 have fallen from about 35% to 23%, according to Zillow.

About a fifth of the homes in the Los Angeles metro area, covering Long Beach and Glendale, are underwater, Moody’s Economy.com’s data show.

It’s a similar situation in the Seattle metro area, where a fifth of the homes are underwater.

“We’re seeing more activity in the lower level,” says Cathy Millan, a Realtor with Windermere Real Estate in Seattle. “There have been a lot of first-time home buyers coming through, but the higher end is sitting.”

Sales of entry-level homes at a median price of $209,952 jumped from 37% in November 2007 to 40% in November 2009, according to Zillow.com.

Those priced at a median of $478,282 slipped from 32% in November 2007 to 30% in November 2009.

Signs of interest

Despite its shortcomings, the tax credit may be having some impact. Realtors say buyers are talking about both the move-up tax credit, as well as the credit of up to $8,000 for first-time buyers, when they look at homes. Some say the tax credit is launching the spring buying season unusually early this year.

Charlie Russo, a sales counselor with Plantation Homes, a home builder in Firethorne, Texas, says there’s no question the credits have pulled some buyers into the market.

“The low interest rates really have people in the market, and then the money (from the tax credit) is a huge incentive for people who weren’t looking right now,” Russo says. “It’s a perfect storm of incentives for them. No one ever paid me to buy a house.”

The tax credit is a motivator for Marifran Manzo-Ritchie, who says now seems like the perfect time for her to sell her home and buy another place.

It seems perfect because the home she bought in Phoenixville, Pa., for $150,000 seven years ago is now worth about $280,000 following the revitalization of the former steel town. Plus, her family, with three children, needs more space.

If she closes on a new home by June 30 as she believes she’ll be able to, she’ll qualify for the move-up home buyer tax credit. She and her husband are already working with a Realtor to list the house this month.

“Our home, which once seemed so big, seems very, very small now. And our property value has increased, so we have the equity,” says Manzo-Ritchie, 34, who runs a marketing agency from home. “But it’s the tax credit that really lit the fire under us.”

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February 11, 2010 by Mimi Miller.

Fort Collins/Loveland Hits Dream Town Status
Source: AARP.org | May 9, 2003

Fort Collins/Loveland ranked # 1 as boomers redefine retirement and lead the move to a new generation of dream towns

Once again, baby boomers are breaking the rules. But this time it’s in ways that will alter the country’s future physical and financial landscape. This influential group has bumped traditional retirement off its list of priorities and is now contemplating what to do in their next stage of life. And where. Responding to this trend, the May/June issue of AARP The Magazine features the editors’ picks of the 15 top dream towns for this new generation of future retirees.

The list of 15 highly livable towns was compiled according to a range of criteria, from affordability to community life, access to outdoor recreation to proximity to good health care.

AARP The Magazine discovered what those of us in Colorado have known for years—we have a lot of super places to live. Fort Collins/Loveland was chosen as the #1 place to reinvent your life. Close to Denver and facing the Front Range of the Rockies, the towns boast fine culture, beautiful scenery, and a bustling college town. Included in the ranking were job availability, affordable housing, culture and entertainment, access to outdoor recreation, safety, colleges and universities, sense of community, proximity to good comprehensive healthcare, good public high schools and ease of getting around.

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February 10, 2010 by Mimi Miller.

RISMEDIA, February 10, 2010—Home values across the country declined again in the fourth quarter of 2009, as the Zillow Home Value Index fell 5% year-over-year, and -0.5% quarter-over-quarter, to $186,200. That marked the 12th consecutive quarter of year-over-year declines, according to the fourth quarter Zillow Real Estate Market Reports. Despite home value declines seen across most of the country throughout 2009, some markets experienced what appeared to be a bottom in home value declines, or even increases in home values during the year. However, the fourth quarter of the year brought signs that the fledgling recovery of home values in many of these markets is slowing again. If the declines are sustained, the result will be a “double dip” in home values, defined as two periods of sustained declines in home values separated by a brief period of stabilization or recovery.

One in five, or 29 of the 143 markets tracked by Zillow, showed at least five consecutive month-over-month increases in home values during 2009 before beginning to flatten or fall again in the second part of the year. These markets include the Boston metropolitan statistical area (MSA), the Atlanta MSA and the San Diego MSA.

Home values in an additional 29 markets, including the Los Angeles and New York MSAs, increased on a month-over-month basis each month throughout the fourth quarter. However, the rate of increase slowed from November 2009 to December 2009 in 21 of those markets, and several appear likely to experience several months of sustained decline in early 2010.

The percent of single family homes with mortgages in negative equity was essentially flat from the third to the fourth quarter, changing from 21% in Q3 to 21.4% in Q4. This comes after a decrease in negative equity from the second quarter’s 23%.

The number of homeowners losing their homes to foreclosure across the country reached a peak in December, with more than one in every thousand homes being foreclosed–a number not reached since Zillow began recording national foreclosure data in 2000.

“While we have seen strong stabilization in home values during 2009, there are clear signs that they will turn more negative in the near-term,” said Zillow Chief Economist Stan Humphries. “What we saw in mid-2009 was a brief respite from a larger market correction that has not yet run its course. The good news is that, for those markets that will see a double dip in home values before reaching a definitive bottom, this second dip will not be a return to the magnitude of depreciation seen earlier, but rather will look more like a modest aftershock of the earlier downturn.

“The recent stabilization owed a lot to policy support in the form of tax credits, lower interest rates and increased Federal Housing Administration lending. The remaining correction in home values we’ll see in the first half of this year is a function of market fundamentals, such as the increasing flow of foreclosures, high levels of inventory in the market and a probable decrease in demand as the impact of the tax credit wanes and mortgage rates rise. While the next few months are likely to bring further home value declines in most markets, we do expect to see a national bottom in home prices by the middle of this year. Thereafter, home values are likely to bounce along the bottom with real appreciation remaining negligible for some time.”

Foreclosure re-sales across the country remained high, making up more than one-fifth (20.3%) of all U.S. home sales in December. Foreclosure re-sales also made up the majority of sales in several MSAs, including the Merced, Calif. MSA (68.3%), the Las Vegas MSA (64%) and the Modesto, Calif. MSA (62%). Additionally, 28.5% of home sales nationwide sold for less than what the seller originally paid.

Several markets across the country showed positive longer-term appreciation. Home values increased year-over-year in 27 of 143 markets and remained flat in 15.

The Boston MSA was the largest area with year-over-year appreciation, despite its more recent downturn in home values. The area’s Zillow Home Value Index rose 1.9% in 2009. Home values in the Boston area rose for eight months in 2009, which outweighed the recent declines.

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February 9, 2010 by Mimi Miller.

By John Rebchook, on February 8th, 2010

This home at 3220 Zuni St. in Highland is priced at just over $1 million. It is listed by Dee Chirafisi of Kentwood City Properties.
Almost one out of every four homes sold and closed in the metro area in 2009 took place in Denver. And almost 30 percent of the homes sold above $1 million were in Denver.

An analysis of Metrolist data by independent broker Gary Bauer shows that 10,010 homes closed in the Denver area last year, accounting for 23.8 percent of the 42,027 home sales in the metro area last year. Arapahoe County was No. 2, with 8,230 single-family homes and condo closings last year.

That may not be too surprising.

“Denver usually seems to get the largest percentage of the buyers, except during the time when Douglas County was really growing like gangbusters,” Bauer said. During much of the 1990s, Douglas County was the fastest growing counties in the U.S. and is still one of the fastest. (Indeed, I remember writing a story at the Rocky Mountain News during the ’90s that Highlands Ranch in Douglas County accounted for one of five out of every new and used-homes sold.)

Denver Mayor John Hickenlooper said that given Denver’s size, Denver’s showing last year isn’t startling.

“Denver accounts for 22.2 percent of the metro area’s population,” Hickenlooper said. “So we are doing a bit above that for home sales, but not much more. Denver is right about where it should be.”

Hickenlooper did say that a Realtor-friend recently mentioned to him that sales activity seems to have picked up recently.

Corey Wadley, a broker and co-owner of Nostalgic Homes in West Highland in northwest Denver, said that a lot of buyers are drawn to certain Denver neighborhoods because they think homes will retain their values more than suburban counterparts.

“In the Highland neighborhood, for example…our prices held stable during this recession,” Wadley said. “I think the biggest factor is homes being able to hold values. There’s only a finite amount of new stuff in a place like Highland. I think also there is a uniqueness about Denver neighborhoods. You can walk street-by-street and see how the housing stock changed from different eras and from additions, renovations and even some scrape offs.”

Perhaps what was most surprising about Bauer’s report, is that Denver also dominated the $1 million and over price category. The 131 single-family homes and condos that sold and closed last year in Denver accounted for 28 percent of the 471 homes sold in that lofty price range. Arapahoe County, with 95 homes selling at $1 million or more and Douglas County with 67, accounted for 20 percent and 14 percent of that market, despite a number of high-end enclaves.

“That is a bit surprising,” said Chris Mygatt, president of Coldwell Banker Residential Brokerage Colorado. In the past, he said, the vast majority of homes in that price range were in Arapahoe County, because of the concentration of huge homes in Cherry Hills and Greenwood Village.

“What I think what this is showing is a societal change,” Mygatt said. “It speaks to the idea that people who have a significant amount of money who are down-sizing or right-sizing, who are deciding they do not need a half acre or an acre of land. It’s never been more fashionable to be frugal. Let’s face it: Someone who is buying a million-dollar home is not spending their last million dollars on it. But they don’t want the expense of watering a giant lawn or keeping it clean, even if they can afford it. ”

He said the move to Denver from the suburbs is a trend he sees continuing. Mygatt said there are “too many 6,000-square-foot homes,” in the suburbs, and they will be increasingly difficult to sell.

“The smart developers are now building a very well-designed, very efficient 3,500-square-foot home instead of a 6,000-square-foot home,” Mygatt said. “And the new homes are very, very green. ”

“That’s great,” about Denver, said Christina de Barros, of RE/MAX Masters. “It is a little surprising given that Arapahoe County has Cherry Hills and Greenwood Village and Douglas County has Castle Pines Village. ” Cherry Hills, for example, had 46 home sales of more than $1 million last year, while Cherry Creek in Denver, had seven, she said. And Boulder County (although not most of the city of Boulder), had a total of 126 home sales above $1 million, for 27 percent of that market, making it Denver’s closet competitor.

Some well-heeled buyers were picking up screaming, high-end deals last year, said Susan C. Mathews, a broker with Fuller Sotheby’s International Realty.

“There were a lot of foreclosures, or more likely short sales, in places like Hilltop and Crestmoor,” Mathews said. “I saw homes that were originally priced at $2.25 million and up selling for $1.4 million or $1.5 million. And that was good. It helped us get some of this inventory off the market.”

She said high-end deals can still be found, but there are not as many as there were in 2009.

“I think consumer confidence is returning,” Mathews said. “People are not as afraid that prices are going to continue to drop if they buy now. I do think we are past the bottom.”

Wadley said that in northwest Denver, homes priced below $450,000 are selling, but it is tougher to move ones above that range.

“But Jenny (Apel,his wife and co-owner of Nostalgic Homes) did sell a William Lang mansion off Lowell (Boulevard) last year for $950,000,” Wadley said. “And I think that when homes that do sell in places like Cherry Hills for above the $1 million mark, they have been heavily discounted from their original asking price.” In fact, he said he thinks a lot of those ultra-expensive suburban homes are being sold at a loss.

Bauer said that one reason Denver dominates the luxury home market, is that empty nesters, who are at the age and income level who can afford seven-figure homes, would rather live in an urban area than in a suburban community.

“I think part of it is the aging of the population,” Bauer said. “Many people are still working, and want to be closer to where they are working, which is often downtown. They are down-sizing and their children are grown. For a large percentage of the population, Denver offers a chance to be close to the sporting facilities, theater, and everything else in downtown and LoDo.”

He pointed to Janet Elway as an example.

“With these $1 million-plus homes, people really want something special,” Bauer said. “Janet Elway went from a giant home in Cherry Hills to a Denver home in Belcaro.”

County $0-
$100k $100k-
$200k $200k-
$300k $300k-
$500k $500k-
$750k $750k-
$1mil $1mil+ Total %
of Total
Adams 1,453 3,376 1,295 509 89 17 11 6,750 16%
Arapahoe 1,410 3,283 2,119 1,019 238 66 95 8,230 19.6%
Boulder 105 1,061 1,083 1,259 456 136 126 4,226 10%
Broomfield 4 228 369 313 77 5 8 1,004 2.4%
Denver 1,901 3,480 2,092 1,703 524 179 131 10,010 23.8%
Douglas 82 689 1,760 1,575 402 130 67 4,705 11%
Elbert 23 70 95 111 13 3 - 315 0.75%
Jefferson 447 2,374 2,336 1,228 300 69 33 6,787 16%
TOTAL 5,425 14,561 11,149 7,717 2,099 605 471 42,027

Source: Gary Bauer

Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865.

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