The Latest Case-Shiller Data on Denver [Analyze This]

--- by Osman Parvez

The latest Case-Shiller HPI update is out this morning.  Home prices in Denver inched up to 7.7% year over year in August, compared to the 7.2% for the same period a year earlier. Meanwhile, the 20 city composite increased 5.5%.  

Anecdotally, we're seeing a surprising number of options for our buyers hit the market and starting to have strategy discussions with sellers who are concerned with missing the peak of the market.  

Although Denver is still appreciating, the pace of gains is beginning to slow nationally.  I expect appreciation rates to flatten in the next 12-24 months, inventory to increase slightly, as higher interest rates reduce buyer demand. It shouldn't be anything like the 2006 to 2008 plunge, not even close, but it will be noticeable to buyers and sellers. It will also likely impact the highest tranche of the market first, a top to bottom down cycle. 

From the S&P Dow Jones Indices

“Following reports that home sales are flat to down, price gains are beginning to moderate,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Comparing prices to their levels a year earlier, 14 of the 20 cities, the National Index plus the 10-city and 20-city Composite Indices all show slower price growth. The seasonally adjusted monthly data show that 10 cities experienced declining prices. Other housing data tell a similar story: prices and sales of new single family homes are weakening, housing starts are mixed and residential fixed investment is down in the last three quarters. Rising prices may be pricing some potential home buyers out of the market, especially when combined with mortgage rates approaching 5% for 30-year fixed rate loans.

“There are no signs that the current weakness will become a repeat of the crisis, however. In 2006, when home prices peaked and then tumbled, mortgage default rates bottomed out and started a three year surge. Today, the mortgage default rates reported by the S&P/Experian Consumer Credit Default Indices are stable. Without a collapse in housing finance like the one seen 12 years ago, a crash in home prices is unlikely."
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The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties.   We strongly recommend conducting rigorous due diligence and obtaining professional advice before buying or selling real estate.   image: Tom Pumford


Please Note

This document contains forward-looking statements. You are strongly cautioned that investment results are subject to business, economic and other uncertainties. There are no guarantees associated with any forecast and the opinions stated here are subject to change at any time. Always consult your financial advisor before making an investment decision.