Prices of existing homes in the Denver and Boulder metro areas fell in the first quarter of 2006, the first time in at least 16 years, according to a federal index of home prices released Thursday.
Boulder County, long considered one of the state’s more robust real estate markets, suffered a 0.12 percent drop in the price of existing homes between January and March, according to the Office of Federal Housing Enterprise Oversight.
It was metro Boulder’s second quarterly drop, with prices declining 0.33 percent in the fourth quarter of 2005.
Home prices in metro Denver fell 0.35 percent between January and March, one of the weakest quarterly showings since the housing bust of the late 1980s and early 1990s.
At least one expert attributes the decline to basic supply-and- demand imbalances.
“People who are upside down on their mortgages are putting their houses on the market,” said Mike Rinner, a real estate analyst with the Genesis Group in Englewood. “There are too many homes on the market.”
Soft home prices could stretch for several more months as excesses get worked out, especially in the lower end of the market, said Phil Storms, a real estate investor with Westmont Cos. in Denver.
“I would be worried about a bubble bursting if we had seen the same markets we saw in Florida,” he said. “But we have had some slow markets for quite some time.”
Home-price gains along the Front Range have run at a fraction of the pace seen in hot real estate markets such as Florida, Arizona and California.
If price declines continue, recent buyers who put no or little money down on their homes will find it increasingly difficult to sell them, warns Lou Barnes, a mortgage broker with Boulder West Financial Services.
Rinner attributes the large number of homes for sale to the loss of more than 60,000 jobs in the state in 2002 and 2003.
Although Colorado is adding jobs again, its total payroll is still below the peak hit in 2001. Interest rates are also rising, making homes less affordable.
Barnes also cited a building boom stretching along the northern Interstate 25 and E-470 corridors that is flooding the market with new homes. Those homes are undercutting the demand for existing homes, putting downward price pressure on older properties.
Colorado ranked first among states in March and April for the percentage of its homes in foreclosure, according to RealtyTrac.
“We are in worse foreclosure shape than Michigan is,” Barnes said. The difference is that in Michigan, which is suffering from automotive layoffs, “nobody is building a lot of homes.”
Rinner and Barnes agree that hidden within averages are some very wide disparities.
Popular neighborhoods within Denver remain strong, while entry-level markets in Adams and Arapahoe counties are getting hammered with foreclosures and falling prices.
“The older neighborhoods throughout the metro area all feel downward pressure,” Barnes said.
The city of Boulder, which has had no new construction, is averaging about 5 percent appreciation over the year, aside from condo conversions that are competing with university housing, Barnes said.
The eastern edge of the county, by contrast, has seen downward pressure on resale home prices because of new-home construction across the border in Weld County.
Average home-price appreciation in Boulder County ranked 258th among 275 metro areas tracked by the federal index. Denver ranked 248th, and Greeley/Weld County placed 256th.
Nationally, existing-home price gains averaged 2.03 percent in the first quarter and 12.5 percent over the past 12 months. Colorado’s growth was much smaller, with a 0.20 percent average home-price gain for the quarter and 5.1 percent gain for the year ended March 31.
Over the past 12 months, Denver homes appreciated 3.24 percent and Boulder County homes 2.53 percent.
Staff writer Aldo Svaldi can be reached at 303-820-1410 or asvaldi@denverpost.com.
