Home resales plunged nationwide during the April-to-June quarter, but Colorado is weathering the downturn better than most states.
Forty-one states suffered a decline in home resales compared with the same period a year ago, while a third of metro areas recorded a rare annual decline in median home values, according to a report Wednesday from the National Association of Realtors.
The downturn in housing is the worst recorded in the past 16 years. Driven by loose lending standards and a rash of speculative buying, the housing pullback has rattled financial markets worldwide, forced dozens of lenders to close and raised fears about the health of the U.S. economy.
The hardest-hit states were Florida, Nevada and Arizona, where spec ulative buying fueled huge jumps in home prices and a frenzy of new construction.
“Those are the markets that both went up the highest and will have the biggest adjustment problems,” said Ingo Winzer, president of the Local Market Monitor in Wellesley, Mass.
Sales in the second quarter were down 41.3 percent in Florida, 37.5 percent in Nevada and 23.4 percent in Arizona compared with a year earlier.
Sales nationally fell 10.8 percent compared with the same period a year ago. In Colorado, the decline was a more modest 4.8 percent.
For those caught in the slump, the losses can be significant. Denver real estate analyst Gary Bauer said he has a friend who purchased a Las Vegas home for $250,000 a few years ago after a job transfer.
He is being called back to Denver, but the move will cost him.
“He will be lucky to sell the home for $190,000. It may be $175,000,” Bauer said. “He is crying his woes.”
Some Western states such as Texas and Colorado, which saw home prices run higher in the late 1990s but missed the most recent run-up fueled by low interest rates and easy credit, are faring better in the current downturn, Winzer said.
Colorado ranked 28th among states for its decline in home resales, while Texas was 38th. In Wyoming, which is enjoying an energy boom, home resales rose 10.8 percent.
Lawrence Yun, a senior economist at the National Association of Realtors, put a positive spin on the report, noting that two out of three metro areas saw price gains during the past year.
“Although home prices are relatively flat, more metro areas are showing price gains with general improvement since bottoming out in the fourth quarter of 2006,” Yun said in a note.
Median home resale prices were flat in Denver-Aurora, up 2.3 percent in Boulder and 1.4 percent higher in Colorado Springs.
Winzer was skeptical that housing markets have bottomed.
“There are a lot of factors that will temper demand overall in real estate markets for several years. It will take three to five years to stabilize,” he said. “There is more pain coming.”
RealtyTrac, a California firm that tracks foreclosures, reported escalating foreclosure rates in 82 of the top 100 metro areas during the first half of the year.
Colorado reported the highest foreclosure rate of any state in 2006, according to RealtyTrac. But other states have since passed it.
Foreclosure filings rose 11 percent in the Denver-Aurora area, which ranked sixth among metro areas.
Foreclosure filings are up 256 percent in Stockton, Calif.; 99 percent in Detroit; and 142 percent in Las Vegas.
A rising fear among stock investors is that the housing slump will cause consumers to curtail spending, slowing the economy further and worsening the housing decline.
“Housing may trigger people making the decision that they can’t spend more money,” Winzer said. “When they stop buying, the economy slows down.”
Stock indexes, which had been holding gains early in the day, dropped in late afternoon trading on news that Countrywide Financial Corp., the nation’s largest mortgage lender, was struggling to get the money it needed to continue operating.
Staff writer Aldo Svaldi can be reached at 303-954-1410 or asvaldi@denverpost.com.
