Home prices in Denver and Aurora rose a mere 0.76 percent in the second quarter compared with the same period in 2006, according to a home-price index released Thursday by the federal government.
That’s the slowest appreciation rate for the metro region since the second quarter of 1989, when prices dropped 1.38 percent, according to the Office of Federal Housing Enterprise Oversight.
Nationally, housing prices performed better than expected, rising 3.2 percent. It was still the lowest annual price increase since the 1996-97 period, but industry experts had predicted a decline for the period.
“The national media would have people believe that American housing markets are getting crushed, and it’s not real ly true,” said Jeff Thredgold, an economist with Vectra Bank Colorado. “It’s going sideways in the second quarter.”
Thredgold noted that 2006 was the third-best year on record for both new- and existing-home sales. He said this year will wind up being the fourth- or fifth-best.
The OFHEO data include price information through June and do not reflect the recent mortgage- market instability, which may have affected housing demand and prices. Those effects will be reflected in OFHEO’s next home-price index report.
Statewide, home prices rose 2.95 percent in the second quarter and were up 20.2 percent in the past five years. Nationally, prices were up 50.8 percent in the past five years.
“That tells me there’s value in Colorado real estate,” Thredgold said. “I’d rather be a buyer in Colorado than in California or Arizona, where prices are up over 90 percent. There’s more upside potential in Colorado real estate as an investment.”
Job growth is one of the reasons the Denver market is holding up, said Jon Terry, managing broker of Realty Professionals of America Inc. Metro-area employment growth was 1.9 percent in June, and the unemployment rate was 3.8 percent in June.
“Housing as a general rule follows jobs,” Terry said. “When we have low unemployment and a strong economy, housing normally follows suit.
“Even when we have high foreclosure numbers and slow appreciation, it’s being propped up by the rest of the economy.”
Grand Junction saw the biggest jump in housing prices, with a 14.3 percent increase, while Greeley’s prices declined 0.9 percent.
With all the activity in the oil- and-gas industry and no lots to build homes on, it’s not surprising that prices skyrocketed in Grand Junction, said Tucker Hart Adams, U.S. Bank chief economist for the Rocky Mountain region.
“You have people pouring into that part of the state to drill for natural gas, and there’s lots of activity,” she said. “If you can’t build new homes, it’s going to push the price of existing homes. That doesn’t surprise me at all.
“But why should Greeley be worse than Pueblo? That’s kind of hard to understand. I’ve never put too much faith in home- price data because I think it’s a squishy number.”
The OFHEO index looks at the sale or refinancing of a large block of homes across time, tracking more than 32 million transactions over the past 32 years.
It is considered a more precise measure of home values than Real tor-generated resale numbers, which calculate values based on the mix of homes sold in a given period.
The index tracks only qualified mortgages up to $417,000 purchased by Fannie Mae and Freddie Mac, which on Thursday reported a 45 percent drop in second-quarter net income as it took a $320 million loss on new mortgages.
Staff writer Margaret Jackson can be reached at 303-954-1473 or mjackson@denverpost.com.
