Residential housing in the mountain states of Colorado, Utah and New Mexico is looking stronger than many others, but that's partly because the comeback hasn't been as steep.
Simply put, homes in the region didn’t appreciate in value over the last decade as much as in the coastal regions, Arizona or Nevada. What didn’t go up much before the bubble burst in 2008 didn’t go down much once it did.
Homes certainly lost value, but owners don’t have to regain as much ground to attain their earlier equity.
“We didn’t experience the bubble that California, Florida, Arizona and Nevada did,” said Thomas Thibodeau, a residential real estate expert at the University of Colorado’s Leeds School of Business. "Prices in Denver came down about 14 percent, peak to trough, and it now looks like the decline has come to an end.”
In 2008, Thibodeauco-authored a studyexamining 84 U.S. metro areas for signs of a speculative housing bubble. Twenty-five cities showed housing prices 30 percent over the expected increase, the study concluded. But with the exception of Las Vegas, all were within 75 miles of the Pacific or Atlantic coast.
“Extreme speculative activity, so prominently publicized, was extraordinarily localized,” the study concluded.
The 2012 story of residential real estate in the so-called Intermountain West can be told in a tale of three cities — Salt Lake City, Albuquerque and Denver — where its population is most concentrated.
Salt Lake City Picking Up
Home sales in Salt Lake City climbed for the eighth-consecutive month in January, up more than 30 percent from a year ago, according to a recent report by the Utah Association of Realtors. Meanwhile, Utah reported its best January in five years, with nearly 2,000 residential closings.
The Utah market began 2012 in much the same way the prior year concluded, says Utah Association of Realtors President Lori Chapman.
“Sales were up, inventory was down. The spring buying season also is looking like it will be stronger than last year," says Chapman.
Data from Trulia.com, which tracks residential real estate nationwide, also shows a buyer’s market in Salt Lake, with a median sales price of $122,085 reflecting an 11.2 percent decrease from December 2011 to February 2012.
Salt Lake home sales in the past five years have jumped 9.6 percent, according to Trulia.
"We've been in multiple buyer situations, [making] it hard to get a property," says Janet Marroquin, an agent with Sold By An Angel Real Estate. “We’ve been fighting for properties.”
Indeed, housing inventory in Utah fell 24 percent in January year over year, says Chapman.
Denver Almost Tops
The closely watched Case-Shiller index for January showed the Denver market in positive territory for the first time in 18 months.
The slight 0.2-percent, year-over-year increase was the third-best showing among the 20 cities tracked in the barometer.
Other than Denver, only Detroit and Phoenix showed price increases, at 1.7 percent and 1.3 percent, respectively.
Chris Mygatt, president of Coldwell Banker Colorado, says an improving housing market is reverberating throughout Denver’s economy. “I think it’s an important tell-tale sign, one of many pointing to a continued recovery and stability in the Denver housing market."
Mygatt adds, “I’m being told that there is an increase in furniture sales and landscaping. It really is across the board. Although our strength is modest compared to recoveries of the past, I really do think there is a fundamental shift in consumer confidence and the local economy.”
Another positive sign is the number of unsold resale homes. They plunged 42 percent in February from a year ago, according to the report released by independent broker Gary Bauer.
There were only 10,086 unsold single-family homes and townhomes/condominiums on the market in February, about 60 percent less than the year-ago period, and the least for that month since 2000, says Bauer.
“The inventory is a somewhat challenging situation,” he says. “It’s a good-bad situation, depending on whether you are a buyer or a seller.”
The relative lack of Denver homes for sale has caused Fuller Sotheby’s agent Nancy Levine to reach into her bag of tricks for something she hasn’t used since housing’s heyday in the mid-2000s.
“For the first time in five years I’m getting multiple offers on homes,” Levine said. “So I’m putting escalation clauses into offers again. We tell the seller we’ll pay them $10,000 over whatever other offer they get.”
The biggest problem Denver brokers are having is finding properties for buyers, says Levine. “Relocation clients, people moving here from Nashville or Southern California for jobs, are blown away by the market here. They say they like a house, we go back and it’s already under contract.”
“Prices aren’t up much yet, but I think they’re headed that way,” she adds. I’m seeing more consumer confidence, people feeling better about their jobs and the economy. In Colorado, we feel as if we are finally moving forward, that the worst is behind us.”
New Life in New Mexico
In RE/MAX's 2012 national housing report, Albuquerque topped all 53 metro areas surveyed, with a 46.6 percent-increase in the number of year-over-year sales.
But veteran homeseller Kurstin Johnson isn’t ready to say hard times are behind the city.
“Last year was excellent, we recorded the highest volume of sales in three years,” says Johnson, who’s parlayed 25 years of local realty experience into ownership of her own boutique firm, Vista Encantada Realtors.
“This year’s been slow been to start — plenty of buyers but no closings,” she says. “Everyone I speak with is experiencing a bit of a slowdown. People are sitting on the fence. There doesn’t seem to be anything to propel buyers to act. We have fewer active listings than we’ve had since 2006.”
Johnson concedes it’s only March, with the year’s hottest buying and selling yet to come. But even when she gets a buyer and seller together, there’s tighter credit and stricter loan requirements, especially in the Mountain States, she says.
“I’m sitting on a million-dollar closing right now, and there aren’t that many in Albuquerque,” Johnson says. “I’m waiting for an underwriter in New York City to approve a loan. He’s questioning why the local appraiser would put more value on a home with a mountain view than one with a golf course view."