Northern Colorado Housing Markets Experiencing Declines in Values, New Colorado State University Real Estate Study Reveals

Note to Reporters: Reporters may obtain a copy of the report by contacting Emily Wilmsen.

All 11 major housing markets in northern Colorado have experienced declines in home values – as much as 13 percent in the tri-cities market area of Frederick, Firestone and Dacono, according to a semi-annual in-depth study on home prices released by the Colorado State University Everitt Real Estate Center on Thursday.

John Gerhard, director of research at the Everitt Real Estate Center, talked about the state of northern Colorado’s housing market at the center’s fall real estate conference at the Embassy Suites in Loveland.

Also Thursday, the Fort Collins Board of Realtors announced a corporate membership in the Everitt Center, committing to $5,000 a year for five years for a total $25,000 investment.

“Our board of directors understands the importance of having good data for our members to use on a day-to-day basis. Additionally, it’s important to them to support the future of the industry,” Clint Skutchan, executive vice president, Fort Collins Board of Realtors, which has about 1,000 members.

Highlights of the Everitt Center housing study:

• Total closings in northern Colorado (Boulder, Larimer and Weld counties) have steadily declined since 2004, down 13 percent in 2008 and 20 percent in the first half of 2009. Closings fell 21 percent in the first quarter of 2009 and 19 percent in the second quarter.

• The number of single-family attached home closings such as townhomes, duplexes and condominiums fell 21 percent, as compared with the first half of 2008. Detached homes fell 19 percent.

• Surprisingly, the supply of attached and detached inventory homes remained relatively unchanged in price ranges below $300,000, but increased dramatically in move-up and luxury price ranges.

• The supply of attached homes increased from 13.2 months supply at the end of second quarter 2008 to more than a three-year supply in the $450,000 to $500,000 price range. The supply of detached homes increased from 18.4-month supply to a 27-month supply at the end of second quarter 2009.

The indices rely on data from IRES LLC, the area’s Multiple Listing Service, and roughly 200,000 closings from 1997 through the first half of 2009 in Boulder, Larimer and Weld counties.

The study is more detailed than other indices that report home prices for broader metropolitan areas and uses geographic information systems to select data by Census Tract in order to evaluate smaller boundaries – almost on a neighborhood-by-neighborhood basis.

Two researchers for the Everitt Real Estate Center, Gerhard and Sriram Villupuram, conducted the study, which is released twice a year – in April and September.

“In spite of the declines in values, home values can vary widely by neighborhood and even block by block,” Gerhard said. “There are still neighborhoods that are doing reasonably well and appreciating despite national trends. It’s not all doom and gloom. It’s important to look at market trends at a granular level rather than for a large market area.”

Boulder County outperformed Weld and Larimer counties in overall appreciation although all counties were down compared with the end of 2008 report issued by the Everitt Center. Home values declined 3.2 percent in Boulder County, 4.3 percent in Larimer County and nearly 10 percent in Weld County.

More study highlights:

• At the end of the first half of 2009, the Boulder-Gunbarrel market area still had the greatest overall appreciation since the base year of 1997, up 83.4 percent.

• Lafayette-Louisville-Superior registered the second highest overall appreciation followed by Estes Park, Erie and Fort Collins. The Greeley-Evans market areas home values depreciated 4.3 percent as compared to the base year of 1997.

• In first half 2009, home prices declined all 11 major market areas in northern Colorado. The greatest percentage drop occurred in the tri-cities market area (Dacono, Firestone and Frederick), down more than 13 percent, followed by a 12 percent decline in Greeley-Evans.

• Louisville-Lafayette-Superior experienced the least amount of change in home values– down less than 1 percent – as compared with year-end 2008.

The study uses a weighted repeat sales methodology similar to the Case-Shiller Index, which measures price change for the same home over time, rather than the conventional median sales price methodology which may be impacted by the type of homes selling in a given period. The EREC Indices differ significantly from other repeat sales indices, and include all transactions as well as attached housing. In addition, the Everitt center’s house price indices illustrate the performance of different price ranges of homes within each of the major market areas. Each market area is split into three equal tiers based on closing price to analyze the appreciation or depreciation of low-, medium- and high-priced homes for each market area.