Zooming metro Denver home prices give relocating workers sticker shock

By Howard Pankratz
The Denver Post

Metro-area home values hit another all-time high in May — good news for people who already own houses but bad for businesses trying to lure workers from other cities.

The S&P/Case-Shiller Home Price Indices reported Tuesday that Denver’s home price index reached 152.58, ticking past previous highs of 150.58 in April and 148.18 in March, and up 8.2 percent from May 2013.

The Case-Shiller Index, a closely watched measure of real estate values, tracks the resale of houses in three price tiers over time and does not include condominiums. The 152.58 level means that home values in May were, on average, 52.58 percent higher than in January 2000, the benchmark month.

“If you live here and own a house, it’s great news,” said Metro Denver Economic Development Corp. CEO Tom Clark. “If you are trying to come in from the Midwest or Texas, it’s a challenge. For many folks it can be sticker shock.”

Employees of Sisters of Charity of Leavenworth health care system, when the headquarters moved from Leavenworth, Kan., in 2012, and Ardent Mills workers in Omaha, planning to move to new jobs in Denver this summer were among those shocked by housing prices in Colorado, Clark said.

Denver considers Dallas, metro Kansas City, Phoenix, Salt Lake City and Seattle its regional competitors, Clark said.

According to data provided by Zillow, which tracks sales, home prices averaged $253,000 in metro Denver in May, compared with $144,600 in Dallas, $141,100 in Kansas City, $195,100 in Phoenix, $234,500 in Salt Lake City and $332,000 in Seattle. This month, home prices in Denver averaged $256,800.

Workers moving to Denver from San Francisco might feel like they’ve “died and gone to heaven,” Clark said. But if the cost of living is as much as 30 percent more than what a person is used to, relocation can be complicated.

“It is a deterrent, not for the company so much, because they can be assured they can get talent here, but for key employees who they want to move,” he said. “It sometimes can be enough of a sticker shock that they have to adjust their salaries upward or they have to find other employees.”

Clark said there is big piece of the housing market missing in Colorado: for-sale condominiums.

“Only 2 percent of our construction market is condominiums. In California, it is 20 percent. In most cities nationally, it is 22 percent. Condominiums would give you a price in between that single-family home and renting,” Clark said. “And renting is getting to a point that if you could get a $200,000- $185,000 condo, you would be paying less than you would be paying for rent.”

Clark said state lawmakers need to reform the state’s construction-defect rules — which have left condo developers vulnerable to lawsuits by community associations and boosted insurance premiums for builders.

Broomfield economist Gary Horvath said the rising prices are a two-edged sword — and how they play depends on which side you’re on.

For homeowners, rising values increase personal wealth and makes them more confident and optimistic about the economy. As a result, they are likely to spend on other items, giving the local economy a boost.

But if you don’t own, or were forced out of a home because of foreclosure, metro rents are steep.

Metro Denver — defined by Case-Shiller as Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson and Park counties — started hitting new peaks in May 2013, when the price-index level was 140.98, the highest since August 2006, when it was 140.28.

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