Head and Shoulder Pattern in Denver Real Estate

As readers of my blog know I am somewhat a statistician as I look at various statistical measurements including the well respected Case-Shiller index concerning housing costs. Please note statistics are similar to an appraisal; they are a look back and not necessarily a look forward. I also believe history repeats itself as I have been a broker for 20+ years and have watched with interest the effects of business cycles on our real estate market.

Please note I am not advocating the following analysis concerning a Head and Shoulders pattern adopted from the stock market HOWEVER housing prices in general trend with the stock market. Thus reviewing the latest statistics and graph patterns I noticed a head and shoulders pattern-taking place in the Denver (and other) housing markets: The following is a graphic of a Head And Shoulders Bottom as related to equities:


Per Wikipedia: This formation (Head & Shoulders Bottom) is simply the inverse of a Head and Shoulders Top and often indicates a change in the trend and the sentiment. The formation is upside down in which volume pattern is different from a Head and Shoulder Top. Prices move up from first low with increase volume up to a level to complete the left shoulder formation and then falls down to a new low. It follows by a recovery move that is marked by somewhat more volume than seen before to complete the head formation. A corrective reaction on low volume occurs to start formation of the right shoulder and then a sharp move up that must be on quite heavy volume breaks though the neckline.

Another difference between the Head and Shoulders Top and Bottom is that the Top Formations are completed in a few weeks, whereas a Major Bottom (Left, right shoulder or the head) usually takes a longer, and as observed, may prolong for a period of several months or sometimes more than a year.

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In May 2017 according to the Case Shiller index the average home price in Denver reached $456,100 which is 41%+ higher than the previous peak experienced in Denver in August 2006 which many will remember was the pinnacle before descent into the Great Recession.

While the graph is not the easiest to comprehend yet the visual is strikingly similar to the Head and Shoulders Bottom, the following is the pricing and trend over a 17-year period, which I have mentioned in previous blog posts including the pricing history and activity of a home in Country Club.

  • 17 years: Average Annual Increase: 5.8%
  • 10 Years: Average Annual Increase: 4.6%
  • 3 Years Average Annual Increase: 10%
  • 1 Year Average Annual Increase: 7.9%

The average cost of a home in Denver throughout the past 17 years:

  • 2000: $230,000
  • 2007: $313,500
  • 2010: $290,000
  • 2014: $350,900
  • 2016: $422,800
  • 2017: $456,100

Are times and trends different from the Great Recession at present? Yes. Lending standards have tightened, sub-prime lending seems to be under control and we continue to be in a Goldilocks Interest Rate environment.

However just on a business cycle trend I have some concern and this does not include outside influences i.e. saber rattling concerning North Korea which impacted the equity markets worldwide yesterday with the largest point downtown since May 17th, 2017.

I am not a market forecaster however based on the statistics and graphs presented in this blog my level of concern for a retrenchment in prices is ratcheting upward. We are witnessing price adjustments in the upper-end of the market and if interest rates were to increase we would see affordability challenged further and average prices go down. Not necessity a negative as we continue to be in a seller’s market and average buyers are challenged concerning affordability and inventory, not a positive long-term trend for our housing market. I am not making any predictions, just showing statistics and voicing some concern.




A Burnham Hoyt designed residence comes on the market


While not a household name in Denver, Burnham Hoyt is one of the more influential architects during Denver’s mid 20th century. His most visible projects include Red Rocks Amphitheater and  the original north-wing/rotunda of the Central Denver Public Library set the foundation in my opinion for the Michael Graves addition.

Hoyt was known for his residences which combined the traditional conservative designs favored by the wealthy yet bringing in a modern aesthetic known as The International Style. While some of his homes are classified as mid-century modern, they are truly International Style as his practice shut down in 1955 and he passed in 1960.

While many of his private residences have been altered beyond recognition and a few gems including The Botcher School (1900 Downing) have been completely razed, a few commercial and residential building remain not significantly altered. His primary home at 3130 E. Exposition Ave from 1945 to 1960 remains intact. Another gem at 545 Circle Drivehas been lovingly restored by SempleBrown.

Within the last week another home attributed to Hoyt came on the market at 2125 E. Hawthorne Pl in the Denver Country Club neighborhood. A quiet street within the larger neighborhood, Hawthorne Place, like Circle and Westwood Drives are considered the pinnacle of addresses in the neighborhood.

2125 E. Hawthorne Pl while not as dramatic and bold as 545 Circle Dr is still a testament to the design tastes of Denver’s elite during the mid 20th-century. While many mansions were built in the neighborhood, the Hoyt design captures and flow and size of the neighboring mansions yet encapsulated in a more international style design yet softened by cornices and other exterior features. With its side entry and mature landscaping the house is not as visible from the street as 545 Circle.

The interior is typical Hoyt with square and rectangular functional rooms perfect for entertaining yet also for daily living. Even through multiple owners various interior elements literally bring the viewer back to the 1950’s (constructed in 1954)from the stair railings to the heating elements. The way the home integrates with the surrounding lot is a Hoyt signature understanding the mild climate and designing for our 300 days of sunshine/year.

If the house is ever available to view on an open-house be sure to visit. While we are blessed to have neighborhoods including Krisana Park known for its mid-century moderns, if you wish to see the foundation for such design in Denver, visit a few Burnham Hoyt structures, you will be amazed.


Metro Denver still in top cities for real estate appreciation

The newest Case-Shiller figures were released and as expected the year-over-year pace of home-resale price gains still led most others for percentage price gains. In real numbers, prices in April 2016 rose 9.5% from one year prior.  If you follow my blog you know 10% has been the average gain over the last few months when compared to one year prior.

Two cities surpassed Denver’s gain by small increments, Portland and Seattle. Of the 20 cities tracked the average gain year-over-year was 5.4%. What si more impressive and yet also possibly troubling is Denver is one of 7 cities with resale prices at an all-time high. The other cities are Dallas, Portland, San Francisco, Seattle, Charlotte and Boston.


As an active broker and in discussion with peers we have become a little bit concerned (and it may be a seasonal issue) of the following:

-Homes on the upper-end of the market i.e. above the FHA conventional loan amount (for Denver) of $458,850 seem to be lingering on the market for longer periods of time.

-We brokers are witnessing across the board price reductions in a few specific neighborhoods where inventory has increased exponentially versus true demand. Most of this inventory is oriented towards the luxury market.

-Potential over supply of deluxe and luxury rentals in hot neighborhoods including Cherry Creek and Downtown as well as select suburban communities which assumes the continued influx of residents proceeds unabated.

-Record low interest rates yet buyers still on the sidelines.

As a broker for 25+ years I have been though such cycles prior. We are in a goldilocks period of low inflation, low interest rates and increased supply. Yet there still seems to be a slow down in the upper segments of the market which may eventually trickle down to the larger overall market.

Metro Denver has a history of developing excess inventory during up-cycles. Coupled with the City and County of Denver desiring to increase density in established older neighborhoods there are concerns regarding quality-of-life, congestion and affordability.

With today’s news advising the Federal Reserve may begin to increase interest rates by year’s end we should see fence-sitters locking in historically low interest rates before the election. If interest rates do rise and buyers continue to sit on the side-lines we may have larger issues going into 2017.

Row House that Set the Tone for Modernism in Cherry Creek Hitting the Market

In the early 1980’s Denver was going through a similar boom cycle as we are witnessing at present. The driver, oil and natural resources. At the time 17th Street downtown was called “The Wall Street of the West” and Denver, Houston and Calgary were considered energy oriented cities.

In 1983 Sandy Treat of Summit Habitats took a risk and decided to build on speculation four(4) row houses on the 200 block of Harrison Street in Cherry Creek North. Multiple challenges were presented to the developer including a building lot that narrower than the standard 125′ depth, the east-side abutts Colorado Boulevard which is technically a Denver Parkway requiring an increased set-back, mature trees to be preserve and no alley access. However Sandy enlisted a fledging firm out of Miami, Arquitectonia to design the homes and secured then local architect John Carney as Colorado based licensed supervisor.

Arquitectonia was gaining prominence in the Miami area for their daring designs. Within the opening credits of Miami Vice, the condominium building with the cut-out square and spiral stairs (The Atlantis Condominiums) is one of their signature designs. Many of the fabulous homes in the series were designed by Arquitectonia bringing the design vernacular of Miami’s art-deco/moderne South Beach District to the mainstream. All of a sudden glass block, seafoam green and spiral stairs became all the rage in design circles.

Sandy knowing the principles of Arquitectonia desired their design skills for his initial project in Cherry Creek North. A project that to the present day still inspires architecture and design students to visit unannounced to see these homes up close and personal.

#266 Harrison is coming on the market for the first time since 1989 and only the second owner. Designed for the unique constraits of the urban in-fill lot, the structure enhances the site with large windows, over-height ceilings and an overall whimsical design not found in today’s cookie-cutter spec homes.

The residence has undergone a renovation by Bear Creek Design Group which retained the theme of the architecture yet enhanced the design for today’s desires including but not limited to removal of all brass, rebuilding window frames to withstand the harsh Colorado climate, new paint, carpeting, wood floors and other tasks to allow the next steward of the residence to enjoy for generations to come.

266 Harrison St Denver CO-MLS_Size-004-4-Living Room-2048x1536-72dpi

The residence is still unabashedly modern in tone from the glass block elements (a design element from South Beach) to the off-center fireplace (modernized with natural gas yet retaining the maroon chimney and gloss yellow tile log storage) to the replacement of the original Pozzi bay windows with a modern design respecting Colorado’s climate. The kitchen was redesigned removing the formica counters and laminate cabinets, replacing with slab granite, wood cabinets and stainless-steel Kitchen-Aid appliances. With 4 zones of hot water heat and a separate Central Air Conditioning system coupled with R-33 walls and R-36 ceilings, utility bills even during the coldest winters rarely exceeds $100.

The residence is for those who do NOT desire the conventional. It is perfect for entertaining yet also for everyday living as the private residence rooms  (1st and 3rd floors) are separated from the public rooms. The present seller is an art collector; the home has been a showcase for artists including the late Mark Travis, Gary Sweeney (the artist responsible for America, Why I Love Her at Denver International AirportMatt O’Neill and others. Those who desire an attached garage are in luck as the residence offers a just shy of 400 SF 2-car garage with additional driveway parking, a rarity in the neighborhood.

With two(2) bedrooms and two(2) bathrooms within 1,780 SF the perfect condo alternative and no HOA dues. As a row house each unit also has an individual lot ownership. For more information visit: www.266HarrisonSt.info.

Full disclosure, I am the owner and seller of the residence.



Luxury Housing Market Worldwide Losing Steam

A few days ago I opined on my concern about the Denver luxury housing market. Granted my observations are anecdotal i.e. speaking with peers, eyeballing http://www.REColorado.com and looking at statistics including new listings versus those under contract and closed.

Well it seems the issues are worldwide. In yesterday’s Wall Street Journal there was an article about luxury home sellers dropping their asking prices. Granted, Denver does not have many listings in the $5M and up range, however our high-end market is witnessing an increase of listings.

The City of London, one of the most sought after markets of investors worldwide looking to shelter their Yuan, Ruble

s, Rand, Rupee’s and other currencies is also witnessing a slump in the upper echelons of the market. The following article from Bloomberg illustrates this as developers are offering 20% discounts for bulk purchases.

I also work in the New York City marketplace and I have noticed the upper-end of the market senses nervousness. Granted with the average sale in Manhattan hitting $1.7M, the upper-end is truly upper however most new developments are courting the deluxe and luxury buyer yet inventory seems to be providing a glut in the market as demand softens.

Denver is a unique market. We are NOT a world capital city. Our housing market usually does not gyrate the way some similar post-war city markets have including Las Vegas and Phoenix. We have a very stable employment base, a diversified economy and an enviable lifestyle. However we cannot assume events in other markets will not impact our local and regional marketplace.

Again time will tell and I am not suggesting we need to buckle up as the downturn is coming. Instead I hope some rationality comes back to the market and we avoid the snowball effect of increased inventory leading to a glut along all price-points.

Is there a Glut in the Denver Metro Luxury Housing Market

While stories abound concerning newer deluxe and luxury rentals starting to offer incentives to fill their units, little has been mentioned about the ownership market.

If you have driven through Cherry Creek, Washington Park East, Hilltop or Country Club you may have noticed the proliferation of real estate brokerage signs advising homes for sale. Granted we are entering the Spring season which is always a period of increased listings. However for fun I ran some statistical analysis based on our multi-list system.

At present in the Metro Area as of April 8th, 2016 there is 10,934 homes on the market. Breaking down the market by deluxe and luxury price segments for the metro area and separately the City and County of Denver:

$1,000,000+ = 1,400 Homes of which 221 are located within City of Denver

$750,000+ = 2,424 Homes of which 366 are located within City of Denver

$500,000+ = 4,651 Homes of which 740 are located within the City of Denver

Based on the above the luxury market is truly spread across the metro area with the City and County of Denver accounting for approx. 16% of the deluxe and luxury inventory on the market (a percentage I would assumed was higher as the Central City is generally the most expensive PSF real estate however the C&C of Denver does include outlying suburban markets including Green Valley Ranch and Bear Valley).

My concern is approx. 44% of the inventory on the market at present is asking over $500,000. While this number would be considered low for coastal markets, I am concerned as the average income in Metro Denver would translate to a home affordability in the mid $300’s.

Having been through multiple housing cycles during my 30+ years as a resident in Denver historically the deluxe and luxury market is the first to show signs of fatigue, a potential over-bought market, signs of weakness ahead i.e. an increase in inventory and days on the market.

While I am not expecting a serious downturn or correction I believe the deluxe and luxury market is advising us the rampant run-up in prices may be receding. I personally am seeing more listings in Cherry Creek North that last year at this time would have come on the market at $1M+ being presented at more realistic pricing. I am also witnessing a glut of larger homes in Denver’s Hilltop, Washington Park East and Country Club neighborhoods hitting the market.

Yet macro market fundamentals have not changed i.e. the stock market while running sideways seems stable, interest rates continue at historic lows and unemployment rates continue to drop. On a macro level Denver now has the lowest office vacancy rate since 1990 and our unemployment rate is the envy of may rust-belt cities.

Thus something is happening in the market and only time will tell. However if a client asks me to predict the next few months, my advice would be unless you truly love the residence, plan to reside in it for a minimum 3-5 years or its just so attractively priced, my view is sit on the sidelines if you are able.

I will be interested to look at this post one year from today.



Spring Thaw is in the Air

Wow what a difference a few days makes. Within the last 7 days, 1,395 properties went under contract in the metro area. During the same week 939 properties sold and closed and  there were 735 new listings. In summation, it is still a seller’s market based on inventory and activity.

As I work in the deluxe and luxury market I am seeing some signals that the weakness in the upper-end may be abating OR sellers are becoming more realistic. In Cherry Creek North (I consider 1st Avenue on the south, 6th Avenue on the north, University Boulevard on the West and Colorado Boulevard on the East as boundaries) I noticed listings on the market asking under $1M seem to be generating activity and going under contract.

For fun I ran an informational statistical analysis. In the beginning of January 2016 the average listing in Cherry Creek North was asking $480 PSF above grade. This morning the average asking above grade is $414 PSF. I assume some residences have sold, other listings have been withdrawn or expired. However I believe more telling; listings coming on the market in the last two months have been priced more realistically and many under $1M thus generating additional activity and demand.

While some of my peers may begin to panic, this is the sign of a healthy marketplace or as I suggest coming back to reality. At $480+ PSF one may suggest a bubble was forming. Instead we are seeing a sense of equilibrium heading back into the marketplace. Yes, Cherry Creek North is a unique niche of the market and accounts for a minuscule part of the overall metro area HOWEVER from experience I look to the luxury market to read the tea leaves concerning the overall metro area.

Granted this is far from scientific; however the upper and luxury markets do tend to mirror the economy. I personally know a few retail analysts on Wall Street who visit luxury retailers to gauge the overall activity within the bricks and mortar stores to assess economic health and psychological predictors i.e. spending on attainable luxury suggests an overall positive view of future economic activity.

In speaking with a mortgage lender over lunch this past week; we are both market watchers and agreed at present the market seems to be moving towards equilibrium. With the number of houses on the market still oriented towards a seller’s market; prices may continue to rise yet at an abated rate closer to inflation (which continues to be minimal). Yet once we start seeing a spike in listings i.e. above 10,000 units in the metro area we may be in for a snowball effect with additional listings coming on the market and demand regressing. If this happens and we move into a buyer’s market coupled with potentially higher interest rates the end of our expansion era may happen.

Yet this is not a negative. For many years Denver Metro has been an attractive destination based on lifestyle factors i.e. employment opportunities, weather, recreation and until recently affodable housing. The recent influx of residents has truly strained some of our infrastructure which needs time to catch up coupled with houses prices exceeding average income and decreasing affordability. While positive for an existing homeowner, a challenge for the newly arrived or those who desire to relocate.

While I do not desire a hard downturn, I do wish for a more balanced market including options for first-time homebuyers not being banished to the exurbs for affordability (which only increases metro wide trafffic congestion and lessens air quality), availabile inventory for move-up and move down (empty-nester) buyers and additional options for our aging longer-term resident population.

As one client confided to me “we need to move into a more balanced market so my child can move from our basement to a home of their own”. And I say to that “Amen”.

Rental Concessions Price Drops Incentives Oh My

Should we be concerned about the health of the real estate market?

Anyone who follows my blog knows I have been “concerned” for a while. Of note I have been in the business for over two decades thus I have been through multiple market cycles.

Concerning the Rental Market it is no surprise we are beginning to see rental concessions i.e. free rent, lease signing bonuses, additional amenities and so forth. These concessions have been segregated to the deluxe and luxury segment of rental market, a segment that has witnessed a significant increase concerning inventory throughout the metro area. While concessions benefit the high-end renter in the short-term, the middle and lower-end of the market continue to experience demand far outstripping supply.

In addition I am witnessing a newer trend in the upper-end of the market. Those who may have considered placing their home on the market are now considering placing their home on the rental market, either long or short-term. The upper-end of the market i.e. over $500K is experiencing some fatigue as supply has increased and demand has decreased. Thus some sellers are reassessing their plans to sell and are considering renting their residences with the belief the market will again begin to increase at a later period.In the Cherry Creek North residential area adjacent to the Business Improvement District“For Rent” signs are sprouting up and beginning to crowd out or being placed adjacent to”For Sale” signs.

While the market may begin to uptick in the months to come I tend to be slightly pessimistic. Metro Denver has enjoyed an upswing for multiple years now. Over time markets do eventually correct. Historically housing prices matched the rate of inflation over the long-term. Since we have climbed out of the Great Recession our market has been expanding beyond national averages. Yes we are a pseudo sun-belt growth state with a continual influx of population however market forces eventually lead to corrections.

There is a fine line between demand and cost-of-living. While Metro Denver has enjoyed net migration since the oil bust of the last 1980’s, much of the attraction to Denver was affordable housing. Yes naysayers will advise the average home in Metro Denver is running about $330K in-line with average incomes yet most new inventory throughout the metro area is coming on line at much higher costs. The reasons are complex and varied, yet the end result is product becoming unaffordable to the average buyer.

Am I sounding an alarm? No. However I am advising clients to be cautious. I am finally seeing rationality return to the marketplace i.e. purchasing based on value versus a monthly payment and the realization that over the next 3-5 years equity appreciation may not be guaranteed as past performance is not necessarily indicative of future returns.

However I must advise, if priced correctly no matter what tier of the market, residences are in fact selling. Yet I am advising sellers to consider looking at prices from one year ago versus the last six months. While spring is usually a period of increased sales and activity, having witnessed longer days on market especially at the upper-end of the market, usually a harbinger of trends to come, thus tread carefully and with proper guidance.

Super Bowl Winners and their Home Values

Not sure what a statitician can interpret from the following: a review of past and present winners of the Super Bowl and the average housing value for their city/region. Of note for New England I used Boston SMA as a basis for valuation.

Super Bowl               Winner          Average Home Value 2015

I                                   Green Bay      $117,800

II                                 Green Bay      $117,800

III                                NY Jets            $610,700

IV                                Kansas City    $107,800

V                                  Baltimore       $109,700

VI                                Dallas              $134,200

VII                               Miami             $290,500

VIII                              Miami             $290,500

IX                                Pittsburg        $106,100


X                                  Pittsburg        $106,100

XI                                Oakland          $579,900

XII                               Dallas              $134,200

XIII                              Pittsburg        $106,100

XIV                              Pittsburg        $106,100

XV                               Oakland          $579,900

XVI                              San Francisco $1,118,600

XVII                             Washington   $497,800

XVIII                           Los Angeles    $562,800

XIX                              San Francisco $1,118,600

XX                               Chicago           $199,500


XXI                              NY Giants       $610,700

XXII                             Washington   $497,800

XXIII                           San Francisco $1,118,600

XIV                              San Francisco $1,118,600

XXV                             NY Giants       $610,700

XXVI                            Washington   $497,800

XXVII                          Dallas              $134,200

XXVIII                         Dallas              $134,200

XXIX                            San Francisco $1,118,600


XXX                             Dallas              $134,200

XXXI                            Green Bay      $117,800

XXXII                          Denver           $330,000

XXXIII                         Denver           $330,000

XXXIV                         St. Louis          $101,800

XXXV                           Baltimore       $109,700

XXXVI                         New England $478,000

XXXVII                        Tampa           $154,000

XXXVIII                       New England $478,000

XXXIX                         New England $478,000


XL                                Pittsburg        $106,100

XLI                              Indianapolis   $130,100

XLII                             NY Giants       $610,700

XLIII                            Pittsburg        $106,100

XLIV                            New Orleans  $339,740

XLV                             Green Bay      $117,800

XLVI                            NY Giants       $610,700

XLVII                           Baltimore       $109,700

XLVIII                         Seattle             $530,100

XLIX                            New England $478,000

L                                  Denver           $330,000



Is The Country Club Neighborhood Overheated

DSC_00791I honestly don’t know. However for a client request I decided to run some statistics. I pulled resales through the end of 2015 and compared on a per square foot price to the homes on the on the market at present.

I kept the comparison sample as close a possible as follows:

  • Houses priced/sold below $1,300,000.
  • Using only above grade measurements.
  • Avoid listings on busier streets i.e. Downing St., University Blvd., 1st and 6th Aves.
  • The Results:

The Closed Sales came in at: $446 PSF

Active on the Market at present: $481 PSF

Both on a percentage basis and actual sale price, I have some concerns. For example a 2,000 SF house based on the statistics during the 6 months from summer to today would have gone from $892,000 to $962,000. The difference in a mortgage payment is approximately $345.00/month or over $4,140/yr and .and extra $124,000 over the term of a 30-yr mortgage,

Granted, this is Closed  versus Asking, however sold prices have consistently been close to asking. My concern; will appraisals support the values beings presented during this 1st Quarter of 2016 (in general appraisals look backward not forward). Also, for those buyers purchasing at present will equity appreciation continue?

Of course we are in a low interest environment and while this morning’s unemployment rate was positive for the economy there are questions concerning slipping back into a recession based on world-wide economies.

Anyone who knows me knows I am always bullish on central Denver neighborhoods. I believe in location, location and location. However when I see 8% gains in 6 months and some justifying the gain, I become a bit more skeptical.