Area home prices fall 2.6 percent

Colorado Springs-area housing prices in the third quarter fell 2.8 percent from a year earlier, the steepest decline in more than 20 years, according to same-home price data released Tuesday by the Federal Housing Finance Agency.

Area home prices also fell 2.89 percent from the second quarter to the third quarter. It marked the largest quarterly drop in 21 years and steeper than the 2.7 percent nationwide average decline, the agency said.

The area's one-year decline compared with a 4 percent nationwide average decline - the biggest such drop in the 33 years the data have been compiled.

The agency's numbers track sales or mortgage refinancings of single-family homes that have been sold at least twice since 1975 and only measures homes with government-backed mortgages of $417,000 or less.

The same-home price data show that the Springs area is "holding its own against the rest of the nation, probably because of the stabilizing influence of the military on our economy," said Wynne Palermo, chairwoman of the Pikes Peak Association of Realtors and owner of Wynne Realty Ltd. "Still, many of us are busy - not steady or overwhelming like we were a few years ago - because people are capitalizing on the bargains available in the market right now."

The July-to-September quarter decline over the same 2007 quarter marks the second consecutive quarter that area same-home prices have fallen from a year earlier. Area price gains have slowed every quarter but one since peaking in the second quarter of 2005. The area's year-to-year decline is the sixth-steepest in the 28 years the agency has compiled data for the Springs area.

"This is a result of the overall slowing in the national and local economies. It is unfortunate, but the national economic problems are beginning to be felt in the local economy," said Fred Crowley, senior economist for the Southern Colorado Economic Forum. "I wouldn't call it a panic, but people who are trying to get out of their mortgage can't because they can't sell the house and pay off the mortgage and sales commissions."

The same-home price data parallel other local economic indicators that reflect that the area has entered a recession, including unemployment at a six-year high, payrolls shrinking for the first time in nearly five years, housing construction at 17-year low and city sales tax collections falling at the steepest rate in nearly seven years. Another measure of local housing prices - the median price of homes sold - has declined for 15 months.

"The housing market is very weak both in (the Springs) area and across the nation," said Andrew Leventis, a senior economist for the Federal Housing Finance Agency in Washington, D.C. "Foreclosures certainly are a contributing factor in the declines in many regions by adding to the inventory of homes on the market, stigmatizing some neighborhoods and depressing future expectations for home prices."

Elsewhere in Colorado, prices fell from a year ago by 0.52 percent in Fort Collins, 0.95 percent in Denver, 5.69 percent in Greeley and 6.37 percent in Pueblo. Prices rose 2.38 percent in Boulder and 4.67 percent in Grand Junction. The nation's biggest declines were in California and Florida, where third-quarter prices fell as much as 42.3 percent from a year earlier, though Las Vegas also was among the areas with the 20 steepest declines.

Another widely followed index of U.S. home prices, the Standard & Poor's/Case-Shiller U.S. National Home Price Index, tumbled a record 16.6 percent during the quarter from the same period a year ago. Prices are at levels not seen since the first quarter of 2004.

But the worst may be yet to come as the full force of Wall Street's collapse hits the economy in the fourth quarter.
"The real economy took a sharp turn for the worse toward the end of the third quarter ... So as bad as the latest Case-Shiller numbers appear to be, they are bound to get much worse," said Patrick Newport, a U.S. economist at IHS Global Insight, in a statement.
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Contact the writer: 636-0234 or wayneh@gazette.com. The Associated Press contributed to this report.