Home prices in a six-state region of the West are unlikely to fall much further, but that may not be the case in Colorado Springs, according to a survey of economic conditions in the region.
The Mountain Monitor, a quarterly report produced by the nonprofit Brookings Institution and the University of Nevada at Las Vegas, studies 10 large metropolitan areas and 17 smaller areas in Colorado, Arizona, Idaho, Nevada, New Mexico and Utah. The latest Monitor, released Wednesday, examined data through the second quarter.
Colorado Springs has escaped the wild ups and downs in the housing market that some other areas have seen. Prices in the Springs have fallen 14.1 percent from their peak while Las Vegas, for example, has seen prices plummet 55.2 percent from their peak, the study said.
With such dramatic declines, the study concludes that home prices in the region may have hit bottom — and that, in fact, housing markets generally have overcorrected, with homes undervalued in all but one of the region’s major metros. The one exception: the Springs.
Brookings used an historical analysis looking at the relationship between wages, jobs, 30-year-fixed interest rates on mortgages and housing prices, and projecting where home prices would be if there had been no boom and bust, said Jonathan Rothwell, one of the study’s authors. The analysis concluded that housing in the Springs may still be overvalued by roughly 7.8 percent.
“It’s hard to know how strong these projections are, and the model’s not going to be perfect,” Rothwell said. “It didn’t factor in foreclosures, for example. But the prediction would be that there’s still room for housing prices to fall in Colorado Springs.”
Overall, Rothwell said, the Springs continues to be one of the stronger performers in the region. Among other findings:
• Every metro area in the region except Colorado Springs and Salt Lake City saw foreclosures accelerate in the second quarter. Colorado Springs is one of five metros where the stock of foreclosed properties that failed to sell at auction and are now owned by lenders is below the nation’s top 100-metro average of 4.86 properties per 1,000.
• No metro area has recovered the jobs it lost during the recession. Denver and the Springs saw slight decreases in their unemployment rates in June compared to June 2009, but the region as a whole saw a small increase.
• The Springs is one of five large metro areas in the region that has surpassed pre-recession levels of gross metropolitan product, or GMP — the total value of goods and services produced within a metro area. The region’s GMP growth is “difficult to reconcile” with a dismal job picture, the report acknowledges. But if the Springs’ GMP growth continues, “eventually jobs are going to have to come back,” Rothwell said.
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