by Calculated Risk on 4/04/2008 02:57:00 PM

Luke Mullins at U.S. News and World Report writes: Some Home Prices Are Actually Rising in Denver. This is an excerpt from an interview with Ryan Tomazin, the director and chief financial officer of Integrated Asset Services.

Mullins: Let's look at a specific area. What's happening in Denver, where prices overall have dropped more than 5 percent in the past year?

Tomazin: As a whole, it's down. We're seeing historic all-time highs for foreclosures, all those types of things that are currently the storylines. But within the city, there are areas that are very hard hit in Denver, and yet there are areas that have been relatively unaffected or even appreciating.

[see interesting neighborhood by neighborhood map in article]

Q: The map reflects the price change for detached, single-family homes over the past year, according to Integrated Asset Services. Why are the property values of some neighborhoods [those in green or blue] rising?

Tomazin: In Denver specifically, what we're seeing is there are some neighborhoods that are very valuable—old historic neighborhoods. Their values have historically held up just because there is a limited supply. They are located very centrally, and they are in fairly affluent areas.

Q: What about the neighborhoods in red?

Tomazin: Denver had some of the most unregulated lending practices in the country. And many of the borrowers in these areas are not able to meet the new payments of the adjustable-rate mortgages.

This story reminds us that all areas aren't the same; price action can be different neighborhood by neighborhood.

And Denver did not see much house appreciation compared to many other cities, so prices will probably not fall as far either.

Click on graph for larger image.

This graph show the real (inflation adjusted) Case-Shiller house price indices for Denver and Los Angeles. Real prices have been flat in Denver for about six years - before turning down recently - so prices are probably much closer to the bottom in Denver than in Los Angeles.

Still Tomazin might be a little optimistic that prices are near the bottom in Denver - mostly because there is too much inventory right now - and my guess is there will be further price declines.