Financial crisis stalls nascent Denver housing recovery

— -- Before the financial meltdown, it seemed that Denver's housing market was finally about to turn around.

Although Denver's home sales in August were down from a year ago, there have been a number of positive signs. "We have less inventory right now," says William Roberts, president of the Denver Board of Realtors. "There are more buyers, and the interest rates are fairly low."

Home prices are unlikely to go any lower, says Gary Bauer, an independent real estate broker. Recently, there has been some bidding, and home buyers have paid more than the asking price, Roberts says.

That is a good sign after such a long housing slump. In 2006, after the housing market started to bottom out, Denver's foreclosure rate was among the highest in the nation.

"It hit us first," Bauer says. "And we've been aggressive at working with homeowners, and we worked our way through that." For example, the city set up a foreclosure-assistance hotline.

The Denver metro area encompasses seven counties, and there are a number of very popular and stable neighborhoods, such as Cherry Creek and LoDo, the lower downtown area of the city where there are many lofts. In some other areas, though, sales were hard hit because homes were overbuilt like crazy, Roberts says.

But now, home inventory is 25% less than a year ago, and the Mile High City's local economy is in good shape, Bauer says.

Denver is known for energy and aerospace industries. It is also expanding into alternative energy, including two new plants by Vestas Wind Systems, which will bring about 1,300 jobs, according to Metro Denver Economic Development Corp.

Unfortunately, everything suddenly has hit a major snag. Denver's job growth has slowed because of the national economy. Consumer confidence has been the lowest in years, and that's what's most holding back the housing market, Bauer says.

"No one knows what is going on in the market, and they are just going to sit and wait," he says. One of Bauer's clients, a young Denver couple, had been shopping for a home but instead decided to rent.

If the bailout helps rescue the national economy, Denver's housing market may be able to restart. "We have such a strong position with our economy," Roberts says. "Hopefully, we should be able to lead the nation out of the housing recession."