DENVER, CO - Developer Wally Hultin was watching CNBC early Tuesday when commentators began talking once more about the collapse of the housing market. The latest SP/Case-Shiller report on home values, they said, showed the 20 cities in the index had fallen by a record average 17.4 percent in the past year.
"But people aren't buying a year ago. They are buying today," said Hultin, who owns Byers Street Properties with partner Dave Decker. "And while Denver is down 5 percent, we are confident the market really bottomed this spring. This isn't Las Vegas. This isn't Phoenix," added Hultin, whose company recently finished the construction of the 14-unit Berkeley Row condo complex at West 46th Avenue and Tennyson Street in northwest Denver.
Starting this month, Byers Properties is offering a 12-month "protection plan" for buyers of the remaining six units that is tied to the rise or fall of Denver in the Case-Shiller index. A year after buying a unit, Byers Properties will refund any percentage drop of the purchase price if Denver declines in the index.
"So if a buyer pays $350,000, and the index for Denver drops 1 percent, we will refund $3,500," Decker said. The remaining units range in size from about 1,750 square feet to about 2,000 square feet and are priced from $349,900 to $425,000.
Hultin said they would likely pay down the buyer's mortgage by that amount, rather than write a check to the homeowner. "But I don't expect we will pay anything," Hultin said. "I think the market is going to be more expensive a year from now."
This is a novel idea and is just what the market needs to help restore consumer confidence, said Mike Rinner of the Genesis Group, which tracks Front Range housing. "What they're doing is providing equity protection," Rinner said. "Removing uncertainty is the biggest thing we can do. Buyers are shellshocked."
Source: Rocky Mountain News