By Jill Croteau

Managing Broker
Coldwell Banker Devonshire

Commenting on the foreclosure crisis last month, former Fed chairman Alan Greenspan was quoted as saying, “The financial erosion will come to an end when the prices of homes and equity in homes stabilize.”

Newspaper headlines here in the Mile High are still firmly fixed on the foreclosure story…but national publications are starting to look favorably on Denver’s real estate performance, something that appears less and less like a decline and more and more like a recovery.

You can see part of that expectation in the drop in inventory…down over 6% from a year ago…and by our gradual move downward among the states with the highest foreclosure rates…down from first or second place a few months ago, to 5th, to 7th, back to 4th, but trending lower.

But more to the point are national evaluations of our basic market value compared to other cities around the country. Information like that (along with recreational and cultural amenities, air connections, and education of the workforce-areas where we always look great) are what corporate CEOs consider as a key component of a decision to relocate.

Smart Money summed up that situation for its national readers this month…a ranking of 150 housing markets around the country assembled by Global Insight and National City Corp, focusing on relative investment values. The ranking looks at housing prices crossed with other factors relating to the health of the local economy…essentially asking, “how much have home prices risen in comparison to residents’ abilities to buy those same houses?”

At the top of Smart Money’s list are markets now ranked as Extremely Overvalued. A number of cities that we Denverites were envying two years ago are on that list: Miami , San Bernardino , Stockton , Bakersfield and Los Angeles …with average home prices that are rated an astounding 50% over real value. At various points down the next 80 slots are Phoenix, 43% overvalued, Las Vegas, 31%, San Jose, 29%, San Francisco, 19%, San Diego, 18%, and Minneapolis, 15%.

Well below the halfway point at 92nd on the long list, centered in what Smart Money refers to as Fairly Valued markets, is Denver …3% over value. At the bottom of the fair section are towns with average prices 10% below value including Buffalo, Omaha, Little Rock, and Beaumont (Tex.)…and below that is a short list of Undervalued markets: Wichita, 15% below, Indianapolis, -16%, Houston, -24%, and Dallas, -25%.

If you’re like me, you hear that final list and wonder Who would want to live there? Colorado, meanwhile a place where people really do want to live is doubly blessed this holiday season with a strong economy that includes growing revenues from the energy sector, plus enticing new infrastructure components: DIA, T-REX, Light Rail, sports venues, cultural arts facilities, and on and on.

All of that gives those of us who live here a great deal for which to be thankful…and some solid information to use in countering a few doomsayers in 2008.