The Denver-area housing market showed the most appreciation of any major market outside of California cities and Boston, according to a national second-quarter report released this week.

Denver-area homes gained an average of 2.5 percent in the second quarter from the same period in 2009, according to the report by That compares with an overall drop in value of 3.2 percent for the nation.

When Zillow looked at the 25 largest metropolitan statistical areas, Denver ranked No. 6. Four of the cities showing bigger increases than Denver were in California. San Diego was No. 1 at 7.3 percent. San Francisco was up by 5.9 percent; San Jose, 5.6 percent; and Los Angeles, 5.5 percent. . Boston home prices rose by 3.2 percent. Miami – Fort Lauderdale showed the biggest decline, falling by 15.2 percent, while Phoenix homes prices fell by 11.8 percent.

Denver’s ranking no surprise

Denver’s relative performance to most markets, ”does not surprise me,” said Lane Hornung, president of 8Z Real Estate and an owner of “Especially when you take out San Francisco, San Diego and Boston – where  home prices have been fallen so much more, so now that they have started to recover, their increases are amplified so much more, Denver really is one of the better performing cities relative to other places in the country. Denver is starting to show nice, steady appreciation, without the huge amount of ups and downs as some other places.”

That’s not to say everyone who bought a home has seen it appreciate.

“If you bought at the worst time, in a location where land was plentiful, you’re hurting,” Hornung said. “When you bought your home if you could stand on your driveway and see nothing but plains around you, you’re in trouble.”

He said a “good analogy” is to compare those areas to “foreclosure alleys,” instead of a “tornado alley.”

Chris Mygatt, President of Coldwell Banker Colorado

Chris Mygatt, president of Coldwell Banker Colorado, said at times he is skeptical of Zillow’s data, but he said that this latest report seems in line with other national reports, such as S&P Case-Shiller and government reports. Nationally, 99 of the 144 MSA surveyed by Zillow showed year-over-year declines. That was the 14th consecutive qurater of year-over-year declines for the overall nation.

From the first quarter to second quarter, Denver-area homes gained 1 percent, compared with a 0.6 percent quarter-to-quarter overall decline for the nation as a whole, according to Zilow. · Negative equity dipped in the second quarter, with 21.5 percent of all single-family homes with mortgages underwater, down from 23.3 percent in the first quarter.

Negative equity, the percentage of single-family homeowners with mortgages who are underwater, fell from 23.3 percent in the first quarter, and from 23 percent a year ago. Denver, however, showed a negative equity of 29.1 percent, according to Zillow.

Mixed-bag for nation

“As the national housing market limps toward stabilization, individual markets are a mixed bag,” said Zillow Chief Economist Stan Humphries. “The double (federal and state) tax credits for some California homebuyers have certainly stimulated housing demand there and are partly responsible for the rapid – and likely unsustainable – rates of appreciation in many markets across the state. While there is some uncertainty about how home values will respond in those markets once all incentives are removed, it’s certain they can’t continue at their current rates of appreciation, but is unlikely they will re-test the low points reached in 2009.

“Markets in other parts of the country, like Miami and Phoenix, are not yet showing signs of reaching a bottom in home values,” he continued. ”High supply continues to be a challenge in states like Florida and Arizona. Nationally, home values are moving in the right direction as rates of decline continue to slow.

“There is a large unknown on the horizon, however, as these second quarter numbers are still heavily influenced by the federal homebuyer tax credits, which were available for homes under contract by the end of April. Home sales are declining significantly in the post-tax credits environment, but the impact of falling home sales on already-declining home values is yet to be seen. Recent trends in home values suggest the nation could reach a bottom in the latter half of 2010, but we continue to be cautious about the impact of declining home sales.”