‘Unsold Homes Clogging The Market’ In Denver
The Rocky Mountain News has some numbers for June. “Home sale prices soared to record levels in June, as buyers continue to snap up expensive houses in the Denver area, even while the number of unsold houses on the market also set a record, according to reports. The number of unsold homes rose to 31,900, a 23 percent increase from the 25,934 in June 2005 and a 4.7 percent increase from the record of 30,457 set in May.”
“The supply is rising along with interest rates, which makes it more difficult for first-time buyers to qualify for mortgages. Also, the number of foreclosed homes is rising near record territory, adding to the supply of unsold homes clogging the market.”
“Typically, this would mean that prices would drop because sellers would be forced to lower their prices. But sales activity at the top of the market remains brisk, skewing the overall average and median prices, Realtors agree.”
“‘The law of supply and demand have to be taking over at some point,’ (agent) Steve McGuire said. ‘You have these ultra-high properties carrying the market for the past few years. I think the lower end of the market is going to just get tougher and tougher for sellers.’”
“Independent broker Gary Bauer said the market was going to perform better in June ‘even though a lot of records were broken.’ But the number of unsold homes was expected, he said. ‘I still think it is close to its peak, but it would not surprise me if they don’t creep up by another 1,000 homes or so in July,’ Bauer said. Bauer said prospective buyers have no sense of urgency and are looking at a lot of homes.”
“(Broker) Darrel Evangelista of Cherry Creek said that with a half-year’s data to analyze, ‘The market is a little slower than last year. The inventory is increasing, and there are not quite as many buyers in the market. Hopefully, interest rates will not climb much more and stay fairly steady.’”
“He said the record number of unsold homes on the market doesn’t trouble him because with the metro area’s growing population, he would expect the inventory number to increase. ‘I’m not concerned about a housing bubble or prices crashing like they did in the 1980s,’ he said.”
For the second month in a row, Denver reports show why the median has been so misleading the last few quarters. These brokers are sounding a little complacent, IMO.
Here is another report from Colorado:
‘Last week, six more Brighton homeowners faced losing their homes to foreclosure, according to Adams County public trustee data. They join a Brighton group of approximately 150 who, since January, have found themselves in the same dilemma. The trend is unlikely to change, says Jeannie Reeser, Adams County public trustee. ‘It’s going to get worse.’ She has overseen more Colorado foreclosures than any other county officer this year.’
I grew up in Denver in the 80’s. That crash was ugly. Of course there was the huge drop in high paying oil jobs. Peope I know there ( both friends and family) tell me that the job situation today really is not that great, not bad, just not great. And definitely not getting better. Companies still need people just not paying $100,000 so you can reasonable afford a +$350,000 house.
As far as housing prices, the developers are still just throwing out the freebies so they do not have to lower there asking price by much. My brother bought his house this way. Paid way to much for it (IMO) but got $50,000 worth of upgrades and a landscape allowance.
Denver forgot about its past and is doomed to repeat.
86-87 oil patch
then boston 88-89
then ny 90
point is this down turn is everywhere in 6 months
86-87 oil patch
then boston 88-89
then ny 90
point is this down turn is everywhere in 6 months
Ahhh, you beat me to it. I slept in.
“He said the record number of unsold homes on the market doesn’t trouble him because with the metro area’s growing population, he would expect the inventory number to increase.
“I’m not concerned about a housing bubble or prices crashing like they did in the 1980s,” he said. ”
Yuhuh, whatever, dude.
The term “Blissfully Ignorant” comes to mind.
“He said the record number of unsold homes on the market doesn’t trouble him because with the metro area’s growing population, he would expect the inventory number to increase.
Amazing how every market has a growing population but inventory is rising, I guess that makes sense to a realtor however it escapes my logic.
In a way he’s right, though. This won’t crash like in the 1980’s - it will be much, much worse.
On another note, all of the self-proclaimed contrarians that say there can’t be a bubble if everyone is talking about it are wrong. For every bubble believer there must be 10 non-believers like the guy quoted above.
Sales down in double-digits for Northern NJ (just outside NY City)
April - Down 23.8% Year Over Year
May - Down 15.7% Year Over Year
June - Down 20.9% Year Over Year
http://nnjbubble.blogspot.com/2006/07/northern-new-jersey-june-residential.html
There is no such thing as bad news. There is no bad news that isn’t, in its’ essence, really good news. If jobs are up that’s good. If jobs are down, that’s good too, because it means BB is done raising rates. Same thing with inflation numbers, median house price numbers, etc., etc. It is impossible to have bad economic news, remember that in times of irregularity. (rant off)
Good thoughts on the subject - I often think that ANY type of economic data is taken however the market wants. In “feel good” times, lower job growth = lower inflation outlook = fewer interest rate hikes = stocks jump.
HOWEVER, it works both ways. In “not feeling good” times, lower job growth = lower expected returns on investment = stocks fall (along with whoever is in the Capitol and White House). That is to say, in the broader terms of market psychology, there are also times when it is impossible to have GOOD economic news.
Great post on the mood of the market!
I wonder how they will put a positive spin on this housing blowup when it turns into a financial Katrina for so many.
They have already started with the “buyers market” speel.
mort,when referring to “times of irregularity” is it too many figs?,or amoebic dysentery? the latter can help you lose weight in a hurry.
I forgot to mention, watching a Pollyanna populace spout rainbow stew jargon due to hyperinflationary lending practices gives me gas as well. Fttt!! Oops, sorry.
Numbers for Boulder:
June 2: detached = 720
June 12: detached = 772 attached = 651
June 29: detached = 793 attached = 672
from my neighborhood (close in mountains) have not seen a for sale sign for two years. as of this weekend, there 16 for sale signs and the summer season (schools) is up in a month. change in the air. over 200 units planned or under construction downtown, all $1m plus, someone’s gonna get hurt.
“He said the record number of unsold homes on the market doesn’t trouble him because with the metro area’s growing population, he would expect the inventory number to increase.”
Wha?…How is tha..? This statement defies logic so abruptly it has left me speechless. Maybe this is why there was no follow up question from the reporter…he was too flabbergasted.
I read this article today in the business section and came to the conclusion that the higher median price does not reflect the true state of the real estate market. I do believe that the higher end housing is staying firmer regarding prices but then again not much is selling, inventory is increasing and homes just sit for the most part. The lower end of the market is doing worse because people are being forced to sell. They have no other choice. Eventually, because of the increasing inventory, this weakness will creep up to the higher end. They are still building a plenty here particularly high-end lofts near downtown.
A couple of additive thoughts:
As outlying areas fall in price, they look a lot cheaper compared to closer-in locations. The increasing price differential will eventually drive prices downward in closer-in locations.
Same story with high end vs. low end homes. If you were thinking about a $300,000 home, or pushing financially to get a $400,000 home, it is a HUGE deal if that $300k home drops to $250k or less. In time, the $400k home will follow the $300k home downward.
I can’t believe they can still write articles like this!
Not Too Late for Real Estate
“We’d reached a point where prices had gotten too far away from economic fundamentals,” he added. “A return to a more normalized appreciation climate is a natural outcome.”
And I’m sure NASA engineers weren’t too overly concerned about a little “o-ring” gasket on the solid fuel booster on the Challenger, either.
“The days of whopping 30% or 50% price gains are over,” says Tom Stevens, president of the National Association of Realtors. But Stevens says 6% to 8% price appreciation will happen in several markets over the next year, and “that’s still a phenomenal return.”
And in a stock market rout, many stocks go up 6-8%/yr. Problem is … which ones? One question, how many are you buying Tommy Boy?
Stupid unsold homes. Always clogging the market.
Wait. I’m confused. This guy was talking about the unsold homes market, right?
well, let’s just keep tenderizing the meat a little more.
start with a batter of clogged inventory,
sprinkle with creeping interest rates,
throw in some foreclosures,
add generous helping of arm resets
stir, let marinate until fall
wash, rinse, repeat,
appetizers in ‘07,
main course in ‘08
“He said the record number of unsold homes on the market doesn’t trouble him because with the metro area’s growing population, he would expect the inventory number to increase. ‘I’m not concerned about a housing bubble or prices crashing like they did in the 1980s,’ he said.”
This guy may be the very last observer in the USA who denies that there is a housing bubble! I guess someone has to be dead last.
“He said the record number of unsold homes on the market doesn’t trouble him because with the metro area’s growing population, he would expect the inventory number to increase.”
This is COMPLETE realtor spin for the sheeple. I’ve been tracking the number of homes plus condos listed in the Denver area MLS for just over a year now, using the same source the whole time for consistency.
7/7/05: 25,960 properties for sale
7/6/06: 31,921…which I believe is an all time record high.
I have a couple of realtor friends who know I’m not in the market and will be honest with me…they’re worried. There’s WAY too much supply and mortgage rates are rising.
The market in the Denver area has been sluggish since at least 2001. The poor health of the real estate market has been really underreported here for years. Relatively good paying Jobs left in droves after the tech crash and 911. Nothing has replaced them. The Denver market is stagnant and has been for years. There was no bubble here. We certainly did not experience 30%-50% YOY gains like in other parts of the country. The high foreclosure rate is due to the types of loans people took out. People who shouldn’t have ever qualified for loans in the first place.