‘Riding A Roller Coaster Of Foreclosures’ In Colorado
A pair of reports from Colorado. The Rocky Mountain News, “Last month was a pretty typical July for the Denver-area home market, with the record inventory of unsold homes creeping up only slightly. ‘It is pretty much the same as it has been,’ said (realtor) Jerry McGuire, in Highlands Ranch. ‘The inventory went up only 89 properties from June to 31,989, which is a new high but I would say is really pretty stable,’ he said.”
“The number of homes placed under contract fell from June, but that can be attributed to the seasonal market. The average and median, or middle, prices were down, too, which also is typical for this time of year.”
“The ever-increasing number of foreclosed homes on the market ‘is driving prices down for the average seller. If you have a fixer-up that needs work, you had better price it at what a foreclosed home is selling for, because John and Jane Doe are out there looking at foreclosures,’ (broker) Sunny Banka said.”
“Independent broker Gary Bauer said he was surprised that the average price dropped as much as it did in July, because he thought there were enough luxury homes sold last month to drive the average price higher, even though there still is not a lot of across-the-board appreciation. ‘While it is still a buyer’s market, sellers are out there,’ Bauer said.”
The Post Independent. “Garfield County, along with Mesa and Eagle counties, has been riding a roller coaster of home loan foreclosures for the past 26 years since the oil shale bust in May 1982.”
“‘I think we’re on our downturn,’ said Bob Slade, Garfield County’s chief deputy public trustee. Alpine Bank mortgage consultant Mike McAvoy disagrees. ‘I think this is going to even climb more in the next three or four years,’ he said.”
“Slade believes that currently the majority of foreclosures comes from suburban developers who have anticipated a market that simply isn’t there. ‘This year, it’s been the big development areas, the speculation areas,’ said Slade. ‘I just recently had a $10 million foreclosure on a place called Alkali Creek. Just because they can’t sell them,’ he said.”
“Another big factor in the foreclosure rate, according to McAvoy, has been how the number of 100-percent-interest loans has gone up since the late ’90s. ‘The number of exotic loans that are out, the 100-percent financing, the interest-only, the option arms and things like that where people just don’t understand or aren’t explained to what the ramifications are of that,’ said McAvoy.”
“‘These people say, ‘Well I’m at 1 percent or 4 percent.’ That isn’t even covering the interest-only portion. That creates a negative amortization, so that money is being stacked onto your principal balance, so now you owe more than the house is worth. That’s where people are getting themselves into trouble,’ said McAvoy.”
when was CO’s bull market ?
1999 to 2002 ?
ot but yet another massive fed pause rally is underway !
What rally?
Long bond is unchanged, market has finished down both days since pause, HB’s getting their asses kicked, inventories, while not up a great deal over the last week, are certainly not being depleted. We’ve had a little relief on the long term fixed rate over the last couple of weeks, but big deal. Once we got above 6%, it might as well have been 7%. No one can qualify for their overpriced home on a fixed rate mortgage unless it drops back to below 4%, and that ain’t happenin’.
from the ground, the number of for sale signs continue to build, while transactions are nil. something has got to give. drove through denver yesterday, in a marginal neighborhood (off federal blvd), saw three board ups with hud stickers, half a dozen for sale signs, and a cute little fix and flip with a white picket fence and granite countertops, all in one block. pretty grim.
From the first article:
“Banka said she has recently dealt with about a half dozen people who moved back to the Denver area after working in California, Ohio and Washington, D.C. She said that is a sign the local economy is getting better.”
WTF? That is one heck of a leap to make. Maybe it’s that California is imploding and they are getting out with what they can.
Also interesting is the quote about the summer months typically being slow. I would love to see YoY appreciation stats to remove that seasonality. Anybody from CO care to comment on the summer market?
slow, but there are alot of california plates driving around. high end stuff is moving alot faster than entry level.
couldn’t that be people on vacation?
As a Californian shopping for potential relocation, I have seen listings loiter and often just expire in CO. Lots of people chasing the market down in CO. Yet, I think that CA will outdo them all when it comes to pricing in the rearview mirror. Good to hear from people on the ground. By the time we would buy in another state, we would rent for a while and get new plates. No reason to advertise yourself as somebody to gouge.
“Another big factor in the foreclosure rate, according to McAvoy, has been how the number of 100-percent-interest loans has gone up since the late ’90s. ‘The number of exotic loans that are out, the 100-percent financing, the interest-only, the option arms and things like that where people just don’t understand or aren’t explained to what the ramifications are of that,’ said McAvoy.”
Ah, and just what were you and your buddies telling those buyers while filling your pockets with gold?
The initial monthly payment.
While the teenage mortgage brokers and Realtors deserve all the loathing they receive here, the FBs were not forced into signing anything. They all had big dollar signs in their eyes, and willingly stepped into ARMs way, and have earned their fate.
Well, this seems like a good opportunity to mention my new HousingTracker website. I’ve improved the site so that it is now based on Metropolitan Statistical Areas now. The better metro area definition is giving me really good agreement with published inventory numbers in most cases. For instance, this article points out that Denver has 31,989 listings. The new HousingTracker site currently is showing 31,136 SFH and Condos for Denver as of earlier this week. The old site only shows 26,988. It’s not always a huge difference, but this new site is definitely doing a better job getting Inventory data (and thus price data). And it’s got plots! Hope you guys find it useful/helpful.
PS - Nice article in Newsweek yesterday Ben!
Great site (both the old & new)!
Thanks Lander! I appreciate that.
Ben, nice site! Is there any way you could separate the condos from the SFH’s somewhere?
Thanks Nikki. I’m considering it, but it’s a big project. It’s not yet part of my immediate plan. There’s other stuff brewing though.
great site
http://www.immobilienblasen.blogspot.com/
“‘I think we’re on our downturn,’ said Bob Slade, Garfield County’s chief deputy public trustee. Alpine Bank mortgage consultant Mike McAvoy disagrees. ‘I think this is going to even climb more in the next three or four years,’ he said.”
Someone please tell me who to believe. Is it Bob or Mike?
I’m not sure. Maybe you should go with Mike. He seems less unsure of himself. Yeah, definitely, go with Mike. He’s a mortgage consultant, so you know he’s really got the pulse of the industry at hand. He’ll know. Trust Mike.
Kind of like the comments from Wells and Countrywide this week. Countrywide says the market is in crash and burn mode, while Wells claims things couldn’t be better. For my money, I’ll go with the #1 lender (Countrywide) over#2.
” ‘While it is still a buyer’s market, sellers are out there,’ Bauer said.”
What? What the hell is he even trying to say with such moronic statement?
OMG ! This is absolutely tragic. A tragic comedy. Only just begun. Act one Scene - cue the illiterate clowns please. Buers , please exit stage left.
you beat me to it. Does Bauer know what a “Buyer’s market” means? Why is the newspaper speaking to this epsilon semi-moron!
‘The inventory went up only 89 properties from June to 31,989, which is a new high but I would say is really pretty stable,’ he said.”
Stable my @#s, wait until next spring when the Real Estate fairy fails to arive again!
I’m sure when he said stable he meant for the next 24 hours.
Any theories on why CO seems to be getting hit harder with foreclosures than other more bubbly states?
it’s a boom bang mind set like TX - cool people they’re used to rolling the dice
no appreciation, lots of 80/20, option arm, no-docs=
alot of fb’s-imho.
The states with the least equity cushion (the least price appreciation) are the first casualties of consumer debt insolvency. But the coasts/bubble states will have their days in default, and when they do, it will be swift and absolute, and will cause major damage to the financial infra-structure in this country. Wall Street seems to begin to position itself for this scenario, as evident by the slaughtering in the mortgage lenders and the banks today. I am not aware that there was a RE bubble in Denver. But regardless, this implosion will affect the entire globe, bubble zone or not.
The Fed is not God! No one can create trillion of dollars out of thin air without colossal negative distortion to the economy and the lives of its citizens. People have to understand that it is a zero sum game. Someone has to go into great debt to give them the lottery jackpot that is their house.
I think Denver may have been one of the first places California equity locusts discovered. Shortly after Denver hit it’s nadir from the oil bust (maybe ‘93 or ‘94), we began to hear a lot about Californian’s relocating to Denver. Concurrent with that influx, prices rose up to 400% in some areas. I suspect that locals, trying to compete with the Californicators, had to resort to suicide loans much earlier here. As others have mentioned, had it not been for the credit bubble of the last several years, it is likely the defaults would have started around ‘01 or ‘02, when a) equity nomads moved on to greener pastures, and b) the telecomm bubble burst took a lot of steam out of the local economy. Just my theory.
Since John Elway retired things have been downhill.
But more seriously, QWEST suffered a serious hit, I thought they would go tits up. The shares went from about $65. to $4.00 in short order. Many employees and their pensions were decimated. Lots of Q employees in Denver. Just recently, Sun Micro purged employees. Denver looked bright in 1999/2000 with a tech boom, that ended. I remember at the turn of the century Denver was on the brink of a technogical revolution, the Nasdaq bust hurt bad.
“Alkali Creek”?? Is that near Superfund Road?
Nah - its just down the road from Asbestos Heights.
Lots of speculator building, no jobs to support it.
I’ve only been there 4 times but it seems a lot of the jobs are service related to the tourists industry. Which can’t be very high paying or have much in the way of benefits.
By “there”, do you mean America?
CO
LOL. Good one!
Most families out here seem to live paycheck to paycheck, yet HAVE to have the nice house, the less-than-two-year-old SUV, the ATVs, the nice yearly vacation, etc. The restaurants are still full every day of the week. But high fuel prices and mortage resets are having an impact. The local economy is getting a boost from the increased Federal payroll coming in (to support the five military bases in Colorado Springs) but other than that, this area seems to be headed into a recession.
Can you imagine having “(realtor) Jerry McGuire” be your agent? I wonder how many times he gets that “Show me the money!” line yelled at him on the phone.
NY, Dutchess & Ulster counties continue rise
http://tinyurl.com/o373o
“We’re starting to feel a cumulative impact, a combination of gasoline prices and mortgage rates,” Tambone said. Rates have been rising, generally, since the middle of 2005.
But Tambone said a new trend toward a 40-year mortgage is “going to help that out,” reducing monthly payments even if rates rise.
Uh huh, the fact most people have to drive an hour to work every day isn’t going to be helped by 40 year mortgages you dreamer.
I am glad that I have been renting here in Colorado. A lot is for sale and prices are either stagnant or declining. We had our bubble here in the late 1990’s. With the tech and telecommunication crashes, this area has been hard hit job wise and really has not recovered. The lowering of interest rates over the past 5 years has just delayed the carnage.
I saw the beginning of an episode of “My First Place” on HGTV where a gal just out of college bought a condo in Denver for $400,000 “with a little help from dad.” Could have been about 1400 sq. ft. but I just can’t remember.
The sequel is going to be called “My First Bankruptcy.”
Next sequel: My First “Lis Pendens”
The Mtns and the western slope are still going strong. Denver might have its issues but the garvy train is rolling full speed ahead up here in the hills. Houses were sitting for 12 months+ here last year and the year before but this year they are selling in 20-30days. EVERY house in my neighborhood that sold this Summer sold to California equity nomads/locusts/whatever. How do I know this? Cali plates on the cars in the driveways.
One house sat for all of last year until December when it was sold to a couple from California. They moved some stuff in in March and have “visited” the house for a total of 2 weeks in July. The house sold for $800k. It sits, waiting for their return. Nice to have neighbors like that.
The street here has 15 houses on it. 4 of these are lived in fulltime. The others? Investments? Summer/Winter vacation homes? Who knows…
What was my point? Oh yea, the ponzi scheme continues here. It sucks.
no ponzi scheme, just early pioneers out of california that don’t blush at $800 per square foot. when the coastal markets finally hit the skids reality will return to prices up in the mountains, but that won’t be for a while. i compare the colorado mountains to the florida keys, completely outside money buying up paradise, but who’s gonna cut the lawn when a single family costs $750K?
I can sum up the Denver real estate market thusly:
Apartment building going condo, located right behind me:
A 750 sq ft condo, including garage, listed at $185,000. Assuming $5k down, and a 6.07% 30 yr fixed interest rate: that’s about $1087 a month. For just the mortgage payments. No HOA dues or taxes or anything.
My apartment, also approximately 750 square feet, and a garage: rent is $810 a month.
Sure, the condo might have nicer appliances, but I doubt that would make it worth an extra $277.
So until house prices get closer in line with rents, I’ll stay a renter. Often painful being one of the few people I know who still rents, though.
C’mon market, just bottom out already. Maybe after the elections in November?
Wow, compared to SoCal, Denver hardly has a bubble at all. Your average 750 sq ft. condo in a decent suburb of LA County (Pasadena, Burbank, etc.) will run you about $1800/mo rent, while it sells for about $450K. This would run you at least $3500/mo in PITI+HOA, so we’re talking about a nearly 100% premium over renting. Now THAT’s a bubble!
Well, if I were back in the DC area, or New York, I’d jump all over a rental that was only $1 a square foot. It’s all relative.
I don’t think people around here make enough money to even justify buying a condo for $185k. I’m a techie, and I’ve managed to keep a steady job, even during the tech crash a few years ago. Most people in my neighborhood seem to be teachers, municipal employees, or maybe work at the hospitals a few blocks away. I don’t see a lot of for-sale signs for houses in this neighborhood, but I do for condos. I do see a lot of rentals. I think most people around here who own have done so for a long time.
This is a neighborhood maybe a mile in or two from downtown Denver. If you go a little further out, maybe 4 or 5 miles, you’ll start seeing the for sale signs, maybe 2 or 3 per block. If you go out further to the newer housing developments, you’ll find even more for-sale signs out there.
“Most families out here seem to live paycheck to paycheck, yet HAVE to have the nice house, the less-than-two-year-old SUV, the ATVs, the nice yearly vacation, etc. The restaurants are still full every day of the week. But high fuel prices and mortage resets are having an impact.”
I cannot wait for sanity and the concept of saving for the future returns. I saw a license plate today that said “splurge”. That says it all.
Simmssays…The News About Peer to Peer and Cell Phones
http://www.americaninventorspot.com/p2p_cellphone
One local realtor has vanity license plates that read “BUY LO”.
When next I see her I will ask when WAS the last time one of her clients was able to buy low.
Folks, I’m in an awkward spot. I am a farmer fighting a proposed LMUC golfcourse community next to my farm in western colorado. I am going toe to toe with a Denver developer who has swayed the local city government to his side. I am trying to arouse local sentiment against this proposal, but it is proving to be an uphill struggle. What are my best options to convince people that the real estate boom won’t last forever and the developer doesn’t have our best interest at heart?