Prices Not Seen In “Six Or Seven Years”: Colorado
The Tribune reports from Colorado. “Foreclosures hit a record high in 2006. Weld County foreclosures hit 2,073 for 2006, more than 500 more than in 2005, according to the Public Trustee’s Office. And through the first three working days of 2007, 45 more foreclosures had been filed with that office.”
“‘We have a lot of investor buyers looking at our prices right now. There are some prices on single family homes I haven’t seen in six or seven years and I’ve been in this business in Greeley for 11 years,’ (realtor) Steve Baker said. Prices have decreased significantly in some cases, he added.”
The Mountain Mail. “The number of filings for foreclosure in Chaffee County increased 57 percent from 2005 to 2006, representing one foreclosure for every 152 pieces of commercial and residential property. Many foreclosures in the metro area are a result of risky adjustable rate mortgages, Kim Anderson, mortgage loan officer at High Country Bank, said, and when the adjustable rate increased, monthly payments doubled in some cases.”
The Denver Business Journal. “Tucker Hart Adams, a leading Colorado economist, continues to foresee a 75 percent chance of a Colorado recession in 2007; with a 40 percent chance of a severe recession, 30 percent chance of a ’soft landing’ and a 5 percent chance of disaster.”
“‘Although we do have speculation and overbuilding, particularly in the single-family market, we got on top of it more quickly than many other parts of the country. I’m very concerned about multi-family and townhouses; even though anybody who sells in that market will tell you that it’s dead in metro Denver, starts are still up almost 40 percent year-to-date,’ Adams said.”
The Denver Post. “Pressuring an appraiser to inflate a home’s value would become a crime under legislation unveiled Monday by Colorado Attorney General John Suthers. Submitting a falsified appraisal to get a loan would also be a crime under the bill.”
“Prosecutors need new laws to fight fraud and reduce foreclosures, Suthers said Monday. ‘Appraisal fraud is a big part of the problem we have,’ he said.”
“Reaction from the mortgage industry to Suthers’ proposals was mixed. ‘An inflated appraisal defrauds the funding lender. It can also be bad for the consumer,’ said Chris Holbert, president of the Colorado Mortgage Lenders Association. ‘We are very supportive of the bill.’”
“But Bill Kidwell, president-elect of the Colorado Association of Mortgage Brokers, said there is not enough evidence of a link between appraisal fraud and deceptive trade practices to mortgage brokers. ‘We firmly believe that significantly more research needs to be conducted before additional legislation is even considered,’ Kidwell said.”
“Appraisal fraud typically occurs when an appraiser assigns an inflated value to a home. In some cases, the inflated value allows the appraiser, mortgage broker and real-estate agent to make more money on a completed deal. When borrowers are unable to sell or refinance the inflated property, foreclosure can result.”
“In cases of refinancing, the borrower may benefit initially from an inflated value but owe more than the home is worth.”
“Corrupt appraisers have been too willing to provide whatever value is needed to get a deal done, taking business from ethical providers, said Matt George, vice president of the Colorado chapter of the Appraisal Institute.”
“‘There are a lot of good friends of mine who are not appraising anymore because they lost business by doing what was right,’ George said.”
The Rocky Mountain News. “‘Just as homeownership is the American dream, mortgage and foreclosure fraud has become an American nightmare,’ Suthers said at a news conference. Last year, a record 19,425 real estate foreclosures were filed in the seven-county Denver area.”
“Chris Holbert, president of the Colorado Mortgage Lenders Association, praised the proposal. ‘One of the best aspects (of this bill) is that it includes everyone who would be involved in real estate fraud - it’s not just about mortgage brokers or loan originators, but includes real estate agents and consumers,’ Holbert said.”
“The Division of Real Estate will have the authority to deny or revoke the registration of a mortgage broker who has been prohibited by any court from engaging in deceptive conduct related to the industry. Prohibits mortgage brokers from compensating, coercing or intimidating a real estate appraiser to get an artificially inflated appraisal.”
“(It) will prohibit anyone else, including Realtors, other brokers, lenders, investors or consumers, from improperly influencing an appraiser and prohibits an appraiser from knowingly submitting a false appraisal.”
then you ain’t seen sht boy - try 86-90
“prices on single family homes I haven’t seen in six or seven years and I’ve been in this business in Greeley for 11 years,
anyone have a 1980-2005 denver area price chart for this dope?
http://www.thebubblebuster.com/denver/summary.html
what is really amazing is that the payment to income ratio was quite high in the early 80s as it is now. In the early 80s you had a lot of people with ARMs because rates were so high 10% plus, but now you got high payment to income ratios and low rates that will adjust higher and make the payments even higher…frightening
I was tricked into a ARM at closing in 1985 … What could we do - we had to move into the new house.
- BUT, we came in with 23k cash. There was no such thing as a 100% loan in those days. This was a self monitoring method that limited artificial demand by unqualified buyers. There was no need to flood the market with new homes because of the limited pool of qualified buyers. These 100% loans created artificial demand. Here in Ca, if the home is for speculation and not primary residence the requirement is supposed to be 20% down…..this would of limited speculation if it was enforced.
who can even afford 20% down at these prices? I sold in 05 and still wouldn’t be able to cover a 20% down on my dream home. not in cali anyway. RIDICULOUS!
thanks I see boston has a big rollercoaster going
AIN’T THAT FUNNY!!
CRAZY FRICKEN AMERICANS!!
NEW YORK, Jan 10 (Reuters) - U.S. mortgage applications skyrocketed during the first week of 2007 as interest rates fell for the first time in five weeks, lending support to the view that the housing market is stabilizing, an industry trade group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity jumped 16.6 percent to 671.1 for the week ended Jan. 5.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.13 percent, down 0.09 percentage point from the previous week. Interest rates were above year-ago levels of 6.08 percent.
The MBA’s seasonally adjusted purchase index soared 16.2 percent to 472.8, its highest since the week ended Jan. 20, 2006 when it reached 473.7. The index was also above its year-ago level of 457.4.
Reuters Pictures
Editors Choice: Best pictures
from the last 24 hours.
View Slideshow
The purchase index is considered a timely gauge of U.S. home sales. The group’s seasonally adjusted index of refinancing applications surged 17.3 percent to 1,923.8.
The smart re-fi’s can see the handwriting on the wall, and are getting in now before there’s blood in the water.
“Tucker Hart Adams, a leading Colorado economist, continues to foresee a 75 percent chance of a Colorado recession in 2007….”
Since prices did not double or triple in places like Colorado, what can we expect when the foreclosure storm reaches the coasts?
The storm has reached Cali. I just saw an article (posted here???) a day or two ago that said Cali is #1 for number (rate?) of foreclosures.
Not the highest rate, yet at least, but the highest overall in number. Once the CA foreclosure rate hits the #1 spot we can officially declare that RE is in full blown meltdown.
Thanks for the info…
Oh man, I know California will melt down, but the thought that are rate will exceed Colorado’s or Florida’s… scares me.
It could happen. The thought still scares me.
Neil
Check out the link above at BubbleBuster…
Graphs shows only increase due to inflation. After 2001 many metros go off the chart. This will indeed look nasty, but not for me when i buy pennies on the dollar.
“Chris Holbert, president of the Colorado Mortgage Lenders Association, praised the proposal. ‘One of the best aspects (of this bill) is that it includes everyone who would be involved in real estate fraud - it’s not just about mortgage brokers or loan originators, but includes real estate agents and consumers,’ Holbert said.”
Any opinions on this bill - is it enought to reign in the fraud, or is it window dressing? Are other states passing similar laws?
isn’t this already illegal?
Submitting a falsified appraisal to get a loan would also be a crime under the bill.”
First read about it in 2001 … its been around, but its pretty huge now. There is a petition out by 10,000 apprasiors protesting the action of realtors. Its pretty much nation wide epidemic. Already a illegal if dealing with Federal agencies.
Get rid of this and fake multiple bidders we will see prices come down to real market norms.
i think the subprime implosion is more than enough to slow this stuff down. when you revert back to the big four or five (chase, wells, wamu, citi, cw) those people will be pricing risk and actually looking at the file.
Perhaps, but as long as companies aren’t holding the loans on their books there is less incentive to do due dilligence. My understanding is that everybody sells their mortgages into the secondary market. A big player may be around to potentially buy back the mortgage but a big player can also field an army of lawyers to make the process more difficult.
I wonder if he represents banks, credit unions, etc. that only do A-paper loans and that he is losing business to the subprime lenders who typically go through brokers.
Ohio banned liar loans.
“Liars loans banished ?” But at the US treasury they do that regularly. ENRON did it regularly. PARMALAT did regularly. OK I get it. If you are smallish it’s a crime. But if you are real big and you work for the government its the only way. Anyways liar loans are everywhere. Fannie Mae is an expert in the thing. Or is it “bad loans?” Liar loans are one great tool.
Can someone put in perspective the 19k+ foreclosure filings last year in relation to the overall housing market(how many real estate units in that area). What the percentage is, and all that?
I just can’t believe that Denver leads the country in foreclosures, compared to the dumps in the midwest, Indianapolis, Detroit, Columbus, etc…… Something else is going on here.
When I lived in the Denver area we were absolutely bombarded wtih solicitations for 125% mortges and such. I’d say it’s reflects a terrible lack of prudence in area lenders - and borrowers. Denver also had a big price run up in the late 90’s that probably gave people a false sense of security.
Here’s a grid by state showing the # of households per foreclosure:
http://www.realtytrac.com/ContentManagement/PressRelease.aspx?ItemID=1515
It’s plain and simple that the appraisers were pressured to hit any number by the RE agents & mortgage/lender agents or starve .Good appraisers were pushed out of the business or they loss alot of income . New appraisers were added who didn’t know sh-t about appraisals and some appraisers were commiting outright fraud in connection with the crooks . Many lenders resorted to computer appraisals and often times loans were made without even a visual inspection ,(I would like to know on some of these loan how the lender even knew the property wansn’t gutted or burned out inside or even occupied ).
I remember one time we had a loan come into a office where the offramp of a freeway was right next to the property . The underwriter cut the loan back because that house would be harder to sell in a down market . How are you going to get adverse influences if you don’t do a visual inspection ?
Conserative lenders started hitting the comps because the sub-prime lenders closed escrow on these inflated properties making them the new comps .
I contend that lending was so loose that we have no idea how many cash kickback situations have taken place in the last few years that have also distorted the appraisal comps .
When you think about a market appraisal comp ,they are suppose to be what a willing and able buyer will pay ,you than must say that at least 50% of the buyers were not really able loan wise ,(at least not on a long term basis ),so all comps in the last few years are questionable /inflated /false /.
At this point how the industry is going to sort out this big mess is the big question .
“At this point how the industry is going to sort out this big mess is the big question.”
I think this is already being answered with the subprime lenders tanking. The whole reason lending standards got so loose is that everyone was making money. Now that its looking like everyone is going to lose money the weak are dieing and the strong will take notice and clean up thier act so they don’t suffer the same fate. IMHO this is what is going to really crash housing prices. The supply of fools willing to overspend on housing decreases as prices rise, but as we’ve been seeing for the last few months the supply of fools is still very large. Take away the knife and this bubble is going to explode with a loud band instead faint hiss we’ve been hearing.
Yup.
Fools or not, buyers in many markets are enabled by the subprime lenders. Take away the subprime lenders, and much of the demand disappears.
The next question: who takes the hit when the subprimes declare bankruptcy? We’re about to test the resilience of the CMBO derivatives market, it appears.
Lenders were inclined to lend to anyone willing to fill in an application since their risk (short term) was insignificant as prices escalated. With prices flat or edging down risk is now substantial. Only makes sense to evaluate risk on new loans. All the forces driving the market higher work faster and more severely on the way down…
The same was said about the Public Accounting profession after Enron-WorldCom.
Giving loans to deadbeats is what loan sharks do - only they have the muscle to collect. Instead, these sub-prime lenders are going under.
It’s only the first few dominoes that have fallen so far.
he Division of Real Estate will have the authority to deny or revoke the registration of a mortgage broker who has been prohibited by any court from engaging in deceptive conduct related to the industry. Prohibits mortgage brokers from compensating, coercing or intimidating a real estate appraiser to get an artificially inflated appraisal.”
1. Barn door = open
2. Horse = gone
3. Barn door = closed
4. Colorado Divison of Real Estate = congratulate self
5. Robert = laughs
LOL . good post that really just sums it up in a nutshell .
Hi Robert,
Good one. Kind of like the gunslinger who robs everyone in town, then elects himself as Sheriff.
BTW, we were discussing people getting ganged up on in RiverPark (an “upscale” community in your neck of the woods) a couple days back and thought you would have some choice words.
Any chance you could tell us what you REALLY think about that place?
I promised to follow Riverpark as a New Years resolution and then an update today on my pathetic blog, took some great pictures, readying some serious venom for this abortion posing s new urbanism. I also commented a few days ago on the post you mention but it took a day to show up. My comments either post immediately or enter mediation purgatory for an inordinate period.
Robert posts ” I promised to follow Riverpark as a New Years resolution”
Please do. You are a smart guy with some usefull insight of this mess. I live in the area and drive by that rot (Riverpark) three times a week.
With toothpaste out of the tube so to speak…. I do not understand why these dummys are still pounding nails?
they(gov workers) get raises while we get recession
posted “they(gov workers) get raises while we get recession ”
Well said and very true! But we do get tubesteak!
“We have a lot of investor buyers looking at our prices right now…”
MORE INVESTORS!!! Eating your own vomit won’t save this market!
makes you wonder if they are experienced investors or clueless newbies excited by the price drops. Is this happening in Arizona also ?
Here on my street in Tucson, the “investors” are trying to sell three empty houses. The prices on each are way uppa-there, and guess what? They’re not selling, that’s what!
Any one who buys a piece right now without absolutley stealing it is not an investor. The prospect of subsidizing a property is really insane. I still see ads that say “will cash flow with neg-am loan”
So will my credit card
Here’s the latest on what’s happening in Arizona, Mo:
http://www.azcentral.com/arizonarepublic/news/articles/0110re-trends0110.html
This caught my eye too. Why even buy right now? It seems much too soon in the game. I would guess they are rookie investors.
It’s dumb money buying the dips before the rebound. Same morons who bought Nortel at $60 on the way down to $2.
When will the price declines reach us up here in the mountain communities? Or is is truly ‘different’ here?
(lowest priced crap-box (condo) is around 300K here, only goes up from there….)
I think that exclusive areas will also see some declines, but definitely not to the extent of the marginal areas. Places like Aspen, Malibu, Jackson Hole, the Hamptons, they will never be affordable for the average Joe.
Hmmm… not sure. I should definitely trickle up to your neck of the woods at some point, but it seems that supply and demand has multiple elements.
For instance, the realization that crapholes like Bakersfield,CA have become overpriced has been taken as clear evidence of the bubble. Most other coastal places have also gone ballistic, allowing homeowners to HELOC and buy second homes all over the West. So that is one element. A related element is the horde of boomers who made so much money in equity that they could retire early to meccas like Aspen, Durango, etc. That seems to be a major problem here in Ashland, OR. There is no way local can compete for housing in a small town where folks can pay $500k in cash.
A third element, in my mind, is the increased stratification of our society occurring over the last 20 years or so. With the richest getting continually richer and the rest our wages effectively declining. I am guessing Aspen has risen into the stratosphere of the super rich from around the world. In a glamorous small mountain ski town with a global reputation it seems like demand will continue to exceed supply and local wages have little or nothing to do with it.
I welcome other opinions on this, because I am raising my son in Ashland, (a semi-shishi kinda Shakespeare, Ski, & College town) and I wonder if he will be able to afford to stay in the area, if jobs allow, of course.
I really hope that at some point people will begin to understand that just because prices have not begun falling in your area does not mean that they never will.
Please think this one through. What do you think it takes for a seller to go from asking (and getting) 300K for his crappy little condo one year to asking 150K for the same piece of property?
A cataclysmic psyche change, that’s what. It isn’t going to happen overnight.
Also, I’m sure if you really looked at the MLS in these areas that are making headlines, you’d see that there are still plenty of overpriced properties in those markets.
In other words, even in those places, properties are not going to hell in a hand basket en masse. Not yet anyway.
Now is the time to step back and watch. If you’ve never seen an RE bust, be patient. Watch and learn. It’ll start out very uneven and be awhile before we’re all marching together to the bottom.
IMO, no area is going to be immune from this one.
Frankly, there’s only one area of the US that I can think of that is trully unique: Manhattan, from about 60th to 95th, bordering Central Park, ie. 5th Avenue and Central Park West, a place overlooking the park. THAT is unique.
And guess what? I believe RE will be heading downward even there! So don’t fool yourself into thinking that your Rocky Mountain community isn’t going to lose value. The fact is, there are plenty of pretty mountain communities in the US. There are plenty of pretty city neighborhoods, there are plenty of pretty suburban neighborhoods, plenty of lakefront, plenty of coastal, plenty of mountain, plenty of desert, plenty of sweet small towns, plenty of great mid-size cities, etc. etc.
I’m tracking a foreclosure in Cedar Hill, Tx, my preferred area of DFW. Nice 3500 square foot place on beautiful lot w/terraced back yard. Foreclosed last summer. First listed for sale at 300k, now down to 249K. Tax appraisal: 373K.
Now that’s a deal, especially when it can probably be bought for less than the 249K ask. It’s empty.
care to share the mls?
Whatever became of the “deal” you were working on?
Still working on it. Have a very flaky seller.
All the more reason to fleece him.
Problem with that is when you get into these “resort” areas where you have a lot of rich people w/second homes, they’re not always as needy as the FBs on I/O option arms or what have you. This fellow is a doctor and doesn’t “have” to sell. This is a really flaky area too with a lot of crystal gazers and New Age types around. I guess you can figure out that it ain’t in Texas.
are you sure you want to live (or even vacation) among weirdos?
My guess is the mountains of New Mexico. Yeah, those areas will definitely not drop as much. The wealthy typically don’t have to sell, and can afford to wait however long their greedy heart desires.
Sounds like Sedona….
txchick57, I would like to offer my views, after 30 years in real estate, on why I do not like foreclosures. I put them in the same category as a house where someone has been murdered or a house that was a prior drug base. I call it bad Feng Shui… Something always stays bad with foreclosed homes, for me. I would rather buy a listed property and ask for lots of expensive repairs in the contingency from a highly motivated seller. I look for listings that just had a price reduction and then offer full price with lots of fix up money in the offer.
I’m not interested in buying it myself, just have been watching it and shocked at the size of the reduction.
I put them in the same category as a house where someone has been murdered or a house that was a prior drug base.
Wow if you can get people to buy into that philosphy the market could easily tank an aditional 10 to 20 % on top of whats going to happen.
Have to agree with you David Cee. Foreclosed properties have really bad energy.
I could end up in one anyway but it’s not my first choice and I doubt it’s the first choice of a lot of Americans, outside of specuvestors.
I predict an uptick in ‘”Spiritual” Home Blessers’ , crystals, amulets and all kinds of crap if/when the average buyer starts scooping up foreclosed properties.
BTW am I dreaming or didn’t I read something this week about somebody who lost their home and went back and killed the buyer? Buyers remorse.
Murder story…
http://www.nydailynews.com/front/story/486718p-409756c.html
Sadly, this only the start of some very sad outcomes like this.
One mentally-deranged person committing murder does not indicate a future epidemic of foreclosure-related homicides. That said, I have been looking at foreclosures in my area (we relocated to another state, and didn’t want to jump back in before we were sure about where we wanted to live long-term), and the thing slowing me down is the clustering of households in financial trouble.
I have two children, and when I see two, three, or even four foreclosures on a block, I have to wonder if it’s really a neighborhood in which I’d feel comfortable.
Right now, we’re living in a community wracked with foreclosures. It is one of the unfriendliest places I’ve ever lived. After six months, only two families have introduced themselves. Maybe it’s that there is no room for these people to socialize because they’re too wrapped up in trying to make ends meet?
The elementary school, which was supposed to be one of the best in the region, is having to let go of teachers because of decreasing enrollment. Generally-speaking, it just doesn’t seem to be up to par, and I’m looking at alternatives for the next school year.
So, perhaps this is the bad feng shui to which David Cee referred. Anybody else seeing this kind of stuff?
“…a house where someone has been murdered…”
Hey, if a lot of people don’t want to buy such a house, it would lower the price for those of us who don’t give a rat’s ***.
Amen. I don’t give a hoot what happened before me, as long as the place isn’t built on Indian Burial Grounds.
LOL
What if it’s just the former owner’s creditworthiness that got murdered?
“I call it bad Feng Shui…..”
Sounds awful. I once left some Kung pao chicken in the back of the fridgerator for a semester…..nasty!!
TXChick,
Sorry to be self-righteous, but aren’t you are a couple with no kids ? What do you need with 3500 sf beast? Seems like a resource swilling McMansion. I thought you were an ecomama?! That would be bad for the carbon karma.
See comment above. I’m not interested in buying it, just watching the huge price drop and channeling 1990.
Its all good then. Not that I doubted ya TX (still very eco) Chick!
First listed for sale at 300k, now down to 249K. Tax appraisal: 373K.
“Now that’s a deal, especially when it can probably be bought for less than the 249K ask.”
A deep discount, yes, but still not a “deal” if it’s an average house and the average Joe cannot afford it.
I copied a paragraph from Jim Jubak (see link) its about the way new homes sold is calculated. Maybe off by as much as 20%. But I beleive many here have been saying this all along. just posted to show MSM is picking up on this error.
http://tinyurl.com/yfrb7n
New developments on past columns
“The housing bubble is deflating — but gently”: I wrote the column that went with that headline about a year ago, and I still think that’s the case. But I sure wish the data were more reliable. Turns out, according to the economists at Moody’s, the figures for new-home sales and inventory are off by as much as 20%. The Census Bureau, which compiles the new-home sales numbers, doesn’t subtract canceled contracts from its figures. If a contract doesn’t go through, the house is not only reported as sold in the monthly numbers, but it is subtracted from inventory and never gets added back to inventory.
That’s a huge problem when a market goes south like this one has. Cancellations in November constituted 38% of gross sales at 30 large home builders surveyed by the National Association of Home Builders. That’s up from 26% in November 2005 and an average of 18% in the first half of 2005. All this could result, says Moody’s, in the Census Bureau overstating the annual rate of new-home sales by 150,000 to 200,000. Adding those houses back to inventory sharply increases the supply of homes awaiting sale, officially measured at 545,000, or 6.3 months of supply, in November. Existing-home sales numbers, put together by the National Association of Realtors, only count actual sale closings and don’t suffer from this problem.
In my last posting I said there was no movement in prices in Chicago western suburbs….This week I have seen the first serious attempt. 211S President st, Wheaton. The realtor let the listing in MLS expire last December. They have relisted as new listing (!!!) in MLS and REMAX sites for 10% less. Original price was higher, they chased the market down during 2006 up to 345k in December. New listing 311k. In Ziprealty they left the old MLS number. I have tried to find out how much they owe for this house with no luck…maybe someone with free access to DuPage county records could help.
By the way I am following other houses in Wheaton (where I would like to buy a house…someday) and I have seen the MLS trick for other houses…suddenly all listings (for houses I have seen in the market since last spring) are just 30 DOM.sigh*
implode-o-meter count now up to 9
http://ml-implode.com/
The way things are going, I might make your top 25 list some day. just kidding
Lenin’s summer residence:
http://tinyurl.com/yzhdle
Unbelievable! But you insult Lenin, he wouldn’t be caught dead in that!
Hope the land is worth $400,000 - might break-even after the bulldozing expense.
Nope……the lot is at the end of a gravel road and the “view” is pathetic. I wonder what drug the owner was on….
BTW, the inside looks worse than the outside. With NO windows, they put track lighting everywhere….looks like a TV studio. In the living room is one of those outdoor rock water features…..go figure.
…”A breathtaking Grecian setting for your dream methlab! Note the sturdy, noncombustible walls and low light ambiance. Unforgettable water feature would also help if things got a little “overheated” during product testing. One of the owners (Ted Haggard) is a licensed Evangelist in Arkansas.”