“Sellers Struggling In A Sea Of Listings”
The Denver Post reports from Colorado. “Colorado regained the nation’s top foreclosure rate in December. ‘That’s a matter of concern, particularly since we haven’t had the appreciation in home prices that Nevada has had or the amount of speculative buying,’ said Tucker Hart Adams, a regional economist with U.S. Bank. ‘I don’t think we’re anywhere close to the end of it.’”
“The number of homes sold at foreclosure auctions has been rising each week, said Jeannie Reeser, Adams County’s public trustee. ‘We had over 200 last week, and we’re going to have a whole bunch again this week,’ she said.”
“Shawna Stieber, a broker who specializes in Adams and Weld counties, blames lenders for the high foreclosure rates there. ‘I constantly have people come to me and say the max they can afford is $1,000 a month,’ she said. ‘Then they go to the lender who says, ‘If you change your exemption and do this and do that, you can afford a $180,000 house.’ There’s a big difference between a $100,000 house and a $180,000 house.’”
“Foreclosures and overbuilding the market are taking their toll on existing- home prices, said Dave Babb, a broker who specializes in the north metro area. ‘They’re impacted by foreclosures, but they’re also impacted by new housing,’ he said. ‘Builders are discounting spec homes tremendously.’”
“Northern Colorado’s economy has rested on a foundation of strong construction spending since the early 1990s. That foundation could be sinking.”
“Forecasts from Colorado State University call for 6,100 new jobs in the region this year, which would represent a 2.8 percent gain from November’s payroll count of 216,800 jobs. But that may not be enough to shore up an overbuilt real-estate market, observers told an audience.”
“Construction activity in northern Colorado suffered a significant downturn in the fourth quarter, pointing to tougher times ahead for the region, said regional economist John Green. ‘If construction drives our economy, we need to be nervous,’ Green told (the) audience.”
“‘The northern Colorado real- estate market has generally too much supply in nearly every category,’ said Rocky Scott, president of a 3,000-acre commercial and residential project in Loveland.”
“Housing is where overbuilding carries some of the most severe consequences for residents of the region. Northern Colorado builders were pulling 500 permits per month in the two counties in the early months of last year, Green said. As the year came to a close, they were pulling around 200 a month.”
“In several recent months, Greeley and surrounding Weld County have led the nation with the highest foreclosure rate out of more than 200 metro areas.”
The Free New Mexican. “House sales were slower in Santa Fe County during 2006 than during any of the previous eight years, but the market slowed even more in Eldorado during the past year.”
“Price pressure is squeezing younger buyers out of the Eldorado market, associate broker Fred Raznick said. In the southeast county area, increases in median home-sale prices has outpaced increases countywide, nearly doubling since 1998. Countywide median prices increased by three-fourths over the 1998 median price.”
“Resellers have sometimes had to adjust their expectations. Some sellers have ’spun their wheels’ expecting their older home to be worth as much as a home built on a similar lot now valued at a higher price, Raznick said.”
“‘It’s not what I would call a seller’s market right now. It’s what I would call a balanced market and, at least in the short term, it seems to be leaning toward the buyer’s side,’ Raznick said.”
“The general housing market slowdown across the country apparently reached Santa Fe late last year, the latest home-sales figures show. Sales in both the city and county of Santa Fe in the fourth quarter of 2006 were well behind figures for the same period a year ago, continuing a trend that became apparent in the third quarter.”
“The softer real-estate market favors buyers for at least the time being, and likely means some real-estate agents are having a harder time making a living, one longtime real-estate agency owner said Monday.”
“‘In looking at the entire year (of 2006), there’s no question there was a slowing down but not a going down,’ said Wally Sargent of one of Santa Fe’s largest real-estate agencies. ‘There are more sellers than buyers, and properties are selling when sellers get realistic and don’t hold out for top dollar.”
“The Santa Fe Association of Realtors reported a total of 221 homes in the city sold during the fourth quarter of 2006, a 25 percent drop from the same period of 2005. Santa Fe County totals for the fourth quarter of 2006 show 177 homes sold (a 27 percent decline from a year earlier), and the median sales price dropped by 4 percent to $442,000.”
“David Barker of Barker Realty agreed that there was some softness in real-estate sales in the third and fourth quarters of 2006, a slowdown that has led to an increase in inventory and the number of days it takes to sell a house in Santa Fe. ‘More properties are on the market, and fewer are selling,’ Barker said, a situation that favors buyers at least temporarily.”
The Arizona Republic. “The West Valley’s housing market followed a Valley-wide slowing trend in 2006, with homeowners worrying about slipping values and sellers struggling to stay afloat in a sea of listings.”
“The sluggish market was good news for buyers, as sellers reduced prices and agreed to pay closing costs in a bid to lure customers. ‘Buyers had a lot of choices in 2006 and remain in the driver’s seat,’ said Meredith Andrews, a real estate agent in Surprise. ‘They can bargain a little bit.’”
“As for the West Valley’s resale housing market, Andrews anticipates a correction in the market by midyear. ‘It will take a little more time for listings to start moving again,’ Andrews said. ‘The trick will be to price right.’”
‘As Glendale transforms itself into a sporting and entertainment hot spot, some homeowners are feeling the growing pains. They are upset that homes are becoming vacation rentals, short-term stays for those attending games and events.’
‘The investors are what irk JoAnn Brass, a resident of Coventry Estates in northern Glendale. She lives next to a home that is used solely as a vacation rental. It disrupts the neighborhood when large groups of people stay in one house, she said. ‘They’re turning residential homes into extended stay hotels,’ Brass said.’
‘City leaders have shaved off a chunk of the new City Hall plans, reducing the project’s cost by more than $10 million. ‘As a result of the residential building slowdown that’s hit the city, as well as the rest of the Valley, it’s caused the city to take a very close look at capital improvement planning. This being one of the major projects that the city of Surprise is planning, it drew the scrutiny that it should,’ Beckley said.’
‘For fiscal 2007, for example, the city initially projected 3,600 home permits, but the number will likely fall between 1,300 and 1,900, the city reported in December. So instead of $20 million in construction sales tax, the city is expected to generate about $10.5 million in the fiscal year. The city’s fiscal year runs from July 1 to June 30.’
‘Nearly a third of the office space in the West Valley remained vacant at the end of 2006, according to a study. But that lofty figure likely had to do with the fact that more than 400,000 square feet of office space was built in the West Valley last year, boosting the overall inventory of the region by about 40 percent. Another 578,000 square feet currently is under construction on the west side.’
‘The West Valley should be in perfect shape to have two to three good years of growth because (office space) is available now. It was just good thinking,’ said Mark Urbanowicz, a senior research analyst with Cushman & Wakefield in Phoenix. Urbanowicz said the high vacancy levels out west are certainly no reason to panic. ‘It’s not a bad thing. It’s not cause for alarm, and it’s not, ‘Oh no, oh no, oh no,’ Urbanowicz said.’
I have a good friend who owns a small business in the West Valley. Although she could rent office space, she prefers to work from home. Reason: It keeps the overhead down.
So, I doubt that she’ll be in the market for any office space. And there are plenty of other cottage industry types like her. Not just in the West Valley, but just about anywhere else in America.
Thus, commercial office space may not be the panacea that some real estate investors are looking for. It’s awfully tough to compete with the lure of working from home.
It’s awfully tough to compete with the lure of working from home.
I made that move 17 years ago…At the time, I was very concerned that it would hurt my business because of the “Image” factor….Best move I ever made…
Ditto. I could make much more money working for someone, a fund or whatever, but there is no way I’d do that.
‘The West Valley should be in perfect shape to have two to three good years of growth because (office space) is available now. It was just good thinking,”….?
What kind of dumbbell logic is this? A third of the office space is empty, so we are in “great shape”? It was just “good thinking”? He was probably one of the “good thinking” analysis that told everybody to keep building.
This was in the second Denver article:
‘At that rate of job growth, it will take five years to absorb the currently available supply of vacant retail space, four years to absorb the available office space and nearly 10 years to absorb industrial space. The value of all construction in Larimer and Weld counties has fallen from around $220 million a month in early 2006 to less than $75 million a month.’
Sounds like they’ve been doing some “just good thinking” in Denver as well!
The saying goes: “If you can do your job from a computer in your home, then Apu can do your job from HIS computer in Mumbai.”
Telecommuting won’t be a panacea either.
I think they meant running their own businesses from home. Apu can do it if he can figure out how to start his own business in the US remotely (not an impossible things, I know a couple of folks who did that). I think the bottom line is, if you are an entrepreneurial type of person and are not complacent, you will do well everywhere.
When theres more homes for sale in Queen Creek (~2200) than Chandler AZ (~2100) you know there’s a problem.
$1000 a month? you can’t afford any house , yo
better rent
I guess you aren’t familiar with Arizona wages. Alot of the state is rural. Even in Phoenix, the pay is far below most metros.
–
I buddy of mine spent a week or two in Phoenix doing work on homes that a friend of his in SaCal owns.
When he came back he was happy to tell me that he got lap-dances for $5 when he has to pay $20-25 in SFV where he lives. Now, that is quite a “wage” gap.
Jas
$20 BUCKS WILL GET YOU A dRINK IN ANY DECENT NYC BAR
thank god i am sober
In New Orleans, $20 will get you anything you want…..the question is….do you REALLY want what costs $20!
Ben post’s I guess you aren’t familiar with Arizona wages. Alot of the state is rural. Even in Phoenix, the pay is far below most metros.
Most of the “fly over” states and areas are just like that! If you can find work at all. I live in the So. Cal. area and always bust a gut when I hear a person blathering on about low cost homes in Timbucktoo…. Just wait till they get there!
I was gonna say, if you can afford $1000/month, then rent, you morons. You can find passable 3BRs and quite nice 2BR houses around denver for that much.
‘The trick will be to price right.’
Ahhh, the tricky slippery slope where price it too high and you chase the market down. Wait and the flood of inventory in the spring that uses the NAR suggestion to underprice comps and you’ll never be priced appropriately to sell as every day newer listings will be priced lower, setting lower comps…
SELL SELL FASTER PUSSYCAT
“sellers struggling in a sea of listings”
Have been posting occasionally on the progress of the Morro Bay inventory in the
‘The trick will be to price right.’
I posted in a couple other threads that if you can’t write a check for the difference between the selling price and the mortgage owed then you can’t lower the price to sell. Not too much discussion on this point. Am I wrong and is there some other way out for these people?
If not then I think they will hold on as long as they can waiting for a miracle but in the end they will be foreclosed on and these properties will wind up at auction. If this is the case then the rate of this ‘correction’ will be to a large extent controlled by the staying power of the FBs.
“I posted in a couple other threads that if you can’t write a check for the difference between the selling price and the mortgage owed then you can’t lower the price to sell. Not too much discussion on this point. Am I wrong and is there some other way out for these people?”
Hmmm. Scenario: A FB gets transferred. Buys another house in another state. Gets offer on old house lower than what they “owe”. Rejects offer outright, and holds on, making two mortgage payments. Can’t they roll the diff between selling $ and owe into their current loan, or take out a personal loan, etc? If so, why wouldn’t they want to avoid foreclosure, when there are NO other offers on the table? If they default on one mortgage, what is the likelihood that the bank will take their other house if the bank cannot get what is owed on the old place?
Hmmm… could that be why we see so many houses selling at way above listing price right now? I mean, I’m sure some of it is outright fraud, but a lender would probably rather do this than lose the mortgage completely, no?
Also, people do this with car loans all the time.
“Also, people do this with car loans all the time.”
Bingo, I was hoping someone would understand.
So, can it be done???
The mortgage is secured by one property. The bank cannot transfer the debt to another property. Quite frankly, if I was drastically upside down and owned another property, foreclosure or a short sale would be attractive. Foreclosures will probably skyrocket as more and more people realize they are upside down.
As for car loans, the dealer (or new lender) pays off the old loan and clears the title. The new loan is attached to the new car title. The old lender probably isn’t even involved.
I don’t think that a bank can compel you to pay a morgate in full by taking assets that you didn’t explicitly use as collateral. For mortgages, if you default, the bank repossesses the asset, which is the house, just as it would with a car. (They can’t take other assets to cover the depreciation of the car unless those assets were specifically used as collateral during the financing.) Most mortgages don’t require any other collateral than the house itself. Worse for the bank, I think that filing bankruptcy can prevent a bank from reclaiming a house when the owner is in default on the mortgage.
Wikipedia has some good links. Search for “repossession” and “collateral.”
Never Bought,
You’re forgetting the personal guaranty associated with most mortgages. Typically the bank can come after other assets held by the borrower(s) underneath the guaranty language. Furthermore, the change in the Bankruptcy laws makes it increasingly difficult for a mortgagor who has defaulted on a mortgage to get the deficiency judgement placed against the mortgagor by the mortgagee dismissed.
Think debtors prison or something similar thereto.
This is why there are so many overpriced listings in the bubble areas. These FB’s have little to no room for negotiation. Their only hope is that some gomer with the “bucket of money and box of stupid” shows up. Needless to say, those days are rapidly disappearing due to, not only the subprimes drying up, but better homes coming on the market for a lot less money.
2 ways out of that mess: Short sale or……… foreclosure & BK.
‘It will take a little more time for listings to start moving again,’ Andrews said. ‘The trick will be to price right.’
Ah, yes. Turning tricks…who said these guys aren’t self-supporting in a tough economy?
Yes, your right, he’s got it backwards.
The “price” will be to “trick” right.
“Colorado regained the nation’s top foreclosure rate in December. ‘That’s a matter of concern, particularly since we haven’t had the appreciation in home prices that Nevada has had or the amount of speculative buying,’ said Tucker Hart Adams, a regional economist with U.S. Bank. ‘I don’t think we’re anywhere close to the end of it.’”
This is actually what should be happening. Places without or with smaller appreciation should be the first to see pressure because the toxic loans were available everywhere. With zero or almost no appreciation, the marginal buyers in those areas will be stressed and default first, though the fall out will be far less than places that had the largest run ups in price.
I’ve probably read it here sometime or the other, but when did CO’s appreciation slow or stop? I’m sure there was some, though not like CA, and the foreclosure rates sure foretell the future in this price environment.
can anyone explain the reason for the massive forclosure wave in CO? As mentioned it seems like this may be a glimpse into the future for the country as a whole. How did CO get this way? Were they on the vanguard of the bubble or are there other local elements at work? Any ideas?
I can only speak to the question as I see it in my Douglas county neighborhood, south of Denver. The foreclosure next-door is the result of job loss. It goes to auction tomorrow. The one two doors up happened when the husband was arrested. His wife and kids packed up and moved in with the grandparents. That one is still empty; the bank pulled it off the market after five months of no takers. There’s a VA loan that went sour one street over. I don’t have any idea what precipitated it, but the house appears to have sold. On top of this, the neighborhood is over-built, and spec houses sit empty. Construction is basically at a stand-still. Frankly, I’m stymied, and I’m living right in the middle of it. Anyone else have thoughts?
wierd, as the top 3 counties in Co have big % pop growth
Yeah, wait until property is selling for $20 a square foot and buy.
as has been discussed in great detail on this board, the problem with colorado (and ohio and michigan and other low appreciation areas) rests with the lending environment over the past three years. lending by the subprime wholesalers was done on a national level, and as the borrowers ran into trouble in “bubble markets”, they refinanced, flipped it to a brother-in-law, or sold it. in colorado, if you did an 80/20 purchase 2 years ago, your loan just adjusted and you have a 90/110, or as we like to say you’re “unrefinancable”. a telling statistic- the average life a loan in foreclosure in colorado- 11 months.
Colorado had a big run up with the tech boom, then it just went about flat after that. After 2001 - 2002 there has been very little appreciation.
Denver lost 85k high paying jobs in the tech/telecom bust in about 2001. This was a huge economic shock for the area. Home prices made a huge run from 1995-2000 as the cycle peaked. After the job losses, the housing market should have significantly declined. However, the Fed lowered interest rates so low that it artificially maintained prices in the area. Moreover, a huge oversupply of homes were built and sold due to investment purchases, not fundamentals. As a result, when the Fed rose rates 17 straight times beginning in mid 2004, Colorado got hammered quickly. It took until 2006 to get back to 2000 job numbers (many lower paying jobs) and population figures while probably 40k to 60k new homes were built.
Even if you want to consider the 1995-2000 window, our prices did not appreciate during that time that other bubble areas did in just a couple of years.
A speeding freight train takes a long time to slow and reverse momentum. That’s ALL this run up into crazy prices has been. Freight train momentum created by toxic loans with a big dash of greed. No need to bother looking anywhere else. Toxic loans, greed and momentum. Now it seems the property bubble freight train has not only slowed, it has reversed. This is where the going up momentum vanishes and the down momentum starts to gather speed. It’s slower because a lot of fb’s are stuck but the signs and the stars are all lined up for a nasty 2 or 3 year decline with, of course, the usual dip buyers moving in before the next leg down which slows up the final result. Dip buying on the way down is VERY dangerous. Far more dangerous that dip buying going up.
“Dip buying on the way down is VERY dangerous. Far more dangerous that dip buying going up.”
Buying is only dangerous when one cannot afford the mortgage and does not plan on staying long term. Buying a little too soon on the way down with the intention to LIVE in the place and USE it long term is no big deal.
“Buying a little too soon on the way down with the intention to LIVE in the place and USE it long term is no big deal”
The usual factors are still in play, no matter what the buyers’ intentions are: Divorce, Sickness, Death, Job Loss & job transfer, other financial woes — any of which might necessitate a sale.
Sort of.
What you probably mean is that with a long-term perspective, the consequences are unlikely to be disastrous.
If price drops would’ve allowed you to buy with a 15-year mortgage instead of a 30-year mortgage, I would consider that a big deal, especially with a long-term perspective. You could retire or start a new career once you’ve paid off your house!
Nice points Mike…
LMAO,
I am an agent in norcal. Just opened up an old email account I havent accessed in years. This is one the I gave out to banks for BPOs (thumbnail estimates of value for banks,they pay $15 for in order to get a handle on the value of properties that they may have to forclose on).
I use to get 2-5 a month and I LMAO when i opened it up. It allready has nine request for January and were barely 1/2 way through the month!
It was never worth my time to do them, but I have gotten good listing leads by leaving myself on their BPO provider list. Again, these are properties that the bank is getting ready to own and they need to know what they may be worth.
The funny think is that this is from just one BPO compnay. There are about 5? that I recall and I had myself removed from the others because they kept calling me. I didn’t cancel my provider status on this one company because the most bothersome they got was email.
So, if you multiply the request from this one company by five you get more than a home per day that the lendors are getting ready to eat!
Save your pennies and nickels (the metal is worth more than the face value) and get ready to go shoping in winter 08′ or 09′ at the latest?
I think that all the hanger on FBs hoping for a profit will be shaken out after two failed summer markets, then the real inventory of bank repos will start to flow. By the end of 09′ everyone that owns RE with an investment mindset will be starring into (or out of) the abyss. The federal regulators will be coming through with a great RED pen crossing off both performing and nonperforming loans from the banks balance sheets adding even more to the great bonfire of used properties. This should be the end of drastically falling prices as the market makes is long sideway turn for another 5? years.
It is my projection that it will be 2014 or so before we start to see prices start to outperform inflation, but you may be safe for your primary residence or rentals (with proper rental income of B/E or profit) in 09′.
If you must buy (not likely, but wives like to nest and men like to ….) then buying new in 08′ may be an option. The builders will ruthlessley undercut the resale market just to keep their doors open for the next boom. The buyers at this time will also be of a quality that they will make much better neighbors.
“The buyers at this time will also be of a quality that they will make much better neighbors.”
Interesting point.
Rich,
Seems like I haven’t noticed posts from you for a while. Glad to see you’re still here and providing good info about nothern Calif.
“Northern Colorado’s economy has rested on a foundation of strong construction spending since the early 1990s. That foundation could be sinking.”
Let’s see.. change a couple things and we have…
“America’s economy has rested on a foundation of strong construction spending since the early 2000s. That foundation could be sinking.”
Yeah! Just right.
When I moved to Fort Collins in at the end of 2000 my admin said that fully 1/2 of the people moving to Fort Collins still worked in Denver. So, on top of the foundation of construction spending is jobs in Denver. Eventually Denver’s woes will catch up with Northern Colorado.
Eventually? Northern Colorado is a disaster already. If you have kids, climer, you better cover their eyes because it is getting ugly.
“‘It’s not what I would call a seller’s market right now. It’s what I would call a balanced market and, at least in the short term, it seems to be leaning toward the buyer’s side,’ Raznick said.”
Deja vu. I could’ve sworn I’d read this about Phoenix or Tucson or Dallas or Albuquerque. Is there a script or does the anti-psychotic medication do this to all of the realtors that journalists interview?
‘Buyers had a lot of choices in 2006 and remain in the driver’s seat,’ said Meredith Andrews, a real estate agent in Surprise. ‘They can bargain a little bit.’”
Statement like this make me want to vomit. It’s always just “a little bit”.
50,000 plus homes for sale in the area and buyers can now get that big “5%” off? Yea, right lady. Wait another year or two. No one will be bothering to use you or your mealy mouthed advice. People will be buying direct from the Banks.
Don’t you know it’s in poor taste to bid less than “just a little bit” lower, and risks insulting the sellers? You never want to put the highly ethical real estate agent in an uncomfortable position! That might even violate their code of conduct!!
Ok, if insulting the buyer with a bid is bad how is it gonna look when i start to kick them in the balls and their heads when they are down?
In the 90’s it was SOP to threaten to pull out of an escrow just before the inspection period ended if the sellers didn’t give up (5-10%) of the original sales price. If they refused you just went ahead with the escrow as if nothing happened, most of the time the sellers gave up something. They were TERRIFIED to go back on the market after sitting for sale for two years!
I made many thousands by asking my buyers to let me call up the listing agents and scream at them to give up some cash or get F##D well walk. Most buyers were happy to split this found money with me. How fondly It was to act PISSED and scream for 5 minutes and scrape another two grand out of the deal for me.
“The Free New Mexican. “House sales ….blah blah.
This is the highlight of the post. I am going to start a News Paper called “The New Mexican” and base it in the Inland Empire. I now expect to retire early…it will be a huge hit as most of the IE is Mexican.
“The number of homes sold at foreclosure auctions has been rising each week, said Jeannie Reeser, Adams County’s public trustee. ‘We had over 200 last week, and we’re going to have a whole bunch again this week,’ she said.”
And the next week……..and the next week…………
For how long can these financial losses be absorbed before an absolute crash occurs?
“sellers struggling to stay afloat in a sea of listings.”
Polite way of saying “up sh#t crik without a paddle”
All aboard the Poopship Destroyer!