There Is No Quick Turnaround In Colorado
The Gazette reports from Colorado. “Colorado Springs remained mired in a housing slump in June, and at least one local economist says don’t expect a turnaround until next year. The supply of homes listed for sale soared to 6,870 in June, breaking the month-old record number of 6,567 set in May, according to a report released Monday by the Pikes Peak Association of Realtors.”
“Also, the number of home sales whose transactions were handled by real estate agents fell 17.5 percent in June when compared with the same month last year.”
“The median price of homes sold in June dropped 0.5 percent to $223,900 when compared with the same month last year. It’s the second time in three months prices have dropped, but it might not be the last.”
“‘With 6,800 homes on the market, and the median price going down, I would think we’re going to see more of that until this evens out, as much as I hate to say it,’ said Joe Clement, a veteran local real estate agent in Colorado Springs.”
“Meanwhile, El Paso County foreclosures for the first half of 2007 jumped to 1,708, a onethird increase over the same period last year, according to the El Paso County Public Trustee’s Office.”
“Springs economist Dave Bamberger said too many homebuyers jumped into the market in 2004 and 2005 to take advantage of rock-bottom mortgage rates, greatly reducing the number of buyers in today’s market.”
From Yourhub in Colorado. “A record number of foreclosures in Douglas County has prompted county officials to step in and attempt to help residents who may be in over their head on a mortgage.”
“The county recorded 1,200 foreclosures in 2006, which tied it for sixth most in the state with Larimer County, according to Public Trustee Dianne Bailey.”
“The county has already received close to 900 foreclosure notices through June of this year, which puts it on pace to nearly double the amount of foreclosures from last year, she said.”
“Some lenders extended questionable adjustable rate mortgages and interest free loans that offer small monthly payments upfront but rise considerably over time. After a while, homeowners can’t keep up with payments that double or even triple after a year, said Craig Maraschky, executive director of the Douglas County Housing Partnership.”
“‘Some people are told they can get into a house for $500 a month and don’t realize it could go up to $1,500 a month in a year,’ said Travis Anderson, single family programs manager for DCHP. ‘But the lenders, in most cases, probably knew those people shouldn’t be in a house that big but they did it anyway.’”
“There is bound to be a ripple effect from the number of foreclosures in the county on other homeowners. Foreclosures often drive down property values in the neighborhood and slow down appreciation rates on homes, Maraschky said.”
“‘It affects people on both a micro and a macro level,’ he said. ‘On a micro level, it negatively impacts the family and on a macro level, it negatively affects property values.’”
The Denver Post from Colorado. “With prices starting below $200,000, it took just a matter of weeks for developer East West Partners to sell the 389 units in the 23-story Glass House tower. Although the metro Denver housing market generally is slumping, buyers are snapping up the Glass House units that are coming back on the market.”
“Buyers started closing on their units in late January. Since then, 24 of the units have been resold, and another 44 are on the market. A significant portion of the buyers who have flipped Glass House units for a quick profit have been real estate brokers.
” “When the condos first went on the market, they sold for an average of $350 a square foot. Today, they’re fetching about $450 a square foot.”
“While Glass House attracted a slew of investors when it went on the market in April 2006, Denver hasn’t drawn the number of people looking to flip that markets such as Florida and Las Vegas have.”
“‘In certain areas, it’s almost a profession,” said Randy Nichols, who is developing a 41-story downtown building that will include 503 residences priced from $200,000 to just over $1 million. ‘Fortunately, Denver hasn’t gotten to that stage.’”
“‘It’s good that it hasn’t. If it’s all investors, you haven’t gained anything. You sell all your units and the next day, 70 percent go back on the market,’ he said.”
“‘This investor flip is going to balance itself out,’ said Tami Door, CEO of the Downtown Denver Partnership Inc. ‘When you look over a downtown area and you know that X number of units have been sold, but there are no lights on in the development, that’s a problem. But I don’t think that’s the case here.’”
“Despite the number of resale units available at Glass House, East West is moving forward with a similar project called City House, a 23-story tower expected to break ground later this year.”
The Rocky Mountain News from Colorado. “While downtown Denver home sales are strong, the overall metro market continues to suffer, according to DataQuick and local experts.”
“In the first five months of the year, there were 24,258 new and resale home sales, a 9.4 percent drop from the 26,559 during the same period in 2006.”
“May marked the 12th consecutive month in which total home sales have fallen from the same month a year earlier, according to DataQuick. The median price paid per square foot fell 4.2 percent in May from May 2006, the 10th consecutive month of a year-over-year drop. The price declines have ranged from 1.8 percent to 6.4 percent.”
“Sales of new homes led the decline in May, falling 36 percent from a year ago. ‘I think it is painfully obvious…that we are in a buyer’s market,’ said Roger Reinhardt, executive VP of the Home Builders Association of Metropolitan Denver.”
“He added that home builders aren’t competing with each other but with the resale market. About 20 percent of new-home sales collapse because buyers can’t sell their home, he said.”
“‘Next year won’t be any worse, but it won’t be any better, either,’ Reinhardt said. ‘There is no quick turnaround.’”
“The market, he said, is plagued by rising foreclosures on the low end; a meltdown in the subprime mortgage market; a huge inventory of unsold resale homes; not enough new, high-paying jobs; and a nationwide housing sales slump.”
“‘Someone recently asked me if we are a slumping market with pockets of strength,’ Reinhardt said. ‘I wouldn’t even say that. It’s more like pockets of strength inside of larger pockets, where the market is still weak.’”
“‘Next year won’t be any worse, but it won’t be any better, either,’ Reinhardt said. ‘There is no quick turnaround.’”
Thanslation :
Go ahead and buy now, it is as bad as it is going to get (ie prices have falled to their greatest extent, so no point holding out)
That is so cool, he knows it will not be worse somehow, and also it wont be better. The odds of it being the same are so slim it has to be the worst hedge opinion you can do. Amazing how many pundits think from their gut and believe these things to be true because they got a feel, or a tingle, or whatever. If things don’t get better I am going to go out on a limb here and say…they are going to be worse.
Since speculators that made up 40% to 50% of the demand when the market was hot are no longer buying ,how does the industry expect to make up for those flippers that are not buying and are also bagholders right now that need to dump ?
What a big marketing scheme to tell these investors that the rich baby boomers would be coming in droves to pay big money for these POS houses .
If this is any proof, I wouldnt waste a single dollar on a POS house even if I won the lotto. I could win the lotto next week and 100% of that winnings will be going into stocks and funds and ill wait another 2, 3, 4 years for the market to bottom out then buy a mansion for really cheap
Why would you buy stocks? Why would you buy any bonds except U.S. bonds?
Amazing how many pundits think from their gut and believe these things to be true because they got a feel, or a tingle, or whatever.
Sounds like you’re describing Webster’s 2005 Word of the Year:
… “to describe things that a person claims to know intuitively or ‘from the gut’ without regard to evidence, logic, intellectual examination, or actual facts. ”
http://en.wikipedia.org/wiki/Truthiness
Actually Webster’s 2006, American Dialect’s 2005. It’s the new paradigm and aptly describes many facets of our society.
“That is so cool, he knows it will not be worse somehow, and also it wont be better. The odds of it being the same are so slim it has to be the worst hedge opinion you can do.”
Actually, if you have no reasons to believe otherwise, that is a pretty sound bet. Unfortunately, this blog gives numerous and distinct reasons to believe otherwise.
Thanks Ben.
Paul
“buyers are snapping up the Glass House units that are coming back on the market.”
Uh oh, “Snapping up”, time for a Tequila shot.
I’m with you, I hate that term, why is it that RE attracts so many low-brow people. I guess any industry that requires little to no education, experience, or qualifications would be as such. Most of the people I have met in RE have no higher education to speak of, other than a “certification” from the Learning Annex, or Carlton Sheets’ “Professional Enterprise Institute”
While RE bulls are not necessarily stupid, I’ve noticed that stupid people are invariably RE bulls.
No education, no capacity for critical thought — they’re just empty vessels filled with the ‘conventional wisdom’ of the time.
“The market, he said, is plagued by rising foreclosures on the low end; a meltdown in the subprime mortgage market; a huge inventory of unsold resale homes; not enough new, high-paying jobs; and a nationwide housing sales slump.”
Blah, blah, blah-ditty-frickin’-dah. Why doesn’t someone grow some balls and go ahead and state what we already know, and that is that housing is waaaaay over-priced, and until we can get prices down to what would be considered fundamentally normal the numbers are going to continue to suck! And for those of you that bought in the last 3 years, tough sh*t.
Lord knows I am with you ex. However, if they said this, en masse, the herd to the exits would be sooooo huge it might bring down the entire economy, or at least, stop it for several days.
The problem is that so much crap is leveraged, from to CDO junk that one trigger is all it will take. Housing is also a problem since it is very illiquid, as you guys know. My point is that these guys have to keep the cheerleading going or else J6P sees that the emperor REALLY HAS NO CLOTHES. There is no other option. Plan B does not exist. Keep the party going or go broke trying, but to state the truth means certain death.
Also, not to get on your case ex, but what do you expect from people like this? They got and continue to get theirs, screw everyone else. Too bad you couldn’t afford that 700K home on a 75K salary or 150K for 2 incomes. Not my problem anymore. The dog loan has left the park and gone over to Asia. Now you can pay the mortgage or walk, but I will be buying a new McMansion in the Caymans. Oh well, sucks to be you, Mr. Lifetimedebtor.
Ex, you also state, “grow some balls.” I know TxChick will hate me for saying this, but what are thinking, ex? Come on, the feminization of the American male is all but over. I am no smoker, but the Marlboro man has been replaced by Ryan (I have no) Sea(men) crest.
Grow some balls. Hey, this generation thinks if we have rolling blackouts, we are all doomed to death.
Too bad you couldn’t afford that 700K home on a 75K salary or 150K for 2 incomes.
FWIW, I don’t know anyone who lives in a 700K house. In my neck of the woods 300K is considered upscale.
I consider $500k+ house to be upscale and for rich people. Thatll get you alot of house once prices fall back to fundamentals. Middle class housing is $50k to $150k
Right now $500K gets you a 2/2 crackhouse in Compton or a 450sf studio condo in San Diego. I think the SD prices have fallen about 20% though.
They say you don’t yell FIRE in a crowded theater, but hey, the smoke’s getting pretty thick!
Ex, glad to see you up and posting again. I like to see the venom spread around.
and that is that housing is waaaaay over-priced
In an indirect way he did admit that: “not enough new, high-paying jobs”.
Bear in mind that you can get a decent house out here in the low 200’s. Of course, if most new jobs pay only $12/hr, then they are not affordable. This has been Colorado’s problem since the 2000 tech/telecom bust: precious few high paying jobs have been created.
is there a story coming out of COL that doesn’t involve foreclosures?
But you know some in the REIC are still doing well. Girlfriend’s B–I-L did as much revenue in the 1st 5 months this year as he did all last year. The upscale houses in Lowry (where they live) are selling well, as are the houses near the old airport (Stepleton?).
Oh well - it will take a while to cascade up.
is there a story coming out of COL that doesn’t involve foreclosures?
Hmmm….that the Broncos, Nuggets, Avalanche and Rockies stink?
C’mon, the Broncos are contenders!!!
“‘With 6,800 homes on the market, and the median price going down, I would think we’re going to see more of that until this evens out, as much as I hate to say it,’ said Joe Clement, a veteran local real estate agent in Colorado Springs.”
With a slow housing market and pretty realtors with large house, car, and country club payments, houses prices aren’t likely the only thing going down.
I’m sure you’re talking about congressional approval ratings… right?
If he is really a “veteran” then he no doubt remembers Colorado’s countless boom and bust cycles, and if he has half a brain, he saved for this very predictable rainy day. Plus we haven’t had a boom since the 90’s.
Here are some numbers I have been tracking via Metrolist @ http://www.recolorado.com by doing an empty search and noting the total number of home listings. The search was run on the same day every week (Sunday) and here they are:
4/7 - 19,309
4/14 - 19,616
4/22 - 20,030
4/29 - 20,135
5/6 - 20,235
5/13 - 20,637
5/20 - 20,917
5/27 - 21,236
6/3 - 21,194
6/10 - 21,611
6/17 - 21,861
6/24 - 22,110
7/1 - 22,311
Anyone noticing a pattern here? So much for the spring selling season as it looks like inventory kept right on increasing. And these numbers are for home resales only and do not normally include new houses or subdivisions…
I’ve noticed that WELL-PRICED, spotless homes are moving quite well here in Douglas County. Notice when I say “well-priced” I mean priced right from the get-go; It does not mean well-priced after 3 or 4 price reductions. When a house first comes on the market the seller has ONE chance to attract that initial rush of buyers. Changing the price after the house has been languishing on the market for a few months DOESN’T COUNT.
A few weeks ago I was doing some consulting work for a customer. Over lunch, one of the guys I was working with was going on and on about how it was a seller’s market and he would be “lucky” to buy the house he wanted when he tried to move up. I discreetly asked where he heard that and he said: “I have some friends who are REALTORS and…”. I’m sure some more words came out of his mouth after that statement but I can’t for the life of me remember them as I reflexively tuned them out. The Kool-Aid is still flowing here in Colorado it seems…
Shadow, that guy’s spiel reminds me of the old expression, “If you don’t have any friends in real estate, you don’t have any friends.”
I have friends who have been in RE for 30 Years. I wouldn’t buy anything from them. Sorry.
I had a Uncle long ago tell Me and this is the way it works in the Business world.
If You can’t make Money off Your Friends , who are You going to make money on? Your Enemies?
So he hasn’t noticed the dearth of “SOLD” signs in his hood?
“Denver…23-story Glass House tower…“When the condos first went on the market, they sold for an average of $350 a square foot. Today, they’re fetching about $450 a square foot.””
For those prices, probably units facing the ocean…erm, I mean the lake…errr, I mean The Strip…uhhhh, I mean…what’s the equivalent to “ocean front” in Denver?
I think its the side that doesn’t face the flat lands of Kansas.
Actually, eastern Colorado is far more desolate and flat than most of Kansas. Especially eastern Kansas, which has quite a few hills and water…something which lifeless eastern Colorado doesn’t have.
You ever spent a night in Limon due to heavy snow?
Ugh, I feel sorry for folks who live in the eastern plains. They live in Colorado and can’t even see the Rockies from where they live.
I know, those prices per foot make my head spin. I remember when the only home for sale here in Stockton for a million was a 6,500 ft dream home with huge lot, exclusive hood and a slip on the deep water channel for a large yaught. Now they are touting POS apartments in wherever (not exclusive spots with docks) for 3 times the price per sqft!?!??!??!!
I would just love to be a comedian with a room full of the fools that bought this crap for over $300/ft along with $1,500/mo HOA =) They would kill me, but it might be worth it just to explain to them how fricking stupid they are!!
I know, those prices per foot make my head spin. I remember when the only home for sale here in Stockton for a million was a 6,500 ft dream home with huge lot, exclusive hood and a slip on the deep water channel for a large yaught. Now they are touting POS apartments in wherever (not exclusive spots with docks) for 3 times the price per sqft!?!??!??!!
I would just love to be a comedian with a room full of the fools that bought this crap for over $300/ft along with $1,500/mo HOA =) They would kill me, but it might be worth it just to explain to them how fricking stupid they are!!
oh and that home was for sale around 2000.
Maybe the Platte river near Confluence Park. The other “hot” spot is the Lower Downtown area called LoDo. There are a lot of trendy resteraunts and bars there along with the baseball stadium. It’s really rather nice, but not worth $450/ square foot. There are plenty of rentals within walking distance of downtown that are a better deal.
LoDo will be a ghost section of town when all this is over. Reconversion of the trendy spots to slums is happening in all the major metro areas; it will happen in Denver as well.
In the long run I think you may be wrong on that. With gas prices soaring we may see a lot more people trying to live as close to the jobs as possible. I know in Chicago at least that the trendy spots close to downtown seem to still be holding their own.
i think it’s the far out exurban areas that are gonna be the slums.
Looking down over Elitch Gardens (mini Disneyland). Yuch.
When Six Flags dumped Elicth’s last year there was speculation that it would be torn down and redeveloped. I guess the would be developers knew better and left that sleeping dog alone.
For those prices, probably units facing the ocean…erm, I mean the lake…errr, I mean The Strip…uhhhh, I mean…what’s the equivalent to “ocean front” in Denver?
Being in the foothills: Boulder, Golden, Evergreen, etc.
I thought someone would find this interesting. Can anyone say FB?
http://cbs2.com/topstories/local_story_184163344.html
Why hasn’t someone nuked this place yet? D Rag house blog. Don’t read if you have recently consumed a meal.
July 3, 2007
ELAINE WHITFIELD’S BE$T MONTH EVER
Elaine Whitfield (Dave Perry-Miller/Ebby Halliday) just called to tell me May was her best month ever! She sold $10 million including 10025 Meadowbrook Drive, listed for $4,850,000 which had been on the market for 3.5 years. I was with Erin and Travis Mathews last week perusing 6606 Stefani Drive, $2,199,000 and fabulous, where both Briggs Freeman agents told me they are busier than a one-armed paperhanger, with calls coming day and night from out of town buyers.
I’ve been watching these human beehives get built on the drive home, the location is horrendous, right on a major freeway (101) and next to a junkyard and questionable neighborhoods.
http://www.mercurynews.com/ci_6287711
The comments after the Merc story are pretty caustic, too!
Insurance companies typically use investments to cover underwriting losses and vice-versa. This is the mechanism by which most of the public will pay for the sub-prime/CDO fiasco. The geniuses at State Farm, Nationwide, etc. will “discover” that they have huge losses in their MBS portfolios. Ergo, they will have to raise rates substantially on homeowners to make up for the shortfall in their investment portfolios….
Sort of like what they were doing with medical malpractice premiums a few years ago, right?
“While Glass House attracted a slew of investors when it went on the market in April 2006, Denver hasn’t drawn the number of people looking to flip that markets such as Florida and Las Vegas have.”
“‘In certain areas, it’s almost a profession,” said Randy Nichols, who is developing a 41-story downtown building that will include 503 residences priced from $200,000 to just over $1 million. ‘Fortunately, Denver hasn’t gotten to that stage.’”
-Whew! Denver is a safe place, no flippers! Finally, I can focus in on an area to move to from So Cal that will be full of level headed fiscally responsible people.
Actually, he is somewhat correct. Due to an utter lack of appreciation along the front range (not even in Boulder) since 2001, flipping houses hasn’t become a way of life out here.
What has hurt us has been a deluge of 12/hr people buying 200K houses with sub-prime loans and higher income households Helocing to buy toys.
Plenty of flippers in W. Colorado…
The western slope has been benefiting from high energy prices and with it high appreciation. They are a separate market from the front range. Who would have ever thought that a house would cost more in Grand Junction than Colorado Springs or Fort Collins?
W. Colo has been high priced long before the (current) energy boom, due to the ski and summer tourism businesses. Now the energy boom has hit the towns that were affordable (Meeker, Craig, Junction, Rifle, etc.), brirnging them into the overpriced fold. May it all crash and RIP.
Dear Lost in Utah,
Amen Sir (or Madam),
I have a farm in Fruita, west of Grand Junction, CO and have been contesting a proposed golf course on a neighboring property for the last year. An eastern slope developer quickly convinced the Fruita city council that a flag pole annexation to a satellite 382 housing unit golf course community would be in the city’s best interests. It is sad to see the lessons of the 1982 oil shale disaster so easily ignored when easy money is proffered to local government. Energy is cyclical and the boom will fade in time, again leaving an overextended community and a stagnant tax base. This was the legacy of Exxon and it can as easily be the legacy of Halliburton, Encana and others…
Some people are told they can get into a house for $500 a month and don’t realize it could go up to $1,500 a month in a year,’ said Travis Anderson.
Only $500 and up to $1500 - aren’t these folks lucky.
WAHOOO!! Colorado finally got its own topic on Ben’s Blog. Party time!
And so the insanity countinues. Pennsylvania(northwest) is reasonably priced, I hope many other locations become reasonably priced too. Tennessee(eastern) wasnt hit bad by the bubble but still needs to drop 20-40% in price
The only thing in Northwest Penn is Erie.
And Oil City, Franklin, Titus, Pleasentville and several other small cities and towns. Those areas never saw much, if any bubble. House prices are very reasonable compared to salaries and being self employed, I can get alot of house up there.
I’m not so sure those foreclosure numbers in Douglas County should warrant concern. An awful lot of houses were built in Castle Rock and Highlands Ranch over the past seven years, so while the raw numbers look impressive, it may not be significant.
Here are the number of housing permits over the past few years for Castle Rock, the Douglas County seat (courtesy of city-data)…
* 2000: 878 buildings, average cost: $133,700
* 2001: 852 buildings, average cost: $141,400
* 2002: 844 buildings, average cost: $137,700
* 2003: 755 buildings, average cost: $171,200
* 2004: 1141 buildings, average cost: $204,600
* 2005: 1538 buildings, average cost: $221,900
* 2006: 1172 buildings, average cost: $227,600
Bear in mind, these numbers reflect just Castle Rock, not Parker or Highlands Ranch, which have also seen huge increases in new housing units. Things are looking pretty stable to me.