Inventory Concerns Denver Realtors
The Rocky Mountain News reports on Denvers ‘glut’ of homes. “Sellers were trying to unload 24,387 previously owned homes on the Denver-area market last month, a 16.6 percent increase from the number of unsold homes on the market in January 2005. Although still below the record 28,043 homes clogging the market in June 2004, it is the largest number of houses ever on the market in January, Steve McGuire said.”
“‘The inventory concerns me,’ McGuire said. ‘That’s about 3,400 homes above where we were last January. That is a pretty high number to be starting with.’ McGuire said his fear is that if the supply of unsold homes continues to climb and interest rates rise, knocking potential buyers out of the market, it could cause home prices to dip.”
“Mark Eibner expects the Denver area market to get a boost from people selling their homes in previously hot markets that are starting to cool, such as California, Phoenix, Las Vegas and Washington, D.C. He recently sold a home in Parker to a couple from Orange County, Calif., for $265,000. They had paid $450,000 for their home in California and sold it for $650,000.’”
“‘They made $200,000 in three years,’ Eibner said. ‘I really think we’re poised to see people dump their homes in other markets to come here.’”
“Ed Jalowsky said that homes priced below $300,000 are facing a lot of pressure from homes in some stage of foreclosure. He recently sold a foreclosed home on behalf of a lender in the Curtis Park area for $160,000 that sold two years ago for $210,000. Another broker unsuccessfully tried to sell it for $180,000.”
‘I really think we’re poised to see people dump their homes in other markets to come here [Denver].’
Unbelievable. It must be -different- in Denver. Now real-whores are pretending the bubble pop is a good thing for them.
I guess this guy also forgets that in order for people to “dump” their homes elsewhere, they need someone to buy their previous home. They also need to be able to sell their previous home for a price that gets them out of their mortgage or be able to come up with any shortfall if prices actually fall in the previously “hot” areas. It’s funny when these idiots think everyone can just pick up and move somewhere else in a moments notice because the new city has a boatload of inventory.
I’m also guessing he doesn’t factor in the fact that Denver is an awflul place.
Realtor better known as RealTurd or RealtWhore.
If the inventory continues to increase significantly you can bet that prices will fall. Other major cities are experiencing significant or major increases in inventory.
David
Bubble Meter Blog
Ben -
Another lender is taking it the shorts today. NFI is down 11% something about delayed earnings and delayed 10k. Im sure there is nothing wrong!??!?!
denver is one wierd deal- they’ve been tanking since 02 ?
It shows the most unusual market in USA
looks like they rebounded slightly in 03,04 but still a downward trend throughout the RE bull market
I posted this in another thread, but just in case you missed it: FL home builder/condo tower builder WCI just reported a 69% YOY decline in orders in Q4. But hey, FL real estate NEVER has problems, eh? Enjoy…
http://biz.yahoo.com/bw/060210/20060210005186.html?.v=1
looking really forward to a Denver real estate crash. average household income in Denver/Aurora is only about 50K. No way is that enough to afford the average house around here.
Downtown /Central Denver’s got one of the easiest urban rental markets I’ve ever seen. Literally, drive to a neighborhood you like, the for-rent signs are there for the picking. A few apartment buildings are still going condo, but doesn’t look like those are moving.
The problem with the vision of people moving to Denver from the bubbly coasts is that there is no real job growth here. If you are lucky enough to sell your overpriced house in California, Florida, Boston, etc., you can move here but you may not have any work. If people were going to move here and support our home prices, then they could have done it from 2001 to 2005. There will always be some people who fall into this category but not enough to keep prices from descending. And they keep building in Denver… I hope they move here and want to buy luxury lofts in lower downtown because there will be a lot of empty buildings.
A 16% increase in inventory is nothing. He should look at N. Virginia. Inventory is now up over 800% according to nvfh.com
house up the street in 22151 N VA has a new paint job,carpets ,5th bedroom and no takers at an early 2005 price
Update: from when I looked at inventory this morning, it has now risen another 150 in just one day, and a grand total of almost 700 since Monday! The end is here, folks.
Denver still seems pretty reasonable to me. I have friends who recently moved there from Manhattan and bought a nice 3BR house in a nice neighborhood for what a 1BR apt would’ve cost them in NYC.
If Denver is crashing, then the really bubbly areas have a long way to fall.
Denver is cheap compared to Manhattan, but salaries are lower too. It’s all relative.
Having said that, Denver is not as bubbly as Manhattan or many other areas of the country.
“McGuire said his fear is that if the supply of unsold homes continues to climb and interest rates rise, knocking potential buyers out of the market, it could cause home prices to dip”
what’s wrong with this picture - (can you say circular argument?)
I did a zillow.com on my neighborhood (Congress Park area, lots of little brick bungalows with tiny yards). Houses around me are going from about $350K - 450K. Sure, that’s a lot cheaper than an apartment in Manhattan, but you can’t compare other cities in the US with New York. Heck, I’ve seen people put down close to 8K (deposit + brokers fees) to get rental apartments in Manhattan. And this was in the mid-90’s. Plus in NYC you have to deal with co-op boards, really awful public schools, et cetera. You don’t need to worry about that in other places.
I ran a mortage calculation on the average house price in my area — 5.7 percent 30yr fixed for $350K is approx $1750, 7.5 percent 30yr fixed for $350K is approx $2200 a month. Now how the heck can prices like that be sustainable if wages are stagnant? Which appears to be the case in Denver. There are jobs here, but the good ones are still difficult to find.
This was in this morning’s Denver Post:
http://www.denverpost.com/business/ci_3493052
Miley (a realtor) said he has noticed a number of home sales brochures advertising that contracts are subject to the acceptance of a “short payoff” from the lender. That’s a sale where a lender allows the property securing a mortgage to be sold for less than the existing loan balance, because of factors such as the borrower’s financial circumstances, the property’s physical condition and local real-estate market conditions.
For example, if the mortgage on a $300,000 home is $290,000, the expense of selling it would surpass the home’s value.
“The commission itself would be something like $15,000,” Miley said. “Sometimes, the lenders will cooperate and accept less than their $290,000 balance. If they can do it for $285,000, it’s easier than foreclosing.”
Denver is still hard to afford for those who live there. I have relatives who moved out so their kids could have a decent life - unfortunately they moved to Sarasota, FL - now the kids are wondering where to go next.
CO was something like 4th in the nation for toxic loans last year. I doubt out of state money will be able to halt the decline. It certainly didn’t in the 80’s and that was a regoinal oil bust that left most of the nation better off due to low energy prices. If we have a credit event it will hurt everywhere that job income doesn’t support the house prices. Denver is one of those areas where income doesn’t support the prices - it was a streach even for rent. Most folks with average jobs can barely afford to rent let alone buy. That’s why I left in 98 and it’s worse now, even with the stagnation since 2001-2. Jobs have been even more stagnant than house prices.
I’m seeing more short sales and foreclosures in Fort Collins too. Fort Collins tends to lag Denver. For a while (2000 - 2002) our population growth was 50% people moving up from Denver for lower house prices and better schools. If house prices in Denver go down and gas goes back guess where those folks will go next.
For anyone that follows Gin, his “cautious optimism” about the SD housing market in the last few years has been mostly based on his support of the “tight supply” argument. On Feb 8th, Will Carless from the Voice of SD reports that “….the record-high inventory of homes in San Diego County was 19,000 homes in July 1995 and the record low inventory as 2,301 homes in March 2004. That means the county’s inventory of homes has increased by 713 percent since March 2004.”
Gin still wants more data when there is 713% jump in inventory in less than two years……
Further, Gin asserts on this article that “homes sales generally lead to more home sales, whether the sales prices are high or low.” This has generally NOT been the case in SD when prices were rising at double digits…..the implosion in inventory is a fairly recent event.
I don’t get where Gin coming from…..used to have credibility but this is fading fast from where i am sitting…..
I’ve read a lot of Gin too… I tend to think were in ‘Jesse Livermore time’ - you know,the guy high-flying icon of the ‘29 crash. Seems for most people, this thing is turning soooo fast it’s scaring even them. They either can’t say, or can’t believe, or are finally getting scared. Real scared.
From what I have seen and heard from people who were here for last 10 years or so, Colorado Real Estate went up in high single / low-mid teens during 1996 to 2000.
After 2000 bubble burst, especially in telecom heavy Denver and
surrounding area began to slide 3 to 5 % per year from 2001 to 2004.
In 2005 RE supposedly appreciated by 3 % but I find it hard to belive.
It is routinely taking 6 months or more to sell a house in the area I live (Longmont-Boulder)
NY Times had a piece last July describing Denver market.
http://www.nytimes.com/2005/07/17/national/17denver.html?ex=1139720400&en=11b7386dfd83b9a2&ei=5070
IMO, I don’t see any positive signs in terms of # of jobs moving in or any other factors that will support or boost the RE prices.
I think in next 2 or 3 years we will hit bottom to bring RE prices inline with median income.
FYI: Colorado is #2 in nation in terms of % of homes in forclosure.
HPI for CO
http://www.housedata.info/CO/
http://www.housedata.info/CO/Denver.Aurora/
Foreclosed home for 160k?
I don’t wamt to be unkind :twisted:, but when I retire in 2010, that’s the sort of price I would love to see.