Denver housing market crash? (foreclosures, condos, crime rate)

[downtownnola]

Originally Posted by MN_Ski

Doesn't this chart kind of scare anyone?

It seems to me that there is an EXTREMELY small amount of housing stock that has participated in the housing boom over the last 5 years. So while everyone's like, "wooo lol, I won the housing lottery"!...that only applies if the housing inventory remains at these extremely small levels...which it wont.

It's like a hypothetical market:
You have 10 home owners. 8 bought for 200K, and 2 bought for 700K. All 10 home owners are thinking "wow I can cash out for 700k"! But then one day, people lose jobs, and 5 home owners need to sell. Are all 5 owners going to be able to cash out for 700K? ...probably not. Those who bought cheap will still come out ahead. Say they could sell for 350K and still be happy. But for those 2 home owners (who bought at 700K), they lost big no matter what the outcome.

Back between that 2010-2013 time, investors made up a huge portion of buyers. They flipped these properties into rentals. Now that values have gone up, and rental prices are starting to go down, it seems to me that these investors will unload all of their properties once the sign of a housing market slow down.

It seems like everyone in the Denver area today is thinking they struck gold. But that is misleading. We are going to hit a recession in the next few years. We all know that the economy has a direct affect on the housing market. We have to assume a large portion are thinking they can sell if they lose their job and still come out ahead.

I'm no expert and that is clear. But in my simple mind, I'm trying to wrap my head around what has been going on. I really can't comprehend a scenario where people who bought in the last 2-3 years aren't going to get screwed if they need to sell because they lost their job in the next recession. All I hear is that Denvers market is insanely healthy, and it is impossible to experience any kind of slow down. Sure we won't have 2008 again, but....it should be something?

I just never hear people talk about what will happen when inventory increases, or when investors decide it's time to cash out.

Any experts have any further explanation

Denver walked out relatively unscathed in the last recession because our housing market wasn't subject to the intense speculation that we saw in markets like Las Vegas, Phoenix, Miami, etc. This time, I'm afraid we may face the same fate that our neighbors saw the last time around. I'm not an economist by any means, but I have an uneasy feeling about Denver's current real estate market. I feel like we are headed toward a steep nationwide recession in the next year or two and it will be interesting to see if Denver has such a soft landing this time around. Buckle your seat belts.

[ColdAilment]

Originally Posted by spets

That's actually what I don't want to do. A house in Denver for 500k isn't worth it for me. I have been looking for property out of the state and have actually found tons of land outside of Colorado where I could live and work comfortably and not deal with the **** that will happen to Colorado if people keep moving here..

Not looking to move out of Denver, but I just don't know. I moved here for the tech boom, made my money and now I can do anything and go anywhere. A house for 500k in Denver is a waste for me since I could do better somewhere else....

You can get a lot of house and a lot of land in most Midwest states for dirt cheap, especially Indiana, boasts some of the lowest property taxes in the country. I pay $1,000 a year roughly.

[sammy87]

Denver still has a great economy, 0 unemployment, great weather, great amenities, general good place to live. I don't see the housing market slowing down much. All indicators are pointing to seasonal slowdown tied with a higher interest rate.

We had good friends/neighbors move to Indiana. They bought early in our development and made a nice penny. The wife wanted to move for some reason. They got a bigger home for less than what they sold for but the husband took a 40% pay cut with a crap job to do so. Other than housing they say its about the same as far as COL. But its long gray winters and muggy summers.

We talk about moving from the state, but I'm not sure where we would be happier that's cheaper to live.

[ColdAilment]

Originally Posted by sammy87

Denver still has a great economy, 0 unemployment, great weather, great amenities, general good place to live. I don't see the housing market slowing down much. All indicators are pointing to seasonal slowdown tied with a higher interest rate.

We had good friends/neighbors move to Indiana. They bought early in our development and made a nice penny. The wife wanted to move for some reason. They got a bigger home for less than what they sold for but the husband took a 40% pay cut with a crap job to do so. Other than housing they say its about the same as far as COL. But its long gray winters and muggy summers.

We talk about moving from the state, but I'm not sure where we would be happier that's cheaper to live.

Where at in Indiana did they relocate to?

Wages in Indiana are often lower than other states, but cost of living, namely home prices and property taxes are considerably lower in Indiana.

[sammy87]

Originally Posted by ColdAilment

Where at in Indiana did they relocate to?

Wages in Indiana are often lower than other states, but cost of living, namely home prices and property taxes are considerably lower in Indiana.

Indianapolis......They say its cheaper prop taxes and home value, but the wages are considerably lower.

[Westerner92]

In the age of the internet jobs and overpopulation, Denver has intrinsic value as a beautiful, relatively uncrowded place with world class activities close by for relatively cheap. As long as Denver has an internet connection and enough drinking water for residents, its growth is almost undoubtedly monotonic.

There will always be people wanting to move here if there’s room for them, meaning the distribution of housing prices will always be around 1/3 of people’s post-tax income. For a standard 30-year mortgage with a 5% interest rate and 20% down, 1/3 of the Denver metro’s post-tax median income will be the limit of monthly mortgage payments. With a median household income of $72k/year, that puts the monthly payments at $1650, which for the standard mortgage at average interest rates, puts the home price the median household can afford at roughly $390,000. When interest rates were in the 3.75% range as they have been for much of this decade, the home price the median household could afford was around $450,000.

I think the slowdown we're seeing right now is the result of interest rate hikes causing the market to readjust. As interest rates go up, selling price needs to come down for people to afford living here.

I personally think it’s good for the interest rates to go up a bit. The growth needs to be tempered a bit to put a cap on speculation. The Federal Reserve has had rock bottom discount rates since 2008 to try to encourage people to invest, and they’re just now raising them.

[LHS79]

Originally Posted by Westerner92

In the age of the internet jobs and overpopulation, Denver has intrinsic value as a beautiful, relatively uncrowded place with world class activities close by for relatively cheap. As long as Denver has an internet connection and enough drinking water for residents, its growth is almost undoubtedly monotonic.

There will always be people wanting to move here if there’s room for them, meaning the distribution of housing prices will always be around 1/3 of people’s post-tax income. For a standard 30-year mortgage with a 5% interest rate and 20% down, 1/3 of the Denver metro’s post-tax median income will be the limit of monthly mortgage payments. With a median household income of $72k/year, that puts the monthly payments at $1650, which for the standard mortgage at average interest rates, puts the home price the median household can afford at roughly $390,000. When interest rates were in the 3.75% range as they have been for much of this decade, the home price the median household could afford was around $450,000.

I think the slowdown we're seeing right now is the result of interest rate hikes causing the market to readjust. As interest rates go up, selling price needs to come down for people to afford living here.

I personally think it’s good for the interest rates to go up a bit. The growth needs to be tempered a bit to put a cap on speculation. The Federal Reserve has had rock bottom discount rates since 2008 to try to encourage people to invest, and they’re just now raising them.

And the SAVERS (like me) that have a house paid for and live below their means (what is that??) LOVE higher interest rates- can finally make some money on our savings.

Bring it on!

[COcheesehead]

Originally Posted by Westerner92

In the age of the internet jobs and overpopulation, Denver has intrinsic value as a beautiful, relatively uncrowded place with world class activities close by for relatively cheap. As long as Denver has an internet connection and enough drinking water for residents, its growth is almost undoubtedly monotonic.

There will always be people wanting to move here if there’s room for them, meaning the distribution of housing prices will always be around 1/3 of people’s post-tax income. For a standard 30-year mortgage with a 5% interest rate and 20% down, 1/3 of the Denver metro’s post-tax median income will be the limit of monthly mortgage payments. With a median household income of $72k/year, that puts the monthly payments at $1650, which for the standard mortgage at average interest rates, puts the home price the median household can afford at roughly $390,000. When interest rates were in the 3.75% range as they have been for much of this decade, the home price the median household could afford was around $450,000.

I think the slowdown we're seeing right now is the result of interest rate hikes causing the market to readjust. As interest rates go up, selling price needs to come down for people to afford living here.

I personally think it’s good for the interest rates to go up a bit. The growth needs to be tempered a bit to put a cap on speculation. The Federal Reserve has had rock bottom discount rates since 2008 to try to encourage people to invest, and they’re just now raising them.

Or...

People will move to lower cost of living areas.

https://www.denverpost.com/2017/11/0...stest-regions/

"...Greeley and Fort Collins will double in size and the Western Slope with grow by 2/3rds by 2050"

[Westerner92]

Originally Posted by COcheesehead

Or...

People will move to lower cost of living areas.

https://www.denverpost.com/2017/11/0...stest-regions/

"...Greeley and Fort Collins will double in size and the Western Slope with grow by 2/3rds by 2050"

And as long as demand outstrips supply in those areas, prices will climb to where mortgage underwriters determine what proportion of people’s income going to a mortgage is considered living within means.

The Denver metro is growing at 1.77% a year (since 2010). Keeping up the same growth rates, it will be 75% larger by 2050 itself. Growth isn’t a zero-sum game.

The Federal Reserve raised interest rates last month, and if you check on other cities’ boards, they’re having similar situations with hot markets very suddenly cooling down.

[brown_dog_us]

I'm not in real estate anymore, but here are my thoughts....

- It's definitely slowing down a bit here, but the market was crazy the last few years.
- The sales have slowed, but new inventory has slowed too. It'll be interesting to see if a lot of properties come online this spring. I don't think they will because higher interest rates will keep people from moving up to a bigger house or downsizing.
- Places like Seattle and LA are looking very wobbly.
- The front range has a growth limiter because a new development has to get somebody to sell them water and most of the cities with water don't want to share. This creates a natural restriction of supply, and that restriction should keep prices from dropping a significant amount if there is a recession. If Denver sprawled out to the East it would be easy to over build.
- I'm watching wage growth the closest. With out a serious uptick I don't think prices can go up in the future.