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the denver real estate market continues to resist the bubble markets (ca, nv, az, fl, rust belt) downward pressure and probably is close to bottoming out this year. if anything, the denver housing trend is deaccelerating as i had suggested several months ago. the one year change is -5.0% vs -5.5% last month with march/feb change only -0.1% vs feb/jan -1.1%.
Keeping seasonality in mind, I think it's a bit early to call a bottom. Inventory is still increasing, and there is a known wave of default and foreclosure action coming as all the bad Alt-A/option ARM paper starts to impact the market. These effects are going to be on prime and near-prime borrowers in segments above the entry level stuff hardest hit by subslime.
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Originally Posted by multitrak
what may help stabilize the denver market is lower crude oil (and hence gasoline) prices near term.
I don't see that as a housing market stabilizer. I see far more ominous destabilizing forces in the expanding inventory, shrinking availability of credit, increased down payment requirements and more stringent DTI ratio requirements, for example. Add to that the slowly accumulating downhill snowball of the economy, which has yet to start feeling the effects of a consumer credit crunch from mushrooming bad credit card and auto loan debt, and I see anything but a stable market. A one or two-month lull in the decline during a traditional seasonal peak is less that inspiring.
A mere 5% YOY loss on a $240,000 house is $1,000 of net worth down the drain every month. Or to look at it alternatively, if you wait to buy that $240,000 house, you're gaining $1,000 a month on the deal for every month you wait. That's pretty close to the house payment if you put 20% down and finance at 6.25% over 30 years...
Anyone else notice the sudden up-tick in requests for suggestions about neighborhoods within close proximity to workplaces or public transportation? It is really wonderful to see people trying to make positive lifestyle changes and reducing their carbon footprints, even if it's primarily motivated by gas prices.
On a personal note, this past weekend my spouse and I contracted to purchase a house within walking distance of his workplace and light rail. We're well on our way to being a one-car family! I'm am over the moon about this, even if our family thinks we've lost our ever-loving minds even considering going without a second motorized vehicle.
Last edited by formercalifornian; 06-03-2008 at 11:28 AM..
In Arvada, that New Urbanist development next to Old Town is selling like hot cakes, due largely to the coming Gold Line of Fastracks and its future station there.
Old Town itself has seen a remarkable rebirth over the last few years.
On a personal note, this past weekend my spouse and I contracted to purchase a house within walking distance of his workplace and light rail. We're well on our way to being a one-car family! I'm am over the moon about this, even if our family thinks we've lost our ever-loving minds even considering going without a second motorized vehicle.
I once lived about a 5 min walk from my office. My previous place had been about 20 min away...not a long commute by any measure. The extra 40-45 min of my life I gained every day was by far a more significant change than the energy savings. But the fuel, insurance, and repair bill savings from ditching that second vehicle will add up, and I doubt you'll feel much of a difference once your lifestyle fully incorporates the changes in transportation ideology.
Bob, I am so thrilled about this! Believe it or not, our house in California was only a 10-minute bike ride from our employers. Moving to Colorado and having a 30-minute car commute was a shock to the system. It will be fantastic going back to a lower-impact and healthier lifestyle.
My husband is thrilled about being able to have lunch with the kids at school a couple of days a week. The elementary they will attend is right across the street from his office.
what may help stabilize the denver market is lower crude oil (and hence gasoline) prices near term.
One of the few things that is propping up the Colorado real estate market, especially outside of Denver (Grand Junction comes to mind), is the boom that high natural gas prices have brought to gas drilling and the related economic activity. A significant decrease in energy prices, while it certainly could benefit some segments of Colorado's economy, would likely "pop the bubble" in the part of the Colorado residential real estate market that has defied gravity and stayed at least comparatively robust.
That's the irony of the corner we've painted ourselves into. I see no painless way out of it, and it will come down to circumstances that will dictate what kind ugly outcome we get to "enjoy."
The residential real estate market is trying to get up and dust itself off after clipped by a maniac in a Hummer, but it's about to get thrown under the Greyhound bus barreling at it at 80 mph. And commercial is not far behind. I agree with Bob about this--I don't think we've seen anything yet--what's coming is going to be much uglier and much more prolonged.
The common misconception is that sub-prime lending was the only irresponsible lending done in the last few years. I can tell you from professional experience and observation that there has been plenty of irresponsible lending throughout the property value and borrower quality spectrum. And a lot of that "toxic waste" was bundled and sold down the line just like sub-prime loans and is sloshing around like rotting meat in the balance sheets of banks, brokerages, pension funds, mutual funds, and God-knows-what. When all of that starting puking back up off of those balance sheets, things ought to get pretty "interesting." That will signal the "real" start of the next leg down.
The real estate market is seeing a jump in some areas. The amount of sales are up and this will show in the 2nd quarter and 3rd quarter reports in certain cities. The market has many micro-markets within it.
While foreclosures are happening and increasing but so are the sales of those foreclosures. There are MANY deals out there and you can get some great deals. Many are waiting to buy but if you are able to buy, now is the time, especially the foreclosures. The banks are pricing them way below what the private seller is asking.
The fact is NOBODY knows when the "bottom" will or has hit, it will take some time to see it, but the prices in some areas are already bottomed out or very close to it. It's a good idea to keep an eye out in your market and especially if you are considering buying this year.
The real estate market is seeing a jump in some areas. The amount of sales are up and this will show in the 2nd quarter and 3rd quarter reports in certain cities. The market has many micro-markets within it.
Although some sub-markets' sales numbers are up from the last few months (we are still in the spring/summer sales season) I know of none that are up from the same period last year...the trendline is still significantly down YOY.
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Originally Posted by LBear
While foreclosures are happening and increasing but so are the sales of those foreclosures. There are MANY deals out there and you can get some great deals. Many are waiting to buy but if you are able to buy, now is the time, especially the foreclosures. The banks are pricing them way below what the private seller is asking.
Now is the time to buy if you don't mind the idea that a few months from now you could buy for thousands less. In comparison to last month, now may be a time to buy. In comparison to next month, not such a good deal.
Sales of foreclosures are not as robust as one might imagine. Banks and SIVs make lousy landowners, and they are very unwieldy when it comes to selling their REO properties...and foreclosure sales by the county trustee are resulting in unsold foreclosed properties going back to the bank as REO in over 95% of the trustee sales now. REO titleholders generally take weeks or months to respond to offers (even "full-price" offers at their asking prices)...and in many cases they don't even get their REO properties listed for sale for months or years after inheriting the property in the trustee sale. In some cases they don't even list properties on their books because they are trying to avoid selling at current market (fire sale) prices in a neighborhood where they hold other mortgages, to avoid triggering a further cascade of defaults that could arise from a REO sale massively dropping comps in the neighborhood. In most cases, the REO bagholders are just not able to cope with the volume of the time-intensive property management workload hitting them.
Quote:
Originally Posted by LBear
The fact is NOBODY knows when the "bottom" will or has hit, it will take some time to see it, but the prices in some areas are already bottomed out or very close to it. It's a good idea to keep an eye out in your market and especially if you are considering buying this year.
You say that nobody knows when the bottom will or has hit--and then immediately declare that some areas are bottomed out... (?!)
There are certainly foreseeable effects of the bad paper that we know is already out there, and that makes formation of expectations of more big trouble to come more than just a random guess. Nobody knows when the bottom will be in (if there even is such a thing), but one can surmise, by looking at all the bad Alt-A and Pay Option ARM paper and the predictable effects of those recasts and defaults, that another leg down is coming, so it's a good bet that a bottom isn't in place now or any time soon. Look at what's happening right now with the financial sector...banks are coming, once again, to the confessional with even more big, punishing writedowns as the true extent of their irresponsibility in mortgage lending is gradually pushed into the light of day.
I see no reason to be in a hurry to buy. Mortgage standards have tightened significantly. The inventory of unsold houses is enormous and getting bigger each day still. There will be plenty of opportunity when it becomes clear that the storm has passed.
All good things to those who wait. Patience is paying big dividends now.
I'm sorry, but I just have to add this one to the mix . . .
. . . Ed McMahon, the old sidekick to Johnny Carson, is in default on a $4.8M mortgage to Countrywide Financial Corp. There's a long tale of woe with this house; story says McMahon (who is 85) won a $7.2M insurance judgement for mold issues that sickened him & his wife and killed his dog. The house has been on the market for 2 years at $6.2M but so far no takers. Even the wealthy have their woes. . .
Now is the time to buy if you don't mind the idea that a few months from now you could buy for thousands less. In comparison to last month, now may be a time to buy. In comparison to next month, not such a good deal.
You say that nobody knows when the bottom will or has hit--and then immediately declare that some areas are bottomed out... (?!)
I see no reason to be in a hurry to buy. Mortgage standards have tightened significantly.
All good things to those who wait. Patience is paying big dividends now.
You are arguing and advising the opposite of what I am. If I could be wrong, so can you, once again depending on WHERE you live, each market area is reacting differently.
I am declaring it has hit bottom in SOME AREAS, while you declare it has NOT hit bottom anywhere in the entire USA, which I find harder to believe. I have been very active and researching certain areas very closely. When priced right, the foreclosures are selling and selling fast at times. Prices of $70 per sq.ft for a high-quality and high-end build are going fast. It's really not going to get any cheaper than that.
Some areas require that you do wait it out longer, other areas are different, so you can SNOOZE AND LOSE. The problem is TIMING, it is not an exact science and somtimes waiting too long will cost you in the end. I've already seen a handful of homes that I was looking to get, pass me by as they were bought by other people, and the SNOOZE YOU LOSE saying applies.
It's all specific market area. Some areas are seeing INCREASES already. Parts of Oregon have seen 5%+ increases along with other certain cities in certain states.
Things will get better overall, it is only a matter of time. The doom and gloomers will have to find something else to talk about when that time comes....
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I'm sorry, but I just have to add this one to the mix . . .
