Posted on 04/10/2006 9:22:21 PM PDT by ex-Texan
Rising foreclosures are driving the supply of unsold homes in the Denver area to near-record levels, experts agreed on Thursday.
There were 27,309 unsold previously owned homes on the market in March, nearly 18 percent more than the 23,214 unsold homes a year earlier, and 5.7 percent more than the 25,848 in February, according to reports released on Thursday.
The reports, based on Metrolist Inc. data, were released by independent broker Gary Bauer and Steve McGuire of RE/MAX Professionals.
The record inventory of 27,798 homes was set in June 2004. McGuire adjusted the 2004 numbers for a change in the way they were calculated by Metrolist, which tracks sales of homes sold by Denver-area Realtors. Unadjusted, the record was 28,043 homes in June 2004.
Either way, it's likely that the record will be shattered next month, McGuire said.
"And then it likely will be broken again in May and again in June," he said, because that is when more homes historically hit the market.
"After that, what will happen depends on other contributing factors," such as the economy and mortgage rates, he said.
McGuire and a number of other Realtors said the number of foreclosures on the market is driving up the supply of unsold homes.
Foreclosures in the first quarter are hovering near 4,800, about 31 percent higher than a year ago.
"The increase in the number of foreclosures is putting additional homes on the market," Bauer said.
Rising mortgage rates, aggressive refinancing in which owners pulled out all or most of their equity, and homes bought with no down payments are driving foreclosures, said Ed Jalowsky, owner of Classic Advantage Realty.
"It's almost been a perfect storm," Jalowsky said.
He said many buyers of homes priced under $300,000 who locked in adjustable rate mortgages within the past few years are finding their monthly payments rising by $100 or $200.
"When they go to sell the home, they're finding that their home is worth less than their mortgage," he said.
Kelly Posiviata, a broker with K P Properties, Metro Brokers of Arvada, agreed that the glut of homes is being exacerbated by foreclosures hitting the market.
"A lot more (foreclosed) homes came on the market at the end of February and the first part of March, and I think that this nonstop flood of foreclosures is just pushing up the unsold inventory," Posiviata said.
She said home buyers who took advantage of huge incentives by home builders thought they were getting great deals. But if they've owned their homes for only a couple of years, they're finding that the market value is less than the sales price.
Posiviata advises buyers to stay in their homes for a minimum of three years, and preferably five years, if they want to be able make a profit, she said.
However, there are a few "hot spots," such as Cherry Creek, Bonnie Brae, Crestmoor and neighborhoods near the Denver Tech Center, where homes are bucking the trend and appreciating, she said.
It wasn't all bad news for the market, however.
A total of 6,102 homes were placed under contract in March, 24 percent more than the 4,914 in February. However, such large increases are typical for seasonal reasons. Homes under contract last month dropped 3.5 percent from the 6,325 in March 2005.
Both the average and median prices of homes rose in March from February after an unexpected drop in February.
The median, or middle, price of a single-family home rose to $247,500, a nearly 4 percent jump from $238,500 in February and a 3 percent increase from a year earlier.
However, McGuire estimated that two-thirds of the increase is due to the mix of homes sold - with more expensive homes driving up the median and average prices - and buyers taking advantage of no down payment programs and other incentives that artificially increase the reported sale price.
"Basically, the market is flat," McGuire said.
On the market
27,309 unsold previously owned homes on the market in March. That's nearly 18 percent more than a year ago and 7 percent more than in February.
4,800 Approximate number of foreclosures in the first quarter, about 31 percent more than a year ago.
Interest will shoot up, and people will get stuck with too much debt on floating rate loans. If a glut of housing hits the markets nationaly, it will drive prices down. If something else happens in the economy, job losses etc. That will force more salws and keep driving them down. Banks compesate for losses by jacking up rates.
MOOB!
>>>If we have an amnesty for illegals, housing prices will never come down.<<<
What percentage of illegals-with-amnesty will be able to buy homes at today's prices?
Same here.
I am from Northern California (Santa Rosa, CA to be more specific) and there are no such problems here, yet. However, like I said in a previous post, if we have a large percentage of ARM holders, we might see this phenomenon too. This is why my husband and I will never take out ARM's, particularly on our primary residence.
I don't think we will have too much to worry about. For example, Marin County, just to my south only has 20% of it's total available land available for development. Approx 80% is set aside as open space and owned by various state, county and federal entities so that kind of pressure on the supply and demand of homes up here will buffer us from some of this foreclosure bust.
That's not a good sign. It's spring, things should be moving fairly fast, not sitting around for long. At least that's how it is in these parts, The seasons may be at different times in CA compared to ND.
It's still rainy season in California, even in Southern California, our spring doesn't really start until towards the end of April to May.
That's only if there's a soft landing.
I agree with you. Those people who lusted after the ARM's were penny wise and dollar foolish.
Anyone who has a timeframe of longer than three years has heard this stuff before, many times. Even during general prosperity you'll have markets that tank.
In level markets no one has any business buying zero down. On wild markets no one has any business waiting one minute longer than necessary to get into the market.
In markets with 25% appreciation per year, watch out!
Do you see how this is different than what he says?
What part of California are youe and CindyDawg in? Inventory is up in southern california, and starting to dip.
Ex Tex, I want to commend you for your fine efforts in sounding the bubble alarm. You have endured a tremendous amount of abuse, yet you continued to march forward. It’s difficult to tell people what they don’t want to hear, most especially those with a vested interest in the housing market. I am sure that many here have benefited in one way or another from your advice.
The chickens are coming home to roost.
Can't happen soon enough for me.
Whole buncha people been living in fairy land for the past few years. And they're about to learn there ain't no free lunch!
That's only if there's a soft landing.
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That's media hype talk. There is theoretically no bottom to this, so how can their be a landing. The market is constantly changing, you got to ride the changes like waves with a surf board baby. You never really know how far down or up the market will swing, or how fast. We all are at the whim of cruel fate. Don't live beyond your means, work your ass off, pray to God, and learn to love it.
If/when it crashes, there are serious consequences for the economy as a whole. This thing is neither "regional" nor isolated.
Give it a rest. You've been predicting this for over three years. You are the willie green of housing.
If there is a very rapid decline in home prices, a panic is likely to set in sending the prices even lower. That panic could extend to industries related to real estate, such as lumber, construction, trucking, banking, etc.
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