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.
It is a market by market trend. We have been looking for a home in the SLC area for about six months. The homes in our target range last little more than two days before selling.
True we are probably looking "above median" but about twice what I'd have to pay in southern Alabama.
I'm of the belief that, like politics, real estate is local.
P.S. If you know of any good deals in SLC area ping me!
Real estate is no longer local because it's such a large part of our economy. The firms that support the real estate market are spread throughout the country. If they start hurting, they're going to lay people off.
My better half has been itching to buy a home for about 8 years now, I try to tell him that it's still cheaper to rent, even here in the Southwest.
I recently sold my house. If I sold it when these posts started, I would have sold it for around $250,000.00 less than I did 2 months ago. That being said, the market here in So. Orange County has definitely slowed. The word from the agents is that prices are 3-5% off of their high.
I am in favor of layoffs, if it is realtors. Parasites.
I am also in favor of union layoffs, as in all of them.
1000 people a day move to Florida. How's the real estate there? (aside from Miami--what idiot wants to live there?)
Keyword ad hominems -- last refuge of the anonymous coward
Georgia has a real big lumber industry. Kohler is a major employer in Wisconsin. Jeld-Wen, manufacturer of windows/doors, is a major employer in Oregon.
I don't like the numbers, but you have to look at each region and factor in circumstances which may be influencing national numbers. Building in flood/hurricane damaged areas is expected to be strong, but does it really reflect growth? Rising interest rates are NOT good, nor are a 30% increase in foreclosures. Equity loans, those can mean a few things, but generally it means people are consolidating high debt loads in order to keep their heads above the waterline. Not good.
It's wise to be cautious, and if you can pay off as much debt as you can in case things do go bad. The last thing you want is to be caught holding a large amount of debt when interest hits the roof.
I don't think it's a national crisis yet though.
All he's saying it watch for sudden changes.
bttt
Good observation!
All those jobs Americans will not do may look pretty good to some of those folks pushing for open borders.
Sooner rather than later if we do get in a tight spiral.
8 years? You should have bought a house 8 years ago, LoL!
I'd wait for fall if you can't wait anymore. Spring prices are always higher. But rising interest is also a factor. If you see 5 year amortization periods creeping up, it may be better to pay a little more than it is to pay more interest.
Oh that? It's already started. I was recently offered the services of an American-born woman who cleans houses for about the same price as an illegal.
But what people don't realize is that a housing bust means more than isolated markets taking a hit or a few realtors getting the boot. It will impact the guys who build the houses, the guys who build the stuff that goes into the houses, and the guys who haul the stuff that goes into houses, etc. etc. etc. Then, of course, there's the landscapers, the architects, lawyers, accountants, etc. etc. etc.
More for sale signs here too in the Orlando area. I have also noticed that new development has decidedly shifted to apartments (condos) and townhouses.
Yes, this could be predicted because we just closed on our new home today and aren't putting our old one on the market for a couple more weeks. Perfect timing for a bubble burst!
There is another problem. All this cheap illegal labor is putting downward pressure on wages.
Our costs are going up, something has to give. That 'adjustment" these stock market experts keep talking about IS going to happen sooner or later. We've just been lucky that consumers have managed to spend, and spend some more and keep the economy going.
I think this trend will continue, until that spending money is sucked up by something else, like fuel and interest rates.
Then something will have to give.
It wasn't all that bad, But we were sweating for 5 months, and ended up loosing about $20,000 (the pool we were going to put in the new place) to a market slump.
But they will look good in the H3s!
Yeah, but selling the old house first just isn't a reasonable option because we have so much stuff in it, two toddlers, husband working constantly and too pregnant to do much of anything myself. So, we're moving out this weekend & hopefully it'll be on the market next week! Keeping my fingers crossed-- the market is still pretty tight around here.
Yeah, I pretty much agree.
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