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.
I wish you the best of luck. Hopefully everything will work out great for y'all.
Next door to my sister are three families in one home. Next question?
>>Not in my part of California.
Not here either. There was a house for sale about a month ago up the street. It sold in less than two weeks.
You mean, the Fed raised interest rates 15 times in 2 years, and less people are buying homes!?
That is amazing. Maybe we need a multi-million dollar commission to "study" this phenomenon?
It's a good thing they did this and stopped the Economy from "overheating."
I live in the suburban NYC area. The local paper had a front page article this morning about the local real estate market. Although prices are up year over year, that is only because there were a handful of sales in the $2 million to $4 million range that drove up the averages. The most significant bit of information in the article is that inventories are way up as is the average time on the market. Also, I recently returned from a trip to South Florida, where I go several times a year. For the first time in a long long time I saw ads that read "make me an offer," "motivated seller," and "seller will hold paper," all of which suggest a sluggish market. And in both locations I saw lots of evidence that the actual selling price of houses was significantly less than the list price.
I'll bet a lot of foreclosures on homes owned by Blacks, Hispanics, immigrants who got suckered into unsustainable ARM mortgages. Any illegal aliens that get foreclosed is fine with me.
I read that $500,000 will buy you a house in Watts, Los Angeles
Cute story!
But why...
If people don't like it they can call me Indiana.
?
In my part of western Wisconsin, my wife and I like to go cruising around the area in about a hundred mile radius on our days off. It's rare that we don't pass some new housing development or see many new individual homes (usually huge ones) on our drives. I am assuming that contractors are building these homes because people want to buy them, in short that there is a market for them. I can't speak for other parts of the country, but the housing market doesn't look depressed around here. It's still booming.
Its still regional, and tied to jobs. I was laid off a year and a half ago in Michigan. I've since got another job out of state but our house has been on the market for over a year, and we just got our first offer yesterday. We're taking it.
We bought it back in '98 for $260,000, 2,600 sq ft, 4 BR, 2.5 baths, basement, nice yard, great schools. Since then, when home prices have got up 5-10% a year in many markets, I will be selling my house for $2,500 more than I paid for it 8 years later. Of course, after commissions, I will be losing $13,250.
The midwest, where home price gains have been modest, could be really wacked due to the auto industry going down the tubes. In the high price markets, as long as the economy stays fairly decent, and its an area people want to live, home prices probably will stagnate, or fall a little, and simply stop turning over. People will just live in their house and not see it as an investment and plan on moving on to something else every 2-3 years. Granted, those that were foolish enough to get 100% financing with an ARM are going to be in for a rude awakinging. But that is not the majority in any market.
MonroeDNA: "The Willie Green of Housing."
That is a classic. Ex-Texan, you should use it as your tag line!
Let's just say that I have personal experience of this fact; two houses belonging to friends and relatives have lost considerable value in the last few months. Both for sale, one finally sold for $65K less (and it was only going for $350K originally) and the other can't sell. The owners are going to be in a horrible fix as they can't pay their mortgage now, and unfortunately they refuse to lower the price becasue their realtor friend tells them not to worry, prices will go up again.
I'm seeing more and more 'for sale' signs each day on my drive home from work.
The first wave is already bailing...
Even in parts of upstate SC, never listed as a real estate hot spot, prices seem to be weak with a lot of listings.
If there is a very rapid decline in home prices, a panic is likely to set in sending the prices even lower.
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Pure B.S.! People need housing. the speculative real estate market is icing on the cake. A home has intrinsic value and is only worth what someone will pay for it. Speculation during market fluctuations always occurs, but that doesn't control price, supply and demand does. In point of fact, the supply of housing projected for the next ten years will be way below the demand for adequate housing. Katrina alone insured that demand will exceed supply for the near future. I'm sorry, I have just lived through too many of these cycles to act like the sky is falling every time the market corrects. I'm so sick of newspapers and TV trying to attract viewers by scaring us half to death about every aspect of our daily lives. After awhile you realize its just another fairy tale......the boy who cried wolf!
What has happened over the past half dozen years is very different than anything that's happened before...the zany mortgages, the globalization of debt, record low interest rates, really weird use of equity loans, etc. etc. etc.
In truth, nobody knows how this story ends.
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