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 know a lot of people that must work two jobs each to maintain their lifestyle. You just can't do that forever.
I can only hope this is true.
Getting adjustable-rate mortgages two or three years ago when rates obviously were bottoming was a huge, classic mistake.
I'm seeing more and more 'for sale' signs each day on my drive home from work.
The first wave is already bailing...
Real estate markets climb gradually.
But they come down with a "bump."
This is interesting for the Denver market, as I thought it was just starting to really recover from the dot com bust. I would have expected this statistic three years ago, when I saw homes for sale for 6-9 months, and then taken back off the market.
That's not a good sign. 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,
More BAD signs. Too much debt.
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.
That's why people are refinacing, drowning in debt. They can't pay the bills.
"When they go to sell the home, they're finding that their home is worth less than their mortgage," he said.
That's the killer. If this trend spreads, look out! The bubble is going to bust. Once interest shoots up, it's all over.
Then we will see how good for America all these illegals are when people look for that second job to keep the mortgage paid.
Not in my part of California.
Not here, either. Contractors can't build them fast enough.
It will be great if you are looking to buy. One mans misfortune is another man's fortune. I'd wait and see how this shakes out for a while. If things don't improve during the summer, there will be desperate sellers in the fall.
That rising interest is scary if you are financing. Keep an eye on that. I remember in the 80's where it hit 19%. Increasing bankruptcies will drive that up fast.
Certainly, at least if you plan to hold the investment for more than a few years.
If we have an amnesty for illegals, housing prices will never come down.
Here is a better link to view those obnxoius personal attacks on my real estate posts.
BS. They aren't rising across America. Go sell your Chicken Little routine somewhere else.
I really look forward to your posts, ex-Texan. You get hammered pretty bad, but I think you're right on with all the reports.
I sold and bought almost two years ago. I have about 6 buying and selling forums in my bookmarks that I visit everyday still...they're so addicting. People are hurting with selling. It's doom and gloom. I've chatted with people all across the US that have homes on the market and nothing is moving.
I have no stakes in the selling and buying game. I just wanted to let you know that I enjoy your posts and I believe you're reporting exactly what I'm seeing.
Were you the vandal that posted personal attacks in the KEY WORDS section tonight?
r-e-g-i-o-n-a-l
mayhaps.
It all depends on what percentage of a particular market took out ARM's which are poised to balloon now. The higher the % of ARM's, the higher likelihood of future foreclosures, which might very well put a glut on some real estate markets and drive prices down for the rest of us.
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