Real Estate Market / Inflation / Recession / Depression (Flagler: mortgage, credit, loans)

[multitrak]

Originally Posted by formercalifornian

Where did you get that stat, mulit? I had no idea it was that high!

Denver Colorado Census and demographic information

scroll down to "housing tenure" on the right side of the data table...compiled from the 2000 census. i found another more recent source that listed 45% renters, but i can't find it now...

[Bob from down south]

The cost of building materials has dropped precipitously in this crash as well.

Housing Slump Means Tough Times For Timber

Construction costs should not be as high now as they were two years ago.

Everything you knew, or thought you knew, about the housing market needs to be re-looked right now, as we're on a bed of rapidly shifting sand here.

Formercalifornianan hit it on the nose...it's all about prices relative to incomes. All the easy credit available in the last few years has really desensitized us as to how big a mountain of cash a quarter of a million dollars actually is.

[2bindenver]

Denver 7th-best for home sellers, an article from the Rocky Mountain News, reports that according to Forbes magazine's study of 40 large metro areas, Denver is the 7th-best city in which to sell a home. Forbes.com said, “Overbuilding and a high foreclosure rate stymie Denver’s housing market, which last year saw a 6.3% drop in prices. Still, area homes are selling, and the vacancy rate, while still at a pro-buyer 3%, last year shrunk by 20%. The 49% drop in construction starts, the 12th-largest cut in the country; and 2% rise in new jobs, the 9th-highest rate in the country; are good news for sellers.” Each city was ranked by its 2007 unsold vacancy rate, calculated by the U.S. Census American Housing Survey, and how much the market had tightened or loosened when compared with 2006 conditions. The report also took into account construction starts, job creation, and the degree to which new conforming loan limits from Freddie Mac and Fannie Mae would improve each market's lending conditions.
Forbes: Denver 7th-best for home sellers : Real Estate : The Rocky Mountain News

[multitrak]

Originally Posted by Bob from down south

The cost of building materials has dropped precipitously in this crash as well.

Construction costs should not be as high now as they were two years ago.

actually, lumber peaked in 2004 before the regional housing bubbles popped in 2005. it appears to be bottoming now. lumber is commonly used by analysts as a leading indicator of sorts for the housing industry. otoh, copper prices, a key house building material too, have screamed up several fold (and now near new highs at $4/lb) during the same time period! agreed, you would think that construction costs should be lower because lumber is hovering at 8 year lows now, losing over half of its price since 2004. so are builders pocketing the difference or are the lower wood costs getting eaten up in higher labor and copper costs?

lumber monthly price chart: Futures Trading and Commodities Trading : Discount Brokerage Services

another monthly lumber chart beginning in 1973 http://mooreresearchcenter.net/pdf/lb.pdf

copper monthly price chart: Futures Trading and Commodities Trading : Discount Brokerage Services

another monthly copper chart beginning in 1973 http://mooreresearchcenter.net/pdf/hg.pdf

[sterlinggirl]

Originally Posted by Pettrix

$240K for a home is NOT unreasonable. I worked with builders and building a well-built, 2,400 sq.ft home with 4 beds and 3 bath, with nice finishes, good windows, tile, etc. is not a cheap endeavor. Once your down paying all the subs, your lucky to come out ahead with some money after all your time, labor and risk.

People can't afford 5X their income for housing.....

If you reduce square footage and premium finishes until it gets down to 3X income, then people will be able to qualify for a mortgage to buy it.

[Bob from down south]

Originally Posted by 2bindenver

The report also took into account...the degree to which new conforming loan limits from Freddie Mac and Fannie Mae would improve each market's lending conditions.

The new conforming limits have done next to nothing to improve lending conditions. Fannie and Freddie have significantly tightened their underwriting standards, more than offsetting any anticipated improvement due to raising the conforming limits.

Additionally, since larger (formerly labeled jumbo) loans tend to be refinanced at lower interest rate differentials (known as prepayment risk) the rates for loans made above the old $417K limits are stuck with a higher interest rate to compensate for the increased risk that the loan will be paid off sooner than normal due to refinancing activity.

Funny, but the 8 Apr Rocky Mountain News page with this Forbes article also has a link to another page, describing in much less cheery terms the price hit Denver homes took in March 08.

Metro home prices off 9.9 percent in March, compared with March '07 : Real Estate : The Rocky Mountain News

[multitrak]

same news spun in a more negative fashion (9.9% decline here vs. 6.3% decline there both 03/07-03/08, so which is it?)...the truth of the trend will be known at the end q3. until then, it's all liar's poker...

[suzco]

Originally Posted by multitrak

same news spun in a more negative fashion (9.9% decline here vs. 6.3% decline there both 03/07-03/08, so which is it?)...the truth of the trend will be known at the end q3. until then, it's all liar's poker...

The 9.9% drop was for average price; the 6.3% drop was for median price, according to the Rocky MT News article.

The average price of a single-family home sold and closed last month was $274,693, a 9.9 percent drop from $302,084 in March 2007. . .

The median price of a single-family home in March was $224,900, down 6.3 percent from $240,000 in March 2007.

[multitrak]

Originally Posted by suzco

The 9.9% drop was for average price; the 6.3% drop was for median price, according to the Rocky MT News article.

yep...that's my point: an average house price decline of 9.9% sounds "scarier" for a pessimistic sound bite than a median decline of 6.3%. average prices tend to be less descriptive of the overall house market and can be skewed to the high or low ends. even bob admits that the news piece described "in much less cheery terms the price hit Denver homes took in March 08."

[Bob from down south]

Well, for a person owning that $240,000 median house in Denver in Mar of 2007, that $1,258 loss they took every month through Mar 08 should be scary enough.

Now somebody tell me how those kind of losses translate into a good news story? "Great news!! Forbes says it's the seventh best place to sell a house--but make sure you sell it soon, seeing as how you're losing over $40 a day in equity while your name stays on the deed...even on Sundays."

Gee, where can I sign up for some of that??!!