Real Estate Market / Inflation / Recession / Depression (Denver, Aurora: mortgage, loan, refinance)

[hello-world]

Originally Posted by alexis2005

to wait a few more years but the pull of the mountains and family are also present. My fear is that we buy a house this year and then find out that if we had waited another year or so we could have saved even more. I guess I'm not so much worried about my future employment as I am about losing money in a downward market. I guess trying to time this type of market might be foolish and maybe we just need to go ahead and buy. Oh, and as far as natural gas and it's future - I feel pretty confident that it will remain strong, especially in Colorado. Thanks!

in my humble opinion, i would say that it would be a good idea to keep an eye on interest rates, likely interest rates, and the (your) market's inertia. if you have the luxury of watching until the "time is right", i would go with that, personally. there are threads here (and probably even better informed blogs and literature elsewhere) that cover some of what tends to happen in colorado relative to national trends, historically. with that in mind, and with your "what's going on today"-informed gut, you might be in a good position when the time is right.

you may want to look at historical MLS numbers and their relationships with some of the "key" kinds of factors for times that look a little like what we're seeing now, relative (in terms of those key factors) to what the key factors are like now. intuition can evolve that way, and intuition can give you a good sense (especially if you have reason to believe it serves you well).

The Adams Group - Colorado Economy,
Trulia - Real Estate, Homes For Sale, Sold Properties, Real Estate Maps, and
Zillow - Real Estate Valuations, Homes for Sale, Free Real Estate Information

might be some starting points worth a look to get some sense of relative situations now and historically to inform your intuition. it might not be a bad idea to look at what colorado industry might look like 10 years down the line (or soon after you might buy, to sense what you might lose out on or gain by buying "now", whenever "now" is). how might tourism in colorado shape up in those timeframes considering the national or international economies? how might the construction industry look? how might the energy business look? how might legislation or other important factors look in terms of lending practices, e.g.? (all big players that could impact people's property buying interest and power in colorado) in colorado, as in some other spots, lending practices were relatively lax, which helped bump up costs relative to the buying power of who was buying...and bump it down as "foreclosure capitals of the country" began hop scotching around the denver metro. how low are rents relative to property values? how much of a speculative situation is your target area seeing? how much inventory is there? what are population projections? etc. etc.. which prognosticians do you trust the most, and which ones indicate national home price contractions of how much and what evidence can you find concerning whether colorado locations might lead or lag those trends? etc. etc..

and let us know what you learn!

[hello-world]

Originally Posted by jazzlover

To be truthful, there may be many things that are happening in our economy that make good short-term business sense. For example, if I could cut my labor expenses by 50% by moving my manufacturing plant off-shore, from a business perspective, it probably would be foolish for me not to do it.

The rub comes from the fact that individually sensible decisions may have serious collective consequences--especially over the long-term. In theory, that is what we elect leaders to worry about, and hope that they make good policy decisions to assure our long-term economic and social survival. Today's leaders, though, are so busy looking at this week's poll results that long-term thinking has gone out the window.

The other problem is that we tend to think of things only in economic terms, not strategic terms. For example, buying two-thirds of our oil from overseas in order to keep our wasteful lifestyle built around endless oil consumption going may make some good short-term economic sense in some respects, but it is moronic from a strategic perspective. I alway liked an old saying, "If you are putting all of your eggs in one basket, you'd better be watching the damned basket." Well, 2/3's, going on 3/4's, of our "oil basket" is now in the hands of a bunch of two-bit dictators, oil sheiks, nuclear wannabes, and communists--and the basket is shrinking, at that. If that isn't poison to our strategic interests and security, I don't what is. Of course, our feckless politicians' answer is to drill more in the US and DEPLETE OUR DOMESTIC ENERGY RESOURCES EVEN FASTER. I don't think anyone has to be a Harvard-graduated genius to figure out what makes strategic sense. Anyone with an objective mind and some common horse sense should be able to figure it out. Relatively few of them exist within the Washington Beltway, apparently, and equally as few anywhere out on the political "stump" these days. No one wants to tell Americans that they are going to have to "hunker down" some, and that things aren't going to be near as cushy for awhile--probably a long while. All of this means that things will probably get a whole lot worse than they would otherwise have to for we Americans. As I posted earlier, reality usually wins in the end.

i fully agree on the economic versus strategic thinking. what makes sense economically now doesn't always seem to make sense strategically, or for strategic reasons for later, economically.

as for alexis, (p.s....), i would think that it MIGHT make sense in several months, if prices still appear to be lowER and interest rates are still crazy low to buy then. i think you can get a BIT of sense of trends by looking at the shape of any curves on some of the comps (for example, currently it looks like an overall convex shape - that looks a bit like the curves in some other parts of the country did several months ago that are now on the downhill side - for much of denver, with some blips, so, that tells me that those areas might be heading downward a bit in the near term, anyhow, especially considering the overall economy and employment). but then, with interest rates so low, it could be like buying a cheaper place later at a higher interest rate, so... lots to consider, i guess, but with the info available to you out there (and on threads like this, to some extent, i suppose), my guess is you could make some good moves here in the not too distant future if you have some resources to absorb any risk or further devaluation...to ride anything out.

for whatever one prognostician's perspective is worth, and a single simple "outlook" is worth, here's an excerpt from the Adam's Group 2008 colorado forecast report: "With the exception of the energy counties in northwest and north central Colorado, the state’s economy will mirror that of the nation in 2008." "Because Colorado has not experienced the speculative home-price appreciation that has taken hold in other parts of the country, the recession will not be as deep here as in some other regions. However, with the exception of the Grand Junction market region, which will grow as long as drilling activity continues, Colorado will follow the U.S. economy into recession and remain there until the national recovery gets underway." not that there hasn't been significant speculative buying in some parts of CO.

[Bob from down south]

Originally Posted by timofeu

Very interesting thread. As someone who already has a job in the Denver area but who has not yet moved there, makes me re-think my strategy. Maybe I should sell my house here in TX and move there, but park my gains in Gold for awhile and rent an apt whilst hoping my job does not go to India. Or maybe I should continue to work from here and take a wait and see attitude. Or maybe I should move there and throw caution to the wind and buy a depreciating asset and hope for the best.

Throwing caution to the wind could be a really expensive decision. But renting while you see where things are going isn't a bad idea.

And parking your $$ in gold could pan out as a "stupid tax" as well. If I were going to pick the next bubble, metals, and particularly gold look like a solid candidate. We're never going back to the gold standard, and who really needs gold for anything? A jeweler, maybe. It's only real value is what the next greater fool will pay for it. And they're mining more of it every day, and God only knows how much is floating around as it is.

Bob

[Bob from down south]

Originally Posted by hello-world

what i wonder is whether the connectivity of the global economy might bolster any major economy from truly tanking 1929-US-et-al-style. those countries that sell us things (that we depend on) probably don't want to see us sink in such a fashion (maybe in other, slower fashions they themselves can better adjust to).

also, i'm not sure our ***es are getting kicked. i agree we have issues to deal with, and that somebody, somewhere, does something a little better than we do on any single front, perhaps (maybe across many as measured by HDI "standard of living", e.g - while we're still in the top 10 or 15 there...and slipping), though it does seem that we still do relatively well across many fronts. i would agree we are slipping on many fronts, and many are resting on some laurels (or ignorant as to what's really going on a good part of the time), but still, i wonder how imminent an implosion (as you and bob seem to see it) is? i'm not saying it isn't imminent, but it seems there might be some mechanisms in place today that might buffer things to some extent. but then, those very mechanisms may very well result in more immediate and global issues. hence, i ask...

The other view is that the very same "connectivity," or global interdependence as you refer to it, could actually work the opposite way and amplify the pain level and accentuate the severity of a collapse.

What, for example, would happen if the Chinese government, which exercises direct control on its banks, decided to dump dollars on the currency market while we were suffering the effects of an otherwise survivable but severe economic shock? Many argue it would never happen, as the Chinese would suffer terrific losses themselves in the aftermath. But consider this old joke:

A man strolling on the beach encounters a bottle, and on picking it up, a Genie steams out. The Genie tells the man that he is a very special Genie, that he will grant him three wishes, but there is a catch--whatever he asks for, his wife gets double.

So the man asks for $10 million. *poof*, 10 million dollars appear at his feet, and 20 million appear at his wife's feet.

The man then asks for two 22-year old blondes. *poof* two 22 year old beach bunnies show up at his side, and sure enough, four tanned 22-year old surfer dudes show up at his wife's side.

The man contemplates a minute, and makes his last wish. "Genie, I want you to beat me half to death."

Now what if the day comes when China has so many dollars in its coffers, that they can accept being "beaten half to death" if it means our complete undoing? I don't like to think about it.

Bob

[CosmicWizard]

Jazzlover wrote:

Today's leaders, though, are so busy looking at this week's poll results that long-term thinking has gone out the window.

Never were truer words spoken!

[hello-world]

Originally Posted by NewAgeRedneck

Jazzlover wrote:

Today's leaders, though, are so busy looking at this week's poll results that long-term thinking has gone out the window.

Never were truer words spoken!

i also think that today's american leaders are often too far removed from most people's lives: it seems tough to relate to what people want if someone's life has been so extraordinary (due to wealth, privelege, etc.) for so long. personally, i think that leaders need to watch polls a bit to at least have a sense of what people want (leaders are also representatives, after all). but i agree that the intent is probably often misplaced towards "appearing" like they know what people want, or towards "telling" people what they want to hear without any intention of following through. (uniter not a divider? that rhetoric flows every election cycle) when the representatives are more interested in reelection than doing something that's right, we wind up in economic straights, wars, etc.. but, i would say some of that, at the least, can be our own fault, due in part to laziness in getting the facts and keeping in tune with the facts' contexts.

[hello-world]

Originally Posted by Bob from down south

The other view is that the very same "connectivity," or global interdependence as you refer to it, could actually work the opposite way and amplify the pain level and accentuate the severity of a collapse.

What, for example, would happen if the Chinese government, which exercises direct control on its banks, decided to dump dollars on the currency market while we were suffering the effects of an otherwise survivable but severe economic shock? Many argue it would never happen, as the Chinese would suffer terrific losses themselves in the aftermath. But consider this old joke:

A man strolling on the beach encounters a bottle, and on picking it up, a Genie steams out. The Genie tells the man that he is a very special Genie, that he will grant him three wishes, but there is a catch--whatever he asks for, his wife gets double.

So the man asks for $10 million. *poof*, 10 million dollars appear at his feet, and 20 million appear at his wife's feet.

The man then asks for two 22-year old blondes. *poof* two 22 year old beach bunnies show up at his side, and sure enough, four tanned 22-year old surfer dudes show up at his wife's side.

The man contemplates a minute, and makes his last wish. "Genie, I want you to beat me half to death."

Now what if the day comes when China has so many dollars in its coffers, that they can accept being "beaten half to death" if it means our complete undoing? I don't like to think about it.

Bob

yeah, not completely dissimilar to how the communist bloc unfolded.

from my previous post: "those very mechanisms may very well result in more immediate and global issues."

i agree there's a chance that the connectivity can result in more abrupt and large scale cascades. it seems hard to say which way things might go in today's world given current circumstances, so it could be interesting to see some literature on what people that think more about these things in an geopolitical and economic context find. part of me suspects that in the time frame that we're talking about (the next few years), china may be too interested in establishing itself to cut a market like the US out. but then, i suppose there are "alliances" bigger than china itself out there that aren't necessarily loving the USA these days...

your thoughts?

as for your renting suggestion for the time being (to timofeu), i'd second that motion. there's a good rent versus own calculator at NYtimes (you can google it) that accounts for many variables that just might show you that you're better off renting versus buying lately and for the foreseeable immediate future - rent is relatively low in denver lately (compared to other cities, compared to owning), for example. regarding gold, it is used in high end computing electronics, e.g., but i am not sure that's a reason to buy lots of it.

[jazzlover]

Originally Posted by hello-world

i also think that today's american leaders are often too far removed from most people's lives: it seems tough to relate to what people want if someone's life has been so extraordinary (due to wealth, privelege, etc.) for so long. personally, i think that leaders need to watch polls a bit to at least have a sense of what people want (leaders are also representatives, after all). but i agree that the intent is probably often misplaced towards "appearing" like they know what people want, or towards "telling" people what they want to hear without any intention of following through. (uniter not a divider? that rhetoric flows every election cycle) when the representatives are more interested in reelection than doing something that's right, we wind up in economic straights, wars, etc.. but, i would say some of that, at the least, can be our own fault, due in part to laziness in getting the facts and keeping in tune with the facts' contexts.

As the old saying goes, "People usually get the government they deserve." We are in a hell of a mess in this country, and it is probably going to get a lot worse. We have only ourselves to blame for it.

[2bindenver]

Report offers hope in housing, an article from The Rocky Mountain News, reports that according to the PMI Mortgage Insurance Group's Winter 2008 Risk Index report, the Denver-area housing market is looking strong compared with many other places in the country. Only a dozen cities across the country were ranked higher than the Denver-Aurora area. David Berson, chief economist for PMI said, "Denver, actually, is looking reasonably good. That doesn't mean prices will not fall, but it means there is a very low probability prices will be lower than they are today in two years. That is pretty good news." LaVaughn Henry, director of U.S. economic analysis, said the model used by PMI judges each metropolitan area by five metrics: housing price movement, affordability, changes in local labor markets, housing supply and foreclosures.
Report offers hope in housing : Real Estate : The Rocky Mountain News

[hello-world]

Originally Posted by 2bindenver

Report offers hope in housing, an article from The Rocky Mountain News, reports that according to the PMI Mortgage Insurance Group's Winter 2008 Risk Index report, the Denver-area housing market is looking strong compared with many other places in the country. Only a dozen cities across the country were ranked higher than the Denver-Aurora area. David Berson, chief economist for PMI said, "Denver, actually, is looking reasonably good. That doesn't mean prices will not fall, but it means there is a very low probability prices will be lower than they are today in two years. That is pretty good news." LaVaughn Henry, director of U.S. economic analysis, said the model used by PMI judges each metropolitan area by five metrics: housing price movement, affordability, changes in local labor markets, housing supply and foreclosures.
Report offers hope in housing : Real Estate : The Rocky Mountain News

i like how in times like these, prices falling less "compared with many other places in the country" becomes "pretty good news"!

i agree denver's not as bad off as some other places. prices have only fallen 5-15% throughout much of denver while projected to fall some more, but i guess it didn't get quite as hyperinflated relative to what people can afford as, say, LA or some of florida.