Real Estate Market / Inflation / Recession / Depression (Denver, Lakewood: housing, rental, vacation)

[jazzlover]

Originally Posted by hello-world

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.

Sort of like drowning in 10 feet of water instead of 30.

[NewAgeRedneck]

jazzlover wrote:

Sort of like drowning in 10 feet of water instead of 30.

Or getting run over by a VW Beetle instead of an SUV!

[jwiley]

Originally Posted by hello-world

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.

One thing I always look for when looking at results of studies, is who is behind the money that funds the studies, when you look at the Adam's groups major clients the state tourism board and several home developers are on the list, something to think about when reading their studies.

AS for the housing market in Colorado I think this study by business week shows something that is also interesting.
Top States for ARM Overexposure

They put Colorado as having the 6th most arms in the nation, that is even after being in the top states in the nation in foreclosures the last few years. The whole reason for adjustable rates where so popular for most people is that they could not afford the fixed rate on a home loan, with the cost of living rising, and the overall income staying relatively the same it is only a matter of time before some of these people cannot afford the higher payments that come with the changes in interest rate. For the last ten years or so these people usually would just refinance back into another adjustable loan, now many of those options are gone, or so restrictive that they no longer qualify for them. After years of working in the home lending business, I would say that anybody out there that says that the market will be fine over the next two years, is being irresponsible to say the least, as it has not hit the bottom in Colorado yet, especially with the continued building of new developments, and influx of people to keep the wages down.

[hello-world]

Originally Posted by jwiley

One thing I always look for when looking at results of studies, is who is behind the money that funds the studies, when you look at the Adam's groups major clients the state tourism board and several home developers are on the list, something to think about when reading their studies.

AS for the housing market in Colorado I think this study by business week shows something that is also interesting.
Top States for ARM Overexposure

They put Colorado as having the 6th most arms in the nation, that is even after being in the top states in the nation in foreclosures the last few years. The whole reason for adjustable rates where so popular for most people is that they could not afford the fixed rate on a home loan, with the cost of living rising, and the overall income staying relatively the same it is only a matter of time before some of these people cannot afford the higher payments that come with the changes in interest rate. For the last ten years or so these people usually would just refinance back into another adjustable loan, now many of those options are gone, or so restrictive that they no longer qualify for them. After years of working in the home lending business, I would say that anybody out there that says that the market will be fine over the next two years, is being irresponsible to say the least, as it has not hit the bottom in Colorado yet, especially with the continued building of new developments, and influx of people to keep the wages down.

i totally agree on watching where the money's coming from. i think that could make the fact that the Adams Group still calls for a recession that mirrors the nation's (if to a lesser degree), including housing, a bit more poignant.

and i agree that the ARM and foreclosure rates are worth keeping a close eye on. all things considered, i think if i were looking to buy a place in denver, e.g., i would rent while waiting with a very keen eye on the trends and the news from various sources, while considering that intrest rates are very low. if i had a huge stash of cash (not tied up in stocks or property that are losing too much value) to sit on "just in case", i might think of several months from now, probably pre-election, as an opportunity with some more risk than usual (as, e.g., it still seems hard to say whether what jazzlover, bob, and i had posted back and forth about is unlikely considering how in the hole so many of us are in terms of various debt, investments turning out worse than we'd hoped, etc.). if i didn't have that buffer, i would probably be wanting to wait until things became a little more "typical" and take the higher interest rate (though, probably cheaper property) at a later date (probably a date years out). either way, i think someone could MAKE money by renting (relative to buying) for the near term foreseeable future. but, i am no expert, so....

[Mike from back east]

CPI is up 4.1% for 2007, outpacing wages....

"Inflation spiked in 2007, driven by escalating food and energy costs that more than cancelled the wage gains earned by workers over the year. New federal government statistics show the consumer price index rose 4.1 percent over the 12 months ending in December, 2007, compared to a 2.5 percent increase in the 12 months before that. Energy prices, responding to a surge in the cost of oil, rose 17.4 percent over the period. The price of food increased 4.9 percent -- the largest rise in 18 years......"

washingtonpost.com

[Bob from down south]

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

If you read the linked article, you'll find that the aforementioned LaVaughn Henry references PMI's "high-faluting economic model" to judge each metro area.

I think the technical term is actually hi-falootin' Which is a half step above "newfangled" and a half step below "as seen on TV."

I am left to wonder if this "economic analyst" studied at the same school as the now infamous Lawrence Yun, chief economist, mouthpiece, and cheerleader-in-charge at the National Association of Realtors. That bunch would describe the smell of a ten-day-old bat turd in terms of roses, tulips, and Chanel Number 5.

"Remain calm, all is well!!!!"

Bob

[steveindenver]

According to the NAR it is always a good time to buy. Anything with their name associated should be avoided like a dog turd on the buffet line.

[jazzlover]

The hype coming out of the realtors these days in the face of the oncoming collapse of real estate markets reminds me of the British describing their near annihilation and retreat from the Battle of Dunkirk in World War II as "a bit of unpleasantness."

[Mike from back east]

Okay crew, let's stop bashing the realtors, every business segment has a positive view.... stock brokers will sell you any sort of investment you want today, even though the stock market has gone down and is going down further, and the SUV and Hummer dealers are screaming buy buy buy...so.... let's get back on topic....

"Federal Reserve chief Ben S. Bernanke told lawmakers today it is "critically important" that any economic stimulus package take effect quickly if it is to help ward off recession, remarks likely to push Congress and the White House toward faster action on an ...." washingtonpost.com - nation, world, technology and Washington area news and headlines

Bernanke seems almost in a panic. Those words are not the usual sort of stiff upper lip comment the Fed is long known for... IMO he says we're in real trouble... and of course he declines to blame his predecessor or chief executive for starting the real estate bubble with insanely low interest rates to spur an economy after 9-11 and the dot-com crash, a bubble made worse by a collective failure of every watchdog agency in the nation to halt mortgage practices that were absurd and/or criminal.

I think a recession has already started, will run 18-24 months, and the Dow will sink to 10,750 before it turns up. Bets?

And I've been wanting to add this to the thread for some time now.... that being, in addition to the known economic troubles that lie ahead, the sudden happening of a wild card event, like bird flu becoming human transmissible... and what happens if it really gets rolling in the fetid teeming masses of China, India, Pakistan, Bangladesh, Malaysia, North Korea ... tens of millions die, probably several hundred million, all travel stopped, imports curbed... talk about a bad scene...

Enough rosy scenario for now, gotta go get a haircut.... while I've still got some...

[hello-world]

can someone post some favorite economics blogs? maybe some of what we learn there could even better inform the discussion?