Real Estate Market / Inflation / Recession / Depression (Loveland, Delta: mortgage, credit, loan)

[mrlucero2002]

Jazzlover and Mike from back east…

You don’t understand what a treat it is to be a fly-on-the-wall and listen to you “wise men” speak. Your knowledge and experience is so valuable.

My wife and I are taking a leap of faith and will be heading to the Denver Metro sometime between March and April with no jobs lined up and no house to sell (thank God). We’ve been saving for the past 2 years so we should be in good shape. I figure I’ll consult, temp, or bartend, until I find something I really like. I’ve got a great job here as a Commercial Real Estate Financial Analyst, but it’s not going to buy me a house or allow me to raise a family, out here in Orange County (even when the home priced decline). I’m jumping ship and swimming to shore. I might drown on the way or get eaten by sharks, but it’s better than going down with the ship. Any way, I just wanted to say I enjoy reading your discussions.

Everyone else… listen to these guys. They know what they are talking about.

[Mike from back east]

Originally Posted by mrlucero2002

....I’m jumping ship and swimming to shore. I might drown on the way or get eaten by sharks, but it’s better than....

Thanks for the kind words. If your mouth is big as mine, the shark will be in the mother of all teeth gnashing contests.

[Bob from down south]

Originally Posted by 2bindenver

Denver will be among the next markets to see a boom," Yun added.

I think he meant a Ka-boom.

Bob

[Bob from down south]

Originally Posted by hello-world

so what happens when national AND local numbers point to a downhill slide, or when local numbers are shown to follow national numbers with some lag, typically? i don't know that this is necessarily the case with denver, but there are experts in economies that suggest denver may follow the national trend, right?

I honestly believe that the national trend that is already developing is going to leave virtually nowhere untouched. San Francisco has gone unscathed, but now in the last few months they're getting slammed and they're doubly-hurt that their immunity has been compromised, so to speak.

The mortgage bond insurers are circling the drain now...do a search through the last week's news for ChannelRE, MBIA, and AMBAK. When those dominoes fall, the banks are going to have to bring onto their balance sheets all the suspect mortgage debt that they are still hiding due to accounting rules that permit them to consider it "insured." That could be a 10x increase to what's already written off. I've seen estimates of over a trillion dollars worth of losses.

I think the storm is now here, and I think we ain't seen nuttin' yet.

Bob

[hello-world]

Originally Posted by Bob from down south

I honestly believe that the national trend that is already developing is going to leave virtually nowhere untouched. San Francisco has gone unscathed, but now in the last few months they're getting slammed and they're doubly-hurt that their immunity has been compromised, so to speak.

The mortgage bond insurers are circling the drain now...do a search through the last week's news for ChannelRE, MBIA, and AMBAK. When those dominoes fall, the banks are going to have to bring onto their balance sheets all the suspect mortgage debt that they are still hiding due to accounting rules that permit them to consider it "insured." That could be a 10x increase to what's already written off. I've seen estimates of over a trillion dollars worth of losses.

I think the storm is now here, and I think we ain't seen nuttin' yet.

Bob

i agree it seems the storm's here. plenty of lightning and purple-green clouds looming, anyhow.

[hello-world]

serious layoffs were just announced at a "prominant" aircraft company (adam aircraft) in the denver metro. not good news if you're looking for aerospace or similar work (it looks like it will be a flood of people looking for work due to this). that is after this news came together: The Denver Post - Colorado unemployment rate increases to 4.5 percent

any other info on employment for the area?

i am also wondering if there are any realtors, e.g., out there that might be able to explain where these numbers come from and whether they are a reasonable reflection of what's seen in the MLS:

Denver, CO real estate guide - Trulia.com

[suzco]

Originally Posted by hello-world

serious layoffs were just announced at a "prominant" aircraft company (adam aircraft) in the denver metro. not good news if you're looking for aerospace or similar work (it looks like it will be a flood of people looking for work due to this). that is after this news came together: The Denver Post - Colorado unemployment rate increases to 4.5 percent

any other info on employment for the area?

i am also wondering if there are any realtors, e.g., out there that might be able to explain where these numbers come from and whether they are a reasonable reflection of what's seen in the MLS:

Denver, CO real estate guide - Trulia.com

I'm not a real estate person, only know that those numbers look scary, if true. Curiosity made me check the same site for Boulder stats, and they're very different: Boulder, CO real estate guide - Trulia.com

[hello-world]

Originally Posted by suzco

I'm not a real estate person, only know that those numbers look scary, if true. Curiosity made me check the same site for Boulder stats, and they're very different: Boulder, CO real estate guide - Trulia.com

if you look at denver neighborhoods, most show negative trends (quite significant negative trends, for the most part), except some of the highest end areas. as boulder is sort of "highest end" generally, i suppose that could be reflecting a similar phenomenon (those with a lot of the means are still buying, the rest are not, for various reasons; that's just a guess). i also noticed that boulder is seeing a significant drop in 1 and 2 bedroom sales/prices - those are the "lower end" of boulder prices (probably more condos in that range, too). and, if you look at other towns around boulder (which are less expensive, less "high end"), they also show negative trends, especially since "inflation" is being estimated at between 4 and 6.5% lately. relative to a 4% appreciation of home prices, for example, that means a likely loss in home value, it seems to me; and it looks like few places are even in the + for home appreciation according to trulia.

[jazzlover]

Originally Posted by hello-world

serious layoffs were just announced at a "prominant" aircraft company (adam aircraft) in the denver metro. not good news if you're looking for aerospace or similar work (it looks like it will be a flood of people looking for work due to this). that is after this news came together: The Denver Post - Colorado unemployment rate increases to 4.5 percent

any other info on employment for the area?

i am also wondering if there are any realtors, e.g., out there that might be able to explain where these numbers come from and whether they are a reasonable reflection of what's seen in the MLS:

Denver, CO real estate guide - Trulia.com

As I have preached for awhile, the best sales data is that for ACTUAL sales that have occurred and are of record. Again, thank God, Colorado is an open disclosure state. Outfits like Trulia mine assessors' and county clerks' data to come up with their statistics. I personally pay little attention to MLS listing prices and the like because, bluntly, "askin' ain't gittin'." I also pay less attention to average sales prices--it can be a very misleading statistic--than I do to the median sales price-- it is usually much more meaningful. Here's a very simplified example of why:

5 houses sell:

House 1: $125,000
House 2: $200,000
House 3: $215,000
House 4: $220,000
House 5: $900,000

Mean (Average) sales price: $332,000
Median sales price: $215,000

Same data, different measure of central tendency. Which more accurately measures what most houses are selling for in the market? The median. When computing the median, the "outliers" (the $125,000 and $900,000 sales) do not skew the measure as much as they do the mean (average).

Quite often, realtors (or whomever is trying to make some sort of point with the statistic) will cite whichever one "looks best." If you're trying to make the case that home prices are holding up, that "average" figure looks a whole lot better than the median in this example.

The other thing often unreported in these "news bites" is sales volume. Typically, when I real estate market starts to sour, sales prices will actually be fairly level--maybe even continue to rise a little--but sales volume will fall off dramatically. Let's call that "Stage 1" (to paraphrase the John Lennon lyric, I call this the "Everybody's smokin', but nobody's getting high" stage). In "Stage 2," prices will start declining with still relatively low sales volume. In "Stage 3" (the really ugly part), sales prices continue to decline--possibly rapidly--while sales volumes may actually increase, due to panic selling and foreclosure sales. Finally, in "Stage 4," sales volumes once again drop and sales prices may stabilize--all the bloodletting is done; the market has hit bottom. Then, it may start to recover--albeit slowly. When western Colorado "busted" in the early 1980's, Stage 1 to Stage 4 in the real estate markets there took about 4 years, then it took about 6 more years for the market to slowly start to recover its losses. This go-around, in most of Colorado, Stage 1 started sometime in the middle of last year. I think the markets are now entering or are well into Stage 2. Given the present state of the national economy, as well as some Colorado-specific factors (like over-reliance on construction to keep the economy afloat), I think most of the state will be in Stage 3 by fall, if not earlier. About the only place insulated from that will be the "energy" counties, but even there Stage 2 is making itself known.

By the way, yes, I need to get a real life. I am a statistician, among other things.

[hello-world]

Originally Posted by jazzlover

As I have preached for awhile, the best sales data is that for ACTUAL sales that have occurred and are of record. Again, thank God, Colorado is an open disclosure state. Outfits like Trulia mine assessors' and county clerks' data to come up with their statistics. I personally pay little attention to MLS listing prices and the like because, bluntly, "askin' ain't gittin'." I also pay less attention to average sales prices--it can be a very misleading statistic--than I do to the median sales price-- it is usually much more meaningful. Here's a very simplified example of why:

5 houses sell:

House 1: $125,000
House 2: $200,000
House 3: $215,000
House 4: $220,000
House 5: $900,000

Mean (Average) sales price: $332,000
Median sales price: $215,000

Same data, different measure of central tendency. Which more accurately measures what most houses are selling for in the market? The median. When computing the median, the "outliers" (the $125,000 and $900,000 sales) do not skew the measure as much as they do the mean (average).

Quite often, realtors (or whomever is trying to make some sort of point with the statistic) will cite whichever one "looks best." If you're trying to make the case that home prices are holding up, that "average" figure looks a whole lot better than the median in this example.

The other thing often unreported in these "news bites" is sales volume. Typically, when I real estate market starts to sour, sales prices will actually be fairly level--maybe even continue to rise a little--but sales volume will fall off dramatically. Let's call that "Stage 1" (to paraphrase the John Lennon lyric, I call this the "Everybody's smokin', but nobody's getting high" stage). In "Stage 2," prices will start declining with still relatively low sales volume. In "Stage 3" (the really ugly part), sales prices continue to decline--possibly rapidly--while sales volumes may actually increase, due to panic selling and foreclosure sales. Finally, in "Stage 4," sales volumes once again drop and sales prices may stabilize--all the bloodletting is done; the market has hit bottom. Then, it may start to recover--albeit slowly. When western Colorado "busted" in the early 1980's, Stage 1 to Stage 4 in the real estate markets there took about 4 years, then it took about 6 more years for the market to slowly start to recover its losses. This go-around, in most of Colorado, Stage 1 started sometime in the middle of last year. I think the markets are now entering or are well into Stage 2. Given the present state of the national economy, as well as some Colorado-specific factors (like over-reliance on construction to keep the economy afloat), I think most of the state will be in Stage 3 by fall, if not earlier. About the only place insulated from that will be the "energy" counties, but even there Stage 2 is making itself known.

By the way, yes, I need to get a real life. I am a statistician, among other things.

yes, thanks; i know what median, mean, mode, and skewness are about. as well as statistical significance. trulia provides for median and mean, though number of sales is only available for some areas, and there is no mention on trulia of where, EXACTLY, they're getting their information from (so, no way of knowing whether there is really much meaning to some areas' means and medians). as for denver, they do provide for number of sales (and one can only assume they're using this value in the denominator of mean, e.g.), but no mention of where, exactly, they're getting their info.