Housing Decline (Denver, Aurora, Westminster: house, neighborhood, buyers)

[yukon]

I was in Denver this past weekend, and one of the builders was running a radio spot advertising $100,000 off select homes. Don't remember who it was, David Weekly or KB maybe?

[tfox]

Originally Posted by hello-world

to be honest, i have to say that it's a little hard to believe there's a neighborhood in denver with 13-20%+ appreciation. i just haven't seen anything like that around the metro area, myself, even in the "happening" neighborhoods (where appreciation doesn't seem to really be there - condos, for example, are simply not selling AT ALL quickly or for gains, and losses/seriously slashed asking are what i'm seeing, actually). to me, it seems that:

hello-world, real estate is all local. I think dj32 is referring to Wash Park. What's happening in Wash Park is probably very different than in your 'hood.

[Ted62]

Originally Posted by tfox

hello-world, real estate is all local.

That's not quite right. While each neighborhood has its unique supply and demand conditions that determine housing prices, these are affected by regional and national factors.

Regionally, for example, when housing prices fall in one neighborhood (such as one under development with new homes) it encourages more people to buy there, and thereby reduces the demand for homes in other neighborhoods. The prices in other neighborhoods may remain stable or even rise, but not by as much as they otherwise would.

Real estate prices nationally are affected by general inflation, which is largely a function of the amount of money in circulation as regulated by the Federal Reserve. As with other assets, such as stocks, there is sort of a "bubble" effect where housing prices (especially in desirable areas) can levitate or deflate almost as if by magic.

As with fluctuations in the price of other assets, some people "win" and some "lose." When home prices fall, buyers gain and sellers lose. The reverse happens when housing prices rise. It's pretty much a zero sum "game." People who just stay in their homes are largely unaffected unless the property tax structure is such that changes in their assessed valuation affect their taxes.

[hello-world]

Originally Posted by tfox

hello-world, real estate is all local. I think dj32 is referring to Wash Park. What's happening in Wash Park is probably very different than in your 'hood.

i recall a realtor telling me some of the same things about a year ago, and telling me that they were sure that the housing trough was about upon us (then), thus things can only go up from there in the neighborhood. i agree that washington park, thus far, is doing pretty well relative to last year this time (though DEFINITELY not 13-25% !! - more like a couple of percent, i.e. inflation's pace, or "zero added value" - and it's actually receded within the past 7 months on average, and these things depend as well on type of property - # bedrooms, attached versus detached [attached doing more poorly in times like these, typically], etc). meanwhile, the trough was still to come (overall - is it even here yet?), prices have fallen in that neighborhood (locally - significantly, actually, even relative to FIVE years ago, let alone last year; and it's one of the nicer neighborhoods in the city), and some of those folks that that person's info was inspired from are now out of the business. i guess time will tell (as it did in that case), while i certainly HOPE that things go on the up and up across the board.

[hello-world]

Originally Posted by dj32

hello world-

I was surprised at some of the neighborhoods too- but location, location, location. I think in the suburbs, where there was more land and hte builders were scooping it up, people could be pickier about which builder they went with. In Denver, land is scarce and people will always want to live in Wash Park, Bonnie BRae, etc... also the more stable high dollar neighborhoods like Denver Country Club only grew like 2% (the average I think in Denver?) versus Southern Hills/Southmoor was 20-22% (that was my example). I think those neighborhoods had more diversity in price- the median price there was still relatively low compared to Hilltop, Country Club, Belcaro, etc...

The bottom line is I think we are really lucky that Denver has stayed relatively stable- there is more product on the market but if anything, people are more realistic about setting the price.

What I think is kind of crazy, and success remains to be seen is the vast number of new builds in Wash Park at the 1.2-1.5 price point! There is something like that on nearly every block right now--- under construction. I keep thinking I wonder if they will get it? I can't even figure out good comps for those places, because there has not been huge volume sold to date. So I wonder what will happen?? Will it be another Hilltop?

people are more realistic about setting the price? like i said, i saw a figure of about a 2% DEPRECIATION in SELLING price for metro denver (relative to a year ago), all the while people ASKED on average upwards of 10% MORE relative to a year ago. that tells me that people are definitely not realistically pricing things.

[Mike from back east]

Neumann Homes Inc. will auction 49 properties in suburban Denver on Oct. 3.

The auction includes 15 SFHs, 8 condo's and 26 homesites. The three communities involved are: Village at Harmony Park at 12901 Harmony Park Drive in Westminster; Mountain Shadows at 5850 Twilight Ave. in Firestone; and Serenity Ridge at 7245 S. Millbrook Court, in Aurora. Properties are open for viewing 1-4 PM on Saturdays & Sundays; Sept. 15-16; 22-23; 29-30. Story at: The Denver Post - Builder to auction 49 Denver-area properties

I haven't seen this method used in some time. I suspect the builder needs to get something for the properties to service the debt being carried or even to stave off bankruptcy, but I'm speculating. IMO, the auction is a sign that the current shakeout is affecting some firms quite a bit. Not sure if this is just a ploy (I've seen it before) or if the builder really is desperate and will take any offer. Will be interesting if someone has the inside skinny on what's happening.

s/Mike from back east

[2bindenver]

Denver's July housing, employment ahead of nation's, an article from The Denver Business Journal, reports that employment and housing markets in metro Denver fared better than those markets did nationwide, according to a Metro Denver Economic Development Corp. report. The report also suggests that Colorado may be weathering the housing slump better than many states, based on the sales of new and existing homes. Another highlight of the report shows that metro Denver foreclosure filings continue to decrease in July from 2,083 from 2,500 in June and 2,700 in May.
Denver's July housing, employment ahead of nation's - The Denver Business Journal:

[formercalifornian]

Originally Posted by 2bindenver

Denver's July housing, employment ahead of nation's, an article from The Denver Business Journal, reports that employment and housing markets in metro Denver fared better than those markets did nationwide, according to a Metro Denver Economic Development Corp. report. The report also suggests that Colorado may be weathering the housing slump better than many states, based on the sales of new and existing homes. Another highlight of the report shows that metro Denver foreclosure filings continue to decrease in July from 2,083 from 2,500 in June and 2,700 in May.
Denver's July housing, employment ahead of nation's - The Denver Business Journal:

That is some good news in a sea of scary stories. Hopefully, the trend will continue, but I'm still not buying yet.

[hello-world]

Originally Posted by formercalifornian

That is some good news in a sea of scary stories. Hopefully, the trend will continue, but I'm still not buying yet.

it seems safe to say that recession may be imminent. out of proportion oil prices, out of proportion housing prices, out of proportion stock prices, an overextended federal government (war, infrastructural needs, so bond issuance or lack thereof, and so lack thereof of some big pump priming expenditures?, e.g.), debt and handling thereof (defaults, bankruptcies), social security woes, pension woes (e.g., "Sure you'll have a big pension to retire on" - fast forward 30 years later: "Sorry, but no pensions available, and the government has told us it's ok to not give you any" is the tune for many many boomers), some of what's coming of globalization and many other factors seem pretty well aligned at this point for it. federal reserve seems pretty engaged, but, i wonder if it might be too late of an engagement. throw in some kind of panick inducing destabilizer (as we've seen come up in the past), and that could get quite tricky, i'd think. i wonder if this will make it difficult for many people to get into or stay in the housing market (and to borrow against their homes' values to further prime the pump, etc.).

[sberdrow]

Originally Posted by hello-world

it seems safe to say that recession may be imminent. out of proportion oil prices, out of proportion housing prices, out of proportion stock prices, an overextended federal government (war, infrastructural needs, so bond issuance or lack thereof, and so lack thereof of some big pump priming expenditures?, e.g.), debt and handling thereof (defaults, bankruptcies), social security woes, pension woes (e.g., "Sure you'll have a big pension to retire on" - fast forward 30 years later: "Sorry, but no pensions available, and the government has told us it's ok to not give you any" is the tune for many many boomers), some of what's coming of globalization and many other factors seem pretty well aligned at this point for it. federal reserve seems pretty engaged, but, i wonder if it might be too late of an engagement. throw in some kind of panick inducing destabilizer (as we've seen come up in the past), and that could get quite tricky, i'd think. i wonder if this will make it difficult for many people to get into or stay in the housing market (and to borrow against their homes' values to further prime the pump, etc.).

Just bought, go a screaming deal. Was looking at a house for 229k two months ago, ended up taking my offer at 210K appraised at much higher. Yes I know I might have been better to wait, but if you intend to live in a house for 7 years, even if it goes down for a little while, it will always go back up. The more supply drops and demand rises the higher it goes. Personally, If prices values drop, Im going to challenge my property taxes. If they go up, I hope it keeps up with the other homes in the neighborhood. It was tough sitting on the sidelines waiting, renting. But I spend 2000 renting, and saved 20,000 on the house. 18000 dollar net. 9000 a month aint bad. Now lets just hope I don't lose my job in the next few years and have to move out of the area. I don't want to leave Colorado, Gods counry, Home of the Denver Broncos (are you guys sick of hearing that yet)?