Denver Real Estate Discussion / Opinion Thread (NO Data Charts) (Aurora: foreclosure, renters)

[SkyDog77]

Originally Posted by new_to_town

The problem is not so much with many new people moving to Denver. I mean have THAT many people moved to Denver in just one year? Increased economic activity (jobs) and low interest rates (with the knowledge rates may soon increase) have encouraged many more people to buy that have been holding out. The problem is with low inventory, and from what I've been reading that's still caused by too many people being underwater with their mortgages, so prices haven't risen high enough for them to put their houses on the market to sell. So it's supply and demand. Like the previous poster in Tuscon, who's going to put their house on the market when they are going to lose money or just break even?

I don't think that many people in Denver are actually underwater, but I do not have data to back this up. Prices are as high as they have ever been right now so how could people possibly be underwater? We are back to peak pricing from 2007. http://www.trulia.com/real_estate/De...market-trends/

[SkyDog77]

Originally Posted by davebarnes

1. Prices [nominal] are not yet back to peak. Prices [real] are still way down, but that does not affect selling decisions.
2. In order to sell "at breakeven", you need to sell at 110% of purchase price.
3. Anyone who bought in 2006 and 2007 is probably underwater.

This is a great graph to show that Denver did not experience a bubble the way the rest of the country did. Look how flat the Denver line is compared to the 20 city index. Denver looks to be right around '07 pricing. If you bought in Denver in '07 and put 20% down there is no way you are underwater. If you put 5% down and have been paying you mortgage, I doubt you would be underwater.

Now the burbs are a completely different story.....

[new_to_town]

Originally Posted by SkyDog77

I don't think that many people in Denver are actually underwater, but I do not have data to back this up. Prices are as high as they have ever been right now so how could people possibly be underwater? We are back to peak pricing from 2007. Denver average and median listing prices - Trulia.com

Denver housing market recovers but sellers remain scarce - The Denver Post
Denver's hot real estate market now seeing quick, 24-hour sales - The Denver Post
Housing rebound is facing obstacle: Too few homes - The Denver Post
DBJ's quarterly real estate report: Low inventory, bidding wars and more - Denver Business Journal

I could list more, but won't, I've been following this for a while as I'm a buyer but also an investor. What's more is the media typically trails the real estate market by 6-18 months. So realtors have been seeing this activity for the past year, it's not just been this spring.

The activity has also picked up but pricing isn't yet high enough for builders to start building en masse. Also many builders had laid off so many people that they've not yet re-hired in equal supply.

Additionally, foreclosures, which were steadily increasing the supply of houses on the market and helping to keep prices down, have decreased from 40% to 10% y-o-y. So this is a cause of lowered supply, heightened prices too, but also as a side effect many investors that typically pick up distressed properties are now also competing with standard home buyers on single family homes, especially in a quickly appreciating market.

And finally there's the HAVE TO BUY psychology. Many buyers think that if they do NOT buy now - OH MY GOSH THERE WILL BE NOTHING LEFT. Hence, bidding wars and inflated prices, an "ebay" mentality on houses.

I am considering moving to Denver, but also other places in the country too. Owning a house is a priority of mine, and jumping into bidding wars and inflated prices is not my idea of a good time. Similar things are going on in many larger markets all over the country. Fine if you HAVE to buy a house in Denver now, but that's why I am looking at other areas that have not yet boomed to put my money. Or even until later in the year. Spring is when most buyers come to the market and the most activity happens each year, then it tends to slow down.

[SkyDog77]

So are you agreeing with me or disagreeing with me? Given everything you just posted, it would seem that there are not many people underwater.

[new_to_town]

Originally Posted by SkyDog77

So are you agreeing with me or disagreeing with me? Given everything you just posted, it would seem that there are not many people underwater.

All those articles talk about sellers still being underwater and not putting their homes on the market due to pricing yet. So I'm not sure what you are saying.

I discussed that as well as the other reasons supply is low.

[Mike from back east]

A couple of reasons...from my fertile imagination....

Perhaps supply is low because the locals aren't leaving in large numbers for jobs in other cities. Jobs in other cities seem to be coming here, at least judging by a continuing string of "I'm coming to Denver" threads I've seen popping up for well over a year now.

Others may just be leery of playing fast and loose with their job / housing situation. I know that when many banks failed during the Great Depression the depositors in the failed banks lost all their savings as there was no FDIC back then to protect their accounts. Many of those folks who were burned in that banking disaster never forgave or trusted "the banks" and even with FDIC coming along to protect them they never put their money in banks again. My sister bought a house in the mid 1970's from such an old guy and he didn't trust banks; for the closing table he insisted on, and got, his sale proceeds delivered in cash.

Having witnessed the recent economic disaster, I'm sure many people are leery to deal with builders, lenders, realtors, et al, and just sitting tight.

[new_to_town]

I just spoke with another agent there a bit ago. She agrees with what I've been reading, high demand with low supply, but that she's worked in real estate since the late 90's there and has not seen anything like this except maybe in '06 (before the crash) - so she also says this is not a healthy market to be in. I am not even considering buying if I move to Denver now...

[SkyDog77]

Originally Posted by new_to_town

All those articles talk about sellers still being underwater and not putting their homes on the market due to pricing yet. So I'm not sure what you are saying.

I discussed that as well as the other reasons supply is low.

Did we read the same articles? Admittedly I read them quickly, but the only mentions of being underwater in those articles are in Littleton and Grand Rapids, Michigan. Not a single mention of people underwater in Denver that I saw. Did I miss something?

[new_to_town]

Originally Posted by SkyDog77

Did we read the same articles? Admittedly I read them quickly, but the only mentions of being underwater in those articles are in Littleton and Grand Rapids, Michigan. Not a single mention of people underwater in Denver that I saw. Did I miss something?

Uh, yeah, they all talked about that... that's why I posted them as examples...

And they were only a few examples, I've been studying the real estate market for a long time now in Denver as well as across the country as a owner occupant buyer and investor. When it comes to money I don't guess, I research the facts.

[SkyDog77]

Originally Posted by new_to_town

Uh, yeah, they all talked about that... that's why I posted them as examples...

And they were only a few examples, I've been studying the real estate market for a long time now in Denver as well as across the country as a owner occupant buyer and investor. When it comes to money I don't guess, I research the facts.

I'm going to assume that since you don't live here, you don't understand the difference between the city of Denver and The Metro Area. The Metro Area encompasses the city and all of the suburbs outside the city. I have stated several times that the real estate market in the suburbs was markedly different than that in the city (and actually a better target for home investment right now)

The first two articles you posted made mention of the same statistic that approximately 20% of homeowners in The Metro Area owe more than their house is worth. The example in the first article is in Littleton (not Denver). The third article does not mention Denver, The Metro Area, Colorado, or any state that even touches Colorado. It is completely about Grand Rapids Michigan. The fourth article has a headline about underwater borrowers being forced in to the rental market and then highlights a couple in the city of Denver who bought their home at the top of the market and then decide to rent it out, but don't like being landlords so they choose to sell it. They end up selling and turn a nice profit. The article is more about the tight rental market and the tough parts of being a landlord than it is about underwater borrowers.

So again, did I miss some mention of the market in the actual city?

I too am a real estate investor and I find this market incredibly challenging, but that doesn't mean that I am out. I buy for the long term. As for my personal residence, I don't look at this as an investment. It's somewhere to live. I plan to stay in my house for the next 20 years. If I overpay by $50,000 do you think that will really matter in 20 years? I don't.