Keep in mind that all media reports of home pricing are incorrect, as home price data does not include the incentives generally being used to move the dead inventory out there. That said, here's another meltdown report from Denver, which is quickly turning into one of the sickest markets in the US:
Weld County homeowners saw their home values decline as the nation's housing market hit the brakes hard in the second quarter, according to a report issued Tuesday by the Office of Federal Housing Enterprise Oversight.
"These data are a strong indication that the housing market is cooling in a very significant way," said James Lockhart, director of the Office of Federal Housing Enterprise Oversight. "Indeed, the deceleration appears in almost every region of the country."
In Weld County, the housing market isn't dead, but it barely has a heartbeat, said Pam Worster, a broker associate with Century 21 in Greeley.
Buyers who bought within the past three years without putting any money down, a common practice, can't sell for what they owe. Foreclosures follow, putting further downward pressure on prices.
Higher gasoline prices have made the long commute from Weld County to Denver or Fort Collins less appealing to potential buyers.
Worster, who calls Greeley the "bargain capital of Colorado," said she has seen $200,000 homes going for $180,000. "There is a trickle of buyers," she said.
September 07, 2006
Denver: Housing slump deepens
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14 comments:
real estate never goes down - suzanne researched it!
LOL!
Hey - looks like Phx traffic.
Keith,
1. That photo was NOT taken in Denver.
2. Weld County is NOT Denver.
3. Greely is definately NOT Denver.
,dave
In the 80's Denver real estate went down 50%.
In Aspen? Real estate went down 40%.
The begining of the next bloodbath has began.
I bought a home in a suburb of Denver for $630,000. Its material cost was 2.6 mil.
Yeah, you read it me correct.
The photograph is I-70 in Denver.
Weld county was touted by the RMN as "the hottest area in Co."
You bought too many specs?
Or is your arm re-setting?
The day of reckoning is here.
Why do real estate zealots frequent this blog?
They are scared to death....and should be.
Folks,
From the front lines in Colorado: In Larimer County things are B-A-D-D-D. We're seeing regular reductions of 10-12% across the board. It seems like the A+ houses are selling in about 30-45 days for slightly below asking price, but MANY MANY more homes have been on the Market for 6-8 months, since about Feb/March 2006.
Not even the Money Magazine news can prop up our market.
With that being said, I’m looking for some advice from our wise readership:
We're starting to "look" at buying our first house in the area. I don't want to try and catch a falling knife here, but won't their be a law of diminishing returns as mortgage rates rise that will offset the price deductions on homes?
We’re considering buying in December, with 30% down and looking for a 20% reduction on price, back to what the house would have sold for in ’01-‘02
Am I crazy here?
"We’re considering buying in December, with 30% down and looking for a 20% reduction on price, back to what the house would have sold for in ’01-‘02"
Anon,
You're not crazy, but I would warn you. The same thing is starting to happen in th PHX market. About a month ago I finally thought that I had found a house that was in a good area for the right price. It was the lowest by far, and the housing around it was anywhere from 30k - 50k higher, so I thought I couldn't lose right? As I sat down to hand over my deposit to the builder, he told me that they were going to knock off 40k!!!!! He said it was just to get rid of inventory, but I was already going to buy the house!!!! This goes to show you that no matter how much you think you can get them to knock off the price ie. 20% to return to 2001-2002 levels, until the market levels out and actually starts to appreciate in value again, you are playing russian roullette. And the bullets come in the form of falling prices.
DDDDDDDddeeeeenial!!!!
:DDDDDDDddeeeeenial!!!!
And it's not a houseboat on a river in Egypt.
anon looking to buy..I live in Denver also.
If things get REALLY bad you'll not only get 20% OR MORE off, but interest rates will probably be lower as the Fed desperately lowers rates back to 1% in an effort to get things going again. (which probably won't work this time..)
Denver hasn't had much appreciation since 2001...you can probably get a 2001 price today.
Also, looking over the Sunday Denver Post I noted EVERY big home builder is offering tens of thousands of dollars off new homes they can't unload. Go make them a ridiculous offer..and watch it get accepted.
I'm looking at building a home out in weld county. We haven't signed a contract yet, but are planning on later this week. Is it a reasonable thing to ask the builder to drop the price or add incentives? How and when do I do that? At the contract signing, or should I talk to the builder before that? I don't even know if the builder is going to be at the contract signing. I am new at this, so some advice would be greatly appreciated.
Thanks!
I own a house in Washington Park in Denver. I was relocated to Fairfax, VA this summer. I thought my charming 1922 bricks-all-the-way-around home would sell right away. Ha! Bought it in 2004 and will be blessed beyond measure to sell for my asking price in early 2008, when the rental contract is up for renewal. Here's the problem with Denver - the price of the median home will regress toward the median family's ability to make a monthly payment. Sometimes prices stray from this number, but they regress toward it. Denver is not immune from rising consumer debt that pinches families by reducing the amount of home they can qualify for (too high a debt ratio). Meanwhile, the job market in Denver can't be relied on to raise the income floor to sustain price appreciation. So, as the average family's debt gets worse faster than their rising income is able to make up for it, their ability to make a house payment gets worse with each passing month. All of this, regardless of interest rates! Let's talk about them for a minute. The current flat-to-inverted yield curve will regress toward a positively sloped curve. Two ways to get there - lower short-term rates, or raise long-term rates. I think the long-term rates will go a little up over the next two years, and the short-term rates will stabilize.
What does all this mean? Less buying power for Denver home shoppers over the next two years. But, let's add another dynamic. Indulge me for a minute. Whenever we represent an organization, we tend to be freer with the way we make deals than when we're dealing with our own money. Think of the typical workplace - people are encouraged to make good on errors in service or discount a product when it's not perfect. As a rule, none of us want to admit our personal investments are actually depreciating. So, we tend to cling to our desired selling price (versus the actual market value). But think about what's going on with other homes in our market space (new homes) - incentives galore! Why? Because these sales agents aren't selling their new home - they're selling a company's home! And, their companies are telling them to work with anyone reasonable. New home salespeople will give away the farm - and be rewarded for it! Now, if you're a buyer, why would you deal with the cranky individual who refuses to budge on price when you can have the proverbial red carpet rolled out for you by these home builders? You can literally get 10% of the home's value worth of upgrades and get a 10% discount on the home at the same time!
Bottom line: with family debt pulling down family buying power, an anemic job outlook for a few years out, the likelihood that rates aren't going down anytime soon, and the fact that you're competing with people who are selling a company's home and not their own, you are on an uphill slope if you are trying to sell an existing home in Denver. The only upside for the existing home seller is that you have a better location than the plains of Kansas, which is where many of these homes are being built. But, there again we have human nature working against us, as greed usually wins over prudence when families ignorantly wave off the long commute if they can get into their dream home.
The effective market value of home prices in Denver is already down about 10% from a year ago, and I predict it will go down another 10% before it stabilizes. My advice to buyers is to be as stubborn on your offer in this market as sellers were on their offer in the market of 2002-2004. That’s not in my best interest as a homeowner, but it’s the truth as I see it. The same thing is happening in the Washington, DC area, and I intend to be one of those stubborn buyers here. Sooner or later, I will come into a seller who is up against the wall and will meet my price. To buyers everywhere, I recommend patience.
Wash Park couldnt have said it better. (Centennial Resident here) I will add this; Do exactly as he said and go in and make close to a rediculious offer...and stick to it! When these builders cant get rid of inventory, and when they are seeing these rediculious offers come in on the inventory they have, only then will they decide that this city may not be the builders paradise it has been, and they will pack up and move on leaving less inventory out there.
Then with less competition from new homes, in the coming years we can all see the value of our old homes start to increase again based on the supply and demand triggers. In short....we need to somhow slow the growth! Although growth has its ups and downs,Boulder is the only city seeing the benefits (Value wise)of limited growth laws!
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