Foreclosure sales dominate

Median price falls $25,000 in July in Denver area

By John Rebchook, Rocky Mountain News (Contact)

Published August 11, 2008 at 9:05 p.m.
Updated August 12, 2008 at 9:06 a.m.

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Photo by Preston Gannaway © The Rocky

Kathy Casey, right, laughs while showing Ricardo Collins and his daughter, Angela Boyd, a foreclosed house.

Photo by Preston Gannaway © The Rocky

Realtor Kathy Casey shows a foreclosed home to Ricardo Collins and Collins' daughter, Angela Boyd, on Monday.

One out of every four previously owned homes purchased in the Denver area during the heart of the summer sales season was a foreclosure.

And in Adams County, one out of every two homes closed from mid-June to the end of July was a foreclosure sold by a bank or other lender, according to an analysis of the market by Boulder economist Michael Kone.

Kone, principal of Housingmetrics Inc., analyzed the market at the request of the Rocky Mountain News to determine what percentage of homes being sold were foreclosures.

The large number of foreclosures on the market drives down the prices people can ask for their homes, depressing the overall housing market.

"If you can hold off selling right now, that makes sense," Kone said.

The median price of a home sold in July was $229,200, down from $255,000 a year earlier, according to reports released last week based on Metrolist data. Much of the decline is based on foreclosures.

Kone said that with such a large sample - a total of 4,521 homes - the snapshot of the six-week period is a good indicator of the current status of the market. He used data from recorded sales for his study, so his analysis included more than homes sold by Realtors and tracked by Metrolist.

One thing Kone is noticing is a rise in more expensive homes being lost to lenders.

"When I looked at this stuff a year back, there was not a lot of pain in the upper-price points," Kone said.

"It is a little concerning seeing this spread of foreclosure into the higher-price bands," he said.

For example, in Arapahoe County, 22.2 percent of the foreclosures were homes priced from $400,000 to $499,999.

That doesn't surprise Sarah Hays of Metro Property Brokers.

She is listing about 25 foreclosed homes, priced from $500,000 to $575,000.

"The $575,000 home in Castle Rock sold for about $850,000 two years ago," Hays said.

But she said most of the lower-priced homes that are selling at super-bargain prices are in bad shape.

"They are priced for the repairs that they need," she said. "If you try to low-ball the bank, it usually doesn't work."

On Monday afternoon, Kathy Casey, a broker with Networth Investment Properties, was showing Ricardo Collins a home in Green Valley Ranch priced at $121,0000.

Casey said that three years ago the home probably would have fetched $160,000 to $180,000.

Collins said he owned an appliance store for 12 years. When the economy started going south, beginning with the aftermath of Sept. 11 terrorist attacks, he began borrowing against the equity in his $600,000 home in Hilltop to keep his business afloat.

But he ended up losing both his home and his business and is now shopping for a foreclosed home at less than $150,000.

Casey is working with the nonprofit Neighborhood Assistance Corp. of America to help Collins buy a home, despite his foreclosure.

"I think I should buy while prices are still low and start to build some equity," he said.

Phil Heter of Heter & Co. said people mostly aren't getting great deals buying foreclosures, like they did during the late 1980s.

"I'm not seeing the fire-sale prices, at least not yet," he said.

The Colorado Housing and Finance Authority began tracking the number of loans that it purchased from its lenders when it noticed buyers were acquiring a large number of foreclosed homes from banks, known as REOs, or real-estate owned.

Through July 18, 35.4 percent of all new residential loans the housing authority bought were REOs. In Adams County, 63.5 percent of the loans were REOS.

"CHFA views this as a positive sign that neighborhoods previously suffering from foreclosures are beginning to be re-stabilized through homeownership," said Roy Alexander, CEO and president of the authority.

Centex pulling out

Another giant home builder is pulling out of the Denver-area market.

Over the past weekend, Centex Homes began calling home buyers under contract to notify them that the company plans to close operations in Colorado by next spring, the Genesis Group reported on Monday.

"At least one buyer with a home due for completion and closing this fall was offered a refund of his earnest money deposit - apparently as a courtesy since the neighborhood would not be completed by Centex," according to the Genesis newsletter. "The buyer was assured that Centex would stand behind all warranties via its subcontractors."

Earlier this year, another large builder, Beazer Homes, announced it was leaving Denver. Building new homes in the Denver area is at a 20-year low.

Dallas-based Centex is selling some of its mortgage offices to Cherry Creek Mortgage in the Denver area.

An important point that we should emphasize is that we are committed to fulfilling all of our obligations," said Eric Bruner of Centex.

"We want to make it clear that we are completing work on existing homes, and homes in progress, and completing work on homes that are sold but not yet started," Bruner added. "And, going forward, we will maintain a team of appropriate size in Denver to complete any warranty and support homes from people who buy our homes."

In Colorado, Centex builds homes priced from about $134,000 to the $330,000s in 10 subdivisions.

• August 12, 2008

  9:15 a.m.

  Suggest removal

  youme writes:

  maybe it is time to teach our children money management in high school?

• August 12, 2008

  9:17 a.m.

  Suggest removal

  bonniecox writes:

  This is unequivocally the best time to buy a home (in any price range) over the next decade. We are helping wise, savvy first-time buyers into homes. Since money is hard to come by for high-end jumbo loans and a 20% down payment is a foreign concept to many high-end buyers, Douglas County is lagging. The high-end inventory is there, languishing on the market. For high-end buyers, the time is also right, but many buyers, who would like to purchase a new home, have a home to sell.
  If you want to move up and have not been able to sell your current home, REDUCE your price. Make up for it on the buying side of the transaction. Interest rates will go up. Prices will go up. Metro Denver bottomed out six months ago. Given something very unforeseen in the United States or world economy, the time is now for the Denver homebuyer.
  If you doubt any of this, Donald Trump, no small real estate success, reported the same thing this morning on ABC News. If you can buy a home, the moment is now!
  Bonnie Cox

• August 12, 2008

  9:25 a.m.

  Suggest removal

  bonniecox writes:

  Kay, like now, the 1980's, during the oil bust and the savings and loan debacle were clearly not the time to sell a home. It as a great time to buy. Interest rates had come off the 18% ceiling of the early 80's and values in metro Denver were coming down. Ask anyone who bought a home during that period how much that home is worth today? My guess is that during the past 23 years since you had that unfortunate experience, that home is now up about 150%. This is especially true almost everywhere in Boulder County. Real estate is always going to be a far more stable investment than the stock market.

• August 12, 2008

  9:55 a.m.

  Suggest removal

  WarrenJimmyBuffett writes:

  bonniecox,
  Go sell your houses somewhere else and quit spreading "best time" information. When house continue to depreciate over the next couple of years, will you pay back the buyers who lost money based on your advice? Your biased information is annoying and wrong.

• August 12, 2008

  10:13 a.m.

  Suggest removal

  JWinters writes:

  Bonnie Cox says: Given something very unforeseen in the United States or world economy, the time is now for the Denver homebuyer...

  Unforseen? What part of this don't you understand? How do you know prices have bottomed out? Please enlighten us Bonnie.... Somehow I think you're a realtor and that you only say what you say cause your check depends on it.

  And what would you say to the person who walks into your realty office and is worried that if he buys now and yet prices keep going down? Do you ignore him? Do you shrug it off? Do you just keep repeating some stupid realtor mantra like "the time to buy is now" until he starts chanting it with you?

  What about fundamentals? What about record housing inventory? What EXACTLY gives you the confidence that no one else seems to have? (Try roubini, Case, Schiller, Bill Gross, et al)- Donald trump not withstanding (heck he just sold a home in florida for twice what he paid for it- he's still giddy- but just a talking head- your Lereah probably paid him off for that).

  Why will prices now begin to go up? PLEASE GIVE US FACTS instead of realtor chants and mantras (gag)!!!!!!!

• August 12, 2008

  10:37 a.m.

  Suggest removal

  fadedeagle writes:

  This is unequivocally the most dangerous time to go into debt for a house in the last half century.

  However good real estate prices may look today, they will look better tomorrow. The clamping-off of easy credit will prevent prices from shooting up...there's no reason to rush, and many good reasons to watch and wait. "All good things for those who wait."

  Do a web search for Pay Option ARM and Alt-A mortgages and read about what's about to happen when these loans go bad en masse starting late this year and early next year. It will be worse than the subprime fiasco. Don't get caught in the storm.

• August 12, 2008

  10:50 a.m.

  Suggest removal

  BetterEducated writes:

  As an exclusive RE buyer agent ... it's a good time to hold off.
  Kay -- I would have thought it was nearly impossible to lose $$ on a RE purchase in Boulder, of all places. Yours was an eye-opening story even for those ultra-cautious souls like me.

• August 12, 2008

  2:39 p.m.

  Suggest removal

  jlgraybill writes:

  Bonniecox said: "Metro Denver bottomed out six months ago." Ha ha ha. That's nice fiction there Bonnie. How then do you explain the facts stated in the previous Rocky Mountain News article that "homes in the Denver-Aurora Metropolitan Statistical Area saw a 5.3 percent drop in value in the second quarter"?

  http://www.rockymountainnews.com/news...

  What actual statistics do you have to show that now is a great time to buy? Why wouldn't a home owner wait at least another year as homes drop another 9.8% (as predicted in Money.com for Denver)? Are you saying that new homeowners won't lose their 10% down payment (or half of their 20% down) by buying now? Even given the pending wave of Pay Option and Alt-A resets, which are more than than the subprime resets we experienced? What happens if these resets and the 32% of homeowners who purchased since 2003 who are underwater in their loans start foreclosing? Are you really guaranteeing people that take your advice that you'll pay them back any price depreciations? I hardly think so.

  Now is not a great time to buy. It may turn out an OK time to buy (if your personal situation demands it), but I hardly think so. Besides, patience will not hurt in this market. There are ZERO indicators or statistics to support a rebound right now, so there's no harm in sitting on the sidelines for another year or so and seeing how things pan out. If you really think it's a great time to buy, then remember that the NAR also was saying it was a great time to buy in 2006. I'm sure glad I wasn't one who listened to the propaganda of the NAR, and you shouldn't listen to propaganda from the realtor Bonniecox either.

• August 12, 2008

  4:03 p.m.

  Suggest removal

  bonniecox writes:

  "CHFA views this as a positive sign that neighborhoods previously suffering from foreclosures are beginning to be re-stabilized through homeownership," said Roy Alexander, CEO and president of the authority.

  There will always be the "shoulda, woulda, cloulda's out there. Smart, savvy people, including investors are chewing through our inventory.

  "Conditions are ripe for a recovery in the Denver real estate market this summer. There are several indicators, including stabilizing home prices, increasing home sales, decreasing inventory, and a declining average number of days on the market. Metrolist released its July numbers this week, which indicate a 2.9 percent increase in the number of homes sold in July from last year. Other pieces of positive news include that the number of homes for sale in Denver plunged 15.9 percent from last year and it even dipped slightly from June."

  If you do not have the down payment or a decent credit score, that is too bad. Prices in many price ranges, not only in my opinion but backed by solid Metrolist statistics, have bottomed out in most of metro Denver. High end in Douglas County still has a long way to go.

• August 12, 2008

  4:23 p.m.

  Suggest removal

  purpleorchid writes:

  I would like to know where Sarah Hays is listing these 25 foreclosure properties priced over $500,000. I was not able to find a single listing of her's in the MLS excluding 1 that sold last month. Does anyone know? I would love to check these listings out.

• August 12, 2008

  5:07 p.m.

  Suggest removal

  jlgraybill writes:

  Bonniecox - how can you say there are Metrolist statistics which show most of metro Denver has bottomed out? That's a downright lie. You aren't able to see the bottom of a cycle until farther along in history...it's impossible to see at this stage. Besides, Metrolist doesn't contain stats on all Foreclosures and Short sales (which are a large percentage of this market). Since prices are still dropping year over year in Metro Denver, there is no proof that we've hit a bottom. We aren't declining by huge amounts in some areas, but we haven't stabilized for certain either. Also, how can you be certain that your supposed "bottom" isn't a false bottom with the pending Pay Option and Alt-A resets coming in late 2008 through 2011? If we see a lot more foreclosures due to that (as all non-realtor analysts predict), then it's going to create a difficult situation and market for a number of years. Stop spreading your propaganda, realtor. Admit it...you don't know that we've reached the bottom any more than anyone else.

• August 13, 2008

  7:47 a.m.

  Suggest removal

  jlgraybill writes:

  ImDaMailinator - But our Hondas are going to fly in 2 years, right? I like your fictional world. 30% yearly rise? When has that EVER happened (other than the 2 year speculation in Vegas, Phoenix, California & Florida - which they're paying for now)? If everyone gets priced out forever, then how would prices appreciate? Home prices can't appreciate if nobody can buy them, NumNuts! You are such an economic idiot. Go join the NAR and sell realty.

• August 13, 2008

  9:06 a.m.

  Suggest removal

  gzachman writes:

  Sarah Hays works with Colorado Investors Real Estate Services, a Metro Brokers affiliate. Their website is BuyColoradoForeclosures.com. She can be reached at 303 268 4780.

• August 16, 2008

  12:11 p.m.

  Suggest removal

  hiya writes:

  People are often "sold" on thinking that owning is vastly wiser than renting and renting is "throwing money away". If you think about how much money you're giving to the bank in loan interest and fees when buying, you might begin to think about which way you're "throwing more money away". Unless of course you can pay nothing because a parent or a trust fund or whatever pays cash for you...

  You can look here (http://www.nytimes.com/2007/04/10/bus...) to see whether renting is "bad" and buying is "good". You will likely find that renting while putting what you save into other investments is often wiser. Plus you do not have to worry about dealing with a leaking roof, a faulty furnace, pest control, etc. by renting.

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