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Supply of unsold homes dives again

Denver-area inventory nears three-year low, report says

By John Rebchook, Rocky Mountain News (Contact)

Published November 7, 2008 at 12:05 a.m.

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A sale sign stands outside a new home in Denver during the summer. There were 23,120 unsold homes on the market in the Denver area last month, a 20.1 percent decline from the figure a year earlier.

Photo by David Zalubowski / Associated Press

A sale sign stands outside a new home in Denver during the summer. There were 23,120 unsold homes on the market in the Denver area last month, a 20.1 percent decline from the figure a year earlier.

A price-reduced sign tops a sales placard outside a home in south Denver last summer. The median sale price of homes in the Denver area was $206,000 in October, down from $234,200 a year earlier.

Photo by David Zalubowski / Associated Press

A price-reduced sign tops a sales placard outside a home in south Denver last summer. The median sale price of homes in the Denver area was $206,000 in October, down from $234,200 a year earlier.

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The number of unsold homes on the Denver-area market continued to plummet in October, falling to an almost three-year low.

The reason: Homeowners who don't have to sell are keeping their houses off a market loaded with a large inventory of foreclosed homes.

"I tell people if you don't have to sell, don't put it on the market, or rent it out," said Ed Jalowsky, owner of Hottest Home Realty.

"But if you want to buy, don't wait," he said, because banks are dumping foreclosed homes, known as real estate owned, or REOs, at bargain prices.

He said he doesn't expect the market to bottom out until the end of next October.

The biggest barrier to trying to take advantage of the low home prices, he said, is that it is harder than ever to get a loan.

There were 23,120 unsold homes on the market last month, a 20.1 percent drop from the 28,928 homes on the market in October 2007. The last time the inventory was lower was in January 2005, when it stood at 20,917.

"The inventory for the third month in a row is down by at least 20 percent," said Chris Mygatt, president of Coldwell Banker Colorado, which on Thursday issued one of three monthly reports on the market, based on Metrolist data. "That is really significant."

It was the eighth consecutive month that the inventory of unsold homes dropped from the same month a year earlier, according to an analysis by Gary Bauer, who also released a report.

"It was a better month than I thought it would be," Bauer said. He noted that there were 4,504 homes placed under contract, down only 3 percent from the 4,645 in October 2007.

The inventory also is down 27.7 percent from its peak of 31,989 homes on the market in July 2006, according to Mike Cox of RE/MAX Professionals.

Last year saw a similar trend. In 2007, February and December were the only months to show a year-over-year increase in inventory, although the percentage drops weren't so great.

The prices of homes also were down in October because of the mix of houses on the market.

The average price of a single-family home sold in October was $250,172, down 13.6 percent from $289,754 in October 2007. Also, the median price of a home fell 12 percent to $206,000 from $234,200.

But Mygatt said some neighborhoods, such as Washington Park, Capitol Hill and Congress Park, actually have shown a tiny percentage gain of about a half-percent.

"Other areas, like Green Valley Ranch and Montbello, where there are a lot of foreclosures, are seeing their values drop by 30 percent or 40 percent," Mygatt said.

"The people who have no need to sell now in those areas aren't putting their houses on the market because they don't want to compete with all of those REOs," Mygatt said. "The banks are pricing those homes to sell. They are not listing homes. They are selling homes."

Mygatt said the government must step in quickly to prevent further erosion of housing prices and stop the foreclosure crisis sweeping the nation.

"Regardless of your political party, the reality is that the U.S. economy cannot be fixed until the real estate market is addressed," Mygatt said.

"Every member of Congress understands this. And the Obama team has some very intelligent people, like Warren Buffett. But so far, what the government has done is write some really huge checks to Wall Street. What they need to do is enact legislation to really help homeowners."

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