Real Estate Blog
February 2007

The Good, the Bad, the Ugly of Front Range Real Estate

The Good
Colorado's economy is in good shape. New homebuilders are cutting back on new builds which will help dry up new home inventory, interest rates are still relatively very low when compared to the past 25 years, wages are creeping upward, and the national economy is also doing well. Additionally, the mortgage industry in Colorado is getting more regulation which should help reduce the predatory lending problem and hopefully reduce the number of future foreclosures. Let's not forget about the many redevelopment/urban renewal and rapid transit projects underway and planned around Denver. Many of the micro-markets in and around those renewal areas are considered "hot". A lot of the media hype surrounding real estate bubbles bursting are only specific to the recent high flying markets in specific areas in other states. In those areas there is also surge of defaulting speculative investors who over leveraged themselves which is also contributing to the national media "bursting bubble" hype.

The Bad
The bump in interest rates put a squeeze on many who over leveraged themselves or were the victims of predatory financing. More foreclosures mean more inventory. Negative media hype (which is sensationalized because fear - sells) causes additional market participants to fear the markets and financing homes. Many who are looking to upgrade are choosing to wait and see what happens in the near. The real estate supply and demand scale has tipped in favor of the buyer but there are fewer of them. Prices in many areas are leveling off or dropping and number of days on market has increased significantly in many areas.

The Ugly
It is a widely held opinion that it might take another two years for the supply and demand equation to balance out and turn us back into a stronger appreciating sellers market. To make matters worse, Colorado has been a national leader in number of foreclosures and this unpleasant distinction might stay with us for a couple more years as well. It has been said by some, the cooling real estate market could actually put our local economy into a recession - but I think that is unlikely in light of all the positives going on in our great state. But still you have to respect the research and experience that went into forming that opinion and keep an eye out for the worst case scenario.

In Conclusion
There is much more that could be added to support or dispute my outline above - as I am sure I will get some emails. The bottom line is the real estate market has slowed (with some exceptions) and the consensus is it will take a couple years to get back to pre-2006 strength. Generally speaking, selling a property could take twice as long (if not more) and the sale price could be less than a couple years ago.

Bill
Contact Me