Northern Colorado Housing Market Outlook Shaky, Freddie Mac Economist Says
An economist from one of the country’s preeminent home mortgage giants had a sobering look Thursday for the short-term future of the Greeley, Colo., housing market.
Amy Crews Cutts, the deputy chief economist for Freddie Mac, said that a slowing housing market, combined with high foreclosure rates, has had a negative impact on the city.
“The Greeley housing market is not doing particularly well,” she said.
According to the Greeley Tribune, Crews Cutts was a guest for a meeting of the Kiwanis Club of Greeley Thursday at the Greeley Recreation Center. She grew up in Longmont.
She credited much of the ongoing housing decline to the exorbitant number of risky Colorado mortgage loans that are adversely impacting Greeley and other areas of the Rocky Mountain State.
In 2005, an incredible half of the home mortgage loans issued in Colorado were interest-only or negative amortization loans — mortgages in which the monthly payment is smaller than the interest due.
In the long run, those loans are the most likely to default as the monthly payment rises. Greeley has an especially high rate of people running into walls and being forced to default on those mortgage loans, Crews Cutts said.
“Those are mortgages that are only a year old,” she said.
For those types of loans made in 2003, 10.1 percent have reached delinquent status in Greeley compared to 2.6 percent in the state. Since 2005, 3.7 percent of those types of risky, adjustable-rate loans have gone delinquent.
As people continue to take those risky loans, the trend will probably continue for awhile, she said, adding that defaults will get worse in the short term.
Her prediction was one of a few in recent weeks about the housing market in Greeley and Weld County. In the first week of October, a report predicted that the median sales price for existing homes in Weld would decline by 10.7 percent.
On October 9, Michael Orlando, an economist from the Denver branch of the Federal Reserve Bank of Kansas City, said that the Northern Colorado housing market was in rough shape for now but would improve as more people and businesses expand into the northern part of the state.
Also, for the months of August and September, Weld County had the highest foreclosure rate among the nation’s 252 largest metro areas.
John DeWitt, president of the Greeley Area Realtors Association, said that despite the languishing home sales, many of the outlooks for the housing market aren’t taking into account the potential for the area.
“It’s nothing but a forecast. It doesn’t talk about what may ultimately drive business our way. I’m more optimistic because of our relative affordability and quality of life in Greeley. I want to point out the silver lining.”
He said that the average price of a home in Greeley costs about $165,000 — well below surrounding areas — and those kinds of prices are bound to attract buyers.