Rough Year Expected For Denver Housing Market (Again)
You could call it unlucky No. 7.
As in, the number of consecutive years the Denver housing market has been struggling.
The challenges for 2006 were the same old story, according to the Rocky Mountain News: record Colorado mortgage foreclosures and a 39 percent increase in unsold new homes on the market.
“This will be another tough year,” said Mike Rinner of the Genesis Group, which tracks the region’s real estate market.
But fast-forward to 2008 and there might be some relief.
Denver home prices, which posted some of the strongest growth in the U.S. from 1991 until 2001, floundered after the September 11 terrorist attacks and the subsequent “tech wreck.”
While many of the country’s housing markets soared in recent years, housing prices in the Denver area for the most part remained flat as mortgage demand wanes, and a record number of houses were taken over by lenders.
The report notes that in the fourth-quarter, 4.1 percent of the homes in Adams County were in foreclosure, the same percentage in 1988, when the number of foreclosures previously peaked.
More than 19,000 foreclosures, a record in total numbers, were filed in the Denver area last year. But the overall percentage of homes in foreclosure is 2.6 percent, compared with the peak of 3.8 percent in 1988.
However, on a percentage basis, 2006 was still the worst calendar year since 1989, when 3.2 percent of the metro area’s home mortgages were in danger of some form of foreclosure, according to Genesis.
The market from 2008-2010 should fare much better, based on the projected employment and population growth, coupled with modest new construction.
As with much of the U.S., aging baby boomers in the Denver area will help the upper-end, move-up market. For example, the metro area is expected to see its population grow by about 220,000 from 2005 through 2010 to 2.85 million people. The biggest increase from home buyers will occur in households with incomes of more than $100,000.
“What I think will give us an advantage over a lot of other cities in the country is that not only do we have the aging baby boomers, but we also attract a highly educated work force,” Rinner said.
Home-building consultant Jeff Whiton said young educated buyers have more choices than ever in the current Colorado housing market landscape.
“A lot of little niches are being created,” Whiton said Monday. “There are downtown condos and suburban townhomes. “There will continue to be lot of transit-oriented housing choices.”
Roger Reinhardt, executive vice president of the Home Builders Association of Metro Denver, said that while this will be another “flatline” year for builders, Denver is in better shape than California, Arizona, Florida and Nevada. In those states, prices are cooling quickly after huge run-ups.
“This will not be a good year for the home building business in Denver, but ultimately it will be good for the economy,” Reinhardt said. “When roughly one out of four new home sales doesn’t close, you build up inventory. We’re going to have to work through our problems. There is no quick fix.”
SOURCE: Rocky Mountain News