Colorado Housing Insider: One Foreclosure Begets Another

Foreclosures in Colorado soared 31 percent last year and have more than doubled since 2003, depressing Front Range home values, a new survey from the Colorado Division of Housing says.

“‘One foreclosure begets another foreclosure. You have to ride that wave out and try to do what you can to minimize the damage to neighborhoods,” said Zach Urban, director of housing counseling with Brothers Redevelopment in the Denver housing market.

There were 28,435 foreclosures recorded last year in the 43 out of 64 counties where the division obtained counts.

“Unless new home buyers move to the state in unexpected numbers, the areas hardest hit by foreclosures will probably suffer home-price declines before recovering within 18 months to two years,” said Kathi Williams, director of the division.

About half of the homes that entered foreclosure in the state last year were lost in public trustee sales. About a third of the defaulted Colorado mortgages started were withdrawn. Sandy Hume, Boulder County public trustee, estimates that many homeowners who withdraw their foreclosures still end up selling against their wishes.

“‘Those withdrawals don’t mean that someone gets to stay in their house,” Hume said.

“‘A lot of people who are in problem situations are not subprime borrowers. They are borrowers who weren’t ready for a 2 percent hit on their [home loan rate],” said Michael Thomas, managing partner with Hyperion Capital Group in Aurora.

Thornton homeowner Paul Hernandez blames officials too eager to win new housetops at any cost, even if means destroying the home equity of their current residents.

“If you allow too much building, you are going to hurt the existing citizens of your community. It doesn’t take a lot of brains to figure that out,” he said.

Still, builders are expected to add 14,000 homes this year in the metro area, despite an eight-month supply of existing homes available for sale and more than 19,000 foreclosures last year.