Your Trusted Real Estate Advisor

Every now and then an article shows up that makes a fuzzy picture clear. A lot of those come from Michael Barone. His article, Foreclosures Are a Regional, Not a National Problem--Half Are in Four States, plainly shows that the foreclosure situation in Colorado is pretty good by comparison. It gives hope that our housing market will rebound long before some other states.

Colorado’s foreclosure rate is just under the national average of 11 per 5,000 housing units. Ours is 10 per 5,000. Compare that with:

    Nevada 66 per 5,000 housing units

    California 29 per 5,000 housing units

    Arizona 27 per 5,000 housing units

    Florida 23 per 5,000 housing units

In other words, 53 percent of the nation's foreclosures took place in states with 21 percent of the nation's population. It will take the market a lot longer to rebound there than in Colorado. We don’t have a many foreclosed homes waiting to be sold, so a normal homeowner who wants to sell will have a better chance to sell than in those high foreclosure states.

Keeping up with the economic news is almost impossible, since there are so many different factors to consider. Many of us are concerned primarily with the housing market, but that can’t be considered alone. To get the big picture, I like to go to the experts. Today I went to hear an economic forecast lecture by Patti Silverstein. She is the economist for the Metro Denver Economic Development Corporation, a subsidiary of the Denver Metro Chamber of Commerce.

Click here for her PowerPoint presentation, and it might be some help. In a couple of days, I should be able to provide a link to today’s lecture which was videotaped. For now, these insights from her lecture might help you understand the PowerPoint presentation:

· The Colorado recession will be shorter and shallower than the overall U.S. recession.

· There appears to be a fundamental structural change in the Colorado economy: in 69 years there have only been 7 years of employment decline. Three of those years are in this decade.

· Metro Denver’s population will remain essentially unchanged for 2009

· A major factor in driving this recession is that the Consumer Confidence Index has dropped precipitously since November. Consumers are therefore holding on to their money; and when they do spend, they are spending more carefully. This has affected retail sales; and retail vacancy rates are rising as more stores close.

· The housing boom of 2004-2005 was driven by low interest rates and exotic loans—the culprit in the foreclosures of the past 4 years. I think I heard her say that previously only 6% of loans were “subprime” loans. In 2004-2005 40% of loans were subprime.

· The relative stability of home prices in Colorado means we won’t do as badly as elsewhere. See S&P: Denver had smallest 2008 home-price decline of 20 U.S. cities

· Foreclosures are still high, but are declining (and much better than some other places). See Colorado foreclosures fall in 2008 for 1st time in years for more on this.

· The first half of 2009 will still be difficult, but things should improve in the 2^nd half of the year.