Saturday, June 28, 2008

REO's: THE FRENZY CONTINUES

Altos Research reported this week that Denver had the fastest rising list prices of any housing market in the country, with the average asking price rising by 3.7% during May.


One reason is the noticable increase in competition for foreclosures among investors and first-time buyers. In many areas it is now cheaper to own that to rent, which is putting cashflow-minded investors in direct competition with bargain-hunting buyers.


Overall ACTIVE housing inventory is down over 5% from one year ago in the Denver MLS, and as new foreclosure inventory becomes more scarce, the bidding wars are under way.


I cited a few weeks ago how difficult it is becoming to get offers accepted on bank-owned properties. How it's not uncommon to see investors, agents and bargain shoppers lined up in front of new listings as soon as they hit the market.


Banks are taking note, and they are starting to raise their list prices.


Although the competition for these lower priced properties is causing headaches for buyers and real estate brokers alike, it's a good sign for our market. We need to clear out the foreclosure inventory and get back to a more normal market.


One word of caution: rising rates are a real concern right now, and a spike in interest rates could delay our overall recovery. First-time buyers are more rate sensitive than most investors, however, and anything that keeps first-time buyers on the sidelines will likely continue to push rents higher as landlords take advantage of a red hot rental market.