A prominent theme in yesterday's economic outlook presented by Dr. Ted Jones was that "all real estate is local". Common sense, but often forgotten.
We are impacted by national events.
But we are also cushioned by the relative strength of our own local economy.
I have said in buyer presentations for the past 18 months that Colorado is on the backside of its foreclosure crisis. It came early (2004) and it was severe, but because we went into first, we're coming out of it before the rest of the country.
Two pieces of supporting evidence:
1) The number of foreclosures in the seven-county Denver Metro area last year was 24,650, down from 26,521 in 2007. That's a decline of more than 7%. In California, there were over 236,000 foreclosures last year, an increase of 180% from 2007. When your appreciation dies off, the foreclosures begin. Our market topped in 2004, whereas many markets didn't hit the skids until 2007.
2) The widely-followed Case-Shiller home price index was released yesterday, and Denver ranked as the #2 market in the country, behind only Dallas. According to Case-Shiller, home prices in the Denver region lost 4.3% of their value from November of 2007 to November of 2008. Dallas and Denver were the only two markets with losses of less than 5%.
While a 4.3% loss may not be cause of celebration, I remind my investor clients often that it beats a 40% loss in the stock market. And while some homes may have lost some value, my investors continue to see positive cash flow and my first-time buyers continue to pay less on a mortgage that they would in rent.
These are uncertain times, and as I said yesterday, that's why interest rates are the lowest they have been in almost 50 years. When confidence returns, prices will rise, and so will rates. It's always been that way, and that cycle will surely play out again.
We are impacted by national events.
But we are also cushioned by the relative strength of our own local economy.
I have said in buyer presentations for the past 18 months that Colorado is on the backside of its foreclosure crisis. It came early (2004) and it was severe, but because we went into first, we're coming out of it before the rest of the country.
Two pieces of supporting evidence:
1) The number of foreclosures in the seven-county Denver Metro area last year was 24,650, down from 26,521 in 2007. That's a decline of more than 7%. In California, there were over 236,000 foreclosures last year, an increase of 180% from 2007. When your appreciation dies off, the foreclosures begin. Our market topped in 2004, whereas many markets didn't hit the skids until 2007.
2) The widely-followed Case-Shiller home price index was released yesterday, and Denver ranked as the #2 market in the country, behind only Dallas. According to Case-Shiller, home prices in the Denver region lost 4.3% of their value from November of 2007 to November of 2008. Dallas and Denver were the only two markets with losses of less than 5%.
While a 4.3% loss may not be cause of celebration, I remind my investor clients often that it beats a 40% loss in the stock market. And while some homes may have lost some value, my investors continue to see positive cash flow and my first-time buyers continue to pay less on a mortgage that they would in rent.
These are uncertain times, and as I said yesterday, that's why interest rates are the lowest they have been in almost 50 years. When confidence returns, prices will rise, and so will rates. It's always been that way, and that cycle will surely play out again.
