Finally a decent estimate for the Shadow Market.

In today’s Wall Street Journal there is an article (copied below) about the size of the shadow foreclosure market. This economist pegs it at 1.1 million homes. The Denver metro area is about 0.8% of the overall US population, so as a really rough guess, we would have 8,800 of those homes. That’s only a rough guess of course.

We sold 38,100 DSF + 11,600 CND in 2005 (total = 49,700 resale homes, not counting new construction). This declined to 29,100 DSF + 8,230 CND = 37,339 resale units sold in 2009. In the unlikely event the shadow market homes were dumped on MLS tomorrow morning, we could sell what we sold in 2009 AND all of the shadow homes and still be under the sales volume in 2005!

Here’s another, more realistic way to look at it. Most of the shadow homes will likely under the median sales price. That’s $210K for DSF and about $165K for CND. For this least-expensive half of the market, we have 2.3 months of inventory for DSF (six months is normal) and 4.3 MOI for condos. Blended, it’s 2.9 MOI, a pretty strong seller’s market. If you dumped all 8,800 shadow units on the market tomorrow, we’d increase to 8.7 months of inventory. That is a slight buyers market. More likely, the shadow market will be trickled slowly onto the MLS over months, if not years.

Chicken Little might be wrong about the shadow inventory market making the sky fall on our real estate market.

http://online.wsj.com/article/SB10001424052748704388304575202332735443388.html?KEYWORDS=housing+is+a+post-stimulus#

Mistake to Avoid - KNOW YOUR CREDIT

1. Not knowing your credit score

If you're even toying with the idea of buying a home, you must find out exactly what your FICO score is. If you find it is less than ideal, wage a systematic campaign to raise it. Too many borrowers ignore this step and get surprised when they get interest rate quotes.

Once you've pored over your credit history and corrected any errors, your next step is to pay down revolving debt balances to no more than 30% usage. That will help raise your score significantly.

Why does it matter?

The lower your score, the higher your costs of borrowing. Fannie Mae and Freddie Mac, for example, charge higher up-front fees to borrowers with credit scores below 740.

For a buyer with a credit score between 680 and 700, the fee comes to 1.5% of the mortgage principal. On a $200,000 mortgage, that adds up to $3,000. Someone with a 740 score pays nothing.

Lower-score borrowers also get saddled with higher interest rates, about 0.4 percentage point more for the below 700 borrower. That costs an extra $62 a month -- $744 a year -- on a $200,000, 30-year, fixed rate loan.

Denver Leads State in Population Again Yet Again

Denver Leads State In Population Gain Yet Again
Posted by Ken on April 8, 2010

You may have caught this about a week ago when it was announced, but just in case… the US Census Bureau released its last annual July population estimates before the 2010 Census and, once again, Denver led the state in population gain.

From 2006 to 2007, Denver squeaked past Douglas County by a little over 100 people to have the highest numeric population gain in the state for that year, with an increase of about 12,500. Then, from 2007 to 2008, Denver topped second-ranked Arapahoe County by almost 5,000, gaining over 15,500 people that year. The numbers just released for estimated county populations as of July 1, 2009 has Denver gaining over 17,000 for the year, with Adams County in second place at over 11,000. The City and County of Denver’s population has now surpassed the 600,000 mark for the first time ever.

Of course, the point isn’t really the county vs. county aspect of this. At some point in the future, El Paso County (and other counties as well) will pass up Denver County in population given that Denver covers only 155 square miles (a third of which is DIA) and must rely on infill development for growth, while El Paso County, for example, covers 2,130 square miles and is only about 10% urbanized at present. The point is that Denver is growing in a significant way after several decades of decline during the era of peak suburbanization. This tells us we are on the right track. People are voting with their feet (or perhaps, their house keys). Denver does have some undeveloped areas left (e.g. Stapleton, Green Valley Ranch, DIA/Gateway), but clearly the city’s long-term source of population growth is going to occur through infill development and the densification of its Areas of Change (former industrial areas, the greater Downtown area, transit-proximate areas, etc.). This is a good thing. Densification and urban infill is sustainable development at its most simple.
Filed under Economic Growth, Sustainability, Urbanism

American say time is right to buy home

poll - Nearly two-thirds of Americans think the time is right to buy a house, with a majority believing prices will be the same or higher over the next year. In a survey conducted by Fannie Mae, 64% said it is a good time to buy. However, most of the 3,451 polled said that it would be tougher for them to get a loan than it was for their parents.
http://www.msnbc.msn.com/id/36192404/ns/business-real_estate/

The New Face of House Flipping

Nationally, the number of flipped homes rose 19% to 197,784 in 2009, according to RealtyTrac. Flipping has been encouraged by a FHA one-year rule change, which allows FHA borrowers to buy foreclosed homes from owners who have held title for less than 90 days. Many of the today’s flippers are wealthy foreign investors. In many cases, they bid without ever seeing the properties, relying on photos and descriptions via mobile phone.
http://www.realtor.org/RMODaily.nsf/pages/News2010033106