Important News Release –
The Denver Post printed inaccurate information
– Please read below for ACCURATE information
concerning Colorado Real Estate. -
Last Wednesday, the Denver Post printed an article called “Colorado Could Be Facing a New Wave of Foreclosures” suggesting there may be a surge of shadow inventory coming to our market in the near future. Based upon in-depth analysis, done by the company I work for, Your Castle Real Estate, of the hard data we performed to quantify the so-called shadow inventory and assess its potential affect on our market, we believe their conclusion is both misleading and incorrect and as such does a disservice to home buyers and sellers in the metro Denver area. Below is a synopsis of our analysis.
First, let’s define Shadow Inventory so we’re all playing on the same field. We define it as the number of properties that are either REO or 90+ days late on their mortgage in a given area.
If the inventory is REO, that troubled property could be:
· Actively on the market, available for purchase today
On the market, but under contract
Not actively on the market, a part of the shadow inventory that has to be sold eventually
· Actively on the market, available for purchase (as a short sale or regular sale)
· Under contract or pending bank approval or short sale terms
· Not on the market – but likely to get a loan modification
· Not on the market – but likely to be sold as a regular ale or short sale soon, in an orderly way
· Not on the market – the owner is in denial, and the home will eventually become a foreclosure. This is still part of the Shadow inventory that may hit the market someday.
The metro Denver area does not have a large Shadow Inventory based on three key data points:
1. According to NAR, Denver has had the highest average home appreciation gain of any of the 30 largest cities in the U.S. in the past 3 years, at $29,900. The average gain (loss, actually) of the largest 30 cities is -$18,400. Just for kicks, the worst performing city is Las Vegas, at -$59,900.
2. Because Denver’s home prices didn’t appreciate as much during the bubble and began the correction before most markets, Denver has already processed the majority of its REO inventory. According to NAR, metro Denver has only 9,740 homes currently owned by banks. Only San Antonio and Kansas City have smaller REO inventories. Miami has the largest REO inventory with 159,000 properties.
3. Denver has the second fewest number of 90+ days late residential mortgages of the top 30 cities in the country at 29,000, again according to NAR. Chicago has 284,000 and Miami has 124,000 90+ days late mortgages respectively.
Our contention is that while there certainly is Shadow Inventory in our market, there is no Shadow Inventory PROBLEM. Why? Because we have relatively very little Shadow Inventory in our market, and even on the extremely slim chance that a large portion of that inventory suddenly and magically descended on the market in a short period of time, we currently have such a low level of inventory it would actually help our market not hurt it! Five years ago when we had 27,000 properties on the market a huge influx of inventory would indeed have been a problem. Today, with an inventory of only 10,000 properties a dump of 8,000 more properties on the market would only get us back to 2010 inventory levels. In fact, we need this inventory to sell!
So if you just read the Denver Post or the Wall St. Journal and don’t want to buy now because of the Shadow Inventory menace, I’d like to explain that while this may be a problem in other parts of the country, it’s not a problem for us. Our Shadow Inventory problem is pure fiction!
The reason I have chosen to work for Your Castle Real Estate is because of the massive amount of analysis and trend information that the owner, Lon Welsh, does for his Real Estate Agents, making sure we know how to accurately work with our Buyers and sellers !!! There is no other company in the Metro area that has more accurate information for buyers and sellers and I think the article from the Denver Post is a great example of inaccurate information going out to the public.
If you have any questions concerning Colorado Real Estate please feel free to contact me: Denise Wambsganss – Realtor – Your Castle Real Estate