Brick Wall 2

In “Brick Wall” we discussed the effects of the mortgage lending situation from a national point of view. In Brick Wall 2″, we will look ahead at the Denver market for the next 18 months or so.

According to research from the National Association of Realtors in Dr. Lawrence Yun’s presentation in May of 2007, and again in August, 2007, http://www.realtor.org/Research.nsf/Pages/presentations_use , Denver is fore-casted to be one of the top five housing markets in the near future. While you can go see the slide shows yourself, here are a few reasons why:

• Denver is under-priced in relation to other large Western markets.

• Mortgage servicing costs to income are less than historical averages in Denver.

• Denver did not experience rapid price growth, so corrections will be minimal.

• The current and future FHA mortgage loan products are great for first time buyers, and will be rediscovered by lenders, Realtors, and the public as soon as the crises mentality passes.

• Metro Denver will experience a net migration of population in the next year.

• The August unemployment rate at 3.8% is .06% better than August 0f 2006, and .09% better than the United States average.

Metro Denver property is affordable based on both Price to Income ratio and Mortgage Servicing Cost to Income Ratio, () implies the potential for a strong rise in home prices.

The implication is the “Brick Wall” in the Denver market is not as strong as seen in much of the nation. We can knock through this wall and get the market moving again. How do we do this?

First, the real estate industry has to recover from the shock. There are already signs of this occurring in the mortgage money market, as Wall Street reprices and reassess risk and reintroduces mortgage products to the consumer. We are not going to see mortgage money flying out the door in the form of sub-prime loans, but the reality is that we don’t really need easy money, just good money.

Second, Realtors, lenders and the rest of the housing industry has to get to work communicating with the public.

Third, the Realtors must be realistic and emphatic in their pricing advice. This idea that you can place a property on the market for more than then the market will bear, just so you can have a sign in a yard, is silly and damaging to the consumer and the industry.

Fourth, the American public must embrace a minimal level of financial literacy. While there is no question that predatory lending has contributed to our present problems, borrowers signed off on mortgages based on what they were told, not what they understood.

Like it or not, the market is not always kind to the participants. Everyone needs to stand up, brush themselves off, and get to work knocking down (or going around) the “Brick Wall”.

-that’s 30-

Written by Larry D. McGee, Denver Realtor - Visit Website Sphere: Related Content