Getting Bubbly Yet?
by Osman Parvez ---- A couple of months ago, I posted an analysis of pricing and negotiations at Wimbledon. Read Osman, How Much Should I Offer? If you're not familiar with Wimbledon, it's a small complex of older townhomes located a few blocks from CU on the east side of Campus. The units are a little rundown at Wimbledon, but they have reasonable build quality and HOA fees. Most are occupied by students and owned by investors (often parents). In the past, these have made good investment properties. I like to use the model as a teaching tool with new investors [...]
Is This Boulder’s Future?
by Osman Parvez ---- A client sent me this video about what's happening in the San Francisco Bay Area housing market. It's an eye opener. Is this Boulder's future? Let's hope not. Million Dollar Shack: Trapped in Silicon Valley's Housing Bubble ---- Want to get blog updates via email? Click HERE. Ready to buy or sell? Schedule an appointment or call 303.746.6896. You can also like our Facebook page or follow us on Twitter.As always, your referrals are deeply appreciated. -- The ideas and strategies described in this blog are the opinion of [...]
American House Prices: Reality Check [Analyze This]
by Osman Parvez ---- Today's interactive Daily Chart from the Economist is excellent. American House Prices: Reality Check. It shows house prices going back to 1980 across five metrics; HPI, Prices in Real Terms, Price to Rent, Price to Income, and Percent Change. You can switch on/off markets and use the sliders to adjust the dates. Here's what Denver (grey) looks like for prices in real terms since 2000 compared to Phoenix (green) and Seattle (red). Think we've got room for the market to keep moving up? I sure do. It seems we're a long way from the peak. [...]
When the Bubble Bursts
by Osman Parvez ---- The gig is up. The economy is much weaker than expected. Odds are almost nill that interest rates will rise in September, much less in October or November. Too much cash has been chasing too little inventory in Boulder, creating bidding wars for even marginal properties. Prices have risen quickly. This is called a bubble. Like all bubbles, it will burst. During the last downturn, Longmont saw sales stagnate and inventory pile up first. Longmont also corrected faster. Louisville and Lafayette followed. Boulder held up better. How do we know? Because [...]
Case Shiller Deja Vu – Feeling Bubbly
by Osman Parvez Flippers are back. Rookie real estate agents are entering the business in droves. Inventory is scarce and desperate buyers are bidding up prices. Welcome to 2015. It looks a lot like 2005, minus the inventory scarcity. Take a look at the Case-Shiller index for Denver. - Nobody is talking about it, but the index has exceeded the peak level of 2006. - It's extremely difficult to predict the top or the bottom of a market cycle. Pay close attention to inventory and sales volume. If you haven't already, subscribe to our research, "like" our Facebook page, and follow our [...]
Google’s New Boulder Campus and More [Weekend Reading]
by Osman Parvez Ready for some weekend reading? Here's a quick roundup of interesting real estate tidbits for your reading pleasure. 1. Google's new Boulder Campus gains preliminary approval. This is a huge deal. Once constructed, the new facility will allow Big G's Boulder employee base to grow to around 1,500 people. The impact to Boulder housing will be substantial, particularly at the mid range of the market. Here's why. Most of these employees will make too much to qualify for affordable housing and yet not have enough resources to take down $1MM+ homes. That means the mid range is [...]
The Boulder Market – Bubblicious?
by Osman Parvez For the past year or so, I've had many private conversations about whether the Boulder real estate market is moving into a period of strong and sustainable appreciation or whether we're looking at a new real estate bubble. I hate to say it but the consensus among clients and colleagues is that it's starting to look a little bubbly out there. Last year saw double digit appreciation for traditional houses and nearly double digit for condos in Boulder. This year, market activity appears to be even frothier with bidding wars for every entry level house [...]
$15,000 Home Buyer Tax Credit
by Osman Parvez ---- Not only is the Senate GOP pushing for a 4% mortgage rate program in the latest stimulus bill, they're adding a tax credit of up to $15,000 for home buyers. Will it pass? From the NYT: But Senator Johnny Isakson, Republican of Georgia, a former real estate broker, who was the prime sponsor of the home buyer credit, said it was modeled after a similar, $2,000 home buyer incentive that helped lead the country out of recession in 1975. “We do have a history in this country with housing and it goes back to the crash [...]
The Housing Bill
by Osman Parvez ---- Today, you're no doubt hearing that President Bush signed the housing bailout bill into law. I have mixed feelings. On one hand, institutions that backstop half of the nation's mortgages are at risk for collapse. On the other, markets tend to work better without government manipulation, even when the efforts are to protect institutions supposedly "too big to fail." Ultimately, it's the taxpayers who foot the bill and from what I've read, this one is a blank check - limited only by the new national debt ceiling. In addition to helping prop up Fanny and Freddy, [...]
Why The Downside Is Limited
by Osman Parvez ---- A few comments have suggested that my recent downside estimate for the Boulder market was too shallow. If you're sitting on the sidelines looking for our local (or broader regional) market to collapse like the former bubbles, you'll probably be disappointed. Here's why. Enter the wayback machine and look at my post from two years ago comparing the Denver market with bubble markets. After showing you how these markets compare and overlaying trends, I wrote: Thus, more support for the notion there's no housing bubble in Boulder or Denver. Even so, we will still be impacted [...]
Signs of a Recovery
by Osman Parvez ---- Is a recovery underway in Denver? The numbers are starting to prove it out. From the Rocky Mountain News: ------------ Fresh evidence suggests the Denver-area housing market may be in the early stages of recovery, even as the national housing market faces an even bigger slump. From May to June, Denver homes showed a 1.3 percent appreciation in value, the highest of 20 metropolitan areas surveyed, according to the Standard & Poor's/Case Shiller Home Price Indices. Charlotte, N.C., was No. 2 at 1.2 percent. And while Denver home prices dropped by 0.7 percent in July from [...]
Housing Costs and Unstoppable Demographics
by Osman Parvez ---- From the New York Times, Housing Cost Consumed More of Paychecks in 2006: Nationally, half of renters and more than one third of mortgage holders — 37 percent, up from 35 percent in 2005, or a rise of more than 1.5 million households — spent at least 30 percent of their gross income on housing costs, the level many government agencies consider the limit of affordability. The article included the map below, showing the percentage of homeowners (with mortgages) who spend more than 30 percent of their income on housing. Looking at the map, I was [...]
Contrary Indicators
by Osman Parvez ---- I've been a little too busy lately to blog as much as I'd like, but every once in a while some information pops on my radar screen and screams for attention. You've probably heard about the collapsed Bear Stearns subprime hedge funds (subprime lending is largely made up of loans made to people poor credit histories, essentially riskier loans made a higher rates). There's widespread concern (arguably overblown) that the problems in the subprime sector and in its many derivative products, including credit default swaps, will spread widely. Some investors are worried that this will be [...]
Impacts of the Subprime Implosion
by Osman Parvez ---- By now, you probably know that there's been a rapid increase in the number of subprime lenders tightening standards or closing their doors. Novastar Financial (NFI) and New Century Financial (NEW) in particular (see charts below). According to a new Credit Suisse report, nearly two dozen subprime lenders have ceased operations or have been acquired in the past year. Cumulative losses from subprime loans could exceed $10Bn over the next couple of years. The question you're probably asking... what does it mean for the Boulder (and the regional) real estate market? Here's a few thoughts. 1. [...]
The Fed’s Crystal Ball
by Osman Parvez ---- John Duca, Vice President and Senior Economist at the Dallas Federal Reserve, recently published Making Sense of the U.S. Housing Slowdown. If you're wondering where real estate is heading and why the Fed is paying so much attention, pour yourself a cup of coffee and read this report. Looking through his own real estate crystal ball, Duca had this to say about the big picture of future prices (bolding is mine) Although the recent slowdown in home prices has been dramatic, it's still un-clear how much housing-price appreciation will decelerate from the fast pace of 2004-05. [...]
