The Crystal Ball of Real Estate
by Osman Parvez To honor the passing of widely admired, free market economist Milton Friedman perhaps it's time for a post on economic forces in real estate. If you're not into economics, market drivers, etc., you might want to skip this post. I'll try to write this so it's more interesting, but remember Economics is called the dismal science for a reason. Many recent clients are asking whether to buy/sell now or to hold off on their real estate decisions. They're reading the national news about dropping prices and increasing inventory and rightly wonder whether local prices will be up, [...]
Room for Improvement
by Osman Parvez Since first writing about the housing bubble in 2004 for The Windwalker Report, I've been saying (1) there is strong evidence for a bubble and (2) the markets experiencing the greatest appreciation were most susceptible to the downside risk. My opinion hasn't changed. By now you've no doubt heard that in some parts of the country, the housing bubble is finally deflating. In those areas, inventories are very high, sales have slowed, and foreclosures loom. Speculators have exited and those who bought in 2005 to flip, but lack the ability to hold comfortably, are starting to sweat. [...]
Mortgage Resets
by Osman Parvez In the last few years, millions of people took equity out of their homes and refinanced when interest rates were at historical lows and housing prices were at record highs. As adjustable rate mortgages (ARMs) now reset to current interest rate levels, some borrowers could find their payments doubling or more. Those with negative amortizing, interest only, and "pay option" mortgages are most likely to see a big increase in their monthly payments. Consider this situation (from an article in the Baltimore Sun), [From a] A model letter provided to me by Countrywide includes this hypothetical example [...]
Discussion: The Bubble and Boulder Colorado
by Osman Parvez The housing bubble is a hot topic and I know a lot of people are worried about it. As a followup to my recent post, A Boulder Bubble?, I'm hosting a Skypecast (discussion) this Wednesday at 7:00pm. You're invited! Here's a link to the Skypecast, The Bubble and Boulder Colorado. If you aren't a subscriber to Skype, it will guide you to creating an account. After that, it's free. Any questions? Image:Skype ---- Like this analysis? Subscribe to our client research report. Want to get blog updates via email? Click HERE. [...]
Bubble Behavior
by Osman Parvez Things aren't so bad in Boulder, but drive about 900 miles south to Phoenix, AZ and you'll find a real estate market imploding. It's also creating some very strong emotions in buyers and sellers. We work with emotional clients too, but nothing like what's being reported in Phoenix. From the Arizona Republic, comes an article. Real estate agent Neil Brooks was getting the feeling that his client was about to completely lose it. He'd seen it before. He had just broken some bad news about her house deal, and she wasn't taking it well. She was pacing, yelling [...]
The Bubble – Should You Worry?
by Osman Parvez With all the doom and gloom housing scenarios sprouting on various blogs and being carried by the national media, it's easy to feel pessimistic. You might even start to think the Sky is Falling. Well, should you be worried about Boulder real estate? Are you even wondering if you should sell your property and rent while the market sorts out? The answers lie in research about your local real estate market. Unless you live in Phoenix, Las Vegas, or Miami, don't base your real estate decisions on (often sensationalized) news blurbs about rising inventory and slowing sales [...]
It’s Bubblicious
by Osman Parvez No doubt, if you read this blog you may also be reading all sorts of information online. The housing bubble continues to be a hot topic in real estate, and many industry participants are finally acknowledging that certain markets (particularly in coastal metro areas) are overvalued. As everyone knows, fear sells and the bubble blogs tend to draw tremendous traffic. They also usually have lots of ads and often move towards exaggeration and spectacle to draw visitors (like the tabloids). The Bubble Blogs can be wildly entertaining, however if you are thinking about buying or selling here [...]
Desperate Sellers, BIG Discounts
by Osman Parvez I should start by saying I'm not trying to highlight or take advantage of anybody's misfortune. Occasionally a seller will mis-price their property and it takes time for reality to take hold. At other times, a seller's personal situation forces rapid liquidation of her assets. Naturally, good deals can be found when sellers lose patience or must liquidate. It's also likely in the next few months buyers will exercise greater caution as the media focuses on the bubble deflating in overheated markets. Despite the strong evidence that Boulder, Colorado is not a bubble market (see my posts [...]
House Price Index
by Osman Parvez The housing bubble blogs are using House Price Index charts developed using HPI data from the Office of Federal Housing Enterprise Oversight (OFHEO). Perhaps you'd like to see how Boulder and Denver compare to markets where bubbles likely to exist? Ok, let's compare Boulder and Denver (green and red, respectively) with San Francisco, Boston, and Miami's real estate markets. As usual, click on the charts below for larger images. Looking at the chart above, it seems to me that when the telecom collapse followed the stock market crash, our region's real estate market cooled substantially relative to [...]
Is the Sky Falling in Boulder?
by Osman Parvez After traveling it always seems to take a few extra days to catch up on the work that piled up while I was away (hence the scarcity of blog posts). In the meanwhile, I've noticed more than a few doom and gloom news items about the real estate market. These pieces include a roundup of realtor or gadflyesque blogs on the bubble and another about buyers fleeing to Mexico. From the over-hyped sound of it, real estate is falling off a cliff and investors in particular are desperate to get out. Given that real estate isn't one [...]
Boulder Homes Days on Market in 4Q
by Osman Parvez This morning, we're digging further into the numbers on Boulder's market. The chart below depicts the number of homes sold (still preliminary for 4Q05) relative to the days on market (DOM) for the same period. This analysis is for single family home sales, no condos or townhomes relative to average and median DOM. Why both average and median? To illustrate the consistent skew caused by outlying sales. In plain English, there are a certain number of homes that sit on the market for very long periods of time. If you only look at average numbers, these slow [...]
Boulder 4Q Sales (preliminary)
by Osman Parvez It's still early to tell, but it looks like Boulder's market may have painted a mixed picture for the 4th quarter of 2005. Current results indicate the number of homes sold dropped a little more than 6% compared to the same period a year earlier while Condo/Townhome sales increased nearly 12% (see chart below). The number of homes sold in the 4th quarter was still 16.2% more than in 2002. Keep in mind these numbers are preliminary and are based on a small sample size (208 homes sold, 150 condo/townhomes). Statistics are dependent on brokers correctly entering [...]
Denver Metro Existing Home Sales
by Osman Parvez There's an article from the Rocky Mountain News regarding Denver's existing home sales in 2004. Existing Home Sales: $14.9BN, 4% greater than '04. Average Price: $281,188 up 5.8% ~1,000 fewer homes were sold in '05 than in '04, a decrease of about 1.9%. Current Inventory: ~13% greater than the same time in '04. DOM: Homes sold an average of 90 days on market. An increase of 5.9% from '04 Appreciation rates this year were in the 4 to 6% range (the norm since 2002). In contrast, California and Florida posted bubble-like appreciation rates of more than 20% [...]
Crash!
by Osman Parvez Oh no, could it be a real estate CRASH? The New York Times headline today announced a second consecutive month of slowing sales. What's the scoop? Sales are falling off a cliff, right? We must be nosediving into economic oblivion. It certainly sounds that way from the attention grabbing headline. You might think sales have dropped 20% or more. Well, not exactly. November sales nationwide were off by 0.1% from the same period a year ago. How many homes is 0.1% of our national market? 10,000. In November 2004, NAR reports 6,980,000 homes were sold. In November [...]
Bubble Hoopla
by Osman Parvez Here's an article nicely supporting what we've been saying for some time. It seems a CU professor shares our contrarian view on the local/regional real estate market. As we've said before, the real estate bubble is largely concentrated in metro markets on both coasts. Our local/regional real estate market hasn't experienced the bubble of the past few years and as such is less likely to experience price falls from the bubble bursting. However, as prices flatten or even drop in the more overheated markets around the country, there will be effects locally as well. Local buyer and [...]
