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View Full Version : Denver ecomony looking positive.. housing near bottom


nakman
12-05-2007, 12:26 PM
this could have been tacked on to the "refinance" thread, but what the heck, may as well have a life of its own. IMO, I agree with this and do believe that housing prices have bottomed out, or will be bottomed out within 6 months. By the end of the summer, they will be on the rise again.

And I'm sure if I'm wrong someone will revive this old thread to wave in my face, so let's see what you think.. :p: perhaps it will be I who will be doing the old thread reviving ;). Either way, you're not going to sell/buy/not sell/not buy a house based solely on what I think anyway.. :blah:



but I put it to you, RS economists, what do you think?

Red_Chili
12-05-2007, 12:34 PM
I would agree. I lived through the energy boom/bust (before many of you younguns was born), and our economy has diversified WAY beyond energy. Part of the equation is, we didn't participate in the boom as much as many other areas, so we didn't experience the bust to the same degree either.

It still depends on the specific area though. And do keep in mind energy (peak oil, anyone?), though that is likely to spawn some tremendous new technologies (the 'next big thing'?), water, and sprawl issues.

I personally hope we don't grow all that much! You think it's crowded NOW??!?

MDH33
12-05-2007, 12:37 PM
I certainly hope you're right. However, when taking into consideration the amount of new sprawl that has been built in the last 5-10 years around Denver, and the number of people who used questionable loans and overpaid for housing, it seems very likely that house prices will continue to decline for several years. With loans becoming more difficult to obtain, there are fewer buyers (and even fewer speculators) to keep prices climbing. Too many houses on the market, foreclosures, fewer buyers, all equals lower house prices. I'm not sure that this will drastically effect the Colorado economy over the long term, but it will effect housing prices. In my opinion there is was a bubble here too and it will take more than a year or two for prices to correct to a reasonable level.

My 2 cents. :)

nakman
12-05-2007, 12:43 PM
My father, who was in large scale housing development in Denver for about 20 years, told me the Denver area needs at least 20,000 new homes built every year, just to keep up with the families that already live here. And he's been retired for a while so that's probably old data, that numbers likely higher now. tha'ts not people moving into Colorado, that's just kids who are moving out of mom & dad's house, leaving the dorms, etc.

PatrolMan
12-05-2007, 01:15 PM
Being someone who graduated not all that long ago (2x), I have to admit that trends have also changed. It is much more common now for young adults (graduating students) to move back in with their parents after school. I know that I was one of those people. That wasn't the trend 20 years ago. Times are certainly different, and yes, the demand continues to rise for housing in CO, even in this "recession".

IanB
12-05-2007, 01:18 PM
My neighbor was telling me that our houses here in Louisville have actually been going up in value?

Red_Chili
12-05-2007, 01:46 PM
Yeah, the local picture depends on specific area. Same is true for certain neighborhoods in Littleton. Hard data.

Red_Chili
12-05-2007, 02:03 PM
...it seems very likely that house prices will continue to decline for several years.
I would say making investment decisions based on this caution, while seemingly conservative, may turn out to be quite risky.

MDH33
12-05-2007, 02:24 PM
I would say making investment decisions based on this caution, while seemingly conservative, may turn out to be quite risky.

..but that's what my Magic 8-Ball said, so it must be true! :D

Like I said before, I hope Tim's prediction is true. Kim and I just closed on our first house Monday night! :eek: ;)

Chris
12-05-2007, 02:38 PM
Congratulations on your new house Martin! It's a good time to be a buyer from all indicators I've been seeing. I think the ARM's that are coming due in the next couple months will continue to hurt values overall but shouldn't have any bearing on you. I expect prices to continue to drop through March due to the foreclosures that are going to happen. With this in mind I am looking to buy myself, figure it's about time I get myself a garage!

Red_Chili
12-05-2007, 03:07 PM
..but that's what my Magic 8-Ball said, so it must be true! :D

Like I said before, I hope Tim's prediction is true. Kim and I just closed on our first house Monday night! :eek: ;)
Well now, there ya go!
In theory, theory and reality are the same.
In reality, they are not.

A man can spout theory all day (just look at us web wheelers... :eek:)

Good to know the reality you chose! :thumb:

Hulk
12-05-2007, 03:34 PM
We just did a refi and had our house appraised. I was surprised that the value had increased. It had gone up enough that the loan-to-value was better and we received a better interest rate.

Just think about how kick ass our economy would be if we could stop spending billions in Iraq.

Red_Chili
12-05-2007, 04:32 PM
Regardless of thoughts about Iraq (and I have a few)...
The fact is, with the government spending so much, it actually is an economic stimulus! They ain't sending them greenbacks to Lithuania, after all...
The time will come to pay back the deficit, but that would not be happening now. Yet.

So the question remains, what would the quality of the economy be WITHOUT the government pumping billions into supporting that war? We *should* be seeing significant inflation! But we are not. Deflation is painful, ask the Japanese...

Hulk
12-05-2007, 06:30 PM
Unless you're working for Halliburton, most of the money is going overseas and staying there. Government spending in a time of recession is a good thing -- I won't argue that. But the money would get passed through more pockets in the U.S. if it was being spent here. It may be trickling down, but it ain't doing so here.

RockRunner
12-05-2007, 06:43 PM
My believe and hope are that the housing market declines for another 9 months to a year and then starts to recover. Some of the prices that people were asking for their homes and getting was and still are in some areas ridiculas. Some of our friends bought an existing home about 1.5 years ago, they paid $525,000, $27,000 over the asking price. The wife lost her job and now with the mortgage rate going up they are about to go bankrupt. There home dropped to $475,000 according to an estimate, not that they will get that. They overextended like so many did and did not plan for any of this.

Don't forget the other industries that suffer because of this, we are about to re-hire one worker who was laid of from his dad's granite business. Home Depot and Lowe's, they are feeling the pinch.

My hope is that the prices level of and that includes home building materials like 2x4's and drywall, they nearly doubled in the last 2-3 years. Once that happens we can have a "real" economy, not one that was driven by out of control house prices and appraisals.

Don't forget, if you can afford to buy homes in the near future for rental properties you will be able to make a killing. I see Denver's rental market returning to the glory days of the 80's (some of you may not remember ;-)

PS please don't listen to me I have been known to be wrong before only to find out they were wrong.

Red_Chili
12-06-2007, 08:02 AM
Actually, rentals are already hot - strangely, too, with all the homes not selling you would think folks would be renting them like mad and flooding the market. Guess it ain't so.

Yeah, if you got cash and patience now and the near future is definitely time to pick up some bargains (guess *that* is obvious...).

Red_Chili
12-06-2007, 08:04 AM
Unless you're working for Halliburton, most of the money is going overseas and staying there. Government spending in a time of recession is a good thing -- I won't argue that. But the money would get passed through more pockets in the U.S. if it was being spent here. It may be trickling down, but it ain't doing so here.
I'd be interested to see the actual numbers on how much is going outside the US vs. spent on defense contractors, supplies, staff/military wages, other equipment, etc.

bskey
12-06-2007, 09:17 AM
The reason rentals are hot is that the sub prime lending business had to tighten its purse strings so more and more would be buyers cannot qualify for a home, so they rent until their credit score can come up. I think, if you are comfortable with it, buying homes to rent in the "rent-to-own" style will be a smart idea for those in the position to do so, as that meets many of these buyers needs.

FWIW, I also believe the condo and town house market is going to explode over the next 10-15 years. The baby boomers have made gold out of every industry they touch. Many are getting tired of taking care of their house, yard, etc, and they also want the freedom to travel, so a condo or town house is the perfect solution to that.

....all my 2 cents.

nakman
12-06-2007, 09:17 AM
Hey Tom you touched on something.. do you guys ever notice the pricing of OSB at Lowes/Home Depot? I look that every time I'm in there, it's amazing. Some times it's down to $4.99/sheet. I've seen it as high as $17.99/sheet, and just about everywhere in between. I've never seen a product cost fluctuate as much as 7/16 OSB..

But biggest shocker to building materials has to be the precious metals.. go to the plumbing aisle and look how much the larger copper pipes & elbows are going for now :eek:

Red_Chili
12-06-2007, 10:06 AM
China. Steel too. Same thing with energy. Read an article critiquing the focus by many groups on 'energy independence'. No such thing; the world is way too interdependent now to have any sort of commodity independence.

RE: townhomes, yeah, that is true. Pretty hot in Littleton, but they tend to be upscale units in a whole developed block or such. They aren't yet selling out, but these guys are anticipating a market there. Empty nesters 'downsizing' to 400K townhomes.

MDH33
12-06-2007, 10:28 AM
Well now, there ya go!
In theory, theory and reality are the same.
In reality, they are not.

A man can spout theory all day (just look at us web wheelers... :eek:)

Good to know the reality you chose! :thumb:

Believe me, it came with a lot of sleepless nights and wracking of the brain to make the decision to step into this right now. I think in the long run, we'll be happy in our new place and we've never considered it an investment. We've been saving and renting for a loong time and it will be nice to finally have a place that we can do with as we please and make our own. I did a lot of long term research and watched the market and kept my eyes on a lot of houses to see what the price trends were. Houses are staying on the market for a long time right now and prices kept dropping and we are shrewd negotiators to boot. We also had a good real estate attorney on our side (Thanks Daniel!) As we found out, loans are more difficult to obtain now even with great credit. Overall, I think we got a good deal and hopefully if prices continue down for awhile we'll still be above water. Thanks, for the supportive comments everyone. :thumb:

..and sorry for the thread hi-jack Tim!

Red_Chili
12-06-2007, 11:06 AM
:thumb:
Seems consistent with the thread content to ME!

nakman
12-06-2007, 11:19 AM
:thumb:
Seems consistent with the thread content to ME!

Agreed! :cool: And I think it's fair to point out that the upgrades & improvements you make to the house are going to do a lot to your home value.. so even if you did have to sell in 2 years you're not going to be in an upside down situation, even if housing continues to decline a little more. Your sweat equity should more than offset any additional market decline.

RockRunner
12-06-2007, 10:18 PM
Agreed! :cool: And I think it's fair to point out that the upgrades & improvements you make to the house are going to do a lot to your home value.. so even if you did have to sell in 2 years you're not going to be in an upside down situation, even if housing continues to decline a little more. Your sweat equity should more than offset any additional market decline.

Nak, what you say is true to a certain degree. If you have a limited amount of money to put into your home be sure to choose the areas wisely. Unless you bought a fixer upper or there is something really wrong with a part of the house be careful what you upgrade.

Some areas that increase the value of your home with the highest return are the bathrooms and kitchens. Paint believe it or not is right up there, both interior and exterior, interior being more important. Lastly is flooring, adding wood or granite for example updates and gives the impression of a larger room. Of course there are other things that add to the value of the home but the return on your investment is not as great. and for those of you that are asking what happened to redoing or finishing your basement, it has one of the lowest returns. Far to many people sink a ton of money into their basements thinking they will get it all back, not so.

As far as building materials go, they are starting to down already. I just picked up 40 2x4's today for our basement tonight and they were 20 cents cheaper. It may not seem like a lot but it adds up when you are building a home or doing a full basement. I have been buying a few 2x4's here and there when I had some extra mad money, and I could not find anything for the 4Runner that week ;-). Now I am going to hold of for a while and save up to buy the whole lot all the while keeping an eye on drywall.

Bill, you are dead on. With China's growing economy and the worlds supplies stagnant prices will only go up and up. Steel and cement are like gold, checked the gold prices lately?? Anyway we do need to swing the other way for a while and correct some of our problems.

PS I never intend to offend anybody with my opinions, just add my 2 cents.

nakman
12-06-2007, 10:49 PM
PS I never intend to offend anybody with my opinions, just add my 2 cents.
Tom, I find your responses to be very well spoken and delivered with much class. :cheers: and I've really enjoyed both this thread, and the refinance one.. lots of good points by all in both.

As to Martin's situation, their first area of attack is the kitchen and bathrooms.. and same here with my current project. Not that either of us are fixing up just to sell, but you never know what your future holds, and what decision you may be faced with later in life.. so may as well do your best to prepare for the worst, just remember rule #1 for modifying your house is just like modifying your truck, your mods should be for YOU, not the next guy.. so if you like it, will use it, can justify it, then go for it.. who cares about the next guy. But it's a lot easier to sell a house with a nice kitchen, than one with a crappy kitchen and a hot tub.

Jacket
12-06-2007, 10:59 PM
As to Martin's situation, their first area of attack is the kitchen and bathrooms.. and same here with my current project. Not that either of us are fixing up just to sell, but you never know what your future holds, and what decision you may be faced with later in life.. so may as well do your best to prepare for the worst, just remember rule #1 for modifying your house is just like modifying your truck, your mods should be for YOU, not the next guy.. so if you like it, will use it, can justify it, then go for it.. who cares about the next guy. But it's a lot easier to sell a house with a nice kitchen, than one with a crappy kitchen and a hot tub.

That's exactly right - my wife and I figured that out after we labored for a month to fix up our first place - just to sell it. We really regretted that and learned a ton from it. Next house we were in we started in on it within 3 months, and did everything we wanted to do (on the first list;)) within 2 years. Then we could actually enjoy it AND (if it becomes necessary) improve the resale value of the house on the market.

Whether its a kitchen or bathroom remodel, a basement project, or just a fresh coat of paint in a couple of rooms, it makes all the difference in the world to get in a place and put your own bit of taste into it.

That reminds me....I got work to do around here:comp::bolt:

RockRunner
12-06-2007, 11:49 PM
You are both 100% correct, always remodel your home so that you are happy with it.........oh and the wife too. I have remodeled homes since I was six years old, my parents did their first flat for investment and their second home for us. Everything was first grade and done by us with the exception of the electrical and plumbing.

Sharon and I followed that same example in our first town home, we bought it and build it for us. We used very good materials and it paid of when we sold it. Our next house was bought with the intention of selling it soon and "cleaning it up" We bought inexpensive paint, used laminate flooring etc. you get the idea. We sold it at great profit just in the nick of time.

Now we are in a home that we plan to stay in for a very long time to come and are remodeling it the way we want. We try to find materials that suit our lifestyle and add to the value of the home.

The one thing that makes us different from most home owners is that we will most likely make our money back from our improvements for the simple fact that we are doing the work ourselves. I know what I used to charge home owners years ago and I was pretty inexpensive. I have seen the prices some of our friends have paid for work and the workmanship, I need to get back into the biz.

BTW Nak thanks for the kind words