Foreclosures slam door on home prices

By Margaret Jackson

A third-quarter report on home values in the metro area shows that foreclosures and short sales are still having an impact on Denver-area housing markets - particularly those where homes are priced at no more than $200,000.

The data - compiled by Lon Welsh, managing broker of Your Castle Real Estate and available in an interactive map at denverpost.com - show foreclosures continuing to rise in less expensive neighborhoods.

The average price of a single-family home in the metro area between January and September declined 1 percent, to $311,000, compared with the same period last year. The number of foreclosed homes sold increased from 20 percent to 30 percent of sales during the same period.

"Many foreclosures are caused by ARM (adjustable-rate mortgage) loans resetting to a higher rate, and the homeowner can't afford the new higher payment," Welsh said. "Since the number of ARM resets will peak in March, I don't expect to see a foreclosure peak until six to nine months after that."

In the north Aurora neighborhoods he's investing in, John Klahn says there are as many, if not more, foreclosed homes as there were six to eight months ago.

"Additionally, over the past six to eight months, I have seen bank-owned homes decline in price in the same neighborhoods," he said. "So, without looking at anything more than the neighborhoods themselves, I have to conclude that we have not seen the bottom."

Margaret Jackson: 303-954-1473 or mjackson@denverpost.com

 

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