Real estate OK in Colorado?

Colorado Foreclosure & Real Estate News

By Peter Marcus 

Local real estate agents and mortgage officials are optimistic about anticipated fallout from the national financial crisis here in Colorado.

All signs indicate that buyers have been able to secure mortgages, sellers have been able to sell their houses and the Colorado housing market should continue to climb out of a once very dark hole.

Colorado currently ranks 25th in the nation for foreclosures, up from 12th a year ago, according to Chris Holbert, president of the Colorado Mortgage Lenders Association. The state also no longer ranks in the top 10 for mortgage fraud, an important step toward keeping foreclosures down. Foreclosure rates are as much as three times as high in Florida, Nevada and Michigan.

The nation is on track to have its ninth best year in terms of new mortgages. Last year there were $1.9 trillion in new mortgages, and this year new mortgages should fall around $1.8 trillion, according to Holbert.

“We understand some things might be perceived as being the worst since the Great Depression. But is the glass $1.8 trillion empty, or $1.8 trillion full?” he asked, adding that the glass looks half full, rather than empty.


No trouble finding mortgages?

Holbert does not anticipate that the average Coloradan will have trouble securing a mortgage for a new home.

“People with good credit, living within their means, will probably not have a problem finding money for mortgages,” he said.

Denver-based Kentwood City Properties Realtor Rebecca Crosby is encouraging her clients to buy if they’re looking and to sell if they’re moving. She said the situation on Wall Street and in Washington should not change strategies. In fact, in the last week Crosby went under contract herself to sell her Washington Park home and purchase a new home in Platte Park.

“Most people, when you see real estate stories, they’ve painted a broad brush stroke about the whole country,” she said. “We are currently selling and buying right now, that’s optimistic. And we’re comfortable with the current market.”

Denver is seeing 20 percent less product on the market today than it did a year ago, Crosby said. For sellers, that’s a good thing because it means fewer options for buyers. Sellers then have less days with a listing on the market.

And for buyers, interest rates are at a historic low, which should encourage some to buy, she said.

“If you need to sell because you’re downsizing or moving to another state, it’s OK to sell,” Crosby said. “If you don’t need to sell now and you don’t have quite a bit of equity and there’s too much competition in your neighborhood, then I might counsel you to wait. But I would do that in any market.”


Big borrowing harder?

Holbert, however, says it may be more difficult for people looking for houses above $600,000 to find a mortgage. He said if the financial crisis continues and credit freezes do start to take place more regularly, then lenders may not be comfortable approving large mortgages.

He added that it is too soon to tell if the panic on Wall Street will lead to mortgage and other credit freezes in Colorado.

The Colorado Bankers Association, however, is urging Congress to quickly approve comprehensive bailout legislation in order to stabilize the market. Not passing the Economic Stabilization Act could result in devastation for the state and country, the association says.

“Investors are so nervous that they’ve essentially stopped lending to big companies,” said Don A. Childears, president and chief executive of the Colorado Bankers Association. “If they can’t get short-term funding, these companies have trouble paying their suppliers and making payroll. They have to slow production, lay off workers, and order fewer supplies and services.”

“Then, each of the smaller suppliers becomes short on cash,” he continued. “These smaller businesses, in turn, reduce costs by cutting back on staff and services they use. Incomes fall and jobs are lost. Consumer spending falls. People have trouble meeting their debts.”


Local banks safe?

Colorado’s 197 banks are safe, though, said Childears. State banks have a strong $5.3 billion in capital. And because banks in general don’t make subprime loans, and generally don’t own mortgage-backed securities, things in the local banking world are looking OK, he said.

Local banks do, however, hold a grudge against unregulated mortgage brokers and lenders that made poor decisions.

“We’re as frustrated as the public — even angry,” said Childears. “Real banks had little involvement in creating this, but we’re hurt too.”

Meanwhile, Crosby says her clients are simply going about their real estate business as usual.

“My sellers, they’re nervous about things in general for the U.S. just like anybody watching the news, but they’re going on about their business,” she said. “Nobody’s paralyzed.”


Read an opinion piece by Don A. Childears, president and chief executive of the Colorado Bankers Association, at thedenverdailynews.com.