Denver's housing bubble has burst (how's the bubble in your area?)

[donsu]

http://www.nytimes.com/2005/07/17/national/17denver.html?ex=1279252800&en=f170cc53dac71b9b&ei=5090&partner=rssuserland&emc=rss


Housing Goes Frothy to Flat in Denver Area

-snip-

Even as prices for homes in frothy markets like Las Vegas; Riverside, Calif.; Miami; and Washington are still jumping by more than 20 percent a year, Denver's homeowners are learning the hard way about living through the real estate doldrums. Five years ago, median house prices were rising at an annual clip of nearly 17 percent. By the first quarter of 2005 the increase had slipped to 3 percent, according to an analysis by Economy.com, a research firm.

-snip-

Although sellers continue to profit, houses are sitting on the market longer, buyers are negotiating harder, and some owners, particularly young buyers who may have been counting on rapid appreciation, are postponing dreams of renovations, moves to larger homes and big savings for their families.

With economists warning that prices in hot markets cannot continue to rise as sharply as they have in the past few years, the experience of Denver's homeowners may foreshadow what could happen if those markets start to cool. Denver's circumstances are in some ways particular to the area, driven largely by job losses in the telecom sector, but they illustrate how a moderate slowdown could play out for homeowners in other parts of the country and stand as a potent reminder that galloping price appreciation is not the norm.

-snip-

But many analysts take a gloomier perspective, suggesting that the most heated markets could suffer more than Denver's so-called soft landing. "I think Denver is a best-case scenario," said John H. Vogel Jr., adjunct professor of real estate at the Tuck School of Business at Dartmouth College. In the case of markets like Naples, Fla.; Miami; and New York, he said, "I think you'll see dramatic price decreases because I think the prices have become artificially inflated by trading and speculation."
-snip-
---------------------------


how will the ripple effect go?

[GreenPartyVoter]

1. I live in a place where a little 70s modular ranch goes for $300,000

Unreal!

It's worth $100,000 at best, in my book.

[ptolle]

8. value(s)

GPV- with all due respect, and from the perspective of nearly 40 years in the construction/contracting business there are damn few homes worth $100,00 unless IMO that home is capable of paying for some of its keep by way of photovoltaic electric power generation in sufficient amounts to justify net metering and other cost saving/revenue producing features built in i.e. solar hot water, correct levels of insulation for the area.In other words it's got to, again IMO, pay for itself in ways other than just increased valuation. But that said I've seen this phenomenon before in several area and it always eventually runs out of steam and leaves lots of folks high and dry.

[GreenPartyVoter]

10. I agree. I would love to build a "green" house that sustains itself, but

that house.. and any other.. is out of our reach no matter what, so we'll just have to do what we can to patch up this trailer.

[rfranklin]

2. In my neck of New Jersey, there are more and more signs...

offering homes for sale and many are "For Sale by Owner."

I sold my crappy ranch house for $310,000 and a few years later it's selling for around $500,000. So my $400,000 house should now be worth $650,000. I'd sell it but where would I live?

[Number9Dream]

3. The Lehigh Valley is the fastest growing area of PA...

The Allentown Morning Call just reported. People from NJ, NY, and Philly are moving into shake & bake developments in droves. The community supervisors won't say no to the developers (bribes), and they're paving over farmland at an amazing rate (not to mention all the warehouses & tractor-trailers). We longtime residents are just sick about it.

[Quakerfriend]

7. Me too, Number9!

I live in Philly, but make the drive to the Poconos almost weekly and I can't believe how our beautiful farmland is being devoured!

Back in 1976, I happened to talk to some folks who were part of the Bicentennial Wagon Train that crossed the country. I will always remember one of the men telling me that of all the states they had been thru, PA was by far the most beautiful, in his opinion.

My ancestors once owned several hundred acres in Clauseville, PA. Can you believe their farm is still there?! But, not for long I bet.:cry:

[intheflow]

4. I live in Denver.

Lots and lots of houses for sale, mostly McMansions that were built on lots that had cute little bungalows with yards four or five years ago. Not one home in my neighborhood sells for under $300,000. Granted, I live in a university neighborhood, but still... over a quarter of a mill for about an eighth of an acre? I'll bet the buyer's remorse is just killing some of my neighbors!

btw, I rent a small apt. in a house. I don't have the money for one of these crazy homes!

[Squatch]

5. Assessed value on my house has increased >12% per year

for the past 4 years and shows no signs of slowing.

[Kathy in Cambridge]

6. In Mass. the sale of single family homes fell slightly, but condo sales

still boom. Condo sales are rising because of the baby boomers selling their larger homes for smaller condos, and because the cost of a single family home in the Boston area is around 500K, and people who can't afford that can often afford a condo.

[Tierra_y_Libertad]

9. McMansions are sprouting around here.

They just sold one, on 1 acre, (only part of which is usable due to a protected seasonal creek), for $479,000. The new owner is a real estate agent who admitted that he is speculating on other properties in the area but plans to stay in his new Tara. If the bubble bursts, I suspect he may be in for more than a little trouble trying to unload some of frou-frou decorated, overpriced, barns. Including his.

We paid $189,000 for our adjoining 3 acres and (very nice - but "only" 2100 square ft house) 12 years ago. We could easily sell it for (conservatively) $350,000 today.

Southwest Washington State.