According to top economists, the Denver housing market (and that of the nation, in general) should start reaping the benefits of positive signs on employment and national economic growth  in the coming several months.  This is great news for all who’ve endured what has been a challenging economic climate for the past several months.

First of all, employment is up.  The Labor Department reports that there were 200,000 more job openings nationwide in February 2010 (2.7 million) than in the same survey the month before.

Secondly, the expected growth of gross domestic product (GDP), the main barometer of the U.S. economy’s health, is for a very solid 3% during the first quarter of 2010.  Top experts are saying these signs are indicative of a labor market, as well as an economy that is in the midst of recovery.

How does that impact the real estate market?  Expanding employment, like we’re seeing, that’s created by a momentum-gaining national economy are critical precursors to stimulating high demand and sales.  The more plentiful jobs are and the higher buying power of consumers create increased demand for homes, which are already in somewhat short supply.  As we’re headed into a traditionally stronger time of the year for housing (spring and summer), analysts are predicting a strong market over the next several months.  And, because the federal tax incentives ($8,000 for first-time buyers and $6,500 for repeat buyers) will be expiring at the end of April, sales volume through the spring should be steadily improving to ramp up for the summer season.

As far as home pricing goes, evidence continues to mount that in most parts of the country, home values have either bottomed out or have turned positive.  Here in Denver, we are one of just six cities listed in a Standard & Poor’s report last month that showed a year-over-year increase in prices - we seemed to have bottomed out in February 2009, but have been gaining steadily now since September of last year.

Nationally, last week's Zillow home value report found values essentially flat on a national average basis. They were down by just three tenths of a percent, but up in some major markets of note.  For example, Boston's home values are up nearly 2% year-over-year, according to Zillow, and Los Angeles, San Diego, Philadelphia and Denver have registered gains after long periods of negative numbers.

Two other statistical hints that conditions are improving:

• The difference between listed prices and selling prices of homes nationwide is now smaller than it's been in a year, according to real estate research site Trulia.com.
• Realty Trac found that foreclosures, which are clearly still a drag on the market, dropped by 2% last month, which is the second straight month of decline.
  

Are you ready to jump off the sidelines and buy in our local Denver market?  If so, call your real estate experts at the Bandy Team!  We’ll show you some great deals in the Denver metro area, and across the front range.

Marianne Bandy
Look for Homes in Castle Rock’s Founders Village

In an effort to end the foreclosure crisis, the Obama administration has been trying to keep defaulting owners in their Denver area homes, and nationwide with their Making Home Affordable program.  Now it will take a brand new approach: encouraging underwater borrowers to leave their homes more quickly.  This latest program is one of the administration’s most aggressive attempts to grapple with a longstanding problem that has defied solutions.

Upward of five million households are behind on their mortgages and are at risk of foreclosure, and the government’s $75 billion mortgage modification plan has helped only a small slice of them. Consumer advocates, economists and even some banking industry representatives say much more needs to be done. 

The new program, set to take affect in about three weeks - on April 5, could encourage hundreds of thousands of delinquent borrowers who have been unable to modify their loan to shed their houses through a process known as a short sale (selling a home for less than the mortgage balance). Lenders will be compelled to accept that arrangement, forgiving the difference between the market price of the property and what they are owed. 

To serve as incentive to bring the various parties to the table, the government intends to spread its cash around.  Under the new program, the servicing bank, as with all modifications, will get $1,000.  Another $1,000 can go toward a second loan, if there is one.  And for the first time the government would give money to the distressed homeowners themselves.  They will get $1,500 in “relocation assistance.”
Should the incentives prove successful, the short sales program could have multiple benefits.
For the investment pools that own many home loans, there is the prospect of getting more money with a sale than with a foreclosure.

For the borrowers, there is the likelihood of suffering less damage to credit ratings. And as part of the transaction, they will get the lender’s assurance that they will not later be sued for an unpaid mortgage balance.

For communities, the plan will mean fewer empty foreclosed houses waiting to be sold by banks. By some estimates, as many as half of all foreclosed properties are ransacked by either the former owners or vandals, which depresses the value of the property further and pulls down the value of neighboring homes.

In order to curtail fraud, under this new program, a lender will use real estate agents to determine the value of a home and thus the minimum to accept.  This figure will not be shared with the owner, but if an offer comes in that is equal to or higher than this amount, the lender must take it.

There are myriad other potential conflicts over short sales that may not be solved by the program, whose details are still being fine-tuned, but the administration is obviously hopeful that it will pave the way for major lenders to more readily work with borrowers in the short sale process.

Are you or someone you know facing foreclosure in the Denver area and think you might benefit from this new federal program?  If so, give the experts at the Bandy Team a call.  We will let you know what your options are and guide you ever step of the way with our experience and knowledge of the Denver metro housing market. 

Marianne Bandy
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