How was everyone’s Thanksgiving? Ours was so fun. Lots of good laughs with family and friends (old and new). If you haven’t checked out the game Ransom Notes, I highly recommend you get it before any other holiday parties you have coming up.
Good news! My BFF Veronica is getting married, and I’m so happy for her. She said she’d NEVER get married, yet here she is. Finding love. Loving the idea of marriage. It’s pretty cool. And after the wedding, we’re all going out for pizza, making it doubly cool. Veronica and I met on the school bus in first grade on the first day of school. We’ve been through some stuff. I’m really happy for her! Congrats, buddy!
The safari trip with my friend is in the books, paid for, and I eagerly await this unbelievable vacation! The flight is super long, like, over a day. But, if that’s the worst of my problems, I’ll take it. And, hey, that’s why they made Tylenol PM, right?
Bridger’s baseball is starting, and this is gonna be so intense. We’re talking missing school, traveling out of state, lots of money. What were we thinking? It’s fun to watch, don’t get me wrong, but it’s just a lot. And! It goes to June. Yikes. It’s his birthday tomorrow, so I’m focusing on being happy for all he is and all he does. Even baseball.
I’m headed to Florida to check on the Airbnb later this month. I haven’t seen it since we started hosting people. My mom is meeting me there, and I’m looking forward to it. Immensely. Warmth.
Okay, the Golden Visa in Portugal- heard of it? It’s too much to get into here, but check out the link if you’re interested in investing some time and effort (5 years’ worth) in Portugal so you can get citizenship there. Portugal is stunning and has the best healthcare system! Kids can go to college for free! The climate! I mean, this is pretty cool. Everything.
My Real Estate Status
I had the fastest property sale I’ve ever completed where a lender was involved- shoutout to Adam Rinken; it was done and over in 20 days. And that’s even with an appraisal condition (a staircase was needed). All parties worked hard, and it was essentially a seamless process, which always makes for happiness all around.
Do you guys know what a short sale is? There were thousands upon thousands in the crash of 2008. It’s when you sell a house, but the money owed on the property is more than what the house would sell for on the open market. I’ve never been involved with one of these transactions, and I may have one coming my way. There’s already an interested buyer, which is great.
For agents dealing with short sales, there’s a risk of not getting a commission, but I want to learn how they work, so I’ll take the risk. Plus, I’ll be helping out a friend, so that’s always a good feeling.
And, finally, I have two showings happening today! I think they’ll go great. You’ll hear more about them next week if there’s info to share.
My Forecast for the Housing Market Next Year
Nationally, I don’t think there will be much appreciation in 2023, but I think there’ll be some appreciation in the Foothills area of Colorado. In states and regions where houses had incredibly high appreciation rates this year (like in Colorado), they’ll likely depreciate and start evening out.
Demand for new homes is still here, and I don’t see it going anywhere, especially when the interest rates start to lower.
Expert Forecasts for Home Prices in 2023
Current Denver Area Real Estate Market
"Thanksgiving represents one of the slowest weeks of the year for purchase activity in Metro Denver each year and this year was no exception. Pending transactions fell by -35.9% from the week prior with only 489 total units going under contract over Thanksgiving weekend. While we did see a dip in active units, with the demand side drop of fewer units going under contract it popped our supply in months up from 2.0 months of inventory up to 3.0 months of inventory for this last weekend. Keep in mind there is typically a pop of activity the weekend before and after a holiday weekend so this number should come down this weekend as buyers circle back post-holiday weekend. Hopefully back down the 2.0 month range.
Showings are also a great gauge on market activity, and we only set 5,976 total showings in the week of the 23rd-29th which was down by 39.1% from the prior week. Listings should have seen about 1 showing last week if they were for sale during this period. Again, there is typically a pop of activity the weekend before and after a holiday weekend, so we'll be monitoring showings closely to see if there is a rebound. Shows to contract were 12 this last week and median days on market grew to the highest number we've measured since January of 2014 at 32 median days on market. Median days on market tends to grow through the end of December."
Why There Won't Be A Flood of Foreclosures Coming to the Housing Market
With the rapid shift that’s happened in the housing market this year, some people are raising concerns that we’re destined for a repeat of the crash we saw in 2008. But in truth, there are many critical differences between what’s happening today and the bubble in the early 2000s.
One of the reasons this isn’t like the last time is the number of foreclosures in the market is much lower now. Here’s why there won’t be a wave of foreclosures flooding the market.
Not as Many Homeowners Are in Trouble This Time
After the last housing crash, over nine million households lost their homes due to foreclosure, short sale, or because they gave it back to the bank. This was, in large part, because of more relaxed lending standards where people could take out mortgages they ultimately couldn’t afford. Those lending practices led to a wave of distressed properties, which made their way into the market and caused home values to plummet.
But today, revised lending standards have led to more qualified buyers. As a result, fewer homeowners are behind on their mortgages. As Marina Walsh, Vice President of Industry Analysis at the Mortgage Bankers Association (MBA), says:
“For the second quarter in a row, the mortgage delinquency rate fell to its lowest level since MBA’s survey began in 1979 – declining to 3.45%. Foreclosure starts and loans in the process of foreclosure also dropped in the third quarter to levels further below their historical averages.”
There Have Been Fewer Foreclosures Over the Last Two Years
While you may have seen recent stories about foreclosures rising today, context is important. During the pandemic, many homeowners could pause their mortgage payments using the forbearance program. The program gave homeowners facing difficulties extra time to get their finances in order and, in many cases, work out a plan with their lender.
With that program, many were concerned it would result in a wave of foreclosures coming to the market. That fear didn’t materialize. Data from the New York Fed shows there are still fewer foreclosures happening today than before the pandemic (see graph below):
That means, while there are more foreclosures now compared to last year (when foreclosures were paused), the number is still well below what the housing market has seen in a more typical year, like 2017-2019.
And most importantly, the number we’re seeing now is still far below the number we saw during the market crash (shown in the red bars in the graph). The big takeaway? Don’t let a headline in the news mislead you. While foreclosures are up year-over-year, historical context is essential to understanding the full picture.
Most Homeowners Have More Than Enough Equity to Sell Their Homes
Many homeowners today have enough equity to sell their homes instead of facing foreclosure. Due to rapidly rising home prices over the last two years, the average homeowner has gained record amounts of equity in their home. And if they’ve stayed in their homes even longer, they may have even more equity than they realize. As Ksenia Potapov, Economist at First American, says:
“Homeowners have very high levels of tappable home equity today, providing a cushion to withstand potential price declines, but also preventing housing distress from turning into a foreclosure. . . the result will likely be more of a foreclosure ‘trickle’ than a ‘tsunami.’” A recent report from ATTOM Data explains it by going even deeper into the numbers:
“Only about 214,800 homeowners were facing possible foreclosure in the second quarter of 2022, or just four-tenths of one percent of the 58.2 million outstanding mortgages in the U.S. Of those facing foreclosure, about 195,400, or 91 percent, had at least some equity built up in their homes.”
Bottom Line
If you see headlines about the increasing number of foreclosures today, remember context is important. While the number of foreclosures is higher now than last year, foreclosures are still well below pre-pandemic years. If you have questions, let’s connect.
Upcoming Events
- Saturday Yoga- Head to Garden of the Gods and get in tune with yourself before the holiday chaos takes its toll!
- A Dames Good Ohl Time- Help out a neighbor at this musical fundraiser and open jam for Derek Ohl.
- Santa Cares Day- Children within all spectrums of special needs are invited to a sensory-friendly visit for family photos with Santa!
- Christmas Tea & Market- Get your holiday shopping in with over 30 local vendors as you enjoy hayrides (weather permitting), photos with Santa, ornament making, and hot chocolate!
- Concert Event and Visit with Santa- Head over to this fun and free holiday event at Carl Park Community Center, where the original Dicken Carolers will be performing a concert while Santa takes pictures nearby!
