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Unsold Homes Piling Up

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Homes piling up

Foreclosures help bury metro area in unsold inventory


Email this story | Print By John Rebchook, Rocky Mountain News

May 5, 2006

The number of unsold homes on the Denver-area market hit a record 29,045 in April, according to reports released Thursday.

Rising foreclosures were the driving force for the skyrocketing inventory, which is 19.2 percent higher than a year ago, experts said.

April typically sees more homes on the market as sellers try to unload properties during the summer school break, and the foreclosures - more than 4,700 in the metro area in the first three months of this year - added to the number.

"There's a glut of unsold homes on the market," said Doug Pierce, owner of Pierce Realty Co., a Metro Broker company. And that is extending the length of time to sell homes, he added.

"Foreclosures definitely are having an impact," said Steve McGuire, an agent with RE/MAX Professionals, who released an analysis of the data compiled by Metrolist. Independent broker Gary Bauer also released a report on the data.

McGuire said the sale of low- priced homes has slowed because first-time buyers are worried about everything from their jobs to rising gas prices.

Home foreclosures this year are on pace to hit the second-highest level ever, although they are less a factor than at their peak in the late 1980s because the overall housing market has grown so much.

Pierce said that the Denver-area market increasingly has become a two-tiered one composed of the haves and have-nots.

He noted two homes in Cherry Hills Village recently came on the market in the high $900,000s, and within a week they were both under contract for full-price cash offers, with others standing in line to buy them.

"Flying in the face of that activity, I have a listing in south Aurora," Pierce said. "The house is in good shape and has been updated. It was on the market in the $180,000s last summer and it didn't sell. We now have it at $164,900. We have not even had a showing in 10 days."

The lesson from those two scenarios is simple, he said: "The super-rich do not have any problems. The little guys are worried about their jobs and seem to be suffering."

Ed Jalowsky, principal of Classic Advantage Realty, said 50 percent of the homes priced less than $300,000 in his office are either in foreclosure or facing foreclosure.

Competition from foreclosures will drive down prices in the lower- end market, ultimately causing more homes to end up in foreclosure, he said.

"It is a real shame," Jalowsky said. "It's a battlefield out there for homes under $200,000. I just hope the blood flow will slow."

The number of unsold homes is about 4.5 percent higher than the previous record of 27,798 set in June 2004.

"This is the standard time of the year when people start putting their homes on the market, so they can move into a new home by the time the kids go back to school," Bauer said.

Bauer said he expects the number of unsold homes to continue to rise for the rest of the summer.

Despite the glut of unsold homes, the average price of a single-family home rose to $318,949 in April, compared with $313,339 in March and $303,152 a year earlier.

And the median, or middle, price was $250,000, up from $247,500 in March and $241,687 last year.

Prices are up because of the mix of homes being sold and because the Metrolist data overstates the sale prices to an unknown extent. That's because it doesn't adjust the sale prices for seller incentives, such as down payment assistance, according to real estate agents.

Bauer said he expects overall appreciation of about 5 percent this year and sees no chance of a housing bubble.

For one thing, Denver didn't see the huge housing price gains that other previously hot markets such as Las Vegas, Scottsdale, Ariz., Florida and the East and West coasts saw, so there's no bubble to burst, he said.

Also, the Denver-area economy is more diversified now than it was in the late '80s, so the collapse of one industry wouldn't crush the economy, he said.

rebchookj@RockyMountainNews.com or 303-892-5207

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