Foreclosed Homes in Denver Affect Home Prices in Stronger Markets

by Peter Vernon on Foreclosure Crisis

The impact of the huge supplies of foreclosed homes in Denver is starting to manifest in areas of the metro where prices of houses are previously immune to effects of the housing market crisis. Prices in several areas of the Colorado metro region are starting to decline as short sales and distressed property sales rise.

Meanwhile, areas that were hit hardest by big numbers of foreclosed properties, including Wachovia bank foreclosures, are starting to show some improvements. Although distressed property sales still account for a large percentage of total home sales in these hardest hit areas, the percentage is starting to decline and prices are expected to stabilize in the coming months.

According to local housing data, home sales accounted for by foreclosures in Colorado rose to 17% in the 2010 second quarter from 12% in the 2008 first quarter among houses priced at least $461,000. For residential properties priced between $95,000 and $149,000, 69% of total sales were accounted for by distressed dwellings in the 2010 second quarter compared with 84% in the 2008 first quarter.

During the January-June 2010 period, foreclosed homes in Denver accounted for 42% of total residential property sales, representing a decline when compared with the same 2009 period when 49% of total housing sales were distressed. Housing data in the metro region showed that distressed property sales are creeping into the high end market and putting pressure on luxury home prices.

People who buy bank foreclosure homes have more opportunities to purchase luxury houses now, according to local realtors. Prices of luxury houses have been lowered in most markets and realtors are predicting that the high end housing market will eventually lower its percentage of foreclosed properties, mainly due to the great short sales deals acquired by buyers.

Realtors have also stated that more home buyers are taking advantage of the low priced luxury dwellings in the metro Denver area, which can only mean good news for the market as that will help lower the levels of distressed properties in the luxury residential market. The percentage of home sales accounted for by foreclosed homes in Denver in the overall local housing market is also predicted to diminish by the first half of 2011.