I believe statistics and the actual numbers of what we have all seen in the Real Estate market in metro Denver paint a pretty clear and should have been a predictable picture for us to get to where we are. I have witnessed allot of finger pointing in an attempt to figure out who is to blame. It is easy to point the finger at the mortgage industry and say they should have known this would happen. A couple of years ago it was actually easier to obtain a Home Loan for $200,000. then it was to sign a lease for 6-12 months and cheaper. Colorado was one of only a few states that had unlicensed mortgage brokers and offered mortgages without rules. Meaning no income verification, stated income, no documentation loans for 100% financing. Then the low interest rates made refinancing an alternative to the high interest rates on credit cards and auto loans plus the tax benefits of deducting the interest on home loans; this made debt easier and more affordable then ever.

However, the banks offering home loans could not have provided these loans if the demand did not exist. Consumers or home buyers either first-time home buyers or those wanting bigger homes moving-up created the demand for more. We as Americans are innately optimistic and always believe that everything will just get better; which is why Adjustable Rate Mortgages were possible. Everyone thought their incomes would simply go up over time. Then something unexpected happened, corporate lay-offs, downsizing or large corporations went into bankruptcy. As the foreclosure and short-sale market increased, banks lost money.

The story does not end here. In 1997-2001 the Real Estate market in Colorado was in the top 5 in the nation for appreciation at approximately 18% per year. Large corporations were moving into the Denver metro area and creating a huge demand for housing. As the demand increased and the supply remained the same, prices soared. Colorado has lower property taxes then many other states, and had low land prices; so developers/builders moved in to provide the necessary supply to meet the demand in this high appreciating real estate economy. Many of these Builders purchased the land in 2000 with development to begin in 2004-2005. The Developers/Builders have the land purchased, the construction loans in place and then have to move forward, even though the demand has diminished some since the original plans were drawn up years earlier. However, they have choices the homeowner does not, they can offer huge incentives, lower prices and alternative financing options. The resell real estate market is struggling to compete.

This scenario is not unique to Colorado. Many staes have experienced a much greater decline then Colorado. Californa has experienced a huge decline in average home prices, but they a much more accustomed to their Real Estate hitting peaks and valleys. However, they continue to invest in Real Estate and make money on their investments.

I have been a licensed Real Estate Broker in Colorado since 1997 and a homeowner since 1989. When I purchased my first home in 1989, we had a similiar market with a drop in average home prices, lots of inventory of bank-owned or HUD Homes on the market. I am grateful we purchased a home at that time, even though the interest rates were over 10%. Interest Rates eventually dropped, we refinanced to a 15 year note at a 7% rate kept our housing payment the same and sold our home 8 years later for a profit of $65,000.00

The advantage prospective home buyers have today that did not exist then, is lower interest rates. In my opinion, this is the best time to purchase a home; lower home prices, lots to choose from and great interest rates. If you or someone you know is in the market for a home purchase; the time is now.