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Lane Hornung says the feared shadow market has been replaced by low inventory.
In the spring of 1991, a woman called me at the Rocky Mountain News, complaining that she was tired of Realtors saying now is the time to buy.
She had bought a home in Denver just before the collapse in the mid-to-late 1980s, which was then the worst housing market in the metro area since the Great Depression.
Colorado was one of the so-called COLT states that also included Oklahoma, Louisiana and Texas, whose economies and housing markets had been hammered by falling energy prices.
The Denver-area housing market was horribly overbuilt on speculation that oil prices were headed for $65 a barrel from around $30. Instead, they plummeted, briefly falling below $10.
HUD once Denver?s largest landlord
Thousands of people left Colorado for states where there were still jobs, such as California. While at the?Rocky, I broke a story that the ?U.S. Department of Housing and Urban Development was Denver?s largest landlord, because it owned many foreclosures. The Rocky used to run a weekly listing of HUD properties that was thicker than today?s Denver Post.
The irate caller had taken a check to the closing when she sold her home in Denver, because the sales price was less than her mortgage. She left Denver, moved East and bought a home in Washington, D.C. The real estate gods were not smiling on her. The nation was gripped in a recession when she sold her home in D.C., and once again she lost money when selling her house, before returning to Denver.
At the time, I was quoting people such as Dennis Hipp, president of a company called Perry & Butler, and Bill Moore, owner of Moore and Co., the largest locally owned realty firm in Denver at the time, who said that now is a good time to buy and people will be kicking themselves down the road if they passed on the unique opportunity to buy.
After all, mortgage rates were low at 9.5 percent ? the first time in a decade they had been below 10 percent ?and homes were selling below the cost of building them.
The average home in the Denver area in May 1991 sold for $97,925, the equivalent of $165,426 in today?s dollars.
The woman, however, was having none of it. She assured me that she was not even going to consider buying a home until prices fell at least another 20 percent.
I told Hipp about my conversation.
Timing is difficult
He said he hoped she landed the bargain she was hoping for, but she thought she was wrong. Hipp added that it is incredibly hard to time the market. Despite what so many people believe, Realtors do not set the price of houses, he said. The market is set by the market, Hipp said. That is, ?home prices are determined by what a willing buyer pays a willing seller. While Realtors tend to be ?half-full? glass people, no matter how bullish they are, they lack the power to drive up prices, he said.
Yet, at that time in history, Hipp and other were prescient.
Market on a tear
A year later, the average price of a home sold in the Denver area was $105,418, the equivalent of $172,880 in today?s dollars. Demand out-stripped price appraction. In the first five months of 1992, 12,051 homes closed, a 28 percent increase from the 9,408 in 1991.
?Homes are still reasonably priced,? I quoted Hipp as saying at the time. ?We?re seeing more multiple offers, sometimes with people offering more than the asking price.?
Sounds like today?s market.
Hornung strikes a nerve
I thought of this recently after I published a question-and-answer article with Lane Hornung, CEO, President and Co-founder of 8z Real Estate.
Hornung provided consumer tips for prospective buyers in the current market, who increasingly are being out-bid for homes. He cautioned that the conditions of incredibly low supply and increased demand may not last, but they are the reality of today?s market. Many would-be buyers are disappointed after being out-bid multiple times.
A reader named Peter, who seems sophisticated and intelligent on financial matters, ?responded in a missive that he found it ?shameful? that brokers are such cheerleaders.
Peter, who is renting a million-dollar home for far less than what it would take to buy it, went on to write that he gives the market?s recent bounce another six to 12 months. After that, he sees a double-dip, which is when home prices retreated to new lows. He also thinks a recession and possibly even a depression, are waiting in the wings.
Shaky home sales foundation?
?Stop feeding the real estate greed and learn from recent history,? Peter wrote. ?Your belief is that the recovery is here and the market has bottomed. That is the new buyers? belief and that I believe is built off a very false premise.?
Recently, while attending Universal Lending?s 30th anniversary celebration, I sat next to man who had been a mortgage and real estate broker for more more than three decades.
I asked him if he thought the housing market had hit bottom, or the dreaded other shoe would kick the market?s butt.
?Anything is possible,? he told me. ?Could home prices double-dip and fall another 10 percent or 20 percent? They could. But I don?t think they will.?
Modest appreciation predicted
He thought the odds were far greater than the Denver-area housing market in the next few years will enjoy modest appreciation, of perhaps 4 percent or 5 percent, if the annual inflation rate continues to hover around 2 percent.
That would have a big impact on the market, he predicted, because in two or three years, many homeowners who are itching to sell their homes, but can?t because they are still under water, will be able to sell them and move-up.
Back in the 1991-1992 era, I used to do get a call every Tuesday morning from a radio reporter, who would ask me about the real estate market.?I told him exactly the same thing ? my best guess was that home values would slightly out-pace inflation.
I was wrong. Home prices registered double-digit price increases, almost unabated for the next 15 years, although the market never got as crazy as once-high flying markets such as Phoenix and Las Vegas, before succumbing to the first national real estate downturn since the Great Depression.
I?m wondering what other people think.
Vote in the poll at the bottom of this blog and feel free to leave a comment.
Have a story idea or a real estate news tip? Contact John Rebchook at JRCHOOK@gmail.com. InsideRealEstateNews is sponsored by Universal Lending, Land Title Guarantee Co. and 8z Real Estate.
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JERUSALEM -- Former Prime Minister Ehud Olmert on Sunday urged Israeli leaders to relinquish the idea of a unified Jerusalem if they truly want peace, contending in a pair of interviews that years of government neglect have kept the Jewish and Arab sectors irreparably divided.
The comments, made as Israel marked the 45th anniversary of capturing east Jerusalem, were nearly unprecedented for a mainstream Israeli leader and put Olmert at odds with his successor, Benjamin Netanyahu. Celebrating Israel's control of Jerusalem, Netanyahu declared his government was committed to keeping the entire city Israel's undivided capital.
"No Israeli government since 1967 has done even a smidgen of what was needed in order to unify the city in practical terms. That is a tragedy that is going to lead us, for want of another choice, to making inevitable political concessions," Olmert told the Maariv daily.
Israel captured east Jerusalem in the 1967 Middle East war and immediately annexed the area, home to sensitive Jewish, Christian and Muslim holy sites as well as a large Arab population. The Palestinians hope to make east Jerusalem the capital of an independent state including the neighboring West Bank and Gaza Strip.
Olmert said the notion of a united Holy City is unrealistic. He pointed to a number of Arab neighborhoods in east Jerusalem, saying they have not been integrated into the rest of the city.
"We can't unite them and connect them to the real fabric of life in Jerusalem, and except for grief, we haven't gotten anything from them," he said.
Olmert went through a dramatic political transformation late in his career.
As mayor from 1993 to 2003, he was an outspoken hard-liner opposed to concessions to the Palestinians. Then, while prime minister from 2006 to 2009, he pursued a peace agreement envisioning broad territorial concessions to the Palestinians before a corruption case forced him to step down.
In those talks, Olmert offered to turn over parts of east Jerusalem to the Palestinians, and have Jerusalem's Old City, home to the most sensitive religious sites, be administered by an international consortium including Israelis, Palestinians, Americans, Jordanians and Saudis.
Olmert claimed his talks with the Palestinians came tantalizingly close to an agreement. The Palestinians have said Olmert did not go far enough.
Since taking power three years ago, Netanyahu has repudiated Olmert's willingness to partition the city. With a newly expanded coalition, Netanyahu has cemented a formidable majority for his hardline policies.
"We have a great obligation to the unity and development of Jerusalem," Netanyahu said at the start of his weekly Cabinet meeting Sunday, as he marked what Israel calls "Jerusalem Day."
The Palestinians have refused to conduct peace talks with Netanyahu unless he halts settlement construction in east Jerusalem and the West Bank. About 200,000 Israelis live in east Jerusalem, approaching the Arab population of about 280,000. Netanyahu says talks should resume without any preconditions.
On Sunday, Israel marked the anniversary with a series of marches and speeches throughout the city. The Palestinians' chief peace negotiator, Saeb Erekat, said the Israeli celebrations were "clear proof" that Israel is not interested in peace. "Clearly, this behavior reflects the mentality of a colonizer, rather than a supposed peace partner."
The status of Jerusalem is among the most explosive issues in the Israeli-Palestinian conflict, defying resolution throughout two decades of on-again, off-again peace talks. Today, the Arab and Jewish sections of the city are worlds apart.
Job discrimination against Arab Jerusalemites is common and investments in infrastructure and education in east Jerusalem are far below the levels plowed into the western sector. The discrimination has stifled economic development, fueled chronic joblessness and stoked poverty.
"We often use slogans in regard to Jerusalem and refrain from looking at the reality of Jerusalem. The result is that the discrepancy is something that many people have trouble adjusting to and accepting," Olmert told Israel TV.
A report on east Jerusalem by the Association for Civil Rights in Israel backed up Olmert's arguments.
Israeli government policies have fueled a 78 percent poverty rate among Palestinians in east Jerusalem, the group said, citing statistics from Israel's National Insurance Institute. In 2006, the poverty rate was 64 percent.
Government spokesman Mark Regev said Israel is committed to narrowing gaps in the city.
Also Sunday, Israel's Shin Bet security service said it had arrested nine Palestinians who tried to kidnap Israelis in the West Bank. The agency said in a statement that the ring made three unsuccessful kidnapping attempts in March, hoping to ransom the Israelis for Palestinian prisoners in Israel.
Last year, Israel released more than 1,000 Palestinian prisoners in exchange for a captive Israeli soldier.
Earlier on HuffPost:
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When you apply for this position, please say you saw this job on Green Dream Jobs!!
Launched in 2006 by the United Steel workers and the Sierra Club, this unique labor-environmental collaboration has grown to include the Communications Workers of America (CWA), Natural Resources Defense Council (NRDC), Service Employees International Union (SEIU), National Wildlife Federation (NWF), Union of Concerned Scientists (UCS), Utility Workers Union of America (UWUA), American Federation of Teachers (AFT), Amalgamated Transit Union (ATU), United Auto Workers (UAW), and the United Food and Commercial Workers (UFCW). The BlueGreen Alliance unites 14 million members and supporters in pursuit of good jobs, a clean environment and a green economy.
BlueGreen Alliance (BGA) is an exciting, fast-paced organization that covers a wide variety of issues from climate change to green chemistry to smart grid infrastructure, bringing together an effort to advance a 21s?century economy that respects workers and their rights, protects the?environment and secures America's energy future. Interning for BGA puts you at the forefront of a rapidly growing movement and shows you what it is like to work with diverse stakeholders. Join us in laying the path for the future . . . and have fun in the process! Internships are available in D.C., Minneapolis, and San Francisco.
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The BlueGreen Alliance's Washington, D.C. office is seeking a full-time or part-time unpaid intern to assist the organization's communication team. We are looking for a personable, hard-working, and motivated individual with excellent oral and written communications skills. Job duties will include - but are not limited to - writing talking point, managing press lists, and monitoring the organization's media coverage. A strong interest in labor and environmental issues is necessary. This internship offers an excellent opportunity for professional growth for a talented individual committed to clean energy and social equity issues.
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