Media To Blame for Housing Market Condition?

There’s an interesting thing happening again in the Boulder real estate market community. The journalists have it all wrong… perhaps. David Clucas at the BCBR admits it’s all his fault that the housing market is having a down-turn. I’m glad that someone in the media stepped up and took responsibility for this supposed mess!

While I appreciate his somewhat tongue-in-cheek comments as he tries to turn the perspective around, he’s perhaps missing one critical piece on this issue. The local housing market is not in a down-turn. Recent local Boulder real estate statistics show that Boulder real estate prices appreciated just a touch over 5% between 2006 and 2007. Other out-lying communities faired similarly well when comparing average and median prices of sold homes from 2006 vs. 2007 in places like Louisville, Lafayette and Superior.

Clucas is, no doubt, a well informed and talented journalist. I admire his work and refer to his writing often at the BCBR. He sites past articles he’s written about the problems that questionable lending might cause and he clearly understood the difficult path that this and other issues might take us down. He states in a recent article that

Well before the housing boom cooled on March 3, 2004, I wrote this in a story about ARMs:

“But buyers beware. Like a jittery tech stock investment, mortgages with adjustable rates can be a risky venture.”

No doubt this is good journalism and intelligent advice. I think he’s right that many in the real estate industry were happily ignoring the possible consequences of this tenuous behavior. Not all of us perhaps.

The housing market flattened locally a few years ago and the national media has only recently noticed the national housing market trouble. What local Boulder area folks fail to see sometimes is that our Boulder area economy and housing market tends to trend off-cycle from the national real estate market and economy.

I think Clucas is completely right about several things:

Housing is a great long-term investment.

If you can afford to buy at ‘the bottom’ of the market, this is a great time to invest.

The national media is catching up (but they’re catching up to the national scene, not the local Boulder real estate economy, print and television media is typically many months behind the true trends)

One of the salient points of this current difficulty that put the housing market in the situation it’s currently in is directly related to the loose and greedy lending practices of many lenders like Ameriquest and Countrywide. When you give loans to anyone that will fog a mirror, there’s bound to be some consequences. The now-defunct Ameriquest knows this all to well. The recently acquired Bank of America entity Countrywide might possibly be getting the idea also.

Another thing Clucas clearly states is that recovery from a downturn or recession takes some time. The pertinent question is: when did the local real estate market start to flatten out? Many contend that it’s just now happening but what most of the people in the local real estate community seem to be saying is that we’ve seen a pretty flat market for Boulder real estate for a few years now. Clucas’ story about ARM’s in 2004 was perhaps more timely than he realizes as we were already in the middle of a real estate market that was adjusting after some incredibly aggressive appreciation (the years between 1998 and about 2002/2003 were record-setting years for Boulder real estate appreciation).

I’m seeing the market picking up as we are once again getting busy with buyers and sellers in my office and many other offices around Boulder. Buyers that are well-qualified, can verify their income, and have money for a down payment are still capable of securing great loans to buy real estate. In fact, the rates for ‘a-paper’ borrowers the week of Jan 14th were at an astonishingly low 5.41% which is lower than we’ve seen for quite some time.

Seller’s are realizing that with proper pricing, properly targeted marketing and a well prepared home, their property is no longer lingering on the market. From neighborhoods in Central Boulder to horse property east of Brighton, from Suburban Superior, CO to Gunbarrel and Niwot, homes are selling and market prices are very reasonable for both buyers and sellers right now.

It’s taken perhaps the last two or three years for property owners and sellers to get a fix on the reality that the local market has had a reality check and I think it’s taken the national media attention to communities like Las Vegas, Phoenix, L.A. and many parts of Florida to get local residents to consider that the market adjustments here are real, it’s just that few seem to get the timing right, including perhaps Mr. Clucas.

I believe that he’s wrong about another year of losses in the housing market. Time will tell.


One Response to “Media To Blame for Housing Market Condition?”

  1. Boston Condo Guy on January 27th, 2008 10:58 pm

    One of the significant distinctions that the media continuously drops the ball on is the fact that metropolitan areas are different than suburban or rural areas. You mentioned that Boulder home prices have stayed relatively constant (in the wake of significant decreases elsewhere), and the same holds true for downtown Boston (i.e. a city center) where condo prices actually appreciated 6% in 2007.

    Similar statistics can probably be seen in foreclosures in Boulder, where within the downtown area, numbers are probably quite low, while in suburban and rural areas, the numbers are significantly higher. Within downtown Boston, the number of foreclosures did rise in 2007 compared to 2006, but the number is still in the moderate double digits, far less than the media would have you believe.

    Urban versus suburban is a distinction that hopefully more journalists will begin to recognize in 2008.

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