Colorado Foreclosure Rate Highest in Nation

Realty Trac, a provider of foreclosure information and listings, said on November 1, 2006: "Colorado posted the highest foreclosure rate in the nation for the second consecutive quarter, reporting one new foreclosure filing for every 127 households — 2.9 times the national average. After declining almost 13 percent between the first and second quarter of the year, foreclosure activity in the state was back up 24 percent from the second to the third quarter, with 14,374 properties entering some stage of foreclosure — the eighth highest foreclosure total in the nation."

The number of foreclosures in Colorado has been attributed to: First, overbuilding by homebuilders that has kept a lid on price appreciation of existing homes. When homes are not appreciating and homeowners have to sell quickly due to loss of a job or being relocated, they may have to sell at a loss if they have not had time to build sufficient equity. Second, A weak jobs picture in Colorado in the last few years has caused an inability on the part of some homeowners to make their mortgage payments. Third, the misuse of adjustable rate mortgages may be fueling a new round of foreclosures. Now that interest rates have been climbing, homeowners may not be able to keep up with the increase in mortgage payments.

The good sign is that Colorado is currently experiencing lower unemployment rates, increasing job growth, lower fuel costs, and a hint of steady interest rates in recent weeks.

Is this the time for investors or first time homebuyers to begin to analyze properties and take advantage of the excess of lower priced properties? Our opinion is, yes. It may be another real estate cycle before we see buying opportunities at these low prices again.