Jun

10

Whose fault is it?

Filed Under denver, mortgage, real estate 

Foreclosure and the real estate market is a hot topic in the Denver news (print, radio, and television) lately. One reader of the Rocky Mountain News shot back that realtors need to take responsibilty for the foreclosure problem:

Real estate market in normal part of cycle

I read the article last Saturday, “Foreclosures up 32 percent in first quarter.” It oversimplified the problem. One very big problem that has repeatedly plagued Denver is jobs, or lack of them, and how our booms and busts have determined our market.

Every real estate market - local, regional and national - goes through cycles. This results from the market pushing supply and demand curves to a natural state of equilibrium. Residential growth and purchasing will always follow commercial growth. Since we now have a more diverse job market, we should see a more moderate cycle in comparison to the last 2 1/2 decades.

Everyone wants to tell everybody what the problem is, and it is never their fault. Is the lending environment a factor in foreclosures? It is certainly part of it. Is the overbuilding along the Front Range part of the equation? You bet.

I often get into arguments with Realtors who blame the problem solely on lenders. But did they mind when they got their commissions for putting people into these homes? I don’t think so. We have to consider a number of factors when engaging in public discourse over a subject that scares and intimidates people. Simply put, history repeats itself and the Denver real estate market is no different - we are just going through a normal part of the cycle.

Dan Narsete

Esox Investments

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