It Takes a Contrarian to See the Beauty in Colorado's Real Estate Market

By Richard Barrington
Local Lender Columnist
May 21, 2008
As mortgage foreclosure rates around the country continued to rise, Colorado placed among the top ten states for highest foreclosure rates. So here's a pop quiz: does that make Colorado's real estate market a good one or a bad one? A contrarian viewpoint can help you see the beauty in what the media would brand as an ugly market. Because a mortgage is generally a 15- or 30-year commitment, the conditions under which you make that commitment have a lasting impact on your finances. For this reason, homebuyers are in a position to gain a long-term benefit from Colorado's current housing woes.

Mortgage Foreclosures Tilt Supply/Demand in Favor of Buyers

The news about mortgage foreclosures sounds ugly enough to scare some buyers off, but just the opposite should be the case. The fact is those foreclosures mean an increased number of houses on the market, and under distressed circumstances.

In any open market, prices are set by the balance between supply and demand. As the supply of houses for sale increases, and as demand for houses weakens because of mortgage concerns, it tips that supply and demand balance in favor of buyers.

A Soft Market Means Lower Prices and Lower Mortgage Rates

That change in supply and demand balance should mean lower prices and more bargaining power for buyers. Not only that, but a weakening economy tends to drive interest rates lower. Colorado's weak housing market is symptomatic of what's going on around the country, and that housing weakness is extending into the economy at large.

The result may sound ugly on the nightly news, but for homebuyers, it means conditions are lining up for lower prices and lower mortgage rates. All you need is a healthy contrarian streak to appreciate the opportunity.

Sources:
MSNBC

About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.