Why does Denver have such a high foreclosure rate?
Question:
Answer:
Because during the real estate boom, it was one of the worst bubble markets... homes are very over valued, and a lot of people used ARM's to buy their home or investment property.
Now people are walking away...
The same with every other state that is affected by Sub prime lenders. It just so happens Denver has only so many people affected with either subprime lenders, bankrupcys, family emergencies, death that puts it number 6 on the list. Compared to Detroit, Mi its the number 1! At least they are number 1 at something.
It was a combination of sub prime financing along with a high rate of inflation in home prices.
Longer answer: People bought the homes for two much, and now that those who bought last are not making a profit, in fact their homes are worth a bit less, they are trying to sell. But right now there are hesitant buyers even if the seller is taking a loss. Further, the buyers are foreclosing because they bought more than they could afford, and didn't read the fine print on the financing efforts. Buyers bought more home than they could afford because they wanted to realize the profits so many other home sellers were realizing when houses were appreciating by 50 or 100 thousand dollars in just a year.
Moral to the story: The maximum amount you should buy a house for and finance is the amount you can afford to spend per month, which is normally 33% of your household income (but banks will loan 50, 55%, and subprime even higher).
the problem is the arrogance of the usa citizen by putting nothing down for a house.ever hear you have to do "without" to get what you want.my parents saved money for 10 years and saved about 90k and they bought a brand new raised ranch 4 bed, 2 1/2 bathroom on 1.2 acre land in Pennsylvania in the pocono mountains in 1992..they paid the mortgage off fast because my grandmother passed away and left 30k to each child of hers from selling off her house in Jersey City NJ..thinking about it though, my parents put 75% down on the house...nowadays people put very much less down on a house than that.and they will live clueless until the mortgage is paid...CLUELESS ya hear!!! If you still are arrogant in what I say, you'll lose your house before you know it.
Denver became very trendy starting in 1997... that compared with cheap rates and aggressive financing in the past 10 years simply created a pefect storm. It could have just as easily been Seattle had the rates and mortgages been this way in the late 80's early 90's.
the really interesting thing will be to see which cities in america a really worth it. Which values will hold through to the other side? If a city is really worth the hype, people will be more inclined to stick around and wait out the rockiness before bailing out.
More Related Questions & Answers...