What’s the #1 Problem stopping Denver real estate and the other national real estate markets from booming again?
The answer is - there are no more good Investor Loans!
Currently there are not enough buyers in the United States or in the Denver real estate market specifically, to purchase the entire outstanding extra inventory of homes. Typically, one in 10 to one in 15 homes are purchased by real estate Investors nationally. With the current mortgage mess and credit crunch, Investor Loans have nearly dried up or been wiped out completely. If you want to STOP the oversupply of homes for sale - you simply need to be generous and grateful to Investors with loans! Currently, the only loans available for Investors right now require a minimum of 10% down payment, debt to income ratios at 45% or BELOW, 6 months of documented reserves (401k/savings/mutual fund portfolios) and great credit scores above 680. Unfortunately, these requirements ELIMINATE 8 out of 10 potential Investors from getting a loan!
If you slash 80 percent of the potential Investor home buyers and then combine that with the 24 percent of regular homebuyers who have lower credit and can’t get financing now - you have a BIG DENVER REAL ESTATE PROBLEM!!! Worse yet, is that it’s even more disastrous nationally – as most other US cities aren’t as strong as the Denver real estate market (many Denver Metro are flat or still appreciating in value…despite what you might have read or heard on TV or the radio!). There will be NO RECOVERY until the US Government and Mortgage Banks decide to help the Investors get good (and easier to qualify loans.) Although the “super easy” $0 Down stated-income/stated-asset Investor loans of the past few years added to the real estate mess we have now, those same loans also enabled Investors to purchase much of the outstanding inventory in most major US cities, and helped Denver specifically with our high foreclosure home inventory. In my professional opinion, after closing nearly $100 million in real estate and mortgage transactions, is that we simply need a 95% fully documented Investor loan - even allowing real estate equity as reserves and modifying the 45% debt ratios. If not, we’ll NEVER recover from this housing over-supply mess …not unless they start offering 4% 30-Year Fixed FHA Loans next week!
If you’re a Denver home seller right now, or are planning on selling in the next few months - one of the biggest tricks we recommend now is to make sure your home is remodeled and as nice-looking as possible - so it’ll appraise for the highest dollar amount. Not only will it help you get a higher Purchase Offer, but the REAL REASON is so that the buyers can “roll-in” their loan closing costs into the purchase price of your house, in order to qualify to purchase it. This is because there are virtually no more zero down loans available - just the VA loans now. However, sharp Denver Realtor’s (like yours truly) can use a 3% down FHA loan for many buyers and “roll-in” the 3% down payment plus the approximate 2-3% closing costs into the purchase price of your house – thus converting a 3% down loan into a good $0 Down FHA loan. Don’t forget, FHA loan regulations allow parents & home sellers to contribute the down payment and closing costs, when documented properly by a real estate professional who knows how to write a FHA Purchase Contract.
If your Denver home will appraise for more than your list price or purchase price (that’s why we recommend remodeling) – many of us smart listing agents will advertise & market your home’s competitive advantage, thus typically slashing your listing and SOLD time frame by half the current time of 6-8 months in many “over-stocked” Denver neighborhoods! Why not remodel inexpensively now (ask me what you REALLY need to do!) and add value to your home now - so you “capitalize” on the Investor loan mess and appeal to more regular FHA homebuyers – who’ll be able to purchase YOUR home, despite the fact they have a big decrease in loan qualifying power now.
Write and call your Congressman and tell them to help the Investors Loan problem, and you’ll see most real estate markets recover in 6-12 months. If not, you’ll have 2 years or more years to absorb all the inventory of homes currently in Denver and the United States. This ‘genius’ solution is simply all about “supply and demand” - and the ability of American capitalism to easily fix this gigantic housing problem!
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