Good Time To Buy, Housing Expert Says
As Colorado Springs’ housing slump drags on, real estate agents like to say it’s a great time to buy a house: Selection is plentiful, prices are down and interest rates are low.
Re/Max International Inc. cofounder Dave Liniger certainly believes so. He acknowledges, however, that local and national markets are buried under an avalanche of home listings and that conditions won’t improve anytime soon.
“The problem is, you could try to put a super positive spin on it and say it’s going to be over in a month, or two months or whatever,” Liniger said. “It is not. The market we have today is the market we’re going to have for the next year or so.
“Anybody who tries to time the market to say, ‘Is this the perfect time to sell, is this the perfect time to buy or are we at the very bottom of the market?’ is a fool.”
He added, “Nobody’s ever been able to time the stock market. Nobody can time the real estate market. The truth of the matter is, if you are a buyer, we still have historically low interest rates. We have the biggest inventory of properties in Colorado that we’ve had since 1985 or 1986. The selection is out there. And so if you’re buyer, this is the perfect time to be buying.”
Liniger made his comments Thursday night after addressing the Colorado Springs Chamber of Commerce’s annual dinner at The Broadmoor hotel. A real estate tycoon, commercial pilot, golf course co-owner, Arabian horse breeder and philanthropist dedicated to wildlife conservation, Liniger and his wife, Gail, co-founded Re/Max in 1973. It’s now an international network of more than 120,000 independent agents in 65 countries.
Many economists blame the housing downturn on the collapse of the subprime lending industry — too many loans made to homebuyers with risky credit who couldn’t keep up with payments. As their homes go into foreclosure, inventories of properties on the market swell, sales sag and prices fall.
Liniger, however, called the subprime problem “overblown.” Subprime loans account for about $150 billion of the $9.9 trillion worth of outstanding mortgages in the nation, he said. Of the $150 billion worth of subprime mortgages, half are in foreclosure, but only about 20 percent of those loans reflect homes being lost by owners, he said.
Instead, Liniger blames housing woes on too many adjustable rate mortgages, or ARMs — loans with lower interest rates and smaller monthly payments in the first few years. Many such loans have had their rates adjusted upward by hundreds of dollars a month, making it difficult for owners to keep pace with payments.
Rates on another 2 million ARMs are due to be adjusted in the next year or so, which will put more homeowners in jeopardy and prolong the housing market’s problems, Liniger said.
Add those loans to the subprime problem and the number of homes being sold by bankers and lenders who have taken back properties from borrowers, and the residential market will remain flush with homes for sale, he said.
“The market is going to stay relatively flat, for, nobody can predict, six months, a year, 18 months,” Liniger said. “But you can’t time the market. If you want to buy a house to live in, now’s the time to buy. If you want to buy a house to flip, make an investment, make a quick profit, it’s not possible in this market.”
Even if housing woes drag the nation into recession, Liniger said housing in the United States and Colorado will remain strong over the long haul.
The nation’s population, unlike that of Japan or European countries, continues to grow and create a demand for housing, Liniger said.
Colorado’s economy, meanwhile, has inherent strengths that will re-energize the housing industry.
“If you look at Colorado, we’re not where we were in 1985,” Liniger said. “We’re much better off. We have diversified, we’ve got technology, we still have agriculture, we still have tourism, we aren’t reliant on one industry, we’ve got government employment.
“Our state is positioned that long term, this is a fabulous place to be.”
He added, “The population is still going to keep coming here. They’re going to come to the Sun Belt areas, they’re going to come to Colorado, they’re going to come to Georgia, they’re going to come to Arizona because that’s where quality of life is. So, long term, we’re very bullish on the market, and that’s why we are very involved in heavy expansion at this time.”
By Rich Laden
November 9, 2007
GAZETTE COLUMN
Stuart Scott is President of Stuart Scott Ltd, a Colorado Springs residential real estate company. He has been a licensed Colorado Realtor for 33 years.
Sheila Morris
Stuart Scott Ltd.
726 South Tejon Street
Colorado Springs, CO 80903
Office: 719.578.8801 x116
Fax: 719.578.8808
Cell: 719.290.0770
www.SheilaMorrisHomes.com
