In the past 12 months the inventory of unsold homes in the seven counties that comprise the metro area has grown from around 23,000 to over 27,000. Along with growing inventory of housing, the rate of foreclosures is also growing.

 In March, the State of Colorado reported 5392 homes entered the foreclosure process. This is the highest rate per thousand of homes in foreclosure reported in the country. To give this some perspective, 1 in every 339 homes in the State of Colorado is in foreclosure.What’s interesting though is the rate of homes owned by lenders trails the national average. This means there is an active market of buyers acquiring the properties before ownership reverts to the lending institution holding the mortgage lien.

To lenders this is good news. The national average for lenders owning post foreclosed properties is approx. 19%. The average in Colorado is 16%, meaning approx. 850 homes are currently in the hands of the lender.The trend is starting to suggest that the pool of buyers to acquire these properties at auction is beginning to shrink. This could indicate more properties will be owned by the lending institutions.

Obviously lenders making money from lending money not in owing the real estate. This means if inventories of post foreclosed properties starts to really grow, lenders will start to lower prices to move them off their balance sheet.This will not be welcomed news to owners of the growing inventory of homes not in foreclosure. This is where there is risk of seeing retraction in the average cost of homes in the metro area.

Not all areas will see retraction. Areas close to employment centers; DTC, Denver and Boulder, will be more resilient to the downward pull. Homes in outlying areas are more at risk to downward pricing pressure. Adams and Arapahoe counties are seeing the highest level of foreclosure activity.

The average foreclosure takes more than 6 months to complete. Lending institutions are willing to work with home owners to try and keep them in their home or to assist in finding alternative ways to get a homeowner out of the home. The lenders are not interested in growing the number of homes they are holding. If a homeowner is experiencing financial difficulty and either is or will soon be unable to make the payments it is important to get the financial institution holding the mortgage involved. Don’t assume they cant or wont be willing to help.