tag:blogger.com,1999:blog-14162253.post1761542844906634682..comments2024-03-27T08:39:28.807-06:00Comments on Wash Park Prophet: Denver's Housing Bust Was MildAndrew Oh-Willekehttp://www.blogger.com/profile/02537151821869153861noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-14162253.post-52833802119020812722009-11-24T13:52:18.908-07:002009-11-24T13:52:18.908-07:00I agree that the bubble in Colorado wasn't as ...I agree that the bubble in Colorado wasn't as pronounced and that the lack of a bubble is a key reason that we haven't had a bust.<br /><br />I also agree that Colorado's real estate market had its mini-bust sooner than many other markets.<br /><br />I don't agree that fraud from unlicensed mortgage brokers was a material cause of Colorado's mini-housing bubble or pre-mature bust. Certainly, there was fraud by unlicensed mortgage brokers in Colorado. But, there is little evidence to support the claim that the level of unlicensed mortgage broker fraud in Colorado was exceptional.<br /><br />Colorado's early wave of foreclosures came several years late to account for a lack of housing price growth. The housing bubbles elsewhere (and to the extent that Colorado had one, here) were firmly in place long before foreclosures were putting a drag on Colorado home prices.<br /><br />Also, almost all of the causation is on the upside. Bubble appreciation is a very strong predictor of bubble collapse depreciation outside the Rust Belt. Explaining foreclosures is not the problem. The problem is explaining the appreciation, which largely happened before we were seeing foreclosures anywhere (because in an appreciating market it is easy to sell a house you can't make payments upon on a break even basis or at a profit).<br /><br />Also, while the housing price decline has hit many places across the nation, it has been a predominantly regional crisis. It makes more sense to look at why a handful of states have experienced massive housing price booms (followed by return to gravity declines). And, the very fact that the booms were localized suggests strongly the causes were local.Andrew Oh-Willekehttps://www.blogger.com/profile/02537151821869153861noreply@blogger.comtag:blogger.com,1999:blog-14162253.post-29134696216567843732009-11-24T12:37:13.069-07:002009-11-24T12:37:13.069-07:00Colorado had a somewhat different housing bubble -...Colorado had a somewhat different housing bubble -- caused by unlicensed mortgage brokers, leading to rampant fraud. This led to foreclosures early in Colorado, keeping a drag on Colorado home prices and preventing them from bubbling up with those in the rest of the country.<br /><br />So it wasn't so much that the housing decline wasn't as severe in Colorado as it was the bubble wasn't as pronounced in Colorado. Ironically, this is thanks to the mortgage fraud.Michael Malakhttps://www.blogger.com/profile/10007582156392845677noreply@blogger.com