There has been a lot of discussion on the foreclosure market throughout the nation.   From a Real Estate perspective it’s not unusual to have buyers specifically request to see foreclosures.   In most cases they believe that they will be getting a great deal.  However, this isn’t always true.   Many foreclosures require significant investment to bring them up to the neighborhood standards.  Nevertheless, a high volume of foreclosures in the neighborhood will impact the neighborhood home values.   If you are trying to sell your home and there are a lot of foreclosures in the neighborhood, you may have difficulty getting your home sold. 

One thing we do know, foreclosures will get sold.  In 2008, thoughout the Northern Colorado area, 70% of the foreclosured homes listed sold.  Foreclosure companies who need to get the foreclosed homes off their books will continue to lower the price until they get them sold.  So if you need to compete against foreclosed properties to get your home sold, you may need to drop your price as well.  So how has the foreclosure market impacted Northern Colorado? 

Let’s take a look at Fort Collins.   As you recall, as of 4/4/2009 for the past running year, Fort Collins had 2007 single family residences sold.   Of those, 233 were foreclosed properties (source: IRESIS).  

As you will see in the graphic, for 2008, 12% of the sales were REO (foreclosures) and 5% of the sales in Fort Collins were Short Sales.   This resulted in 83% of the 2008 Fort Collins Sales Non-Distressed sales.   The next thing we looked at was which neighborhoods were impacted by the foreclosures.   To identify which neighborhoods were most impacted we looked at all the neighborhoods which had at least 4 or more sales.   We then looked to see what percent of the sales occuring in the neighborhood were foreclosures.   If the % of foreclosures were 15% or higher, then the likelihood that they would impact the non-distressed sales would be greater.  In looking through the Fort Collins foreclosures we found only five neighborhoods where 15% or more of the homes sold were foreclosures.   Those neighborhoods are identified below:

• Mountain Range Shadows – 36 single family homes sold in 2008, 18 of which were foreclosures properties (50%).   Mountain Range Shadows is a subdivision located next to interstate 25 between Loveland and Fort Collins.  It was a previous trailer park and still has some remants left in the subdivision.  Homes sales in 2008 went from $26,500 to $150,000 with the average sale being $100,540.  The average home was built in 1982. 
• Springfield – 10 homes were sold in 2008, with 6 of them being foreclosure properties (60%).  Springfield is on the West side of Fort Collins (just off of Horsetooth).  Home sales in 2008, went from $124,000 to $229,000 with the average sale being at $148,790.  The average home was built in 1986.
• Fox Meadow – 17 homes sold in 2008, with 6 of them being foreclosure properties (35%).  Fox Meadow is located at the South East corner of Horsetooth and Timberline.   Home sales in 2008, went from $155,000 to $208,000 with the average sale being at $181,988.   The average home was built in 1981.
• Richard’s Lake – 13 homes sold in 2008, with 5 of them being foreclosure properties (38%).  Richard’s Lake is located just North of the Country Club and has a mix of both custom high priced homes and high volume homes built by KB HOME.   Home sales in 2008, went from $162,000 to $350,000 with the average sale being at $237,845.   The average home was built in 2003.
• Waterglen - 43 homes sold in 2008, with 9 of them being foreclosure properties (21%).  Waterglen is located on the North end of town just North of Vine and next to Interstate 25.   Home sales in 2008, went from $136,700 to $207,500 with the average sale being at $170,290.   The average home was built in 2001.

One observation that can be made is that the neighborhoods that were impacted by foreclosures were entry level neighborhoods for the most part.