This quarter’s activity actually resembles third quarter of 2007.   The department is hopeful because it cites a slowdown in filing activity signaling slowing to the Colorado foreclosure spiral.  It is important to point out that while the statewide activity has continued to see an increase, El Paso has shown a nice decline in activity.  El Paso County was down nearly 10% in foreclosure filings.  Mesa County is really taking the majority of the credit for Colorado’s spike; over 126% increase in filing activity in a year over year comparison.  This signals that Mesa County will have a major spike in actual foreclosures by the end of the summer.  Nationally, foreclosure filings have dropped 2% compared to one year ago.

Does a decrease in foreclosure activity serve as a powerful antidote to the feared second dip in the real estate market?  Distressed sales accounted for 36% of sales in the first quarter affecting housing prices for some time as appraisers will be hard pressed to not include at least one distressed sale in his comp analysis.  At certain points over the last two years, appraisers were struggling to find any sales not under distress, especially in the higher price ranges or in newer construction areas.  Back to the question of an antidote…Yes, but.  The question we really need to ask  is where will demand come from?   While the First Time Homebuyer Credit did stimulate the housing market by getting on the fence buyers to jump over, it also pulled from the pool of future buyers.  The market will be moving back into a mode of more houses than buyers; key ingredient to pushing down prices.  The Colorado Springs market is tricky due to military associated employment; some will qualify for the extended Credit allowing for strong purchasing power through the remainder of 2010.  At worst, we remain on track for a slight weakening of prices but not a major drop.

The current Census report cycle has found something that no one expected.  For the first time in over a century, household sizes are increasing.  The average is likely to rise to 2.63; 2010 was projected to see a decline.  Three major groups are the cause:  young adults, seniors and immigrants.  As young people are either unemployed or underemployed, they are staying at home with parents.  College grads, unable to find jobs, are forced to move home as well.  On the other side of coin, older Americans are moving in with their children.  About 20% of Americans over the age of 65 live in multi-generational homes.  Finally, an increase in immigrant households changes the overall distribution because these households tend to have significantly more children and multi-generational living circumstances.  This shocking increase in household size tempers the demand for housing.  At this point, it is unclear if this will represent a major shift in household dynamics or if the arrangements are temporary and become undone as the economy improves over the next decade.