People are buying homes in the metro area despite a sputtering economy. But they’re not your average home buyer. According to the latest figures, mostly they’re investors, hoping to cash in on the housing crisis. Colorado Public Radio’s Ben Markus reports.
Reporter Ben Markus: More than a dozen investors stand in the backyard of an Aurora home that’s for sale. This house has seen better days. Jeremy Rupp of You’re Castle Real Estate is teaching a kind of informal class here on spotting structural damage.
Jeremy Rupp: Alright, so did everyone see the crack -- is that a yay? yep.
Reporter: Rupp points out that -- for some reason -- the gutters drain into the ground right next to the outer wall of the home. Water seeped in and eventually cracked the foundation.
Rupp: So drainage is insanely, insanely, insanely important.
Reporter: The investors -- some writing on notepads -- nod their heads in agreement. Inside, one of the investors in the class...Jason Hahn and his business partner head downstairs to check out the basement. Hahn is betting that now is the best time to buy an income property.
Jason Hahn: Just, we were planning on doing this years ago, but with the economy kind of crashing and everything we wanted to wait until things got a little bit better. And now is kind of the time where we’re ready to go.
Reporter: Hahn’s patience may have paid off.
Hahn: Prices urare low interest rates are low, it’s the right time.
Reporter: Denver home prices have fallen to 2001 levels. And interest rates, at about 4 and a half percent, are flirting with record lows. A recent national survey found that investors, like Hahn, are jumping on these deals.
Charles Roberts: That’s exactly what’s happening, it’s happening nationally, and it’s happening in Denver.
Reporter: Charles Roberts is Managing Broker of Your Castle Real Estate and a Director at the Denver Board of Realtors.
Roberts: The investors come in and say, ‘my goodness, we’ve got properties here that are undervalued with great interest rates.’ And on top of that, our vacancy rate, in Denver, for 1-4 unit properties is 1 1/2 percent--all time low.
Reporter: Which means the future’s bright for buyers who are looking to rent out their investment. Competition for single family homes will likely drive rents higher. Ryan McMaken is an economist with the Colorado Division of Housing. He says that competition for rentals could be a lasting effect of the recession.
Ryan McMaken: People who want to rent houses or live in a single family house they can’t afford to buy one right now, they don’t have the down payment they don’t have the credit rating and so on they’re going to rent instead.
Reporter: Which is almost the exact opposite dynamic of what was happening before the housing crash, where in some cases people could more easily qualify to buy a home than rent. Ron Thrope is a Professor at the University of Denver in the Real Estate Department. He says that flipped dynamic is benefiting investors.
Thrope: Many times they’re working with hard money cash whether it’s theirs or a group of people that they pull together, and therefore they’re able to go at properties cause they have some money, where the homeowner may not be able to compete with the ability to get the down payments.
Reporter: And that brings us back to the basement of that dilapidated Aurora home. Jason Hahn has pooled his money together with a partner who has construction experience. So they’re looking for a property they can spruce up.
Hahn: Right now it’s just finding the right property.
Reporter: And, standing in this dank basement, both Hahn and his partner seem to agree this is not the right property. There’s no reason to rush -- there have been more than 26,000 foreclosure filings in Colorado so far this year.
[Photo by flickr user: respres]
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