Record foreclosures in Colorado and the subprime real estate market have been addressed on a near-weekly basis by the Front Range media over the past several months. Opinions about how the subprime market will impact the broader housing market differ dramatically both locally and nationally. I'd like to share some insight on subprime homebuyers, or the class of borrowers with weak credit histories who would not qualify for a standard mortgage loan.
Locally, the subprime market is a fairly large percentage of the broader market and it is currently more difficult for moderately-qualified people to buy a home, but there are some lenders still willing to work with the subprime market. Our current market situation will fuel the rental market along the Front Range, and renters facilitate the appreciation of real estate properties, so it's an excellent time for investors to enhance their portfolios.
It's also important to note that subprime homeowners with fixed-rate mortgages are not the issue; it's the optional ARMs segment that fuels the default rate. Payments are doubling for many people with ARMS and their paychecks are not. These owners are in serious trouble as evidenced by the foreclosure numbers in Colorado. Nearly the entire foreclosure problem can be directly attributed to ARMs, and it's very unfortunate that this option was even a consideration in the first place.
According to a recent published report, Colorado is on pace to log another 37,000 foreclosures this year, which is up 30 percent from 2006, which was up 30 percent from 2005. Governor Bill Ritter recently signed five foreclosure bills into law, which supporters hope will stem the tide of record foreclosures sweeping the state. Colorado currently has between 18 and 24 months of foreclosure inventory on the books, which includes home ranging from one month in arrears to impending foreclosure by the bank.
Warren Buffet, chairman and chief executive of Berkshire Hathaway, recently said that rising delinquencies and defaults in the subprime mortgage business probably will not be a big threat to the U.S. economy.
One of the bright spots for homebuyers in nearly every qualification category is Coldwell Banker Home Loans, our leading affiliated mortgage company that has the ability to finance the vast majority of borrowers and do it almost effortlessly, with our VIP program, the only qualification they ask for may be a current appraisal. It's nice to know that everyone is treated fairly and professionally, and that they are told immediately if they can or cannot qualify for the loan. We cannot finance everyone, but we do 100's of home loans each month in Colorado, so we have a little extra clout when needed. We provide a wealth of advantages and benefits for home buyers and sellers alike.
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