Property Rights, Housing Markets, and Government-Induced Inflation

On January 25, 2022, Kim Monson opened with John Locke’s warning about liberty and explored headlines ranging from New York City’s non-citizen voting decision to Neil Young’s Spotify ultimatum, before welcoming mortgage specialist Lorne Levy and award-winning realtor Karen Levine to break down Colorado’s housing crisis.

Colorado’s Real Estate Frenzy and the Appraisal Gap Challenge

Start listening at 31:30 – Hour 1

Karen Levine reports that Colorado saw a 19% increase in homeownership throughout 2021, despite historically low inventory. The market ended the year with only 2,329 single-family houses and 730 condos available statewide. Homes are receiving between 12 and 24 offers within days of listing, with showings numbering 60 to 100 per property. Many properties sell for more than 20% above their list price.

The tight market creates what Levine describes as a fundamental tension between investment funds buying properties for rental portfolios and individual families seeking homeownership. Without data distinguishing institutional purchases from owner-occupied sales, the true impact on middle-class wealth building remains unclear. Levine notes that approximately 40% of sellers in 2021 chose to leave Colorado entirely.

“The American people still believe in home ownership, which to me is, you know, warms my heart because you and I and Lorne talk about how that is how Americans have built wealth over the years.”

Karen Levine, Realtor, REMAX Alliance

Mortgage Challenges in an Overheated Market

Start listening at 34:04 – Hour 1

Lorne Levy explains that buyers face a double challenge: qualifying for a mortgage at their target price point while also maintaining reserves to cover appraisal gaps when homes sell above appraised value. Interest rates have climbed from the high twos to the mid-threes, simultaneously reducing buying power as prices escalate.

The Federal Reserve’s anticipated rate hikes in March and May will further pressure buyers. Levy observes that artificially low interest rates over the past decade have punished savers, particularly seniors seeking low-risk investments. Money market accounts that once paid 4.5% to 5% now return less than half a percent, forcing risk-averse investors into volatile markets to generate any return on their savings.

“We really have to get involved with their realtors to talk about what’s called an appraisal gap, where the house doesn’t appraise for as much as the price they’ve agreed to pay for it.”

Lorne Levy, Mortgage Specialist, Polygon Financial Group

Housing Density and the Marshall Fire Aftermath

Start listening at 51:11 – Hour 1

Discussion turns to criticisms that houses in the Superior and Louisville fire zones were built too close together. Levine pushes back against blaming developers for density, explaining that land costs, public policy requirements for green space and drainage areas, and consumer preferences for low-maintenance patio homes all contribute to smaller lot sizes.

Levy adds that the unprecedented nature of the Marshall Fire makes density criticism misplaced. Unlike forest fires that spread through tree canopy, this downslope fire with 80 to 100 mile-per-hour winds would have spread embers regardless of lot size. Both emphasize that public policy promoting multifamily development over single-family construction continues to constrain housing supply.