If you think there are a lot more homes for sale in your neighborhood than reported, you're probably right.

A record 22,910 unsold single-family homes and townhomes are on the market this month. A computer glitch discovered this week revealed a whopping 56 percent discrepancy from the 14,717 unsold homes reported in July.

Because the glut of unsold homes is so much greater than previously believed, it could force sellers to lower the asking price of their homes. Combined with some of the lowest mortgage rates in nearly 40 years, falling prices on a huge inventory of unsold homes could make this an ideal time to buy.

"It is, if you have a stable income," said Byron Koste, head of the University of Colorado Real Estate Center at the Leeds School of Business. "If you don't, you're playing Russian roulette."

In July, 20,005 unsold homes and townhomes were actually on the market, according to a calculation by a veteran real estate agent, Norm Waugh.

A computer glitch at Metrolist Inc. - a real estate information service group owned by the six local boards of Realtors - has been undercounting the number of unsold homes on the Denver-area market since June 2000.

The summer of 2000 is when Metrolist introduced a Web-based system called MyMLS.com, which allowed agents to list their houses on the Internet.

As the Internet became more common, more and more agents started using it, instead of the older, more cumbersome dial-up phone system. But computer software failed to make a "statistical calculation" that included the MyMLS.com figures in the unsold homes on the market, an official at Metrolist confirmed.

The number of unsold homes is far greater than at any other time in Denver history, even when thousands of foreclosed homes bloated the market in the late '80s and early '90s, said Jerry McGuire, an agent with RE/MAX Professionals, who along with son Steve uncovered the error this week.

But Waugh, of Metro Brokers Northwest in Arvada, said he actually discovered the problem three months ago.

Waugh was using raw data to compile his own report and found that his numbers differed from Metrolist's.

For example, his data showed 15,280 unsold homes and 4,725 unsold condos and townhomes on the market in July, about 6,000 more properties than listed by Metrolist.

He alerted Metrolist but said it took the group a while to get to the bottom of the discrepancies.

Other data released by Metrolist, such as the average price of a home, appears to be correct, McGuire said. Metrolist will correct the month-to-month inventory data back to February 2001.

Many agents would have advised their seller clients to lower their asking price if they had known how many unsold homes were actually sitting on the market, he said.

"Thankfully, that issue is not the driving factor right now," McGuire said. "(But) without a doubt, we have a glut on the market, and it will take a good period of time to work through it."

There's now a 5.6-month supply of unsold homes on the market. "If we had not found the reporting error, we would be laboring under the idea that we had an absorption rate of 3.7 months," he said.

Chad Ochsner of RE/MAX Alliance said the new data could send shock waves through certain segments of the real estate market.

"It's an entirely new ballgame," Ochsner said. "But I think it could be positive because sellers are becoming more realistic on how to price their homes."

Steve McGuire said many real estate agents have long suspected that the unsold home inventory was growing and were surprised that month after month the figures showed only small increases in unsold homes.

Jerry McGuire agreed. "You start thinking, 'Maybe it's only in my neighborhood, where I'm seeing a lot more for sale signs,' " he said.

While home prices are hovering at record levels, Jerry McGuire says they're heading lower.

A report to be released today will show the average price of a single-family home sold in August is $274,802, slightly off the record $274,904 set in July.

Ed Jalowsky, a broker with Classic Advantage Realty, said the glut helps explain why so many houses are languishing on the market.

"If I knew there were 50 percent more homes on the market than being reported, I would have told my clients to lower their prices faster," Jalowsky said. "You have to. It's the law of supply and demand. The supply is going up, and the demand is going down."

Waugh said it's hard to say how much of an impact the incorrect reporting of the numbers has had on the market.

"I use articles on home sales and prices each month as an outside resource for my buyers and sellers," he said. "There's probably 80 agents in our office, and I'm guessing maybe a half-dozen of them use the statistics."

Most people probably focus more on the average and median price of homes than the supply of unsold homes, he said. "But I'm sort of a numbers freak, and I like them to be accurate."

John Gonce, a Realtor for 40 years who has been involved with 5,969 closings in his career, said the undercounting of the supply won't make a difference in selling a home.

More important than the number of unsold homes spread throughout the market is that the home being sold is in "showcase condition," he said. Gonce said the market is healthy and will remain so for at least the next 20 years.

Rocky Mountain News

-- Anonymous, September 03, 2002