You are currently browsing the monthly archive for January 2010.

Since the tax credit was extended and expanded in November, I’ve had the pleasure of visiting several of our offices.  What I’ve heard during my visits is the following:

  • Business has been up slightly over the last year
  • First time home buyers are active
  • Move-up buyers are not yet active…at least not now

And yet, from what we know, this is largely because they don’t know about the tax credit or don’t understand the importance of this recently expanded legislation.  My goal, through my conversations with my Agents, through my blog and through any opportunity I receive, is to end that trend.

Buyers and sellers: I’ve been in this business for more than 20 years and in that time, I honestly haven’t seen a better time to buy a home, nor move-up into a new home.  The reason for this is what I call the “perfect storm” in real estate.  It’s what I call the three Is and P:

  • Inventory: There are an overwhelming number of markets where inventory is down, but even with a decline year over year, there are still plenty of homes for buyers to choose from.
  • Interest Rates: Mortgage rates remain at all-time near historic lows.  This means higher purchasing power for buyers.
  • Incentives: Along with tax incentives, the U.S. government has provided further extension and expansion of the first time home buyer and now existing home buyer tax credit but it is slated to expire on April 30, 2010.
  • Prices: Affordability remains at an all time record level nationally and in many of our local markets here as well.

So knowing this, what can consumers do?

It’s time to act.  And act quickly.  With the April 30, 2010 tax credit deadline approaching, move-up buyers and existing homeowners must act almost immediately to ensure they may take advantage of the credit.  In order to do so, they must prepare their home for sale, list the property, get it sold and get it under contract – all before April 30, 2010.  And, might I add, close on their new property by June 30.  If you’ve ever purchased a home you know how lengthy the process can be so if you are considering a move, now truly is the time.

When you are ready, I encourage you to visit ColoradoHomes.com to find a professional Realtor in your neighborhood who may help you.  It’s important that you choose a professional Agent who knows the market and the inventory to ensure your listing and sale success.

I honestly can’t emphasize this enough.  Over the last year we have seen the first time home buyer respond to the tax credits and incentives – upwards of 2.4 million first time home buyers entered into the market in 2009 – that’s close to half of all homes sold last year, according to NAR.  But the move-up market has been somewhat stale.  If you are someone who is considering purchasing a home, now truly is the time.

For our Agents, we can’t assume our clients know and fully understand the benefits of the tax credit.  It is now more important than ever to get out there and share with the world just how many opportunities are available to our buyers.

And with that, let’s take a look at this week in real estate:

  • Boulder/Longmont—Boulder reported the Boulder county market started 2010 with a bang, with sales and showings up sharply and listings following suit.  This coming after two holiday weeks, so no big surprise but showings are up 105% over the preceeding weeks.  Happy New Year!  Longmont reported there was a major jump in showing activity.  Up 43% week over week!!  The price point for homes being shown is creeping higher and higher.  Homes listed in the $350,000 range are among the top ten shown properties.  Short sales are still a large part of those being sold.  These short sale transactions are taking two to four months to close. It is  a special buyer that can wait this long.  Banks/lenders are getting a little better with approval processes on these deals.  Homes in the upper price ranges are showing up on the foreclosed market.  Some of these homes are amazing deals.  Now is the time to purchase that dream home at a great price.
  • Evergreen/Conifer—Evergreen reported we’ve had a total of 9 new listings so far in January.  Seven listings went under contract during the last two weeks and a total of 146 showings during this two week period.  There were four buyers put under contract, including a property listed at $2,500,000.  Overall, activity has increased significantly since the beginning of the year over all price ranges, not just first time home buyers or short sale/foreclosure activity.  Buyers that have been sitting on the fence for long periods of time now seem to be taking action.  Conifer reported showing activity has increased significantly compared to December with a total of 88 showings for the month to date.  Listing activity is increasing with tree new listings plus several listings in the pipeline.  Two listings have gone under contract with four additional offers received over the weekend, two of which had multiple offers.  Price ranges for under contracts are from $350,000 to $450,000 with several local buyers, an early indication of some movement in the move-up buyer category.
  • Denver Central – Overall sold units were down from 2008 to 2009 but overall inventory was down at a greater % than were resales.  The drop in inventory in 2009 is a very good sign for the Denver market & its future.  Unemployment continues to be lower than the rest of the country which is helping the Denver market.  With the extension of the tax credit to April 30, 2010, there has been an increase in first time home buyers looking for property.  We’ve also had several existing homebuyers contact us for information on the $6500 tax credit.  If you want to take advantage of thesecredits, time is running out.  The inventory shortages in the lower end market has created multiple offer situations in that market.  The inventory is substantially lower than it’s highpoint in 2007.  Over 50% of the home sales in the Denver metro area continue to be under $250,000 price point.  If you’re looking to sell a home, now is the time.
  • Devonshire— Happy New Year! We’re all looking forward to a new year and a fresh start for the real estate market.  We are definitely seeing the need for more inventory in most price points as buyers seem to be waiting for the “new” homes on the market.  With the buyer incentives going away in late spring, February & March should be much better than January is shaping up to be. It seems slow & our showing numbers attest to this.  With new inventory coming on the market, price & condition are still very important.  Sellers should use this time to be sure that their homes are in tip top shape.  The upper end of the market is still very slow but as we get closer to spring we’re hoping to see movement in this sector.  We are looking forward to a steady improvement in the market as a whole.
  • Douglas County— Our Southwest Metro office reports showings are increasing and buyers are ready to buy.  We’re seeing an increase in activity in our listing inventory as Sellers are ready to list their homes and buy.  Our agents are very busy with their clients, not only first time buyers but those that are ready to make the next move.  We’re still seeing homes in the low $200,000 moving quickly as well as homes in the $400,000 range having an increase in activity & offers.  Open houses have been terrific this month.  Agents have been very happy with the activity & the potential business that they are receiving from their open houses.
  • El Paso County— Colorado Springs reports the activity in Colorado Springs is steadily increasing week over week in January.  With rumblings of more troops being moved to the area, we expect this trend to continue.
  • Larimer County— The first quarter is starting to really rev-up the last two weeks.  Showings have more than doubled since the last week of December & buyers are coming out in droves to see the new inventory.  Most of the action is taking place in the lower price range from $250,000 & under.  In fact, the median price is now roughly $215,000.  Look to see a bump in closings & new listings this winter due to the tax credit extension.  If you are hoping to sell before the credit expires on April 30th to take advantage of the additional buyers available, you should really have your home on the market no later than the first two weeks in February.  Northern Colorado has been fortunate in that we’ve not seen the huge decline in prices.  In fact, the average sales price in Fort Collins has increased every year with the exception of 2008 (-0.9%) & 2009 (-4.7%).  It goes to show that over the long term, investing in a home in this area is a pretty good idea!
  • North Metro— The new year is starting out well in the North Metro office.  We have 23 new listings on the market in the month of January so far.  The lowest price $60,000 and the highest at $1,600,000.  The average list price is around $300,000.  We’ve put 32 homes under contract this month.  The average under contract price is $202,000.  The list to sale price is averaging about 90%.  Some of the new listings from our office are coming from sellers who previously tried to sell their hom on their own.  Our agents are able to meet with them & to explain the benefit, especially during this type of market, to list with a Realtor who is familiar with the market & has numerous marketing materials available to them.
  • Parker— The buyers have been apprehensive, it seems at the start of the year.  The number of showings is increasing gradually.  We are seeing more relocations to the area and we’re seeing a little more activity in the bank owned sector.
  • Southeast Metro— The SE Metro office is seeing a steady increase in buyer traffic.  Our showings have increased over 55% since the first of the year & we set over 500 property viewings last week.  It’s a great time for sellers to get their homes on the market as buyers are having somewhat of a challenge finding homes to fit their needs.  Our luxury properties are experiencing a slight increase in traffic as well.  One of our top agents successfully closed a $2,200,000 home in the final week of ‘09.  We’re confident that this market in the se metro area will see an increase in sales for the 1st quarter of 2010.  Yes, sellers, there is no need to wait for Spring…..with less competition & a healthy buyer pool, now is the perfect time to position your property for a successful sale.
  • West Lakewood— December sales were great to end the year.  Now we’re looking forward to a great 2010.  Seems as though the first week of January was slow, but it’s picked up since then.  We have 35 under contracts for the first two weeks of January.  Go tax incentives!!

We’ve all been reading the conflicting headlines.  Some say 2010 will have its challenges.  Others say 2010 will be the start of good things to come.  But what’s the truth?  How can we read through the pessimism and for that matter, the rose colored glasses, to determine what is the truth?

Well, as we all know, only time will truly tell.

But in this forum, I have the ability to offer my insight and share what I believe the coming year will bring.  Together, we’ll weed through the headlines and I’ll offer my honest, unbiased opinion.  And a year from now, we’ll look back on this edition ofWeekly Market Watch to determine if my hunch was correct or if I should’ve kept my opinions with the rest of the weeds.

  • Overall. I think 2010 will be the year we begin to build a foundation.  Many experts are predicting that the recession is nearly complete, if it isn’t already as measured by a decline in negative growth.  But the recovery is going to depend on stimulus spending and doing more to facilitate job growth.  As Leslie Appleton Young said, “If we don’t create more direct policies to get people back to work, this could go on much long.”
  • Let’s start with foreclosures. No, I don’t think we’re out of the woods yet.  I think we have a lot of work ahead of us and much of that has to do with the state of the overall economy.  Unemployment is still high and while I think we’re better, we’re not healed.  The latest U.S. Bureau of Unemployment Figures show that unemployment rates were higher in November 2009 than for the same period in 2008 in all 372 metropolitan areas.  What happens when people lose their jobs?  They typically aren’t able to pay their mortgages.  There are also many people out there with adjustable rate mortgages that just haven’t yet adjusted.  If the government doesn’t step in and those mortgages adjust, many people will find themselves in a short sale or foreclosure situation.  Fortunately the good news is that the government is putting more pressure on the banks to work with homeowners and my hope is that if that, combined with the government’s own work to help homeowners in trouble, I think we’re on a better path with these foreclosures than we were a year ago.
  • Interest rates. There are a lot of schools of thoughts with relation to the future of interest rates.  I tend to agree with many economists who believe that last year’s record low interest rates, where some were able to secure a 30 year fixed rate mortgage for under 5%, may be a thing of the past.  Do I see them taking a surge in 2010?  No, probably not.  CNBC Reporter Diana Olick wrote, “Unless the government decides to extend its Fannie-Freddie purchase program or do something else to juice the credit markets, mortgage rates will rise steadily, probably leveling off somewhere around six percent” and I tend to agree with that philosophy.  Still a good place to be.  But having said that, I encourage you to review my February 2009 Reality Check piece in which I shared how increases in purchasing power can affect a buyer’s purchasing power.  I have updated it with the latest numbers and if you are considering buying, you may want to consider doing so before interest rates start making their way up.  Even a small hike in rates can dramatically affect your purchasing power.
  • The hottest market? The entry level market is by and large the hottest segment of the housing market right now and in all honesty, probably will continue to be in 2010.  But, it was also the first to experience the downturn so it is certainly easy to suspect that it would be the first to recover.  What we know about the entry level market is this:
    • Homes saw a great deal of depreciation in this market
    • This market was most affected by foreclosures and short sales
    • Affordability is especially high in this market
    • The inventory is low in the entry level market in many areas

I don’t see much of this changing in 2010.

I do see a trickle affect coming from the entry level market into the move-up market.  Many homeowners are looking to take advantage of the $6,500 existing homeowner tax credit as well as the opportunity to cash in on a buyer’s market in the entry level and a seller’s market in the move-up region.  It really is a perfect storm for this group and I hope more move-up buyers will consider that.  Fortunately, we have our Move-Up Marketer program which helps to educate move-up buyers about the opportunities in today’s market.

The luxury market is a very different market indeed.  It was the last to be affected by the market changes and in all likelihood it will be the last to recover.  Having said that, there are some very interesting pockets of success.  It really depends on the house, the neighborhood and the overall demand for that market.  We’ve seen instances where a million dollar home comes on the market only to be snatched up within a few days.  Then, others, just sit.  It really comes down to what the market will bear.

In the end, regardless of what the market may or may not be in the coming year, the bottom line is, it may be a really great time to buy.  Attractive interest rates.  Increased affordability.  Tax credits.  Higher inventories in some market.  In many instances, there hasn’t been a better opportunity to buy in decades.  Please don’t lose sight of that.  If you are in a position to buy and are considering do so, please do explore your options.  I believe 2010 will be a year of building a solid foundation on which to build.  Don’t wait until it is too late.

Sorry to be so long-winded but I wanted to give you a really good glimpse at the coming year.  Now, let’s take a look at this week in real estate:

  • Boulder/Longmont—Boulder reported, as one might expect, Christmas week put a huge dent in all numbers.  Over the past two weeks we see that new listings are down 62%, sales are down 46% and showings are down 52%. Here’s to 2010!!Longmont reported 2010 is going to be a good year for buyers.  The tax credits are too good to ignore so now is the time to act.  Short sales are still a large part of our business.  They are time consuming and frustrating but they can be a good value.  They are also impacting appraisals in certain neighborhoods.  Higher priced properties are still long “days on market.”  If you want or need to buy a home this is one of the best times.  Interest rates are low, prices are low and motivated sellers are ready to negotiate and the tax credit not to be missed.
  • Evergreen/Conifer—Evergreen reported we had a total of one new listing for the week & four listings that went under contract including two parcels of lands.  We had a total of 23 showings during the week.  Activity is down due to normal seasonal activity however most agents are reporting that both buyers and sellers will resume activity after the year end holidays are over.  Listings are expected to come back on the market beginning mid-January for the spring selling season.  Conifer reported there were no new listings taken during the reporting period.  One of our listings went under contract.  The number of showings is declining due to seasonal trends but is expected to return to normal levels beginning in mid-January.  Property values have not recovered along the 285 corridor and large numbers of bank REOs and short sales remain on the market.
  • Denver Central – With the extension of the tax credit to 2010 there has been an increase in first time buyers looking for property to take advantage of the $8000 credit. We’ve also had several existing homeowners contact us for information on the $6500 tax credit.  We continue to see inventory shortages in the Denver market which has created multiple offer situations in the lower end market.  The inventory is substantially lower than it’s highpoint in 2007. Over 50% of the home sales in the Denver metro area are under $250,000.  If you’re looking to sell a home that is priced under $300,00 this is a great time to sell.  This is definitely the perfect market to move up to a higher priced home.  Your financial gain in getting a higher priced property for less should be a big reason to make a move now & take advantage of the slower high-end market.  Overall  we are very encouraged  and excited about the future of real estate in 2010.
  • Devonshire—No information reported.
  • Douglas County Showings were down in December and this is the norm during the last two weeks of the year.  We have several agents very excited about the new year as they have several clients ready to list their homes as well as buyers ready to move forward in their quest for a new home.  Sellers & buyers are feeling confident that this is the time to either list their home or buy.  Several of our agents have received a number of phone calls regarding the tax breaks & activity is picking up.  With numerous buyers ready to purchase, we feel there will be great activity at our upcoming open houses.
  • El Paso County— Colorado Springs reports the Springs saw a dramatic drop in activity the week of Christmas but it seems to be ramping up once again.  We’ve seen an increase in showings and hopefully that will lead to an increase in listing/sales activity this coming week.  Military relocation referrals have been steady the last two weeks but are still less than we have been seeing on a weekly basis.  With the new year upon us, we’re ramping up for an increase in sales over 2009.
  • Larimer County— It’s pretty slow going out there right now and we’ve seen a decrease in activity in both contracts and new listings.  Though there was a slight bump in listings just after the first of January as sellers decided to put their homes on the market in the new year.  Our agents are out showing properties and we’re seeing  new interest due to the extension of the tax credit.  Our median single family home sales price is right around $220,000 & our median attached dwelling sales price is right around $145,000.  Decent inventory & historically low interest rates should give current home owners or buyers a great chance to move-up or purchase their first home.
  • North Metro— No information reported.
  • Parker— This was an interesting and challenging year for real estate.  The buyers were still out there, just a little more savvy and cautious.  The homes in the Parker area continued to sell and the homes that were priced correctly sold quickly, sometimes with multiple offers netting higher than asking price.  2010 should produce the same type of activity and even more buyers due to the extension of the tax credit.  Parker & the surrounding area will continue to be desirable for relocation with the numbers of jobs projected to increase in the southern areas of metro Denver.  The number of foreclosed homes coming on the market will directly impact prices & length of time on the market so sellers will need to stay aggressive in order to sell their homes.
  • Southeast Metro— Welsome to 2010!  We’re off to a fabulous start at the SE Metro office. A record 72 showings were set the day after New Year’s Day!  Inventory continues to decrease & buyer traffic is on the rise.  A record number of homes sold in December and we are confident & optimistic about the 1st quarter of the year.  We’re very excited about the merger of Century 21 Advantage Plus agents to our team.  Here’s to an exciting & prosperous 2010!
  • West Lakewood— No information reported.

After enduring three years of a declining real estate market, 2009 brought a much needed break for the hard hit real estate sector. Driven largely in part by the economic stimulus that helped the housing market emerge from the recession, it leaves many of us wondering what is next for real estate. Will housing prices rebound? Will the new extended and expanded tax credit be just what the doctor ordered? Will the luxury market recover similarly to the entry level? I recently sat down with Coldwell Banker Residential Brokerage President Chris Mygatt to answer these questions and more as we discussed the 2009 housing market and what we may expect in 2010.

How would you say the housing market faired in 2009? Did it live up to your expectations or falter?

“Although it was a challenging year, I believe that it ended up being a year of stability. It was a year of transition in many of our markets. We bounced along a rough bottom but at the same time, we are really prepared for a modest and consistent improvement. The second half of 2009 was when we finally saw a jumpstart. I think that really stems from consumer confidence. At the end of the day, what drives affordability is confidence. Does a buyer feel confident in his/her employment and finances? If so, then buying a home is typically a good option. Another way that the government is reinforcing the viability of buying a home is by offering the tax credit.”

Do you feel the tax credit was an important factor in the market turnaround?

“Undoubtedly, the tax credit was an important factor in our market’s turnaround. We didn’t really know this for sure until we started looking at the number of closed escrows in September, October and November. The number of properties that went under contract increased as we grew closer to November 30th, the original expiration date for that tax credit. It was a very clear indication that once potential buyers realized they might miss out on the $8,000, tax credit if they did not move quickly, many buyers got off the fence and began to act. The number of property showings was up. The number of properties that were sold was up. Then, we saw the extension of the tax credit and we saw yet another market adjustment. I wouldn’t say that the market has been slowing, but there has been a softening of the frenzy. I think as buyers near the new expiration date of April 30, 2010 that they will once again begin to act.”

Do you think the extended and expanded tax credit will solidify our market recovery?

“Certainly the increased activity that we’ve had in the lower end market has been good; but in and of itself it probably will not create a market-wide recovery. To have a market- wide recovery, we have to be able to engage the move-up buyer. We have to remind the move-up buyer that now may be the best time in our history to step up to the higher priced homes. The new tax credit that provides existing home owners with a $6,500 tax credit is certainly helpful but many buyers need more than just a tax credit. They need to have the courage to step up in today’s market. Those who do, may reap the best benefits. The fact is, you probably have never gotten as much value, thanks to interest rates and given what you’re earning, as you have in today’s market. Six months to a year from now, we probably won’t be able to say the same. We are certainly recognizing that the tax credit is a great thing. But it isn’t compelling enough if a potential buyer isn’t confident in his/her finances or future employment. For those who are confident, the tax credit should serve as a clear and convincing message that now may be a great time to move-up.”

Why is it such a great time to move-up?

“It’s all about the power of leverage. The fact is that in most markets, inventory is very low in the low priced home range. So buyers in that market are often competing against other buyers for the same home making it more of a seller’s market. However, it is a buyer’s market in the mid-level and upper end markets so you truly get the best of both worlds when you choose to move-up.”

There is a lot of talk about the impact of inflation. Do you think people should be concerned about it?

“Certainly people need to be aware that inflation is very likely. The government has devoted a great deal of money to stimulate our economy and in order to strengthen our dollar over time, inflation will be likely. With inflation comes higher interest rates and ultimately less buying power for a home buyer. But it all goes back to maximizing your opportunities now, in today’s market. For those who have made a fortune in their lifetime, they were always looking at the opportunity, today. In order to do so, you must sell where the market segment is strong and buy where the market segment is weak. Today that opportunity resides with the move-up buyer.

“Another important fact to note is how advantageous interest rates are right now. Some buyers are able to qualify for 30-year fixed mortgages at under 5%.”

Do you think we’ve hit bottom?

“I think in many communities we probably have hit bottom. We are seeing statistical evidence of it in the average sale price and in the number of homes sold. Interestingly (and I think this may be contrary to what most people believe), the communities that may have hit bottom are not necessarily those that were hardest hit by foreclosures. The communities that are strongest today are those that are clearly most desirable. When the market gets soft, the people who in previous markets couldn’t afford their first choice market had to settle for their second or third choices. But thanks to the opportunities in today’s market, they are better able to buy into their first choice communities and neighborhoods. It goes back to supply and demand. Those communities that have good schools, good local economies, diverse activities and, overall, are just considered more desirable places to live, are once again driving demand.”

What do you recommend to today’s home buyer?

“Buyers need to understand right now that the market is a little schizophrenic. You know it is probably the time to buy and you also know that the market has been challenged. But you may see that in certain markets, we’ve had lower prices and decreasing numbers of available homes for sale. In that type of area, you might expect to get a lower price than a year ago. But you also need to realize that the market is picking up and that in many markets, we’ve probably hit bottom. For example, if you want to be where the best schools, best hiking trails and best parks are, that will probably be where the best recoveries are likely to occur. To properly ride the wave, you should find the houses where people want to be. The problem is that if you wait a year, you’re probably going to run up against a lot of challenges: increased interest rates, increased buyer demand, and lower available housing inventory. The combination of those factors is what is creating more urgency in the more desirable markets today.”

What do you anticipate for real estate in 2010?

“What we’re going to see in 2010 is probably the more desirable neighborhoods seeing a modest increase in sales price and a decrease in the number of homes on the market. I predict that we are going to see an overall stabilization in the marketplace. We are probably going to see on the whole a slight increase of the average sales price of homes. We’re probably going to see a stabilization of the market. We probably won’t ever return to the sales levels of 2005 and 2006 because so many of those sales were artificially created. Fortunately, I believe that we are now on the right path toward modest, sustainable growth.”

When will the luxury market begin its turnaround?

“We should see a slight turnaround of the luxury housing market in 2010. We believe that it will be the last market to turnaround. It was the last market to experience a turn down and it will probably be the last market to experience an upturn As business and the economy strengthen, we’ll once again see a more robust luxury market.

“The bottom line is there is a lot to be confident about in relation to the housing market: the tax credit; attractive interest rates; buyer demand in the entry level market; opportunities in the move-up buyer market; and sustainable growth. It all adds up to what we anticipate to be a very productive 2010.”

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