This week’s edition of Weekly Market Watch will provide a Q&A with answers to many of the questions real estate agents hear from the public.

1. What will the industry do to adjust to the new market demand or lack thereof?

In recent years, the industry has been adjusting as the market has struggled with the economic downturn. But at Coldwell Banker, the only way to grapple with the challenging market is to intensify efforts on business growth. This has resulted in launching a number of new initiatives, such as the relationship with Comcast, as well as CBConnect and more. Far-reaching new customer outreach campaigns, both at the corporate level and agent level, have been instituted. And Coldwell Banker has launched more focused marketing campaigns, especially e-marketing, and deployed more advanced technology for agents. Additionally, this as an opportunity to recruit outstanding agents to join the team – people who have a strong track record of success and have been through these cycles. Although facing the same challenges as everyone else, the way Coldwell Banker has weathered the storm and actually grown business and market share in some regions is encouraging. Market figures and reports from the field show things have improved tremendously over the past year.

2. How much more contraction can we expect?

No one has a crystal ball, but the data from Coldwell Banker offices and the market in general indicates that the worst of the downturn has passed and the market is heading back. Obviously things are not back to “normal” – far from it. But solid improvement has been seen in many of Denver metro markets. Last year, much of the gains came from bargain hunters buying up foreclosures and other distressed properties… But since last fall, and especially this year, strong improvement has come in the mid-range and even some of the upper levels of the market. Coldwell Banker’s monthly million-dollar housing report found high-end home sales in the Denver metro area jumped to their highest level in two full years this June. Still, American’s and Coloradoans must realize that as great as it would be, a V-shaped recovery in the economy or the housing market is not likely. This rebound is looking like it will come in fits and starts – more of a stair step improvement than a straight line. The good news, is has bounced sharply off last spring’s recessionary lows. But growth has slowed in the aftermath of the federal tax credit expiration. Facing economic headwinds in the months ahead – high unemployment, very slow GDP growth and consumer spending, and concerns about the debt markets. Nonetheless, improvement in Colorado sales is apparent. Couple that with an improving stock market, affordable home values, record-low mortgage rates, and you have a solid foundation for a steady housing recovery.

3. What continues to insulate or separate the Denver metro area from other markets?

The Denver metro area’s housing market has long been one of the most sought-after– not only in Colorado, but across the country. The demand for housing here has historically been far greater than most other regions for a number of reasons: First and foremost, the astounding entrepreneurial success that continues to spawn high-paying jobs and affluent employees looking for homes. Also, there’s a tremendous quality of life here that few regions in the world can match – outstanding schools, a wealth of recreational activities, five-star restaurants…and so much more. Also, some of the very best universities in the world are here in Denver and in Colorado – institutions that are producing tomorrow’s entrepreneurs. Buyers have always been willing to pay a premium for homes here, and sellers have historically received strong returns on their housing investments. Coldwell Banker’s latest Denver million-dollar home sales report illustrates this point: Not only were sales up to their highest level in two years, sellers got on average 90% of their asking price. So while the Denver metro area has not been immune to the economic and housing downturn of the past few years, this region may be bouncing back stronger than other parts of the country. Long-term investors who have waded into the market of late will be rewarded for their efforts with solid returns over the years.

4. What influence does the nation’s economic crisis have on real estate?

It’s an interesting question. It will be hard for the market to come all the way back to normal until our nation is in order, both in terms of the economy and what’s happening in the government. With a large budget deficit, the government must find a way to begin closing the gap. The only two ways of doing that are by cutting spending and increasing revenue – most likely both. Increased revenue will come as the overall economy recovers, but in the meantime it could mean increased taxation – perhaps sales and income tax. On the reduction side of the equation, closing the gap will likely mean job cuts and more unpaid furloughs of state employees. Both scenarios mean less disposable income for homeowners and potential homeowners to spend on housing. While all of this will certainly have an impact on the housing recovery, it’s more than offset by the positives being seen: buyers taking advantage of record-low mortgage rates and attractive prices, as well as a slow but steady improvement in stock portfolios, the jobs picture and the overall economy. The long-term future of real estate is bright.

Advertisements