Monday, April 28, 2008


The question has already come down from this morning's posting about the nine states with decreasing year-over-year foreclosure rates, so here's the list...

- Colorado
- Nebraska
- Alabama
- Iowa
- Kentucky
- New Jersey
- North Dakota
- South Dakota
- West Virginia

Friday, April 25, 2008


My phone rang at 8:10 this morning. It was a past investor client, who had some exciting news to share.

"Did you see this morning that AOL says Denver is one of the top ten seller's markets in the country?" he said. "Can you believe it?"

I said I wasn't sure if I could believe it... at least, not yet. The article my client cited actually appeared in Forbes about two weeks ago, and I wrote about it in this space.

For many months, I have started almost every buyer or seller presentation with a discussion about how the Denver Metro housing market is actually two markets: the traditional resale market and the foreclosure market. Different rules for each, different expectations for each.

Last week, I attended a CRS seminar on the "true" state of the Denver market, which was compelling on many levels, because it validated many of the premises in the Forbes article.

Did you know that 80% of foreclosures in Colorado affect homes priced at $240,000 or below?

Foreclosures dominate the headlines (more on that in a moment), but the reality is the vast majority of foreclosures are found at the bottom of the market.

It’s important to realize that the foreclosure “problem” in Colorado is not a “market-wide” problem. Our metro area is full of sub-markets, many of which are performing quite well.

While overall metro area prices have declined slightly over the past two years, when you eliminate foreclosures and short sales from the calculation, the numbers change rather dramatically:

2006 Denver Metro “non-foreclosure and short sale” home prices appreciated at 6%.

2007 Denver Metro “non-foreclosure and short sale” home prices appreciated by more than 5%.

The overall downward pressure in prices has been a result of foreclosures, which weigh heavily on the bottom of the market.

As you move up in price point, not only does the market stabilize, but prices in most areas have actually increased.

Realty Trac reported this week the number of new foreclosures nationally increased 57% in March of 2008 versus March in 2007. In Colorado, the number of new foreclosures during the same period FELL by 1.39%, making us one of only nine states in the country to see a decrease in foreclosures.

In 2005, we led the nation in foreclosures.

In 2006, we led the nation in foreclosures

In 2007, we fell to number 12.

So far in 2008, we’re one of only nine states to see a decrease in the number of foreclosures.

To be realistic, there is still a “foreclosure problem” in Colorado. We’ve been hit hard.

But don’t these numbers tell a different story?

Thursday, April 24, 2008


Grand Junction was named the 9th fastest growing metro area in the country for 2007, as the oil and gas boom continues to drive jobs, construction and profits to the western slope of the Rocky Mountains.

Home prices in Grand Junction appreciated by nearly 20% last year, marking the third consecutive year of double-digit gains. The first quarter vacany rate for Grand Junction rental properties is 1.7%, which is the lowest figure I can ever recall seeing, anywhere.

The boom in Grand Junction is all about oil – or more specifically, oil shale, which can be converted into crude oil through chemical or heat-based treatment processes.

This type of extraction, which fueled a similar Grand Junction boom in the early 1980s (but "busted" when oil prices dove later in the decade) is more expensive than traditional drilling techniques. Analysts say that refining oil shale profitably requires a market threshhold of at least $50-60 per barrel, but with oil now well over $100 per barrel, Grand Junction’s revival would seem to have legs.

The upside for us here in Denver? While the oil shale extraction is going on along the western slope, the high tech (and higher paying) engineering and management jobs related to it are coming to Denver.

This is one reason our unemployment rate is holding at 4.4%, while the national average has jumped past 5% and Calilfornia has risen to 6.2%.

Grand Junction’s boom isn’t just profiting the western slope – it’s bringing scores of high paying jobs to Denver as well.

Sunday, April 20, 2008


The PMI Group, which insures mortgages throughout the United States, has issued its 2008 report on the state of the nation's housing market. And, predictably, there's cause for concern in many areas.

Riverside, California, for example, is predicted by PMI to have a 93% chance of lower home values 24 months from now. Phoenix has an 84% likelihood of lower prices, based on the PMI analysis. Miami checks in with a 61% chance of falling prices.

So where is Denver?

PMI, which stands to lose a lot because it makes underwriting decisions based on these risk factors, assigns the Denver market a 1% chance of lower prices two years from now.

One percent... which, according to PMI, equates to a 99% probability of higher prices over the next two years.

One word of caution - the PMI report discusses Denver as a whole. As you know, there are scores of "submarkets" that make up the Denver metro region. Some areas will outperform others - this is always the case. Work with your broker to choose an area with solid fundamentals, and you should be in great shape.

(Click on the image to see the full report)


Many of us here in Denver were irritated by USA Today’s front page article last month decrying Denver’s “housing crisis”, when in reality the paper’s reporting was focused entirely on the Green Valley Ranch subdivision out by DIA.

Has Green Valley Ranch been decimated by foreclosures? Yes.

(And if you have time and are interested, I can share with you how the County of Denver played a large role in undermining this entire community from the very beginning with income-restricted housing assistance that basically put people in “over their heads” from day one)

But follow this… in 2005, 41% of sales in Green Valley Ranch were short sales or foreclosures. By the end of 2007, 92% of sales were short sales or foreclosures.

92%? How much lower can you go??

Green Valley Ranch values have fallen by 30% or more since these homes were first built a few short years ago. And I’m not suggesting you rush out and buy a Green Valley Ranch foreclosure today. (In fact, there are many other areas where I would take you first)

However, within a year or two, what you are going to have in GVR is a totally new generation of residents, who qualified for mortgages with full documentation at great rates and who did not grossly overpay for their homes.

Can you see how that might make for a better picture two or three years down the road?

Thursday, April 17, 2008


Active Homes on the Market as of 3/31/08: 25,516
Active Homes on the Market as of 3/31/07: 26,398
Change: - 3.46%

Homes Under Contract as of 3/31/08: 5,874
Homes Under Contract as of 3/31/07: 6,108
Change: - 4.05%

Homes SOLD in March 2008: 3,709
Homes SOLD in March 2007: 4,191
Change: – 13.22%

The story is mixed in this month's sales numbers from Metrolist.

In comparing 2008 activity to 2007 activity, it's almost as if we are comparing apples to oranges, because the world of financing today is totally different than it was one year ago.

For example, almost every loan program has a higher down payment requirement today than it did 12 months ago. 100% financing products from a year ago often require a down payment of 3% or more today. 97% LTV products a year ago now require 5% down, and so on. And popular loan products like "stated income", "no doc" and "reduced doc" have almost totally disappeared from the lending landscape.

Underwriting guidelines are much tighter today, with lenders under extreme scrutiny and banks only willing to finance the safest of deals.

So if many of the "tools" buyers used to purchase homes have been taken away, it's totally logical that you would see a drop in sales activity.

Having said that... the number of transactions closed in March surged over 23% higher than the number closed in February, and homes under contract increased by almost 15% over one month earlier.

REO, or bank-owned inventory, FELL in Colorado last Month. In fact, Colorado was one of only nine states to see fewer REO properties come on the market in March of 2008 than in March of 2007. Nationally, foreclosure properties increased by 57% over the previous 12 months, while in Colorado REO inventory fell by 1.39%.

That is a key trend to watch, because once our foreclosure inventory starts to burn off, our market will start to look a whole lot healthier.

Sunday, April 13, 2008


I am not a commodity.

If I become one, I am dead.

For 14 years, my focus in this business has been on creating “degrees of separation” between myself and the 1.2 million other card-carrying members of NAR.

If you believe that all Realtors are the same… that you are paying 6% to get your property placed in the MLS with a sign in the front yard… that you are merely hiring someone to fill in the blanks in a contract too complex for most people to fully understand… you believe that Realtors are commodities.

If this is the case, you would be a fool to pay a 6% commission.

You are hiring an agent to do two things for you – market and negotiate. If we market and negotiate skillfully, you will get a solid offer in a reasonable period of time from a qualified buyer who can close as promised.

If we don’t, you’ll end up on the market for weeks… then months… and then when an offer finally does come along, you’ll leave thousands of dollars on the table and walk away feeling slighted and angry.

Because you hired a commodity to do the job of a professional.

My listing presentation includes a 71-point marketing plan. Seventy-one points... the most powerful and effective practices derived from 14 years of experience as a licensed broker.

• I belong to two MLS systems – not one. That’s an extra 19,000 agents looking at your home, at my expense.

• I pay for upgrades on, so your property has 25 photos (instead of one) and shows up first when people look at your neighborhood online.

• I take your listing and promote it at marketing meetings, in the community, before the chamber of commerce, before leads groups… I engage in ACTIVE marketing, which takes time and money.

• I utilize innovative commission strategies to get your home shown, even in a soft market.

• I provide staging consultations, at my expense.

• I do virtual tours, at my expense.

• I market with full color flyers, at my expense.

• I post your listing on scores of national websites like Zillow, Trulia, Google Base and (not to mention thousands of local IDX sites) which draw millions of visitors each month, at my expense.

My listings last year sold in an average of 44 days.

44 days.

The average here in Denver was 114.

Ultimately, the decision of who to list your home with is yours… as it should be.

But if you don’t take the time to educate yourself… to deeply understand what it is you are paying for… you’ll end up on the market (at least) 114 days, and when the offer comes, it will be lean and mean. You’re likely to leave money on the table, with frustration in your heart, because you thought that it didn’t matter who sold your home.

I am not a commodity.

Thursday, April 10, 2008


If you need to re-read the headline, go ahead.

Take a deep breath... it's not a misprint.

Forbes Magazine this week named Denver as one of its TOP TEN markets for home sellers in the United States. Here is the Forbes list:

1. San Jose
2. San Francisco
3. Salt Lake City
4. Austin, Tx
5. Kansas City, Mo
6. San Antonio
8. Providence, RI
9. Charlotte
10. Seattle

While acknowledging the negative impact foreclosures have had on our market, Forbes points to a 49% reduction in new construction starts and robust job growth as reasons our market will continue to rebound through the summer months and into the fall.

Citing similar fundamentals, last August the National Association of Realtors projected Denver to be one of its top five housing markets in 2008.

It's important to note that there are "submarkets" all throughout the metro region. Some of these markets are quite robust, while others remain in tatters. With real estate, it's always about location, location, location.

But it's encouraging to see more of our submarkets turning around. I remain convinced that this is the best window of opportunity for buying a home in the past decade.

Wednesday, April 9, 2008


Market share statistics for the 4th quarter of 2007 have been released...and as usual, the RE/MAX brand is dominant.

With 29% market share in the entire Denver Metrolist area, RE/MAX has nearly 2.5 times the market share of any other company.

It's not just overall transaction volume that drives the numbers, either. It's the productivity of individual agents that powers the brand.

Look at the following categoies:

1. RE/MAX - $3.6 million per agent
2. Coldwell Banker - $2.3 million per agent
3. Metro Brokers - $2.2 million per agent

1. RE/MAX - 13.3 transactions per year
2. Metro Brokers - 8.9 transactions per year
3. Century 21 - 8.4 transactions per year

1. RE/MAX (85 days)
2. Keller Williams (88 days)
3. Metro Brokers (91 days)

If you were limited to one piece of information in choosing an agent, the best choice you could make would be to simply go with a RE/MAX agent, based on these numbers. RE/MAX agents outproduce their competitors by 30% in terms of transactions, and by over 50% in terms of dollar volume. That is a dominant brand!

Wednesday, April 2, 2008


Because I have spent an awful lot of time in these types of homes, I felt a sense of connnection to this article in the Denver Post today.

I have seen the photos left behind... children's school work on the floor... toys abandoned in the backyard... and occassionally the massive "tear outs" when people leave a home with bitterness and anger.

There's both an economic side and a human component to the foreclosure drama that has played out in Colorado.

For first-time buyers, investors and others who are taking advantage of steep REO discounts, this is a season of tremendous opportunity.

For those leaving homes they could not afford, it's a season of pain and sorrow.

There's a lot of emotion in this housing market, both positive and negative. When you walk through a foreclosed home, you feel both sides of it.