Friday, November 28, 2008


It's year-end, and that means there's a stack of bills on my desk.

Local Realtor Associations dues... State Realtor Assocation dues... National Association of Realtor (NAR) dues... annual CRS membership dues... my local Chamber of Commerce dues... annual RE/MAX affiliation dues... renewal of my database management program... my websites... my upgrades... the list is painful just to look at.

Selling real estate has never been cheap, and this year more than ever we are looking to find the value in the associations, affiliations and technology we employ.

I received a correspondence from NAR earlier this week, and it's good to see that one organization is fighting hard for its members and the principles which drive home ownership. NAR is launching a lobbying campaign outlining a four-point agenda to help free up capital in the credit markets and bring buyers back into the market.

Given NAR's long history of strong influence in Washington, I would not be surprised to see much of the NAR agenda enacted early in 2009.

Here's NAR's four-point plan to revive the housing market:
  1. Make the $7,500 first-time homebuyer tax credit available to all buyers and eliminate repayment requirements. The credit's limited availability and repayment requirement severely limit the credit's use and effectiveness.

  2. Make the 2008 FHA, Fannie Mae and Freddie Mac higher loan limits permanent. New rules for 2009 will reduce them. Now is not the time to limit mortgage affordability.

  3. Get the Treasury relief program back on track and target more funds to mortgage relief. Create a federal mortgage interest buy-down program to make below-market rates available and stabilize home prices.

  4. Permanently bar banks from engaging in real estate brokerage and management. The banks have proved they have enough to do to simply manage the loan process. Banks should not manage home sales and purchases.

From my perspective, the most important item on this list would be the first one, and that is to make the $7,500 first-time homebuyers tax credit permanent (or at least extend it beyond June 30, 2009) and eliminate the repayment requirement.

Right now, first time buyers are essentially being offer a $7,500 interest-free loan by the federal governement, with a lump sum disbursement up front which is then recaptured over 15 years at the rate of $500 per year.

This tax credit has been a powerful tool for my foreclosure buyers, allowing them to budget for appliances, paint, carpet and basic repairs. Making the tax credit a permanent fixture (with no recapture clause) would be a strong incentive for many buyers to get back into the market.

I do believe help is on the way for the housing market, above and beyond the shift in government policy on Tuesday that resulted in the biggest one-day interest rate drop in seven years.

Buying a home will continue to be incentivized in 2009, in my opinion, which will bring more buyers back into the market. And with foreclosure inventory already tailing off significantly, "retail" (private party) sellers will stand a much better chance of being able to sell next year without having to compete with an exorbitant inventory of discounted, bank-owned homes.

Tuesday, November 25, 2008


As the Federal Government continues to scramble in search of a formula to stabilize the markets and restore confidence in the economy, Treasury Secretary Henry Paulson announced today that the government would be purchasing up to $600 billion in mortgage backed securities from Fannie Mae and Freddie Mac.

In response, interest rates on 30-year mortgages immediately fell by nearly 50 basis points, into the mid 5's. Those rates are the lowest I've seen in 14 years as a real estate broker.

For those who don't follow the mortgage markets closely, this announcement is in very interesting because the Treasury has basically shifted its policy away from buying debt (loans previously made) to buying mortgage-backed securities (loans to be made in the future).

In other words, the shift in thinking here is one that moves away from helping homeowners who are in foreclosure and instead focuses on helping future homebuyers (as well as those with enough equity to refinanace into a conventional mortgage).

Interesting, dramatic events.

The trick now is to see if the Treasure Department will actually FOLLOW THROUGH on this announcement, given the abrupt changes in policy and philosophy we have seen over the past 90 days.

Good news if you're a buyer or looking to refinance. But if the events of the past few months have taught us anything, it's that these rates won't be around for long. The best deals are only there for those willing to take action, and with the inventory of homes on the market already 20% below where it was one year ago, these lower rates only figure to spark more competition for foreclosures and well-priced entry level homes.

Friday, November 21, 2008


Apparently Adams County residents don't have to travel far to find an ideal place to hibernate during the economic downswing - according to, their own backyard will suffice.

On Nov. 12, the business magazine's Web site published the top 10 counties nationwide to "weather the downturn" based on affordability, job growth and proximity to a major metropolitan area. Adams County placed third on the list that included counties in Arkansas, Ohio, South Carolina, Louisiana, Iowa, Alabama, Texas and Kansas.

The story cited Adams County's 3.4 percent job growth year-over-year, a "diversified" economy, which includes aerospace, aviation and bioscience jobs, low property taxes and inexpensive housing as the reasons why the county was chosen.

Positive publicity is always welcomed, although getting lauded as a desirable place to live when unemployed or in financial turmoil isn't exactly comforting news for people in distress. But if that's the reality of the moment, then the news represents a very positive turn for Adams County, which for the past five years has been battered by foreclosures and falling home prices.

Forbes probably considered well-paying aerospace, aviation and bioscience jobs in nearby counties in addition to Adams County, which includes Brighton, Commerce City, Federal Heights, Northglenn, Thornton, Aurora, Bennett, Westminster and a small section of Arvada.

Nearby Jefferson County also has the highest number of aerospace jobs in the Denver-metro area.

Other businesses that might have been factored in include wind turbine manufacturer Vestas, which recently announced its expansion to the Weld County part of Brighton, and will be hiring 1,400 people. Ascent Solar, a developer of thin-film photovoltaic materials, is moving its headquarters to Thornton.

As for the affordability factor, the average price of a house that sold in Adams County in 2007 was $175,000. I have worked with many investors and first-time buyers who have taken advantage of affordable housing prices and strong rental demand in Adams County, and I expect that trend to continue in 2009. Brighton East Farms, in particular, is one area where first-time buyers can buy "nearly new" homes for less than $200,000, with good schools, newer infrastructure and strong community roots.

That makes Adams County an extremely affordable - and attractive - place to live. The county is also adding more jobs than new housing units, which should put it on the leading edge of the state's housing market recovery.

To view the Forbes article in its entirety, click HERE.

Sunday, November 16, 2008


Altos Research Group says that list prices in Denver are rising, one of only three markets that Altos tracks that are showing appreciation.

Denver list prices rose by 0.7% in October, edging out Houston (0.6%) and Dallas (0.3%) for the top spot in the Altos Survey.

At the other end of the spectrum, Las Vegas home prices fell by almost 4% in October alone, Detroit homes lost 2.1% of their value and Phoenix home prices fell by 2.0%.

If you have read this blog or spoken with me over the past few months, you know where this increase is coming from. The bottom of our market, which was so hard hit by foreclosures in 2005 and 2006, has turned the corner.

With prices in the range of $225k and under having fallen by as much as 25% over the past four years, it's now cheaper for many to own than to rent. Investors are scooping up cash-flowing rental properties and banks are seeing multiple offers on many of their foreclosure listings.

In response, there has been a definite adjustment upward in REO pricing. There are also a lot fewer foreclosures on the market today than six months ago.

For example, in Arvada, there are currently eight single-family detached REO properties priced below $150,000 on the market. Eight.

This summer, I was showing as many as six to ten new listings a week in this price range. The foreclosure pipeline has just slowed to a drip.

If you're thinking about buying a foreclosure property, don't be discouraged. The deals are still out there... but they are harder to find.

You need to be working with someone who is in this market every day, so that when a well-priced home in good condition comes on the market, you see it immediately.

Many agents will tell you all the deals are gone. That's not true. They are simply going to the agents who get their first, who know what they're looking at, and who have prepared their clients to take action when the right deal comes along.

I'll put it this way - if you're not working with someone who understands what's happening, you're not going to get the result you're looking for.

Keep the faith - the deals are out there. And we're getting them.

Friday, November 14, 2008


What a week it's been in the markets... we certainly are living through historic times.

While I cannot tell you what the stock market is going to do next (or the Federal Government, for that matter), I can tell you what's happening in the Denver real estate market.

Here's the short summary:

The low end of the market, up to $250k, continues to sizzle. As of this morning, the absorption rate for homes in this price range is just 3.69 months, meaning that if no new homes were to come on the market the existing inventory of homes in this price range would be completely extinguished in less than four months.

Of course, most of this activity is driven by foreclosures. Over 80% of all Colorado foreclosures have been at price points of $240,000 or below. This is where values have fallen the most, this is where most of the bargains are and this is where investors and first-time buyers are still crawling over each other to find and purchase bargains.

The bottom of the market remains HOT!

The middle of the market, from $250 - $400k, is doing okay, but it's slowing. Market time has increased to nearly 10 months over the past 30 days... this is where we begin to see the impact of the massive stock market / 401k losses that have affected so many.

From $400 - $600k, things are really slowing. The inventory of homes in this price range has surged to 21 months over the past 30 days, an increase of nine months market time in just 30 days. People in this bracket are not buying homes right now. Sellers need to realize this and decide if they really need to sell. If you do, cut your price. If you don't, pull your home off the market and save yourself the frustration.

Above $600,000, it's just plain dead.

There's no denying the stock market and global financial drama of the past few weeks has paralyzed buyers in our market and throughout the country, except at the lowest price points, where demand remains exceptionally strong.

My take on this is that, while everyone needs a home, not everyone needs a $600,000 home. Builders are telling us that "small is the new big", and that going forward, most builders are shifting their focus to smaller, more affordable, "greener" homes.

These are dramatic changes going on, and it really pays to study the nuances of what is happening in this market. There are great opportunities to be had, but there are also mistakes that will be made, and this is no time to be guessing your way through a very choppy and segmented market.

If you would like me to email you my latest chart showing activity in all price ranges of the Denver MLS, simply drop me a note and I'll be glad to get the data right out to you.

Monday, November 10, 2008


Just completed my CRS coursework requirements for 2008, and like so much of what we learn in the CRS program, the concept of Ninja Selling is worth talking about.

The Ninja Selling philosophy originated with The Group, Inc., a Fort Collins-based real estate company that has been studied nationally for years because based of the incredible productivity of its agents.

The Ninja Selling philosophy is based on efficiency, service and focus.

What this means in real life is that -

While the industry says…

the customer is a unit…
the market is based on competition…
agents should focus on personal promotion…
it’s better to get more…
the goal is fame and fortune…

The Ninja says…

the customer is to be served…
the market is based on cooperation…
agents should focus on personal service…
it’s better to become more…
the goal is happiness, satisfied clients and an endless stream of quality referrals...

I have long said that philosophy is 50% (or more) of all education. The Ninja Philosophy fits beautifully with my referral-based business model and it speaks to what I want my business to look like.

My business has always been about relationships first, and transactions second. Forming and building strong, long-term relationships is the only model that guarantees long-term success in any business. Ninja Selling is a proven long-term approach to quality relationships, quality transactions and a quality life.

Friday, November 7, 2008


Interesting article this morning in Inman News about the return of smaller homes.

Yes, what’s old is new again. Frugality is in. McMansions are out.

The author in the article cites a 1998 book by Sarah Susanka called “The Not So Big House” which appears to have been ahead of its time. Now that the national economy is causing a lot of folks to rethink their economic priorities, there is a surge in “small building” that has not been seen in decades.

Not only are small homes cheaper to build and more affordable to maintain, they are friendlier on the environment as well. Smaller mortgages obviously give families more financial flexibility, and in theory, a less stressful financial existence.

The size of one’s home is obviously a personal decision, but it’s interesting to watch builders and home buyers react to new economic realities.

What do you think? To preview Chapter One of “The Not So Big House”, click HERE.

Wednesday, November 5, 2008


Here's yet another item suggesting that we are going to continue to see fewer and fewer foreclosures on the market here in Colorado.

JPMorgan Chase & Co. on Friday announced a loan modification plan that will help as many as 400,000 customers avoid foreclosure. JPMorgan, which has already modified about $40 billion in loans, will not put any loans into foreclosure as it expands its program over the next 90 days.

JP Morgan follows the lead of Bank of America, which has said that starting December 1, it will modify an estimated 400,000 loans held by newly acquired Countrywide Financial Corp. The plan is driven by an $8.4 billion class action settlement.

According to the Rocky Mountain News, there were 4,406 foreclosure filings in the third quarter of 2008 in the Denver Metro area, compared with 5,840 in the third quarter of 2007. That's a 24.5% drop.

The overall inventory of homes on the market in the Denver MLS has fallen over 20% from one year ago.

Sunday, November 2, 2008


We stay out of politics on this blog, except when they have a direct impact on real estate.

While I won’t be voting for either of the two major party candidates (I'm more of an obscure third party kind of guy), I will say that there has been way too much turbulence leading up to the election as both major party candidates have floated all kinds of proposals aimed at trying to “fix” the housing and stock market mess.

By offering what seems to be a new plan every week to slow foreclosures and restore confidence in the markets, I believe both major party candidates have created more fear and destabilized the situation even further.

That’s politics, I guess.

The good news is that, after Tuesday, at least we’ll have a better idea of what we’re getting. And hopefully whoever wins will settle on a message and actually stick with it for a while.