I have treated each deal as if it was my own, and I remain committed to being both your trusted advisor and fiercest advocate.
Thursday, December 31, 2009
I have treated each deal as if it was my own, and I remain committed to being both your trusted advisor and fiercest advocate.
Wednesday, December 30, 2009
Overall, Case-Shiller reports that homes in the Denver market lost 0.1% of their value in the year ending October 30, the top reading from the 20 major metro areas the study tracks.
However, as is always the case the statistics, some interpretation is in order.
Almost all of the strength in the Denver market lies in one place, and that is the sub-$300,000 market. We have seen appreciation as high as 15% in some areas of town over the past year, mostly in areas of entry-level homes that were on the front end of the foreclosure cycle. Above about $400,000 the market is dead, regardless of what your neighborhood brokerage is putting out there or what propaganda you read in the newspapers.
Our economy has fundamentally shifted in the past 18 months, and “thinking small” is the trendy new reality of today. One client recently asked me, “How much house can we afford if my wife loses her job and we have to get by on one income?” That’s a great question, and it’s one you never heard asked three years ago.
New construction is dead, high end is dead, but the population continues to grow. Colorado is on track to be the fourth fastest growing state in the country in 2009, and our excess housing inventory is being depleted at a pace that is much quicker than the rest of the country. The number of homes for sale is off by nearly 40% from its peak in 2007, and bank-owned inventory is getting harder and harder to find.
Bottom line: the Case-Shiller news is good for Denver. But it’s especially good for people who have purchased entry level homes over the past 36 months, with fixed rates in the 5's and waves of future demand sure to come as our population continues to grow.
Wednesday, December 23, 2009
Pick up a copy of Robert Kiyosaki's Conspiracy of the Rich, a fascinating and fast-paced read that discusses the conditions that led to the stock market collapse of 16 months ago and talks about what you can do to better prepare yourself for the choppy economic waters ahead.
Financial education in this country is woefully inept, according to Kiyosaki, and if you don’t know the difference between investing for capital gains and investing for cash flow, you need to slow down and really come to understand these important distinctions.
Most capital gains from the past decade have been the result of easy credit, which created an asset bubble which caused real estate and stocks to become overvalued. Now that the credit bubble has popped, those who invest in real estate or the markets need to rethink their strategies to focus on cash flow and sustainability in an economy that will not be going back to what we knew (and grew too comfortable with) just a few years ago.
Kiyosaki also talks about the corruption of our political systems, of how President Nixon’s decision to take America off the gold standard in 1971 essentially unleashed a new, debt based (as opposed to “production based”) economy that enriched banks and catapulted average Americans into a debt spiral that finally came unraveled over the past 24 months.
The book warns of hyperinflation in the years to come, showing how the amount of currency in circulation has essentially doubled in the past eighteen months. This around-the-clock printing strategy will ultimately drive the prices of commodities higher (think $5 per gallon gasoline and $3 per head lettuce), eroding savings and pushing much of the middle class into a lower standard of living. Demands for government services will rise, taxes will increase, and high unemployment will become the new norm.
It’s a scary assessment, but to protect and prepare for your financial future, you need to consider the possibilities. There will be opportunities and shelters in every economy, but they will be fewer and it will take a better understanding of economics to identify them.
Now is the time for raising your financial IQ. If you know that interest rates are going up, taxes are going up, unemployment is likely to stay high and the stock market is likely to stagnate, is it a good time to buy a house? Is it a good time to buy two??
Since the onset of the stock market crash 16 months ago, I have subscribed to the notion that the only way out is to forget about the government and for YOU to get better. For YOU to improve your skills. For YOU to become more financially literate, better educated and adaptable to a changed economy.
Saturday, December 12, 2009
I have read Rohn’s "Seasons of Life" aloud to both of my daughters, who are 8 and 10. The book is written in simple English, but it explains with clarity and beauty the natural flow of seasons in our lives. “Sow in the spring or beg in the fall” is one of my favorite Jim Rohn quotations.
At the same time, Rohn taught that winters are an inevitable season of life. We all experience setbacks, we all deal with loss from time to time… but spring will come again, and another opportunity with it. Knowing that the next opportunity is just around the corner places winter in its proper context – as a season, not as a final result.
Rohn also influenced me to become an avid goal setter. Five years ago, I began making lists of one year, 5-year and 10-year goals. I review them often, and the truth is, I have learned that our minds are equipped to take us anywhere we choose to go. Focus on scarcity, and it finds you. Focus on abundance (and engage in the disciplines to create it), and it will find you as well.
Rohn taught that many of us are held back by our own self-imposed limitations. Rohn said we are all faced with a choice – we can choose to earn a living, or we can choose to design and live out an extraordinary life.
I’m pursuing that more disciplined, extraordinary life now, and the journey is exciting. Jim Rohn taught me how to start the process. Simple disciplines, consistently repeated - an apple a day, sending out handwritten notes, making one extra call - add up to huge results.
Thursday, December 10, 2009
This tight market created urgency, bidding wars and a lot of angst for both buyers and their agents. But now that we have hit the holiday season (and even though the tax credit has been extended), it's seems the market has hit a wall of exhaustion.
Friday, December 4, 2009
Yesterday in this space I wrote about the fact Denver had shed almost four percent of its jobs in the past year, and that interest rates were holding in the 5% range because you cannot have true economic growth without job creation.
Thursday, December 3, 2009
This remains a serious problem, and I believe that it's the primary reason interest rates are still in the 5% range, despite trillions of dollars of spending and spending commitments by the federal government.
The story is far more bleak in other markets - several metropolitan areas reported job losses of 7 to 8% over the past 12 months, while Detroit checked in with a staggering unemployment rate of 16.7%. The entire state of Michigan is broken.
A total of 124 cities across the country reported unemployment rates of 10% or higher, led by El Centro, California, with 30% of its workforce sitting at home.
No jobs, no economic growth, no matter how much the government spends. That's the deal. And with 361 of the 369 cities surveyed reporting job losses over the past year, a legitimate recovery remains a long way off.
Tuesday, December 1, 2009
The strongest rental market in the region remains Jefferson County, where the vacancy rate is just 3.4%. Adams County (6.2%) and Douglas County (5.7%) have the highest vacancy rates in the seven county metro area.
Friday, November 27, 2009
As in, I showed this property (which went into the MLS late Monday afternoon) at 6:05 a.m. last Tuesday morning, wrote the contract at 8 and had it under contract before noon.
By Tuesday night, the listing agent tells me she received six additional offers, many of which were no doubt higher than the offer we submitted.
Sunday, November 22, 2009
Today, you need a realistic perspective about both the potential upside - and downside - of buying into different areas and different price points as the national economy struggles to regain its footing.
Friday, November 20, 2009
While the news of a decline in completed foreclosures is positive, we obviously are still in a very tough economic situation. The first wave of foreclosures which pounded the state from 2004 - 2007 were driven by unregulated lending, overdevelopment of new construction and easy access to subprime financing.
Today, the primary culprit is job loss. Prime fixed-rate loans to borrowers with good credit now account for about one-third of all new foreclosures nationally, up from just 21% a year ago. Colorado's unemployment rate in October stood at 6.9%, while nationally the unemployment rate is 10.2%. Five states (Michigan, Nevada, Rhode Island, California and South Carolina) reported unemployment rates in excess of 12%.
Tuesday, November 17, 2009
Nationwide, mortgage delinquencies stand at 9.64%. Florida, California, Arizona and Nevada account for 43% of all delinqunent mortgages in the United States today.
In terms of foreclosure filings, Colorado ranked 19th in the country during the third quarter. 1.05% of outstanding mortgage loans were served an NED (notice of election and demand), which starts the foreclosure process, during the third quarter.
Sunday, November 15, 2009
Allan managed over 1,000 agents in our company, and with that many agents and transactions, disputes were inevitable. Yet Allan won people over with his pragmatic approach to solving problems and his ability to bring out the best in people. Allan’s job was to deal with problems, yet he navigated litigious minefields with a smile on his face and cheer in his heart. And rarely was there a problem or conflict that he could not mediate to a peaceful solution.
Sunday, November 8, 2009
Ten months later, it’s time to see how I did. Here are the primary predictions I made in January, along with what happened as 2009 unfolded:
Prediction #1 – Prices below $250,000 to stabilize and recover in most areas
Result: Spot on. In fact, especially below $200,000, many areas saw appreciation between 5 and 10% over 2008 as first-time buyers poured into the market, attracted by lower prices, low rates and the $8,000 first-time buyer tax credit. 2009 was a great year to buy an entry level home.
Prediction #2 – From $250,000 to $325,000, values will stagnate. Above $325,000, they will fall.
Result: Again, pretty accurate. While the market below $300,000 generally held up, above $300,000 we simply did not have enough consumer confidence to support the inventory of homes available in the market. Above $325,000, values fell almost everywhere.
Prediction #3 – Above $600,000, losses in value will be severe.
Result: Lack of affordable financing, economic concerns and corporate downsizing destroyed the move-up market in 2009, with many homes high end properties absorbing six-figure losses in value. Anyone looking at purchasing a higher-end home needs to be extra-cautious right now, because the conditions that drove values up from 2000-2005 (easy financing, low rates, consumer confidence) are gone for the foreseeable future, replaced by tight credit, higher rates (for jumbo money) and systemic fear of job loss and downsizing.
Prediction #4 – Interest rates will spend more time in the 6’s than in the 5’s.
Result: Wrong-O! I saw the “trillion dollar money bomb”, otherwise known as the stimulus package, unleashing a series of unintended consequences that would drive rates higher throughout the year. The Federal Reserve responded to the threat of higher rates by agreeing to purchase over $1 trillion in mortgages at discounted rates, which held rates in the low 5s for most of the year. But trust me, sooner or later rates will boomerang into the 6’s, at which point the refi party will be over and home buyers who don’t take action today will see their purchase power erode.
Prediction #5 – Foreclosures in the Denver Metro area, which fell by 7% in 2008, will fall by an additional 12 to 15% in 2009.
Result: Through the first seven months of the year, foreclosure filings in the seven-county Denver metro area had fallen 6.4% year-to-date versus 2008. Keep in mind that the 7% decline last year and the 6.4% decline so far this year puts us nearly 15% below our 2007 numbers, so clearly the flow has slowed. This has been especially evident to first-time buyers, who have been frustrated during the second half of this year with extremely limited inventory and intense competition (see my post from August 20 on “The Best Days to Buy a Foreclosure” for more information about this subject). But ultimately I thought we would see a greater effort from banks to process loan modifications and short sales to stem the tide of foreclosures. Guess I underestimated the callousness and stupidity of banks.
So what’s coming in 2010? I have some specific ideas which I will share in the space next month, but to preview… expect more of the same. 2010 is going to be a lot like 2009, but perhaps with some improvement in the $250,000 - $400,000 market during the first half of the year, spurred by the new “move-up” tax credit signed into law by the President on Friday.
But here are some basic tenants to keep in mind: 1) houses are no longer ATM machines; 2) don’t buy a home if you don’t plan to live in it for a while; and 3) “buying it right” is the key to making a good long-term investment.
Private home ownership has always been at the core of the “American Dream”. But it’s never been more important to do your homework up front, and it’s never been more important to hire a professional who understands the market to protect your interests in these tumultuous times.
Thursday, November 5, 2009
Wednesday, November 4, 2009
Tuesday, November 3, 2009
Monday, October 26, 2009
The three charts below show national housing inventory, sales of existing homes and the pending sales index through September.
It's pretty easy to see there has been marked improvement in all three areas - listings on the market have fallen from an inventory of 12 months in January to less than 8 months today; sales have rebounded strongly through the summer months to an annualized pace of 5.6 million; and the pending sales index is up nearly 30 basis points sinice bottoming out at the start of the year.
As the debate rages over extending or even expanding the first-time buyer tax credit, these charts are at the center of the discussion. Has the tax credit caused the rebound, or was the market already rebounding when the $8,000 tax credit was implemented? Truth is, the market was already improving at the start of the year, and the tax credit just amplified the bounce.
Should the tax credit be extended? Do we need it any more? Can we afford it? What do you think? One thing is for sure - buyers who took advantage of depressed prices, low interest rates and got the tax credit appear to have gotten a pretty sweet deal.
Wednesday, October 21, 2009
Sunday, October 18, 2009
Thursday, October 15, 2009
And while the next few years will be challenging due to high unemployment and record foreclosures, Liniger predicts that huge demographic changes starting in 2012 will unleash the next national surge in real estate values.
“Then you have the ‘Gen X’ers’”, said Liniger. “They are the ‘sandwich generation’, because while there are 80 million ‘Boomers (born between 1946 and 1964) and 74 million Millennials (born between 1980 and 1995), there are only about 48 million Gen X’ers. For the past decade we have been working through a demographic trough, with immigrants helping to supply the additional demand that helped to drive prices higher. Now you’ve got the Millennials coming, and they will start to hit the market in force as first-time buyers in 2012.”
Liniger cited NAR research showing that nearly 70% of first-time buyers are age 34 or younger, meaning that a wave of Gen Y’ers (who are now between 14 and 29 years of age) will be sweeping over the market for the next decade. With new construction down by nearly 80% due to the economy and many builders having gone out of business altogether, Liniger predicts the demand for existing housing will fuel the next boom.
With a surge in housing demand coming, today’s first-time buyers can look forward to seeing appreciation in their housing investments. But today’s buyers won’t necessarily need to sell in order to cash in – by locking in low, fixed rates now in the 5 to 6% range, today’s buyers will have the option of holding on to their homes and owning cash-flowing investment properties for years to come.
Wednesday, October 14, 2009
“The market we had this year is pretty much the market we’re going to have next year,” predicted Liniger, who says that the country will have at least three more years of higher than normal unemployment as we struggle to come out of the recession.
Short sales continue to be the most frustrating segment of the market nationally, with just one in nine listed short sales closing successfully so far in 2009.
Sunday, October 11, 2009
Sunday, October 4, 2009
Thursday, October 1, 2009
Turning leaves, crisp nights... and decisions that will shape our destinies in 2010 and beyond.
Friday, September 25, 2009
Here's one strong argument against an extension for the credit - the cost.
Originally projected to be $7 to $8 billion, the total tab now stands at over $15 billion and counting. Proponents say that it's evidence the credit is working. Opponents say the government can't continue to subsidize a program that has been this expensive when so many other needs are being unmet.
So will the tax credit stay or will it go? Bottom line - it's a toss up.
Two months ago, I thought an extension was a slam dunk. Now I'd call it 50/50, maybe less than 50/50, that the credit is extended.
Too expensive to continue? Or too successful to unplug? That's the question being debated in Washington right now.
Sunday, September 20, 2009
The contract is then faxed, where it often sits in a pile behind a receptionist's desk for another hour or two, then carried to the listing agent's office, where it may sit for another hour or two... do you see where this is leading?
Thursday, September 17, 2009
Up until a few days ago, I was pretty confident it would be extended. Now I am not so sure.
Interest groups like the National Association of Realtors and the National Association of Home Builders (as well as ancillary beneficiaries like Lowes, Home Depot, etc.) are lobbying not only for an extension of the credit, but an expansion to $15,000, made available to all home buyers in 2010. That proposal comes with an estimated price tax of $100 billion, or an additional one-year tax burden of about $1,200 for every household in America.
I have felt all along that the lobbying for an expansion of the credit was simply a negotiating ploy to preserve the existing credit for a few months longer. That still could happen.
Here's a thought: if keeping the housing market afloat in the midst of the worst economy in 70 years is a priority, why don't we cut the credit in half for 2010, and offer $4,000 to first-time buyers? Don't unplug the stimulus all the way, but let's recognize we can't subsidize all areas of the economy forever.
Although I have helped a lot of buyers take advantage of the $8,000 first-time buyer tax credit, we shouldn't be dependent on it, nor should we count on it being around indefinitely. Reducing or eliminating the credit is probably better for the long term health of our housing market than expanding or extending it.
Friday, September 11, 2009
Tuesday, September 8, 2009
HB 1276 offers homeowners a 90 day deferment on their foreclosure sale date, meaning that the public auction process will be delayed. This can provide up to an additional 90 days for the homeowner and their HUD approved housing counselor to work with the bank.
The posting notifies the homeowner that they may be eligible for a foreclosure deferment through HB 1276, and provides contact information to reach a HUD-approved housing counselor.
Sunday, September 6, 2009
Proven Systems to Generate Real Estate Leads (in no particular order)
• For Sale By Owner: Offer services, advice, stay in touch with unrepresented sellers who may list with you down the road
• Past Clients / Sphere of Influence: Connect with your friends, family and past clients for business referrals
• Door Knocking: Walk neighborhoods and talk to people
• Open Houses: Hold three to five every weekend, post 12-15 directional signs, follow-up with everyone who comes through
• Floor Time / Ad Calls: Sit around the office and wait for someone to call - the WORST strategy ever, but some people do it
• Sign Calls: Pay referral fees to other agents to “ride” their signs and take buyer calls off of their listings
• Investor Groups: Associate with investor clubs
• "Traditional" Advertising: Bus benches, magazines, PTA newsletters, etc
• Absentee Owners: Build relationships with out of area landlords (good strategy in rental towns, like Fort Collins)
• Just Listed / Just Sold Postcards: Mail to areas around company listings, sales
• Websites: SEO, unbranded stealth sites (ColoradoForeclosures.com, etc)
• Relocation: Affiliate with relocation companies and pay referral fees for leads
• Bank-Owned Listings (REO): Represent banks in the dissolution of their inventory
• Blogging (Active Rain, Zillow, Personal): Engage the consumer online
• Networking Groups: Leads groups, BNI, chambers of commerce
• Geographic Farming: Focus on select neighborhoods (sponsor Little League teams, community garage sales, monthly newsletters, etc)
• (800) Call Capture: Advertise listings, services, free reports and capture phone numbers
• Expired Listings: Call on listings others failed to sell
• Short Sales: Ouch!
Tuesday, September 1, 2009
Wednesday, August 26, 2009
And since higher end homes simply are not selling, it's important to keep in mind that what Case-Shiller is really telling us is that the homes that are actually selling (lower end homes) are increasing in value.
Thursday, August 20, 2009
While I won't give all of my secrets away, here is one... the best days to look for foreclosures and write offers and Monday, Tuesday and Wednesday.
Why is this?
Sunday, August 16, 2009
Friday, August 14, 2009
Denver is ranked number seven on the list.
Forbes says foreclosures currently account for just 24% of sales in the region (compared to 70% or higher in parts of California and Nevada), and prices have stabilized in many parts of the metro area. According to the magazine, while the higher end of the market remains soft, entry level homes are showing strong value increases as first-time buyers chase after limited inventory, low rates and the $8,000 federal tax credit.
Exactly what we're seeing on the street.
Thursday, August 13, 2009
Sunday, August 9, 2009
This year’s roundup has a few new twists. On its website, the magazine allows users to find the best place to live near their current locations. It also introduces some subcategories, including 25 best places for affordable homes, towns where there are the most jobs, towns with quick commutes, 25 best places for singles, best places for pricey homes, 25 towns where the residents are young, and places with the cleanest air.
Here are its top 10 selections for the best overall places to live—all of them small towns with strong local economies, good schools, affordable homes, and low crime rates:
1. Louisville, Colo.
2. Chanhassen, Minn.
3. Papillion, Neb.
4. Middleton, Wisc.
5. Milton, Mass.
6. Warren, N.J.
7. Keller, Texas
8. Peachtree City, Ga.
9. Lake St. Louis, Mo.
10. Mukilteo, Wash.
Friday, August 7, 2009
1. Milwaukee, Wis., 4.9 percent
2. Charlotte, 4.7 percent
3. Boston, 4.6 percent
4. Cleveland, 4 percent
5. Washington, DC, 3.7 percent
6. St. Louis, 3.3 percent
7. Columbus, Ohio, 3.2 percent
8. Seattle, 2.8 percent
9. Denver, 2.3 percent
10. Philadelphia, 1.8 percent
Sunday, August 2, 2009
For the first time in 34 months, the Case-Shiller national housing index showed a rebound in prices, with values up in May by 0.5% over April's figures. The Case-Shiller report tracks the 20 largest markets in the county (including Denver) and reports its numbers with a lag time of about two-months.