Thursday, October 30, 2008


My colleague Lon Welsh points out that homes located within two miles of the T-Rex (southeast) light rail line have appreciated at 4% on average over the past two years, while the overall market has struggled to hold values and many outlying areas have lost value.

The expansion of Denver's light rail system over the next few years is a subject investor clients ask me about all the time. The build out of our light rail system will eventually include nine "spokes" coming out of Union Station in Denver, with lines running up US-36, north into Broomfield, northeast into Thornton, east to DIA, south to Aurora and Castle Rock, southwest to Littleton, west to Golden and an 11.2 mile corridor from Union Station to Ward Road in west Arvada.

Easy transportation to downtown jobs, museums and sports venues will greatly improve quality of life for residents in outlying areas over the next 10 years. And this will be reflected in home prices.

To see a map of all current and proposed light rail lines, click HERE

Tuesday, October 28, 2008


If you have friends or relatives traveling over the holidays to visit a family member or loved one in a hospital or nursing home, Tharaldson Hotels has a promotion you should know about.

Tharaldson’s ROOM AT THE INN program offers a free night’s lodging on Thanksgiving or Christmas Eve to anyone traveling to visit a sick friend or relative.

Tharaldson Hotels is one of the largest hotel management companies in America, which properties in 22 states and locations in the Denver Metro area including the Westminster Residence Inn, the Westminster Hampton Inn, and Marriott properties in Greeley and Colorado Springs.

In an era where everyone is talking about corporate greed and an erosion of values, it’s nice to see a major corporation reach out. To learn more about the ROOM AT THE INN program, click HERE or give me a call and I’ll be happy to provide you with the details.

Saturday, October 25, 2008


For those of you looking for the State Farm Home Inventory Checklist I referenced in my most recent "snail mail" correspondence, here it is...

With these cooler fall days keeping more folks inside, now is a great time to take a few hours to itemize (and video) your belongings. Remember, when it comes to home insurance claims, if you can't document it, it's hard to prove it.

And if you're looking for a great referral for your homeowner's or landlord's insurance policy, drop me a line and I'll be happy to pass along a terrific referral.

Wednesday, October 22, 2008


One of the many daily newsletters I subscribe to online is 5280's Daily News Roundup. Here's a "quick hitter" from today's report...

Not Bad: The Denver Real Estate Market

As Wall Street's mortgage woes ripple across the country, Denver appears to be doing relatively well. In fact, the Mile-High City is among places to watch, according to the Emerging Trends in Real Estate 2009 report by the Urban Land Institute and PricewaterhouseCoopers, which is the "oldest, most highly regarded annual industry outlook" for real estate, according to MarketWatch .

Federal government offices will buffer job losses. Population growth and diversifying industries will keep housing stable. "Mass transit should pay future dividends," according to the report, which foresees a harsh couple of years ahead nationally. The Denver Business Journal notes Seattle and San Francisco are the top two cities to watch, as the industry otherwise struggles with property owners "drowning in debt" and lenders not lending.

The best part of the Denver market seems to be the little guys. Homes in the $50,000 to $250,000 price range are going quick, according to The Denver Post.

Thursday, October 16, 2008


Yesterday I posted an item related to the relative affordability of living in Denver compared to other major cities... and as I was continuing to think about that, I discovered a very interesting study on last night that really illustrates the point.

This chart is key to understanding what's going on with the national housing market, and why cities like San Diego, Miami and Phoenix are in freefall. The numbers shown for each city are the percentage of household income it takes to make payments on a median priced home with a 20% down payments and a 30-year fixed rate loan.

With "traditional" mortgage underwriting, ratios of 28 and 36 are the standard. That means one's housing payment should not exceed 28% of income, while payments on all installment debts (housing, car, student loans, etc) should not exceed 36%.

Note that Denver's payment to income ratio is 21.7%, while Los Angeles is 63.5%, New York is 56.5% and San Diego is 51.8%. Any wonder why those markets are out of gas?

1) Los Angels 63.5%
2) San Francisco 58.2%
3) New York, 56.5%
4) San Jose, CA 55.0%
5) Orange County, CA 54.3%
6) Honolulu 53.9%
7) San Diego 51.8%
8) Miami 46.8%
9) Riverside, CA 38.8%
10) Newark, NJ 33.7%

Now let's look at a statistic called "mortgage to rent ratio". This statistic shows the ratio of the mortgage payment on a median-priced single family home (again assuming 20% and a 30-year fixed rate loan) to the local median rent for a three bedroom single-family home.

According to, Denver's ratio is 1.00, meaning that mortgage payments on a median-priced home are exactly equal to median rent for a three bedroom single-family home.

Now let's match that up with other notable cities:

Seattle: 1.55... or owning a home is 55% more expensive than renting
Portland: 1.36... or owning a home is 36% more expensive than renting
Chicago: 1.27... or owning a home is 27% more expensive than renting

Of course, many of the cities on the first chart in this post (Los Angeles, San Francisco, Honolulu, etc) have ratios that are even more out of line (1.60 or higher) - and this illustrates the clear lack of affordability in these markets.

Interesting stuff... but one of the reasons our market has upside and is insulated to some extent from the corrections going on elsewhere.

One last note - this analysis does not take into account the tax benefits associated with home ownership, which are substantial, especially for landlords.

Wednesday, October 15, 2008


Money goes further some places in the United States than it does in others.

Housing, in particular, has remained most affordable in the South and the Midwest. That’s because of less stringent building, an abundance of land and growing populations in the South, says Daniel McCue, a research analyst at Harvard’s Joint Center for Housing Studies.

To determine the cities that offer the best quality of life for the least amount of money, Forbes magazine calculated the ratios between a city’s median home price and its median household income. It also factored in projected job growth. And it compared median income to Moody’s’s cost of living index.

Here are the 10 cities that it found to offer the best value, and the cities that it believes offers the worst value.

Cities Where Residents Get the Most for Their Money
1. Austin, Texas
2. San Antonio, Texas
3. Indianapolis, Ind.
4. Houston, Texas
5. Charlotte, N.C.
6. Columbus, Ohio
7. Dallas
8. Minneapolis/St. Paul
9. Denver
10. Portland, Ore.

Cities Where Residents Get the Least for Their Money
1. Los Angeles
2. Providence, R.I.
3. New Orleans
4. Philadelphia
5. Cleveland
6. New York
7. Milwaukee, Wisc.
8. St. Louis, Mo.
9. Washington, D.C.
10. Sacramento, Calif.

Monday, October 13, 2008


I have important information for investors and first-time buyers interested in owning a single family home in Adams County.

For the past 15 years, the Adams County Housing Authority has owned and maintained an inventory of three bedroom, one-and-two bath single family homes as Section 8 rental properties.

Under a provision of the federal housing bill signed by the President in July, the Adams County Housing Authority has a limited-time opportunity to receive federal grant money for the purchase of multi-family properties, which may be a better solution long-term to helping lower income residents find a decent place to live.

The upshot: the Adams County Housing Authority has made the decision to liquidate its inventory of single family homes by selling them quickly, and at a discount.

There are 23 total homes being offered this month... eight have already come on the market, and four of those are already under contract. The remaining 15 homes are being released as fast as the county can finish the rehab work. Prices on these home range from less than $80,000 to the mid $100s. (All will cashflow nicely)

While the Housing Authority has said they will give preference to first-time buyers, I have already lost one of these homes to an investor when I was representing a first-time buyer who actually made a higher offer than the investor, but in the end I think the Housing Authority is looking for the most committed, most qualified buyers so they can move these homes and get their federal grant money.

These homes are being listed at an average of 66.57% of their assessed value, based on the first group of homes to hit the market.

While the assessed values are probably high, these are terrific deals nonetheless because they are priced like foreclosures but with rehab and maintenance completed, and a credible seller on the other side of the deal.

If you have any investor clients interested in more information, please call me with names and numbers so I can get in touch with people quickly. Very few agents have any idea this is going on and these homes will be gone within a few weeks.

This is a very brief window of opportunity based on a one-time liquidation of housing inventory. I'd love to be able to help you or anyone you know take advantage of this unique situation.

Saturday, October 11, 2008


If you have spent any time on this blog or with me in person over the past six months, there's no doubt you have heard this message: this is the best market for investors and first-time buyers in 15 years.

It's not just spin - it's a fact.

The inventory of homes under $250,000 is shrinking faster than any other segment of the Denver market, and we are seeing fewer foreclosures now than any time in the past few years. The number of homes on the market is down over 21% from one year ago.

The absorption rate for all homes - foreclosures and private sales alike - at price points below $250,000 is less than four months. For homes above $1 million, it's nearly 60 months! There is obvious value in the bottom of our market for buyers today.

Here's a rhetorical quesiton: do markets change, or do they stay the same forever?

Obviously, they change. And they are changing. We lose opportunities only when they are taken by others. And right now, there are lots of people who are fearlessly snapping up the deals I see everyday.

Here are some compelling reasons why NOW is the time to get off the fence if you a first-time buyer:

-- FTBs are buying homes today that don’t have inflated equity...
-- FTBs don’t have to wait for their home to sell…
-- FTBs have sellers willing to pay their closing costs and buy-down already low interest rates...

-- FTBs are finding in many cases that it's cheaper to own that to rent, and that's before considering the tax benefits of home ownership...
-- FTBs are in the first true "buyers market" in nearly eight years.
-- FTBs still buy a home with 3% down, a job, and reasonable (not perfect) credit through FHA...
-- FTBs who purchase a home by July 9, 2009 are eligible for a $7,500 federal tax credit...

-- FTBs who buy and close before December 31, 2008, will receive their cash credit as soon as they file their 2008 tax returns...
-- FTBs who buy before December 31, 2008, will still be able to buy a home with just 3% down using FHA financing (down payment requirement increases to 3.5% January 1, 2009)

If you would like to wait another 12 months... until the news gets better on the television and word somehow reaches the Denver Post... that's your right. My concern, however is that by waiting you will face higher prices, less inventory, higher interest rates and tighter qualifying guidelines. Plus that tax credit is a great tool to help with rehab and improvements.

Please keep in mind that our market is complex and what applies to first-time buyers may or may not apply to $400,000 move-up buyers. All markets are local... and every buyer or seller is an individual.

Give me a call and let's talk about what the market looks like for you...

Friday, October 3, 2008


The housing bill was signed by the President Friday, and I say it’s a good thing.

Not for the precedent it sets – nationalizing markets is not my thing.

But because the system had ground to a halt, for reasons I will be happy to explain if you want to get into it. We can talk about secondary markets and bad underwriting policies and how Washington Mutual made a tra-zillion dollars (at first) writing Option-Arm loans, great for the P&L in the short run until all the loans went bad.

The reason we needed this action at this time, in my opinion, is because the distress in the market at the moment is not cyclical.

When our housing decline started earlier this decade in Colorado, it was because of the economy. The tech bubble and 9/11 did us in, and the foreclosures here began piling up in 2005.

The last time the national housing market dipped, it was because of the economy. Major job losses in the early 90s, primarily tied to the downsizing of the defense industry, caused people to lose their jobs, which caused local economies to deteriorate.

Look at Michigan over the past few years... job losses first, home prices followed.

This time it’s different.

Initially, it wasn’t the economy that undid this market. It was a cycle of speculation and greed that drove houses to unsustainable values. It was a game, underwritten (at first) by Countrywide, Washington Mutual, and an army of mortgage brokers who were having a great time “living in the moment”.

It wasn’t a recession that killed the housing market… it was the housing market that started a recession.

Job losses are coming now – massive ones, at that. It’s not good out there in many parts of the country. Any service or trade tied to housing, or the equity that was created in people’s homes, is not a good one to be in at the moment – and that basically means all of us.

The job losses this time are coming AFTER the housing market decline, not before it. If you don't stabilize this market, the job losses will only accelerate.

In the 90s, during California’s last major housing decline, there were still two times as many private party sales as foreclosures. This year, California will see twice as many foreclosure purchases as private party sales.

Reread that sentence, because it’s key.

Values are in freefall in Las Vegas (30% in the past year, according to Case Shiller) and San Diego (29%, according to the same report). Denver is down 4.7%, which makes our market one of the steadiest in the country by comparison.

So the government comes up with a powerful prescription designed to address the catastrophic losses in markets like Las Vegas and San Diego, to stabilize values in the hardest hit areas. Yet Denver, with a relatively mild 4.7% annual decline (and a current streak of six straight months of appreciation, according to Case Shiller), gets to benefit from the strong and heavy medicine this bill aims to use to remedy the national economy.

Massive injections of money into the capital markets. Money to lend. Money to borrow.

The credit markets had frozen. No one would buy loans from banks. Therefore banks had no money to lend. Even if you lived in a stable market like Denver, and had a ready, willing and able buyer, financing was completely uncertain.

Is that going to help you sell your home?

The government is buying loans investors don’t want, and at a significant discount.

In fact, if the government can find a way to hold these notes for a few years, values will come back, and at that point this deal might actually be a winner for the taxpayer. (Let's not get carried away, though. We're presuming reasonable competence to pull this off, and well...)

I don’t like government intervention. I don’t like Washington Mutual (now Chase). I do not like Angelo Mozillo (former CEO of Countrywide), or any other CEOs, now that I think about it.

But this bill had to get done.

We’ve just been handed a $700 billion education on how markets work. Better take some good notes, because $700 billion is a tuition bill we cannot afford ever again.

Thursday, October 2, 2008


Just a quick note of thanks to everyone who pitched in last night to make our First-Time Buyers Workshop at the Arvada Public Library a great event.

In the course of just over an hour, we had a comprehensive discussion about the different types of homes for sale in our market, activity at different price levels, neighborhoods that are "up and coming" and some excellent questions about mortgages and finance.

My goal for 2009 is to do at least four of these workshops during the year.

While we were able to get a good amount of publicity out in advance of our workshop - including a press release in the Denver Post, support from the Arvada Chamber of Commerce and lots of signs and flyers leading up to the event, the best way to bring people to programs like this is always by referral.

Remember that I am never too busy for your referrals, and I would be happy to go over our classroom materials with anyone you may know looking to buy or invest in today's market.

Also, if you would like a copy of the workbook we put together for our program, just shoot me a note and I'll be happy to get the materials out to you.

Wednesday, October 1, 2008


Welcome to my favorite quarter of the year in real estate - the fourth quarter.

The best time of year to sell a home, with the best "built-in" excuses.

"It's a lousy time to sell - there are no buyers!"

"It's a lousy time to buy - sellers pull their homes off the market for the holidays!"

"It's too cold!"

Okay, the only argument with any merit may be number three, and only then after Thanksgiving. But I love this time of year.

In an overcrowded industry with too many buyers, sellers and agents who lack motivation, the fourth quarter is where we see who is really serious about achieving great results.

Statistically, the highest percentage of listings on the market sell in the fourth quarter. Because only serious buyers are out right now.

You'll have fewer showings (less inconvenience), and there is still no guarantee you will move your home if it isn't priced right and in great condition. But the quality of your showings will be much higher, and you'll likely sell your home in fewer showings, with less competition.

Let's get to it!