Friday, January 30, 2009
Wednesday, January 28, 2009
We are impacted by national events.
But we are also cushioned by the relative strength of our own local economy.
I have said in buyer presentations for the past 18 months that Colorado is on the backside of its foreclosure crisis. It came early (2004) and it was severe, but because we went into first, we're coming out of it before the rest of the country.
Two pieces of supporting evidence:
1) The number of foreclosures in the seven-county Denver Metro area last year was 24,650, down from 26,521 in 2007. That's a decline of more than 7%. In California, there were over 236,000 foreclosures last year, an increase of 180% from 2007. When your appreciation dies off, the foreclosures begin. Our market topped in 2004, whereas many markets didn't hit the skids until 2007.
2) The widely-followed Case-Shiller home price index was released yesterday, and Denver ranked as the #2 market in the country, behind only Dallas. According to Case-Shiller, home prices in the Denver region lost 4.3% of their value from November of 2007 to November of 2008. Dallas and Denver were the only two markets with losses of less than 5%.
While a 4.3% loss may not be cause of celebration, I remind my investor clients often that it beats a 40% loss in the stock market. And while some homes may have lost some value, my investors continue to see positive cash flow and my first-time buyers continue to pay less on a mortgage that they would in rent.
These are uncertain times, and as I said yesterday, that's why interest rates are the lowest they have been in almost 50 years. When confidence returns, prices will rise, and so will rates. It's always been that way, and that cycle will surely play out again.
Tuesday, January 27, 2009
This morning I had the privilege of attending a 2009 State and National Economic Forecast meeting featuring Dr. Ted Jones, a nationally recognized real estate research expert who is senior vice president and chief economist for Stewart Title Company. Formerly, Dr. Jones was chief economist at Texas A&M’s Real Estate Research Center, the nation’s largest publicly funded real estate research organization.
When it comes to purchasing big ticket items like homes, emotion and psychology play a huge factor in the overall health of the market. People are reluctant to take on large financial commitments when they are operating from a place of fear, and one of the primary objectives of any stimulus plan to come out of Washington will be to change how people feel as well as provide some short-term economic relief.
Thursday, January 22, 2009
If the economy deteriorates further, rates will likely fall as investors seek the "safe haven" of mortgage backed securities.
If the economy improves (or gets a massive, artificial injection of stimulus from the federal government), money will fly out of bonds (which dictate interest rates) and into the stock market. If no one is left to buy bonds (because other investments look better), the yield must rise, which means higher interest rates.
So which will it be? Great Depression 2, or the Trillion Dollar Money Bomb?
Now, there's one segment of the market I won't pitch this idea to, and that's the high end ($500,000 and above)... and that's because I see in the numbers some trends that are very concerning to me right now. If this is your situation, we need to have a separate conversation.
Monday, January 19, 2009
· What else can (or will) the government do to prime the housing market in 2009?
· Are the number of foreclosures going up or coming down?
The program will run about 90 minutes and I'll be joined by Christine Jensen from Cherry Creek Mortgage. We'll have light snacks and plenty of good information.
Please call or email to RSVP - and if you have a friend or family member who would like to attend, please let me know so that I may invite them personally.
I look forward to seeing you next Thursday night in Olde Town Arvada!
Friday, January 16, 2009
Thursday, January 15, 2009
METRO HOUSING HOLDING ITS VALUE
Don't know how long this link will stay up, but enjoy it while it's there.
And to see the complete PMI forecast which puts the likelihood of further price declines in Denver at less than one percent, click HERE.
Wednesday, January 14, 2009
Relocation.com analyzed nearly 500,000 moving quote requests from 2008 in arriving at its list for 2009. About 14% of those requests involved out-of-state moves, according to the company.
As an interesting sidebar, the Denver Post ran a story this week on people leaving California and moving to Colorado. You can check it out here. Note that there are over 250 comments on this story, and counting.
Sunday, January 11, 2009
$250,000 - $400,000: 8.82 months to 12.86 months, a 46% increase
$400,000 - $600,000: 14.72 months to 18.23 months, a 24% increase
$600,000 - $1 million: 34.58 months to 41.40 months, a 20% increase
$1 million and above: 56.43 months to 67.08 months, a 19% increase
Saturday, January 10, 2009
Although overall active inventory is down over 20% from one year ago (a good thing), understanding what that actually means is something different.
Thursday, January 8, 2009
20: Companies with gains in sales volume
17: Companies with gains in transaction sides
7.3: Average number of sides per associate
13.8%: Decline in average number of transaction sides
6.1%: Drop in average number of sales associates
2.4%: Drop in average number of offices
10.1%: Decline in average sales volume
Here's an interesting piece of data: while 80% of companies in REALTOR Magazine's Top 100 saw a decline in overall sales volume, these companies only lost 6.1% of their agents. Estimates nationally are that between 35 and 50% of licensed agents will leave the business when their licenses expire, based on current trends.
The takeaway is this: the best agents are with the best companies.
RE/MAX agents are involved in more than 30% of all real estate transactions in the state of Colorado, and agents in my office average more than 13 years of experience.
In tough times, the brand matters. Experience matters. And the REALTOR Magazine Top 100 survey bears this out.
Monday, January 5, 2009
The new rule -- one of many changes to the Real Estate Settlement Procedures Act (RESPA) being phased in by the end of the year -- was set to take effect January 16.
Sunday, January 4, 2009
So how do you find the real thing? Patience, persistence, and a little luck.
Are you thinking it's time to get serious about buying a home in the Denver area? Here’s what you can expect to find as we kick off 2009...
* 30-year fixed rates in the 5's - historic and (I believe) temporary
* Bidding wars over the best deals priced below $250,000 - private party or REO.
* A slower market up to $400,000, increasingly sluggish up to $600,000, and just about totally dead at price points north of that.
* Private-party sellers who continue to be in denial about the impact foreclosures and the stock market crash have had on their values.
* Short sales that look pretty behind the glass, but rarely close.
* REO's that run the spectrum from well priced in good condition to poorly priced in terrible condition.
Obviously, there are a lot of "wrong" choices for buyers on the market today. So how do you find a good property at an attractive price?
Here are a couple of strategies that might help.
Be Willing To Wait - One lender’s current policy on their REOs is to accept no offer below list price for the first ten days of the listing. Regular sellers tend to react the same way. You regularly hear about sellers who get a good offer during the first week of their listing, only to blow it off, and then regret it later.
If you want a discount off the list price, you’ll probably have to wait them out. (This also means you are going to lose some properties, though.) A good rule of thumb is about 1% per week. If you want it for 10% less, wait 8-10 weeks. It takes that long for the sellers to come to their senses. But remember that, even then, it only works if the seller has enough equity to sell and bank-owned listings that sit on the market that long normally have serious issues.
Look at the Higher-Longers - If you are interested in a private-party resale (which will normally be in better shape than REO inventory), understand that a lot of sellers are tired, frustrated and losing faith. When I take listings, I talk with my sellers about the fact they have "one shot at the parade" - in other words, listings get the most attention in the first 21 days they are on the market. After that, it can be a long, slow slog before an offer comes along.
Negotiate Later - I call this "double negotiation", and it's a common tactic in a buyer's market. Round one is presenting a clean offer and negotiating on price. Round two comes after the inspections, when we negotiate repairs, credits and concessions to keep the deal together. The fact is that, under the Colorado real estate contract, the Inspection Notice allows us to renegotiate based on the condition of the home. Of course, a buyer's emotional attachment to a property goes a long way toward determining whether this is a viable tactic, but it's one I put on the table because I am here to aggressively protect the interests of my buyers.
Last week, I closed on one of the most complicated deals I have negotiated in a long time - and the seller was a bank. We literally obtained thousands of dollars in "11th hour" repairs in unbelievably short time frames.
Whatever you think of conditions as they exist today - overvalued or undervalued - you're going to find out if you are right in 2009.
Is this your moment to catch an incredible deal? If you're an investor, do you like buying into the tightest rental market in a decade? If you're a first time buyer, do you like the idea of a $7,500 tax credit and foreclosures that are priced 20% or more off their 2004 peaks? And no matter where you're coming from, aren't 30-year fixed rates in the 5's ridiculously appealing?