Monday, October 26, 2009


Interesting chart today addressing some of the "big picture" national trends affecting real estate.

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


A new national study by and reported by the Wall Street Journal this week confirms what I have been saying to my clients for months... while the lower end of the housing market got walloped in "round one", it's the high end that's going to take the next big hit.

The Zillow study showed the allocation of foreclosures in markets around the country, breaking the pricing tiers into the bottom, middle, and top based on area median price.

The findings? While higher end homes accounted for just over 10% of foreclosures in 2005, upscale homes will account for 30% of all foreclosure activity nationally in 2009.

And lower end homes, which accounted for 60% of foreclosures nationally (and nearly 80% here in Colorado) in 2005, now account for just under 40% of all foreclosures.

The first wave of losses were driven by subprime loans and easy credit, which primarly attracted buyers who had never been able to obtain credit or financing before. The losses sustained from those loans has caused banks to radically restrict lending practices (call it "risk avoidance"), making it difficult or impossible for higher end buyers to obtain the financing they need to purchase or refinance move up homes.

Call it what you will, but the reality is that round two of the foreclosure crisis is going to weigh most heavily on the upper-middle class. This market remains the most segmented I have seen in many years, with three very different realities for buyers and sellers at the entry-level, mid-level and higher end.

This market calls for a more thoughtful examination than any market in decades, and buyers and sellers need to work with someone who understands what's driving the radical changes taking place.

The quality of your outcomes is going to be based on the quality of your information, and that is why you need serious, professional, and honest representation today.

Thursday, October 15, 2009


Yesterday in Fort Collins, I was part of an audience that listened to Dave Liniger, President and Founder of RE/MAX International, as he offered his opinions on the state of the United States real estate market in 2010 and beyond.

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.

“You’ve got 80 million Baby Boomers, many of whom are looking to downsize in the next few years,” Liniger said. “And what you see is that, for the most part, these are folks who do not want to leave the areas where they have raised their kids, made their friends and lived their lives. Many of these people are looking for lower maintenance homes in urban environments where they can enjoy their retirement without the hassles of home upkeep and maintenance.”

Because these boomers will need to sell their existing homes in conjunction with buying their new ones, there’s a huge opportunity for real estate brokers who successfully can market to this demographic.

“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


I was in Fort Collins this morning for a presentation on the state of the real estate market by RE/MAX President and Founder Dave Liniger. Speaking before about 250 RE/MAX associates at the Fort Collins Hilton Hotel, Liniger shared his feelings about the tough times we’ve seen in the housing market, but also about the opportunities that lie ahead.

“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.

Liniger predicted that up to 50% of all real estate transactions in 2010 would involve distressed properties, either short sales or foreclosures.

In 2005, there were only about 400,000 foreclosures. In 2010, there are projected to be 1.9 million foreclosures across the United States, with Nevada, Arizona, California and Florida accounting for over one-half of the total.

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.

The vast majority of short sales end up as foreclosures, with banks often leaving tens of thousands of dollars on the table because of their unwillingness to accept short payoffs.

Like many agents, I caution my buyers about the perils of short sales. I have one offer written in May that is still in a holding pattern five months later, despite the fact my clients have twice “upped” their original offer and agreed to switch from FHA to conventional financing. There’s no reason (other than stupidity) that the bank is leaving this offer on the table as the foreclosure sale date looms.

“The banks have got to understand that they are damaging themselves, their balance sheets and an eventual recovery in the market with their stupid policies regarding short sales,” Liniger said. “If the banks can start to process this backlog of short sales, the sellers who are losing their homes today could be back in the market in as soon as two years. But when they foreclose, people see their credit damaged far more severely, and it takes them years longer to get back into the market.”

Tomorrow I’ll talk about the silver lining that Liniger sees starting in 2012 – and how today’s first-time buyers could be real beneficiaries of the wave that is coming.

Sunday, October 11, 2009


The bitter cold that rolled through over this weekend serves as more than a gentle reminder that winter is right around the corner. For those who have lived here a few years, the drill is familiar. For those new to our state, here are a few tips to help you get ready for the cold season ahead.

Shut off the water to your sprinklers and have them blown out. Hopefully, this advice isn't coming to you "too late". I saw at least three homes in my travels over the weekend where copper lines had frozen and geysers were shooting up toward the heavens. Last year, we blew our sprinklers out in early October and then had three more weeks of hot weather. This year, the first "hard freeze" hit October 9. As usual, the autumn weather here is purely random.

This weekend's cold snap has thrown a lot of the trees into a panic. From here on out, we're going to have a pretty fast "turning" of the leaves, which means roof gutters and downspouts will be filling up with leaves over the next few weeks. Clean them out to make sure water (which will freeze and expand) isn't trapped, and make sure they are firmly mounted so they can bear the weight of snow and ice.

Don't forget to have your furnace checked out at least every two years. Same with your gas fireplaces. Carbon monoxide in your home is a deadly serious matter (bad pun intended)... and over the past few years Colorado has been in the news more than a few times for CO-related deaths. Effective July 1, sellers are now required by law to install functioning carbon monoxide detectors within 15 feet of any sleeping area in homes with fuel-based heating systems.

Make sure you know where your snow shovel is before you need it, and take time this week to fill your car's windshield washer fluid reservoir with a good, winter grade solution. Keep in mind, too, that your tires may loose a few pounds of pressure in the cold air and you should top them off next time you hit the filling station.

This is not a comprehensive list, but it's a good start. The important thing is to be prepared for whatever comes, and help your neighbors to do the same.

Sunday, October 4, 2009


I wouldn't pop the bubbly just yet, but we'll take good news where we can find it.

Case-Shiller reported this week that July housing prices in the report's 20-city composite index rose 1.6% between June and July, the sixth straight month of sustained improvement in the national survey.

On a year-over-year basis, Case-Shiller reports an overall decline in values of 13.3%, but a loss of just 2.9% in Denver.

While Case-Shiller's information is interesting (and gets plenty of media attention), it doesn't really tell you much about the market that exists today.

Because Case-Shiller is lumping all sales together into one statistical pie, it does not illustrate the radical disparity between the hyperactive, multiple-offer driven entry level and the credit-frozen, equity-losing high end of the market.

A Denver area seller or buyer at $200,000 is living in a completely different reality than a Denver area seller or buyer at $600,000. Below $200,000, many homes are appreciating (or more accurately, rebounding from previous losses) at 5 to 10% on an annualized basis. Above about $400,000, it's hard to find any neighborhood that isn't losing value.

So take the Case-Shiller report as good news, but don't get carried away. Show me continued improvement AFTER the $8,000 first-time buyer tax credit goes away, and then you'll have me on board the recovery bandwagon.

Thursday, October 1, 2009


October is here, at last!

Turning leaves, crisp nights... and decisions that will shape our destinies in 2010 and beyond.

The fourth quarter of the year has always been my favorite quarter of the year, not only for the change of seasons, but because the last 90 days of the year is when those of us in real estate are faced with a critical, annual decision:

Ramp up, or shut down. Make plans, or "veg out". Accelerate hard, or coast into next year.

I don't know why agents lose focus in the fourth quarter of the year. Maybe it's the shorter days. Perhaps the colder weather turns them off.

All I know is that there is less competition, and those who are in the market are more motivated than those who work and shop seasonally.

It's true that demand among first-time buyers will fall off soon, either because the $8,000 tax credit is extended ("Whew! - more time") or expires ("Tilt! - game over"). But first-time buyers are only a part of the market, and I believe there are many non-first time buyers who have been sitting on the sidelines waiting for traffic to clear.

Either way, there is always opportunity if you are willing to work hard.

So bring it on... let's rock in the fourth quarter!