Friday, November 27, 2009


A few months back I shared some tips in this space about how to get well-priced, structurally sound foreclosures under contract quickly when the marketplace is teeming with buyers and bidding wars are increasingly common.

The photo to the left is dark and a little hard to make out because it was taken at 6:05 a.m. last Tuesday morning.

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.

We have completed inspections, the appraisal is done (the home appraised about 7% above our offer price) and we are on track to close in three weeks. Plus my buyers are getting a 30-year fixed rate at 5% and an $8,000 tax credit. Sound like a good deal??

The point is... you can complain about the market (or your job, or the government, or anything else, for that matter) or you can choose to get up a little earlier, work a little harder and go the extra mile to get the results you want.

I do not want to leave my house at 5:30 in the morning to show property... but I will.

Will your agent do the same?

Sunday, November 22, 2009


About 214,000 of the 1.1 million homes with mortgages in Colorado are "under water", according to a new report by First American Core Logic. Mortgages are said to be "under water" or "upside-down" when a homeowner owes more on a mortgage loan than the home is worth.

Nationwide, 23% of all mortgages have negative equity positions, led by Nevada (65%), Arizona (48%), Florida (45%), Michigan (37%) and California (35%).

According to First American, most of the loans in trouble share common characteristics:

* the vast majority of upside-down loans were originated between 2005 and 2008, with 2006 being the peak year for negative equity loans

* adjustable-rate loans have defaulted at rates far higher than fixed-rate loans

* in much of the country (including Colorado), new construction has taken a more serious hit that traditional resale homes

* homes originally purchased for $250,000 or below have accounted for nearly 80% of Colorado's completed foreclosures, although it appears more higher end properties are now falling into foreclosure

Although all areas have been affected to some extent, it is very clear that certain areas have taken a heavier hit than others. Communities like Brighton and Commerce City, which were flush with entry-level new construction during the early years of the decade, and areas with older housing stock, like Aurora and Lakewood, have seen foreclosure rates far higher than cities with a more diverse mixture of housing stock.

For my clients, the name of the game is always to "buy it right". Hoping future appreciation will bail you out of a marginal home purchase is not a good strategy. Researching, analyzing and finding motivated sellers (including banks) is a much better approach to protecting yourself long-term, although it often takes more time and patience.

And remember that with new construction, you are always paying a premium for the "shininess" of your new home. Understanding what is "retail" and what is "wholesale" when it comes to buying a home is critically important in a volatile economy. Make sure your agent isn't just a cheerleader for the housing market.

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


Through the first three quarters of 2009, completed foreclosures in Colorado stood at 14,971, an 8% decline from last year's total of 16,265 during the same period. Colorado foreclosures are down almost 20% from their peak levels in 2006, despite large job losses and record unemployment.

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


A total of 6.7% of all Colorado residential property mortgages were past due at the end of the third quarter, ranking Colorado 42nd among the 50 states for mortgage delinquencies. By comparison, Florida mortgage delinquencies stood at a staggering 25% at the end of the third quarter.

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


A close and dear friend of mine, Allan Gantt, passed away on Friday from pancreatic cancer. Allan was the former managing broker for my firm in California and someone who exemplified “walking the talk” when it came to ethics, character and competence.

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.

Allan loved baseball, and he often made his Dodgers season tickets available to Sherry and I. Each spring he would pack up and head for Arizona with a group of baseball buddies he had known for decades, watching spring training games for a week in the warm Arizona sun and enjoying the finest restaurants in Scottsdale, Tempe, Mesa and Phoenix. We bumped into Allan on a few occasions, as we also loved to make the rounds of the Cactus League, and without fail Allan would invite us to join his group for dinner or take in a show.

Allan Gantt was one of those rare people who improved morale just by walking into the room. He was a friend to hundreds in the Southern California real estate community, and he will be sorely missed.

I have traded emails with many former colleagues this weekend concerning Allan’s untimely death, and without fail the sentiment is the same: we have lost someone who routinely brought out the best in others and helped all of us to “raise our game” in real estate.

He will be missed in many ways, and we send our deepest sympathies to those who were closest to him.

Sunday, November 8, 2009


On January 10th of this year, I sent my 2009 market forecast to about 100 past and current clients. I also blogged about my predictions for 2009 in a series of posts that you can find in this space by clicking on the JANUARY tab in the lower right corner of this page.

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


I've tried to stay away from "over-analyzing" all the rumors, lobbying and grandstanding about the proposed extension of the $8,000 first-time buyer tax credit. Either they will or they won't, has been my feeling, and beyond that I have just been focusing on business as usual.

Today, however, it looks like we have concrete news...

U.S. House of Representatives just voted 403 to 12 to extend the home buyer tax credit, expanding the parameters to include existing homeowners and not just first-time buyers. As it now stands, the federal tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline.

First-time home buyers will continue to be eligible for a tax credit of up to $8,000, while existing homeowners will be eligible for a reduced credit of up to $6,500. To qualify for the $6,500 credit, existing homeowners must have lived in their current residences for at least five years.

The bill also increases the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000 in both instances. Under additional provisions included in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns.

The legislation maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.

So round two of the tax credit looks like its going to benefit a new class of homebuyer - the five-year homeowner who has been looking to move up (or move down). This figures to give some more push to the $250,000 - $400,000 market, which has been flat, and so sellers in this price range should start thinking seriously about taking advantage of this coming wave of new buyers.

Wednesday, November 4, 2009


Remember when Colorado led the nation in foreclosures per capita in 2006? Or when we were 7th in 2007? Although there are still troubled spots in certain areas (mostly outlying suburbs), the "big picture" continues to get brighter and brighter for the Denver metro area.

RealtyTrac's third quarter foreclosure filing data was released this morning, and the Denver region now ranks 47th among the nation's largest metropolitan areas for new foreclosure filings with 0.89% of homes in some stage of the foreclosure process. Las Vegas, ranked at the top of the survey, has 5.13% of its housing inventory in some stage of the foreclosure process.

Third quarter filings in Denver were down 1.58% from a year earlier, despite the downturn in the economy over the past 12 months. By comparison, foreclosure filings were up 105% in Salt Lake City, 80% in Reno, and 53% in Las Vegas during the same time.

Cities in California, Arizona, Nevada and Florida accounted for 19 of the top 20 foreclosure hot spots in RealtyTrac's report. Greeley, at number 33, was the worst performing Colorado region on the list.

Tuesday, November 3, 2009


Not calling out any names here, but here's my favorite picture of the week from the MLS.

This is a home for sale in Green Valley Ranch - a short sale, of course - where the agent's commitment to quality marketing went all the way to rolling down the passenger window, but not to the point of actually getting out of the car to take this marketing photo.

How can agents realistically expect sellers (or banks) to pay full commissions when they are too lazy to get out of the car and actually photograph the home? Come on, the sky is blue, I bet it's at least 60 degrees!

For the record, I consider photography to be one of the critical elements in marketing a home for sale, which is why I hire professionals to photograph and stage my listings. We are in the "first impressions" business, and what I see here is that if the seller's agent is too lazy to get out of the car, then how in the world is she going to get the bank to sign off on accepting a short sale?