HELLO RE/MAX MASTERS!

I think it's safe to say the biggest decisions are accompanied with the biggest feelings of relief. This week, I made a move I had dared myself to make for a long time - I have changed offices, moving over to RE/MAX Masters, which is the top RE/MAX office in the Denver region.

Why would I do it? Well, frankly, I have these strange flashbacks to people who have been influential on me through the years... and one of those voices was bouncing around in my head at the end of last year.

"If you're not growing, you're dying..."

Those were some of the first words I heard when I entered into the real estate business back in 1994. And man, are they ever true.

RE/MAX associates are involved in 32% of all transactions in the state of Colorado. Total market domination. On average, RE/MAX agents outperform agents in my old franchise by a 2 to 1 margin. And yes, it costs a heck of a lot more to be a RE/MAX agent... but in reality, the difference between a "cost" and an "investment" is simply what you do with it... and for me, this is going to be a great investment.

Special thanks to Kim W and Peggy T at Masters for their help in making this move possible. Now it's up to me to hit some pretty lofty goals for 2008!

2008 MARKET UPDATE - PMI RISK INDEX FAVORABLE

The PMI Group, which provides residential mortgage insurance for mortgage lenders, released a report this month detailing the probability of falling prices in the nation’s top 50 housing markets, based on its delinquencies and exposure in each of these markets. And while markets like Riverside, CA (94% chance of declining prices) and Las Vegas, NV (89% chance of declining prices) made the headlines, Denver was tucked away at the bottom of the report with just a 1% chance of further price erosion over the next two years.

2008 MARKET UPDATE - POPULATION GROWTH CONTINUES

According to the University of Colorado, our state grew by nearly 100,000 people in 2007, with nearly 60,000 of those residents moving here from other places. That marked the first time since 2001 that migration outpaced new births in terms of population growth, an important fact since families that move here have immediate housing needs.

2008 MARKET UPDATE - BELIEVE IT OR NOT, INVENTORY IS FALLING

With over 24,000 homes for sale in the Denver MLS to start the year, there is still plenty of inventory to choose from. But, according to the Wall Street Journal, Denver remains one of only two major markets in the country (Boston being the other) with fewer homes on the market today than one year ago. And in the condominium market, inventory is down over 8% compared to a year ago, indicating a significant firming at the bottom of the market, which had been hardest hit by foreclosures.

2008 MARKET UPDATE - THERE IS “PENT-UP” DEMAND IN THE MARKET

When there’s little appreciation and minimal confidence in the market, people tend to stay put. But life circumstances change. Kids are born, children go to college, adults retire. In short, our housing needs change as our life circumstances change. An improving housing outlook may unleash years of backlogged demand.

I certainly saw this phenomenon in California in the late 1990s... and I saw how a little confidence in the market went a long ways toward creating a positive "snowball" effect in the housing market.

For the past few years, moving hasn't been "cool" - not when you have no equity and you're fighting just to make a mortgage payment. But when your home starts to act like an "investment" again (i.e., actually appreciating in value), people become much bolder and much more willing to take the next step.

Psychology has always been a huge factor on Wall Street - watch and see if that same psychology doesn't help propel housing in a big way throughout Colorado in 2008.

2008 MARKET UPDATE - RENTS ARE RISING

Residential vacancy rates fell from 6.7% in the third quarter of 2006 to 5.3% during the third quarter of 2007, a reflection of the increased number of renters (from the high foreclosure rate) and an overall healthy economy. Vacancies are now at their lowest level since 2001 – it’s a good time to be a landlord!

2008 MARKET UPDATE - A STRONG LOCAL ECONOMY

With unemployment hovering around 4%, Denver’s economy is healthy. High oil and gas prices continue to fuel a major boom in our coal and mining industries (especially in Western Colorado), and retail spending is up almost 10%, according to Mile High Market Watch. Additionally, the 2008 Democratic National Convention will pump another $150-200 million into the area economy.

2008 MARKET UPDATE - HELICOPTER BEN

30-year fixed rates at 6%??? That’s what we have as I am writing this post tonight. And it's likely the Fed is going to start whacking away on adjustable rates over the next few weeks. Which leads to one of the funniest cartoons I've seen on the web - if you haven't met him already, let me introduce you to "Helicopter Ben"...

There's a lot of criticism brewing in the financial community about the fact Ben Bernanke might be a bit "panicky" when it comes to stabilizing the markets. And that his past writings and speeches suggest that flooding the economy with money is an option... that makes those low fixed rates of today mighty attractive.

2008 MARKET FORECAST - AFFORDABILITY

The NAR projection for the Denver Metro Area as a "Top 5" market for 2008 shows that we still live in one of the most affordable major markets in the country. A median priced home in the Denver Metro Area at 80% LTV at today’s prevailing mortgage rates consuming just 16% of average household income. Median priced homes in San Diego, by comparison, require 45% of average household income to service an 80% LTV mortgage.

2008 MARKET FORECAST - MORTGAGE REFORM

Colorado real estate commissioner Erin Toll has aggressively tackled the issue of mortgage and appraisal fraud. In 2007, Colorado has moved to a mortgage broker registration program, and for 2008, a full licensing program is in place. Although it’s hard to track exact numbers (because there was no way to count how many people were actually doing loans in an unregulated system), estimates are that the number of brokers doing loans in Colorado has fallen by as much as 50% since 2006.

2008 MARKET FORECAST - FORECLOSURES ARE FALLING

Although we began 2007 as the “most foreclosed upon state in the country”, as we near the end of 2007 Colorado has (thankfully) fallen out of the top 10. This month, Foreclosures.com reports that Colorado foreclosures have fallen 22.6% year over year, the biggest drop in the nation. Arizona, by comparison, saw foreclosures rise by 293%. Nationally, foreclosures this year are up 92%.

LET'S MAKE IT GREAT IN 2008!

As the headlines cried out, 2007 was one of the most tumultuous years on record for the UnitedStates housing market. For the first time in 25 years, the median price of a home in Americamoved lower. Rising numbers of foreclosures turned many formerly “hot” markets upside down, and the prevalence of gimmicky financing programs based on the theory of endlessly appreciating values came tumbling down like a house of cards.

Here in Colorado, our challenges traced back much further, perhaps all the way to 2001… to an oversupply of new homes, post 9/11 economic troubles in the airline industry and the high tech sector, and the dubious distinction (finally corrected in 2007) of being one of only two states in the country which required NO licensing or registration of any kind for mortgage brokers.

The result: too many homes, not enough high paying jobs, and rampant mortgage fraud. Under that formula, Colorado entered 2007 number one in the nation in foreclosures per capita. Many areas, particularly those east of I-25, such as Greeley, Brighton and Aurora, became known as “foreclosure alley”, and values dropped in many parts of the state.

Spring forward toward the end of 2007, however, and the picture appears to be changing. In August, the National Association of Realtors caught many off guard when it named the Denver region as one of its top five projected housing markets in the country for 2008. Since then, NAR has reinforced that position by placing Denver on its preliminary list of top five markets for 2009, as well.

Working in the field, I have seen a lot of positive indicators over the last half of 2007. Many of you have worked with me, either as investors or first-time buyers, in picking up properties out of foreclosure. Some of those deals were just amazing, and while 2007 was a challenging year for many home sellers, buyers picked up some incredible bargains.

Those of you well-acquainted with me know that I am a hound when it comes to research. Over the next several days, I'd like to share with you some of the reasons 2008 is poised to be great!