Thursday, January 29, 2009

Is It Too Early to Call It a Trend?

Earlier this week, the National Association of Realtors reported that in December, existing home sales rose unexpectedly while inventory declined.

The national real estate organization reported, “Existing home sales – including single-family, townhomes, condominiums and co-ops – jumped 6.5 percent to a seasonally adjusted annual rate of 4.74 million units in December from a downwardly revised pace of 4.45 million units in November, but are 3.5 percent below the 4.91 million unit pace in December 2007.”

Total housing inventory at the end of December fell 11.7 percent to 3.68 million existing homes available for sale, which represents a 9.3-month supply at the current sales pace, down from a 11.2-month supply in November.

Here at home, the sales news only gets better. Earlier this week, we released our December luxury home sales release—which was picked up by countless news media outlets:

http://www.wilmington.dbusinessnews.com/shownews.php?newsid=175342&type_news=past

http://www.dailycamera.com/news/2009/jan/26/boulder-real-estate-denver-area-luxury-home-sales/

Among the top findings in the report:

  • A total of 48 properties sold for more than $1 million last month, up from 35 in November

  • At the same time, the median price of million-dollar property sales fell to $1.23 million, down more than 17 percent from November and more than 8 percent from the previous year

As the report notes, over the past few months we have started to see a gradual turnaround in home sales in our region, and that’s encouraging for an ultimate rebound in the housing market. Much of the sales increase has been focused on the lower end of the market rather than the move-up and luxury housing market. We have to work through this process and it’s going to take time, but ultimately I think you’ll see every segment of the market benefiting.

So why the sudden, so drastic surge in sales? There are a few reasons:

  • A lot of people who were previously priced out of the housing market can finally buy

  • With interest rates under 5%, a buyer’s purchasing power is at its best in more than three decades

  • After months of increasing or stable inventory, we are finally starting to see the numbers fall

  • Increased consumer confidence (of late) based on the new administration

  • We’re seeing a lot more investors coming into the market in addition to first time buyers

So is it too early to call it a trend? Probably. In all honestly, we still have a lot of distressed properties to move through before we can begin to see prices stabilize. At least for the foreseeable future, buyers will probably have the edge but with an 84.9 percent increase in sales year over year and inventories on the decline, we’re finally moving in the right direction. The key to all of this: buyers are ready to buy when they perceive a good value. Until then, they wait.

Now let’s take a look at this week in real estate:

  • Boulder County—Our Boulder office reports that it is a bit too early to tell how 2009 will fair. 2008 ended steady from the rest of the year and January appears to look the same. It appears our Agents are busy, largely in part to the new, lower interest rates. Our Longmont office shares that lenders are reporting increased activity, both applications for new loans and refinancing. Activity is in all price ranges not just lower end homes. Floor calls are picking up and Agents are having activity on listings.

  • Clear Creek County—Our Evergreen office reports increases across the board with listing inventory, sales activity and showing activity all on the rise. We had 13 new listings during the week including a six lot subdivision plus a $1.8 million spec home. We also listed a $5.2 million estate in Soda Creek. We had 52 showings plus five Agent previews during the week compared to 44 last week.

  • Denver Central—Our Denver Central office reports that we are seeing multiple offers on about 10% of our listings, largely thanks to bank owned and short sale properties. We saw some spikes in showings this week, including 102 on Friday. We are seeing an increase in qualified leads which hopefully will translate to solidified deals.

  • Devonshire—We have seen a huge change over the last two weeks in showings and in contracts presented and accepted. We have a house in Washington Park that went on the market last Wednesday and had three offers by Friday, with an accepted offer by Friday night.

  • El Paso County—Our Colorado Springs office notes that buyer activity is on the rise. We had six contracts written this week alone. Buyers are out there and inventory as a whole is starting to decrease in the market. There are still many short sale and bank-owned properties on the market that are driving down prices, however.

  • Jefferson County—Our Conifer offices notes that listing inventory, sales activity and showing activity are all on the rise. We had two listings that went into multiple offers this week and we represented a buyer in a multiple offer situation. We saw a significant number of price reductions this week as sellers begin to realize the fact that properties that are selling are extremely competitively priced.

  • Larimer County—Our Fort Collins/Loveland office reported an increase in showing activity. The market, however, seems to be in a holding patter. We had an up-tick in showings but nothing that we are confident that would support a trend. We have heard that some buyers are waiting for the 4.5%, 30 year fixed to appear long enough for folks to take advantage of it.

  • North Metro—No information reported this week.

  • Parker—Activity is still increasing throughout our region. However, there are still several areas with significantly declining values. Wherever we have a good portion of new construction, the values have decreased between 5% and 20% (Pradera 15%, Idyll Wild 20%). The established areas are stable in value right now. Bank-owned properties are still moving quicker (priced more aggressively = more energy!) and we are seeing more success with short sales.

  • Southeast Metro—We had 12 multiple offers this week alone! The office is extremely busy with showings and Agents are having some difficulty actually finding properties in the under $350,000 range. Coldwell Banker Home Loans put into process $4.5 million in loans so far this month. We have listed 51 new properties as of today and we have 75 transactions scheduled to close this month.

  • Southwest Metro—Our market is doing well for January. Showings have increased each week and listings are on the rise. Buyers seem to be ready to move. Our inventory in Highlands Ranch has been low and is growing at a steady pace.

The bottom line is that while sales are on the rise, we still have many distressed sales that must work their way through the system. With Wednesday’s controversial passing of the stimulus package (with a near party-line vote), we can only hope that the administration’s plan—in what we know is unchartered territory for our country—is successful. Read more at:

http://www.washingtonpost.com/wp-dyn/content/article/2009/01/28/AR2009012800196.html?hpid=topnews

The administration needs to move fast to stimulate a spring sales upturn and set the foundation for an economic recovery.

Until next week,

Chris Mygatt
President and Chief Operating Officer
Coldwell Banker Residential Brokerage Colorado

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