Welcome to Weekly Market Watch

Happy New Year! It certainly is nice to be back and full swing into work. The holidays of course are great but oh how I miss the energy, enthusiasm, excitement—and who could forget the 200 e-mails a day—that our day-to-day business brings.

Now that 2009 has begun, by far the most common questions I get are: “When will this recession be over?” and “When will the housing market begin to rebound?” Now as much as I would love to, I don’t own a crystal ball but what I can offer is my own personal weigh in on what I see as the future for our market.

First, let’s look at the economy. Anyone who believes that the economy will completely rebound in 2009 is probably in a fantasyland. Without a doubt, President-elect Obama has his work cut out for him when he enters office in less than two weeks. Many experts agree that the year ahead will bring an increased jobless rate, a contraction in the economy, a dip in consumption and (in some areas of the country) a drop in sales prices.

The picture seems bleak, doesn’t it?

Well, without sounding too much like I’m wearing rose colored glasses, there are a lot of positive signs that our market is heading in the right direction.

For starters, our new administration is committed to fixing the economy. President-elect Obama and his economic team are in the process of developing an economic recovery plan designed to help Main Street and Wall Street with an ultimate goal of creating 2.5-3 million jobs while rebuilding our infrastructure, improving our schools, reducing our dependence on oil and saving billions of dollars. Speaking to a group to George Mason University in Fairfax, Va. Thursday, President-elect Obama said, “It’s a plan that recognizes both the paradox and the promise of this moment—the fact that there are millions of Americans trying to find work even as, all around the country, there so much work to be done,” he said.

Of course it won’t happen overnight and I think we all anticipate that much of 2009 will be focused on creating and implementing this recovery plan, but the positive news is that we are heading in the right direction for growth and prosperity with some experts predicting that by 2010 we could see as much as a 1.5% growth in our economy.

In terms of the immediate, one current positive aspect to our economy is that gas prices are relatively low right now which, according to National Public Radio, means that consumers who have seen their incomes go down over the past year due to layoffs, less hours worked or cuts in wages, are actually benefiting in a 4% boost in their income thanks to the recent drop in crude oil. This is positive news in the short term as it allows consumers to put that money directly back into the economy and while it won’t fix the recession, it certainly should help to moderate it.

Additionally, recently there has been much discussion that before long we will see mortgage rates at 4.5% which could spur a great deal of positive attention for our industry. If the Treasury does in fact lower the rate, present homeowners who want to refinance would be able to do so at a historically low rate. According to the Wall Street Journal, “up to 34 million households would be able to do so, at an average monthly savings of $428—or a total reduction in mortgage payments of $174 billion. This is a permanent reduction in payments and is thus likely to spur appreciable increases in consumption.”

In terms of the local real estate market, the timing of our price recovery may depend on how quickly the government takes steps to mitigate foreclosures, but looking forward to 2009, many experts agree that the financial system will begin to show signs of stabilization in early 2009 and we may begin to see a real estate turnaround by the summer. Our industry was one of the first to be hit by this recession and in all likelihood will be the first to overcome it.

And with that good news in tow, let’s take a look at this week in real estate:

• Boulder County—Our Boulder office reports that 2008 ended steady and early January is about the same. Agents seem to be busy and the office is predicting that new, lower rates should help the year start fair. The Longmont office concurs noting that buyers seem to be in the market and are much more active than they have been in the recent past. Open house activity is good and buyers seem to be much more serious than they have been over the past few months. We are still experiencing deals that are falling through due to last minute lender issues. The most successful sellers in today’s market? Those who price their homes extremely competitively from the beginning. Homes that are priced well and show well are moving. The buyers are out there but are looking for the best deals. It is important for sellers to consider this as they position their homes on the market.
• Clear Creek County—Our Evergreen office is seeing some positive news with listing inventory increasing, sales activity steady and showing activity increasing. Several of our Agents are reporting increased interest in their listings and floor activity, walk-ins and buyer prospects are all on the rise. This will be a market to watch as we continue on through the days and weeks ahead.
• Denver Central—We are seeing a lot of positive signs in the Denver market as we head into the new year. For starters, 10% of our deals are earning multiple offers—largely due to bank owned properties and short sales. The city of Denver is enjoying a relatively balanced market with about a 5-6 month supply. We’re also seeing an increasing in the amount of listing appointments—a good sign of things to come over the next several weeks. In a sign of the times, we are getting a lot of listing appointments due to sellers who must sell due to their financial situation. Currently, REOs and short sales are making up about 60% of the Denver Central office’s business.
• Devonshire—We’re seeing some positive news from our Devonshire office with a dramatic increase in showing activity. After coming out of dormancy over the holidays, buyers are writing offers to take advantage of the current interest rates and their increased purchasing power.
• El Paso County—Sales activity and showing activity are on the rise and our Colorado Springs office reported five multiple offers within the last week.
• Elbert County—Now that the holidays are over we’re seeing an increase across the board—in listing inventory, sales activity and showing activity. It’s nice to see activity picking up and buyer interest restored.
• Jefferson County—Another market to watch, our Conifer office is reporting an increase in showing activity with showings up to 23 from seven during the holidays. We had two multiple offers this week which is a positive sign that the buyers are out there. Our West Lakewood office concurs noting that sales activity and showing activity are both on the rise. We are seeing multiple offers though typically only on bank-owned properties.
• Larimer County—Our Fort Collins and Loveland offices are reporting that though there was a flurry of activity toward the end of December, the market has grown a bit sluggish as we enter the new year. We are seeing frequent multiple offers on REO properties and short sales and the entry level market—when properties are priced competitively and show well—are moving. Others tend to sit.
• North Metro—With listing inventory and sales activity decreasing, the North Metro area is seeing very limited activity in the marketplace.
• Southeast Metro—The office is a abuzz with activity. We had seven multiple offers over the last week and are seeing a dramatic increase in showing activity. Couple that with the news that we have taken 17 new listings, five new contracts and 57 closings currently scheduled for January—and its only the first week of the new year. Wow, let’s hang on for a wild ride.
• Southwest Metro—We’re seeing a definite increase in sales activity and showing activity. Though we aren’t seeing multiple offers, homes are holding their value and we are seeing a number of sellers listing now that we have entered the new year. Buyers seem interested now that the holidays are over.

As you can see, activity in nearly every market is picking up now that the holidays are over. Buyer—and seller activity for that matter—are restored and it seems many buyers are finding great comfort in the fact that interest rates are low, inventory is strong and many sellers are motivated.

President-elect Obama has a grand vision for the country once he takes over later this month and I think all of us are waiting to see if he is able to fill his promises.

It seems we are all excited about what 2009 has in store and are feeling pretty positive about the future of real estate in our market.

Until then, I’d like to leave you with this. Today’s market is not for the weary. Today’s market is for the serious buyer and seller. Buyers who are looking for a home right now—in today’s economic conditions—are serious and typically, are ready to make a move. Sellers who are selling right now—again, in this market—tend to be serious and motivated. The key is to bring the two together on level playing fields to gain a positive result.

Right now remains one of the greatest opportunities in decades to purchase a home so my best recommendation to buyers is to take advantage of this opportunity before the window of opportunity is gone.

Have a great week!

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