Economic Stimulus Package Could Bring Big Benefits For Real Estate Sector

If you tuned into CNN, Fox News or any of the other major news media outlets this week, you likely watched the drama unfold regarding the new Economic Stimulus Package which is currently making its way through the Senate. This controversial package has many speculating as to its legitimacy but is being driven by President Obama in an effort to jump-start our ailing economy.

To learn more about the status of the Economic Stimulus Package, click here:

http://www.reuters.com/article/politicsNews/idUSTRE5136U320090204?virtualBrandChannel=10112

As of now, the Economic Stimulus bill is winding its way through the U.S. government, pushed by Demographic leaders who want to present President Obama with legislation he can sign by-mid February.

From a real estate perspective one of the biggest potential benefits of this Economic Stimulus Plan is special Amendment #353 to the Plan, a provision for the Federal Government to buy-down mortgage rates to 4.5% or less for a 30-year fixed rate loan for the purchase of a primary resident. Without question, a 4.5% or lower, 30-year fixed rate mortgage would help stimulate housing sales and would also open the door to hundreds of thousands of new potential buyers by greatly improving housing affordability.

While the Economic Stimulus Package makes its way through Washington, real estate sales continue to show new signs of life. Just this week, NAR released its pending home sales report noting that pending home sales rose 6.3 percent nationally to 87.7 from an upwardly revised reading of 82.5 in November and is 2.1 percent higher than December 2007 when it was 85.9.

Also noteworthy this week was an article I came across on Reuters.com (http://www.reuters.com/article/newsOne/idUSTRE5140H420090205) which points out that housing markets across the country may be nearing bottom and we should begin to see signs of new life by the 4th quarter of this year. Among the highlights of the article:

• "More than three years since the market began correcting, inventories are flattening, prices are coming back down to earth, and sales are approaching stability," the report said.


• “The outlook, however, assumes stronger action by U.S. policymakers and says that even with further government intervention, the recession will keep the housing market from fully recovering until the end of this year.”


• “With this help, sales are probably at bottom, stabilized by foreclosure sales, while construction will hit bottom in the first half of this year, although the pace of housing starts will remain very depressed until 2011.”

The coming week will likely be an interesting one in Washington, D.C. as lawmakers make the final decisions on the Economic Stimulus Package. It will be exciting to see the details unfold and the plan take shape as lawmakers work to quickly restore our ailing economy.

Locally, we’re seeing some interesting trends. As we continue to work through our bank owned properties, it is a welcome sight to finally see banks responding to short sale offers. Couple that with the fact that with interest rates so low, buyers—especially first time home buyers and some investors—are finally beginning to feel the need to come off the fence and take action. The hardest hit markets are new construction and the upper end. Both are nearly at a stand still though as prices begin to stabilize and we finally weed through the bank owned properties (later this year), we should begin to see a domino effect that ultimately benefits all price ranges.

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

• Boulder County—The Boulder office reports that listing inventory, sales activity and showing activity are all steady, though activity in the below $500,000 range has been much more active than the higher price ranges. Well-priced foreclosures are commonly drawing multiple offers and we’ve seen a notable uptick in first time home buyer interest.


• Colorado Springs—The Colorado Springs office is reporting an interesting trend noting that military are returning at a steady pace. The Space Command Center at Schriever Air Force Base continues to expand bringing more transfers from California. Since the closing of John Lang Homes, new development in the area is now very quiet.


• Conifer—The Conifer office reports increases across the board including listing inventory, sales activity and showing activity. This week we listed a new subdivision in Conifer with six lots priced at $250,000 each. We saw some good sales activity including four offers on our listings, three are short sales and we are awaiting bank approval. We also submitted two offers on behalf of buyers and are awaiting responses from the sellers. Showing activity continues to be strong with 29 showings and four Agent previews during the week.


• Denver Central—The Denver market is still holding steady. We are seeing 5-7% of our deals going into multiple offers, thanks in large part to REOs and short sales. With interest rates at all time lows, many buyers are making their move. Listings are up but we are still seeing more buyers. Last week we had one non bank owned property that had three multiple offers. The lesson: when priced right, they sell.


• Devonshire—The market is positive right now. There is good energy with lots of showings. Buyers are beginning to realize that with interest rates at such great levels and inventory decreasing, it’s time to get out and find a home. Open houses are busy. In this market it is especially beneficial for sellers to work with full-time, knowledgeable professionals who are on top of trends and current market conditions.


• Evergreen—Our Evergreen office reports a good, solid week with four new listings. We also had two of our listings go under contract. There were 36 showings plus seven Agent previews for the week making a total of 180 showings for the month.


• Larimer County—Our Fort Collins/Loveland office is reporting decreasing inventory along with steady sales activity. The Loveland market remains slower but steady given the season. In Fort Collins, showings are heading upward and many home owners are taking advantage of ultra low interest rates and the opportunity to refinance. Inventory levels continue to fall as fewer listings are taken. We are anticipating a very strong Spring selling season when demand for move-in ready homes that can close quickly increase substantially. The new construction market is at a stand still. There are very few new permits being issued. This will assist in keeping inventory levels reduced and will keep a balance between supply and demand.


• North Metro—The North Metro office is noting huge leaps in listing inventory and showing activity. Many of our Agents are currently in multiple offer situations with their buyers. The reason contracts are down this week is that we are waiting on banks. Once these break loose we should see a real spike in sales. We had over 80 properties come on the market. Showings are way up. We expect many contracts in the coming weeks. It’s an exciting time at the North Metro office!


• Parker—The Parker office is reporting a temporary slight drop in sales activity, mainly because many of the bank owned properties have sold. Showings are still increasing. Activity is up throughout the lower and mid price range as well as on investment properties. Upper price range inventory ($600,000 and up) is still increasing about 10% per month. This effects total inventory numbers. Short sales are still on the rise and we have formed a short sale expert team to help those needing assistance in that area.


• Southeast Metro—The office is busy with showings and Agents are reporting great activity at open houses. One Agent had more than 30 visitors at a single open house. We have taken 92 new listings this month and many of our current sellers are repositioning their properties as a result of experiencing increased activity. We are seeing multiple offers though typically on bank owned properties.


• Southwest Metro—Our Southwest Metro office is reporting steady listing inventory and sales activity despite the fact that some buyers are weary due to big layoffs that were announced this week. But these announcements haven’t really slowed down interest level. Showing activity is up. One Agent had three successful buyers and one is closing next month. Another had three buyers who called this week saying they are finally ready.

My overall assessment of the market this week is that buyer interest is up. It seems buyers are finally realizing that with today’s low interest rates and generous amount of inventory—including a large number of bank owned properties—they may be in a very strong position and in all likelihood, can afford a lot more home than they could’ve a year ago, or even six months ago for that matter.

Next week I will release my February Reality Check which will focus on interest rates and how they may affect a buyer’s purchasing power. I trust this will be helpful in educating our clients on why now truly may be the best time to buy.

Until next week, make it a great one,

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