“The End is Near”

Well last week I told you the week would bring some interesting twists to the market. And I was right. New mortgage applications for home purchases and refinancings were up 77 percent from the same week in April 2008.

Mortgage rates continue to average well below 5 percent – 4.7 percent last week on average for 30-year fixed rate loans and 4.5 percent for 15 year loans. Rates like these are a major factor pushing applications.

Nearly 600,000 home buyers have already claimed either the $7,500 tax credit from last year or the $8,000 credit for this year, according to IRS data cited by the National Association of Home Builders.

Also of interest, new home sales have been showing signs of improvement. Last week the Commerce Department reported that March sales were off just 0.6 percent, exceeding analysts’ expectations, after climbing in February.

In other positive trends, interestingly enough, The Wall Street Journal reported this week, “Analysts say: The end (of declines) is near. While new home sales show signs of stabilizing as builders cut back on building and boom-bloated inventories are slowly absorbed, prices of both new and existing homes are still being dragged down by a flood of foreclosures. Still, the experts were optimistic that the federal government's efforts to stem foreclosures eventually will have an effect by the end of this year or early next year; Mark Zandi, chief economist of Moody's Economy.com, even ventured (jokingly) a date when home prices would stop falling—December 15, 2009.”

It’s hard to know whether or not the sum of these indicators is equivalent to a recovery but my sense is that the end is near—if we haven’t already passed it here in Colorado (some experts are even saying that we’ve already hit bottom and we’re in slow recovery mode). When the bottom has hit exactly is hard to predict but based on what I am seeing in our offices, based on the statistics that I am seeing on pendings and buyer interest/activity and based on the overall national recovery effort, it seems the prediction by many experts (in late 2008) that we would hit bottom by the middle of 2009 is probably not far off.

Now for those of you who are “timing” the market, I have to caution you on this. The only way you know that the market has hit bottom is when it is on its way up. While certainly housing is one of the biggest and most important investments we will make in our lifetime, it is also important to remember that our home is so much more than an investment. It is where we raise our family, where we create memories and where we plant our roots. So as you try to “time” the market, remember these key facts and make sure that beyond the investment, you are choosing a home that will bring you the happiness you deserve. Because in the end, that is what matters most. Choose the home that is right for you and your family right now and for years to come. Historically speaking, Colorado real estate brings long-term investment gains for almost all homeowners so if you choose the home that is right for you, you almost can’t loose.

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

• Boulder/Longmont—Our Boulder office reports that new listings were up about 10% last week as Spring approaches. Despite a fair amount of bad weather, sales and showings stayed pretty level. More Agents are reporting frustration with getting deals closed, largely due to wildly different methods of handling short sales from one company to another as well as problems with appraisals. The Longmont office reports this is the second week in a row that our showing activity is up. We are up 15% week over week. Our homes "under contract" are up as well as our listings taken. We have more buyers looking at new builds and writing contracts on current builder inventory new home starts. Short sales and foreclosures are still impacting the values of local neighborhoods. Appraisals are continuing to be a stumbling block for some sales. It really is an area where the local Realtor can assist. One of the Agents here today commented that "I am rocking and rolling" with new business. It feels good!
• Evergreen/Conifer—We had a total of six new listings for the week. Six of our listings went under contract including one priced at $1,300,000. There were 74 showings for the week which was back to the normal level following a decline the prior two weeks due to bad weather and our office being closed for three days.
• Denver Central— We are seeing an increase in under contracts as of late. We continue to see drops in inventory.
• Devonshire—This week we have seen a decrease in showing activity which is quite a seasonal anomaly. On the other hand, we are seeing lots of offers being written and actually accepted. It seems that this week buyers have seen what is on the market and are now at the decision making stage. With May here, we are still projecting a strong month and a good summer.
• Douglas County—Our Southwest Metro office reports that showings were the best yet for 2009 so far. Friday-Sunday we had 175 showings. Agents are very busy with buyers and have had numerous calls regarding the $8,000 credit. We definitely see signs that buyers are starting to seriously look and make offers on properties. We had several listings that went under contract in less than a week with one on the same day. Our mortgage rep continues to be very busy with loan applications. Sellers are calling, wanting to list their homes.
• El Paso County—No information reported.
• Larimer County—Our Fort Collins/Loveland office reports that showing activity continues to increase in our market and we had the best week yet with property showings increasing by nearly one hundred showings. We are seeing many first time home buyers coming into the market to take advantage of the $8,000 tax credit. These first time buyers are buying power priced homes in the low to mid $200,000 price range. We had a solid number of homes go under contract last week. In fact, it was the most for a one week time period this year. However, no multiple offers were reported. If your property is in a good location, clean, well priced and under $300,000 there is a good chance it will sell in this tough market.
• North Metro—The average price range under contract is around $250,000. Sales to list price is 98% to 100%. Days on market decreased to around 85 days. We've seen multiple offer situations on homes this week when the listing is power priced. Open house activity has increased as have the number of floor and sign calls. We continue to have the challenge of getting appraisers out quickly & loans out of underwriting in time for closing. We're working with many sellers.
• Parker—Our Parker office reports: another record week for showings! Once again, sales activity increased last week. We received multiple offers on several power priced listings including eight offers on a bank owned property and three offers on a $1,300,000 listing. The inventory in our marketplace is steady. Depending on the price range however, we see a huge difference in the amortization rate from less than two months in the lowest to over three years in the upper range. In the million dollar plus market, it is necessary to position listings way below the competition in order to create activity.
• Southeast Metro—We set 700 showings last week! Open houses traffic continues to increase as buyers are ready to make a move. We have put under contract 139 properties just this month! Homes in the high energy areas of the city are seeing a significant decrease in the average days on market. However, outer areas in the price point above $400,000 are still a bit sluggish.
• West Lakewood— If you have a buyer wanting to purchase a bank owned property, they most likely will need to offer a substantial amount over the list price. We've had buyers offer $15,000 over list price and still not be the highest offer. One West Agent went under contract with a buyer for $800,000 a possible indicator that there may be some movement in this price range. Two $500,000 homes were placed under contract this week, again a possible indicator that there may be movement in this price range as well. Showings at all price ranges have increased.

No matter how cynical you are about today’s economy—and trust me, with as much as we’ve all been through over the last few years, I certainly understand—it’s important to point out the positive signs that we are seeing in the local marketplace. All signs are definitely pointing towards a recovery.

Next week I will release my May Reality Check message and I will focus it on why today’s market brings such prime opportunities for savvy investors. I hope you will check it out.

Until then,
Make it a great week,

Chris Mygatt