Memorial Day is Over…Soon-to-be-Summer Selling Season Off to a Good Start

With Memorial Day behind us and the busy summer selling season about to begin, some interesting trends are landing in our laps.

First, NAR this week announced that existing home sales rose in April with strong buyer activity, in, as expected, the lower price ranges. Nationally, existing home sales increased 2.9% to a seasonally adjusted annual rate of 4.68 million units in April from a downwardly revised pace of 4.55 million units in March, but were 3.5 percent below that 4.85 million-unit level in April 2008.

Most of the sales are taking place in lower price ranges but in a positive trend, we are seeing increased activity in the mid-price ranges. This is all a domino effect. A turnaround begins with the lower price range homes and once that sector of the market is stabilized, we begin to see changes in the mid and upper price ranges. The upper end, though we have seen increased activity, still is slow but we fully anticipate that this will change over time, too.

Many of you are asking me questions about the moratorium on foreclosures. In many markets we’ve had a foreclosure moratorium set forth by Fannie Mae and Freddie Mac as they wanted servicers to reduce interest rates, delay back payments and penalties, stretch the length of the loan or defer payments on part of the principal. The moratorium is likely going to be lifted soon and foreclosed properties are going to be released into the market starting (in many markets) in June and moving through the remainder of the year. In order for a recovery to be sustainable, we really need to clear through those distressed homes so we can begin to sustain a price recovery.

In markets like California, this moratorium has really hindered sales. The demand for housing is outrageous as buyers anxiously await the inventory to increase so they snatch up the listings. In some cases they are seeing 15, 20 offers on properties as they hit the market. The June release of the moratorium is expected to alleviate some of that demand.

While the moratorium has impacted us in some ways, I’m not overly concerned about it here. One reason is that we have had less of a bubble here as compared to other markets in the country. I truly believe that we’ve seen the worst and locally we’re headed in the right direction. Our weekly updates showcase that fact and in analyzing the office data I think we can safely assume that the worst is behind us.

Two local articles of interest this week that I wanted to be sure you saw are:

• Denver Business Journal: S&P: Denver existing home prices outperform other cities http://www.bizjournals.com/denver/stories/2009/05/25/daily15.html
• Denver Post: Metro Home Slide Not Off Click http://www.denverpost.com/search/ci_12455302

Definitely worth the read and a great reminder of why we call this special place home.

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

• Boulder/Longmont—Our Boulder office reports that Boulder County has shown a large increase in sales over the past two weeks, with 20% more under contracts and pending sales than in the past several weeks. Listing activity has been dead even over the past few weeks. Agents report more buyers but many are entering the market attempting to get the "Deal of the Century.” It's taking time to educate them about market realities in Boulder County. Values continue to increase slightly and the number of units closed in April was up sharply from March, though still significantly less than a year ago. Our Longmont office reported showings are historically down during this time in May and this May is no exception. The number of homes put under contract went up 92% week over week. You've got to love that type of activity! Buyers are savvy to the $8000.00 tax credit and are taking advantage of it! The cool weather is keeping the grass green and the wildflowers are blooming. It is a beautiful time to be in Colorado!
• Evergreen/Conifer—No information reported.
• Denver Central—No information reported.
• Devonshire—No information reported.
• Douglas County—Our Southwest Metro office reported that last week was quiet as far as showings and open houses. We felt that the weather and graduation had a hand in this slow down. A number of our Agents are working with buyers (especially fist time buyers). Floor continues to provide viable leads for our agents. Our mortgage rep tells us he is busy & this is good. We have several Agents holding first time buyer workshops and workshops on the $8,000 credit.
• El Paso County—Colorado Springs reports our listing inventory remains steady with no one area getting more than another due to foreclosures or REOs. Sales are very busy in the under $250,000 range. Listings in this price range are either gone in a week or have several offers. VA is busy in all price ranges. Lenders for VA and conventional are requiring 45-60 days even with sizeable down payments. Appraisals continue to come in consistently low. New home sales are picking up as new home construction areas (under $300,000). Lot sales for custom homes are still extremely slow. Commercial leases are everywhere and it doesn't look to change quickly.
• Larimer County—Our Fort Collins/Loveland office reports activity has been very steady the past few weeks and the buyers are starting to come out of hibernation with the good weather. Agents are reporting more buyers in the marketplace but they are taking their time to sift through the growing inventory and typically want to see many homes before making a decision. Closing times seem to be an issue lately with underwriters and appraisers being more vigilant about each property, thus increasing the start to finish time of the transaction. The upper end market is still moving very slowly with the bulk of the activity around homes under $300,000. Well priced homes in good condition are still selling.
• North Metro—The listing price and the under contract price continue to average around the $250,000 range. We did have one listing go under contract that was over $600,000. The other listings over this price range continue to have slow activity. We are seeing multiple offer situations with homes priced under $250,000. We continue to deal with many short sale situations both listing & buyer sides. After attending a class on the short sale process, Agents have been finding the process to be much more manageable. The forms process are now in place for an easier transaction, not necessarily faster but more systematic.
• Parker—No information reported.
• Southeast Metro—The heat is on! One of our listings posted 48 showings in the first week! Homes in desirable locations and in good condition are going under contract within days. We are seeing a steady increase in multiple offers in every price range below $400,000 and our listings are averaging four showings in the first week on the market.
• West Lakewood—Buyers in the lower price range are having difficulty finding suitable properties that can close quickly. Any property priced below $200,000 is flying off the shelf! Buyers must make quick decisions. We had a million dollar property recently sell for $800,000. There's not much activity on properties priced over $300,000. High-end townhomes are stagnant. If a condominium's HOA fees are excessively high or there is a special assessment, it can kill a possible big sale.

Historically speaking the week of Memorial Day quiets things down in the housing sector but this year it was a bit different. Thanks to the $8,000 first time home buyer credit, low interest rates and increased affordability, buyers in the first time home buyer market are out in droves and really are snatching up properties. Now that Memorial Day is behind us, we’ll probably see a week or two of quiet yet brisk activity until school is out and then…let the floodgates open. The summer selling season will be in full force.

Until next week,
Make it a great one,

Chris Mygatt
Coldwell Banker Residential Brokerage Colorado

NAR Announces Housing Affordability Highest in 18 Years

For months I’ve been sharing that this is one of the best times to purchase a home in decades. Well this week the National Association of Realtors underscored that fact with the release that nationwide housing affordability jumped 10 percentage points during the first quarter of 2009 to its highest level since the series began 18 years ago, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI). The HOI showed that 72.5% of all new and existing homes sold in the first quarter of 2009 were affordable to families earning the national median income of $64,000, up from 62.4% during the previous quarter and up from 53.8% during the first quarter of 2008.

Locally, the story is similar. In the Denver-Aurora area, 79% of all new and existing homes sold in the first quarter of 2009 were affordable to families earning the area’s median income of $76,000. That’s up 9% from the previous quarter and up 14% from the same period a year ago.

In Boulder, 69% of all homes sold were affordable to families earning the median income of $89,100. That’s up 7% from the previous quarter and up 12% from the same period a year ago.

In Colorado Springs, 82.9% of all homes sold were affordable to families earning the median income of $70,800. That’s up 11% from the previous quarter and up approximately the same (11%) from the same period a year ago.

For complete details on the report, click here: http://www.nahb.org/page.aspx/category/sectionID=135

I’d also like to share a couple of other stories of interest from the week:

• http://rismedia.com/2009-05-20/buyer-interest-in-foreclosures-spikes-says-survey/
• http://www.nytimes.com/aponline/2009/05/19/us/politics/AP-US-Economy.html?_r=2&scp=17&sq=housing&st=nyt
• http://rismedia.com/2009-05-18/distressed-properties-and-first-time-home-buyers-the-recipe-for-real-estate-recovery/

Finally, many of you have asked me questions about the potential changes in the $8,000 tax credit (http://www.realtor.org/RMODaily.nsf/pages/News2009051202?OpenDocument). Essentially the U.S. Department of Housing and Urban development announced that the Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 first-time homebuyer tax credit as a down payment. FHA's approved lenders will be permitted to "monetize" the tax credit through short-term bridge loans. This will allow eligible buyers to access the funds immediately at the closing table. Here is a CNN Money article which explains some of the details: http://money.cnn.com/2009/05/18/real_estate/tax_credit_as_downpayment/index.htm?postversion=2009051912

While it is an exciting turn of events I would caution you that the execution of this is quite complicated and it may take some time before it becomes a reality. HUD will authorize lenders, non-profits and certain agencies to provide a bridge loan which will then be reimbursed at the time of tax refund. These players are not yet identified. Again, an exciting turn of events but the execution and timing of it have yet to be fully outlined. Watch for more to come.

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

• Boulder/Longmont—Our Boulder office reports activity is very steady over the past few weeks for both sales and listings. Showings have shown a solid increase in the past week and even though sales in the marketplace are steady, sales in the Boulder office showed a solid upturn over the past few weeks. We are also seeing some stirrings of life for incoming relocations, although most of these are buyers seeking preliminary information for a potential move to Boulder later this year. Short sales remain the dominating factor especially outside the immediate Boulder/Louisville area. The Longmont office reports homes are selling! We doubled week over week the number of homes that were put under contract. Once in a while good news does creep in. The Denver magazine 5280 did a great article on the fact that real estate values are LOCAL and that there is some very good news on home values in our area. Buyers and sellers are slowly getting that message and understanding the value of the REALTOR. Short sales are a large part of the market and REALTORS that understand the process are getting them sold.
• Evergreen/Conifer—No information reported.
• Denver Central—The average number of days on market has dropped from 24 days to 71 days. We have seen a dramatic increase in showings and inventory continues to drop. Our Agents are handling a lot of multiple offer situations.
• Devonshire— We are truly in the late spring surge. Houses priced in the lower end of the market, $250,000 and below are selling. If they show well and are in good locations, they often sell with multiple offers. Particular neighborhoods have consistently high showings and the homes in these areas are selling well. The upper end of the market is still sluggish but we're seeing sellers getting their homes ready to list and on the market as the news regarding the real estate industry is better as a whole. With interest rates still at fabulous levels, now may be the time to buy for the first time or to move up to a higher value home. One thing we may want to remind buyers and sellers, warranty programs are available to protect their investments and benefit them when repairs become necessary. I mention this as we have a lot more noise relative to home warranty programs. They're a benefit to both buyers and sellers. Happy house hunting!
• Douglas County—Our Southwest Metro office reported that showings were down this weekend. We feel this was due to Mother's Day weekend, graduations and the weather. We have been very successful with open houses. One of our Agents picked up two buyers from her open house and already has them under contract. We did have multiple offers on three of our listings. Agents are working with buyers and we are seeing a tremendous amount of interest related to the $8000.00 credit. We are seeing a lot of activity in the office and we are busy.
• El Paso County—Colorado Springs reports our inventory is decreasing without a lot of replacement. Sales are very strong with lots of buyer activity from all companies. Open houses are happening even during the week and Agents report great traffic. Our board sales on SFR went from 566 in Mar/09 to 708 in Apr/09, a 25% increase in one month while inventory dropped from 1557 to 1445. (April 08 was 1835). Prices are absolutely stable with no increases over the past two months. The occasional multiple offers we have are all in the under $250,000 range.
• Larimer County—Our Fort Collins/Loveland office reports "steady as she goes" should be the mantra for last week. We are seeing a steady increase in showings, under contract homes and new listings coming on the market. There is still a large amount of inventory and it still remains tough to sell, but it is possible with the right price, condition and location. It is graduation week and the end of the semester at CSU. There will likely be a large number of families in town this week. Typically some of the parents that have a child returning or attending graduate school begin looking for an investment property for their son or daughter. I believe we'll begin to see an increase in condo/townhome sales the next couple of months. Short sales are starting to enter our market a little more frequently than in the past 12 months. Banks are still relatively slow to respond, but it does still remain a viable option for some sellers that are stuck in a tough spot.
• North Metro—Our Agents are starting to get higher priced homes listed. Most sales from this office are still under $300,000. Activity is picking up, especially with listing appointments. The average days on the market for our listings is right around 73 days right now. We're seeing a decrease in the number of listings for "bank owned" properties. Homes that are priced right are receiving multiple offers.
• Parker— After a brief slowdown, all activities have gone full speed again. The sales activity has doubled from the week before. Showings are up drastically and our listing inventory has decreased by 12%. As long as the market is this active, now would be the time to contact your Agent to talk about the next steps if you are planning to make a move. The high end market is still slow., however we have started seeing some activity there as well.
• Southeast Metro—We are seeing multiple offers now in every price range below $400,000. One agent wrote 25 offers last week on different properties with different buyers & every property was a multiple offer situation. Our showings continue to increase and we are averaging close to 100 per day. We have placed 65 [properties under contract so far this month. The general consensus is that we have turned the corner and the real estate market is on the rise! Spring has sprung!!
• West Lakewood— Showings are up, nearly double from the previous weeks. One Agent had nine listings of which eight have sold in the price range of $240,000 to $400,000. Buyers are complaining that there is not enough inventory to choose from. It is very difficult for the self-employed person to get a loan unless they have a co-signor or take fewer deductions on their tax return to show ample income. The market is saturated with first time buyers. Very little new bank owned properties are coming on the market. FHA loans are backed up and are difficult to close in 35 days. Buyers need almost 45 days or more.

As we head into this long, three day weekend I’d like to wish everyone a very happy Memorial Day weekend. Enjoy your time with BBQs, sunshine, maybe a little swimming and (hopefully) a home sale or two.

Until next week,
Make it a great one,

Chris Mygatt
President
Coldwell Banker Residential Brokerage Colorado

Stress Test Reveals There’s More Work to Be Done By the Banks But The Local Real Estate Market Continues to Thrive!

This week the results of the long-awaited Stress Test on the banks were released. What the government hoped to accomplish through this Stress Test was to determine how much more capital the banking sector would need to withstand the recession—much of which was caused by residential mortgages and other consumer loans such as credit cards. The result was that 10 of the nation’s 19 largest banks will need to raise a total of $74.6 billion in capital. The Stress Test revealed that banks like Goldman Sachs and J.P. Morgan seemed to be better positioned than Citigroup and Bank of America.

At this point, according to Kiplinger, “The stronger banks will actively do what they can to return any money borrowed from the government to get out from under restrictions on dividends and executive compensation. Their ability to sell common stock to the public is far better than their weaker counterparts, who may have to privately sell stock to investors or raise capital with so-called mandatory convertible preferred shares.”

According to industry analysts, it seems that until the banks get back on their feet, credit will continue to be tight. That leaves the Federal Reserve responsible for filling in the gaps with its own lending programs aimed at jump-starting lending.

On a brighter note, however, the real estate sector of our economy continues to show some positive signs—a good symbol that the programs that the government has put in place are helping. USA Today reported earlier this week that “More homes for sale are attracting multiple offers as buyers pursue lower-price homes and banks low-ball asking prices to attract competing bids on foreclosures.” It’s exactly what we’ve seen locally. Just as I revealed in an earlier blog posting, the first time, entry level home buyer market is fueling this recovery. It’s something we certainly forecasted and it’s finally coming to fruition. Now, we’re seeing, in many markets, multiple offers on starter homes and even some frustrated buyers who are scratching their heads and wondering what happened to the buyer’s market. We warned that the change could come before we knew it and in some price ranges, it might’ve already come and went.

Here are some links to some interesting, positive news stories from the week:

• USA Today: More homes get multiple offers; downturn may be nearing end (http://www.usatoday.com/money/economy/housing/2009-05-05-foreclosure-home-sales_N.htm?loc=interstitialskip)
• Business Week: Want to Sell Your Home? Lower Your Price (http://www.businessweek.com/lifestyle/content/may2009/bw2009055_075566.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis)
• RISMedia: Relocation.com Survey Shows Consumers Moving Further Due to Economy (http://rismedia.com/2009-05-05/relocationcom-survey-shows-consumers-moving-further-due-to-economy/) – This is a good reminder to consumers as to why they should choose an Agent who is affiliated with a large, global real estate company that has the breadth and influence to reach the largest pool of buyers.
• NYTimes: Where Home Prices Crashed Early, Signs of a Recovery (http://www.nytimes.com/2009/05/05/business/economy/05turnaround.html?_r=2&hp)
• Realty Times: Real Estate Outlook: Sales Rising in Some Areas (http://realtytimes.com/rtpages/20090505_realestateoutlook.htm)

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

• Boulder/Longmont—Our Boulder office reports that activity has been very steady the past few weeks in all three categories, showings, sales and listings. Agents are reporting more buyers in the marketplace but they are being very cautious and want to see a great many listings before deciding. Underwriters and appraisers are being more cautious as well. Getting deals to close remains more challenging than in the past. Short sales remain a major market factor in the area. The Longmont office reports that showings are becoming more consistent. Listings are selling in days when they are priced right. Good clean listings are hard to find for buyers right now. The price range from $150,000 to $250,000 is very competitive and these homes are not staying on the market for very long. The loan process is still a confusing one for buyers. It is not the slam process it was in the past. New times = New rules. Prequalification is the best way to go. Open houses are seeing good traffic.
• Evergreen/Conifer—There were four new listings during the week for a total of 33 for the month. Three listings went under contract in the $575,000 range and one in the $1,000,000 range in Evergreen. The other was vacant land. A total of 19 homes under contract for the month. Showing activity showed a dramatic improvement following several straight weekends of snow. There were 71 showings for the week for a total of 244 for the month. The Conifer office reported that there were no new listings during the week. One listing went under contract during the past week, bank REO. Two buyers went under contract in the $250,000 range in Centennial with multiple offers. Other was a buyer from a floor call that went under contract on a home in Conifer listed at $1,000,000. Showing activity showed dramatic improvement following several straight weekends of snow, for a total of 52 showings.
• Denver Central—We are seeing an increase in under contracts and multiple offers. We continue to see drops in inventory.
• Devonshire—No information reported.
• Douglas County—Our Southwest Metro office reported that showings have continued to increase. We have had two clients who have closed on their properties and have amended their tax returns and received their $8,000 refund. We are seeing buyers wanting to take advantage of the $8,000 and as a result are seeing lots of activity with Agents and buyers. Our open houses continue to be successful and our Agents have flyers with the information on the $8,000 credit. Many Agents have picked up buyers from their open houses and floor has been great, too. We seem to be making a turn.
• El Paso County—Colorado Springs is still bustling with activity. Inventory seems to be remaining steady but buyers are out in droves. Currently and Fort Hood, TX is a moving seminar for troops coming to Fort Carson. CBRB was selected as the only real estate company to be represented at the conference. They estimate between 6,000 to 8,000 troops and their families will be moving here this year. We are also representing a team moving from Scotland to work at a local technological company. Home prices are remaining steady & homes under $200,000 are still leading in sales volume.
• Larimer County—The market is steady with inventory growing and more buyers taking advantage of the first time home buyer incentive. Showing activity is steady especially in the lower price points. Two Agents reported an under contract home in less than five days at the $200,000 price point. Homes in the $450,000 plus market are struggling and the primary culprit seems to be the jumbo interest rates. With FHA financing hovering under or around 5%, it looks to be the best deal out there. Buyers are cashing in on this tremendous rate. Cash heavy investors are also taking advantage of good deals in the market.
• North Metro—Activity continues to be strong. Our Agents are going out on numerous listing appointments and buyer appointments. Inventory decreased which is creating multiple offer situations on homes for the buyers. There are many short sale properties on the market.
• Parker—After two crazy weeks showings have decreased slightly. We are still up on new listings, contracts written and closings year over year about 20%. Compared to the Denver Metro market which is down about 16% this is still great news. The lower price range homes are still selling quick if priced right. The high end homes are sitting on the market for a long time unless priced very aggressively.
• Southeast Metro—No information reported.
• West Lakewood— The Agents in the West office are very, very busy listing and selling homes. Sellers need to be realistic when pricing and staging their homes. Buyers are realizing that they are not going to "steal" a home. Offers being accepted are fair and reasonable. We are seeing some movement in the higher price ranges.

What do we do with this information? Spread the word! It’s one thing for me to talk about a recovering market but it’s another when even the most pessimistic analysts are doing the same. The stories above share the real story. All of our offices are reporting similar stories and as I visit our offices and talk with our Agents, I’m hearing the same scenario: the market is changing.

The window of opportunity has been open and it has been inviting buyers in for months. Now, the buyers are acting and if you were sitting, cooling your jets, it may be time to start your engine! Don’t wait until you’re kicking yourself and saying, “I should’ve bought a lot more real estate.”

Until next week,
Make it a great one,

Chris Mygatt
President
Coldwell Banker Residential Brokerage Colorado