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
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