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