Thursday, June 4, 2009

Showing Activity In the Entry Level and Mid-Level Markets Continues to Rise…For the Entry Level Buyer, Are Bidding Wars Back?

Now that school is almost out, we’re finding many families are starting to look at homes in anticipation of getting settled prior to next school year. Showing activity, in many markets, has increased considerably.

Sellers are now getting their homes on the market and, in general, seem to be quite knowledgeable regarding staging and pricing. The homes in the entry-level market, for the most part, are moving well if they are in good condition and fairly and competitively priced. Several Agents whose clients’ listings are in the entry level market are reporting that they have had buyers lose out on homes in bidding wars. Could they be back? The competition for well priced homes in good condition is heating up and we are seeing multiple offer situations in most of our first time home buyer markets.

Though we have seen sporadic increases in the upper end market, it is still relatively slow on showings and closings but we do anticipate that that sector will loosen somewhat if the economic news continues to show some stabilization and an upswing.

Before I get into the week’s top news, what I would like to share is that LORE Magazine and The Wall Street Journal this week released their Top 400 list. You may view it online at
http://online.wsj.com/ad/top400-articlecontinued.html. Many of our own Coldwell Banker Residential Brokerage colleagues we’re recognized within this coveted ranking and for that—along with all of their hard work and dedication—I salute them.

The most notable news this week was The Mortgage Bankers Association’s (MBA) release of is Weekly Mortgage Applications Survey for the week ending May 29, 2009. The Market Composite Index, a measure of mortgage loan application volume, was 658.7, a decrease of 16.2 percent on a seasonally adjusted basis from 786.0 one week earlier but was 14.4% higher than the same week a year ago. This increase is due, largely in part to the first time home buyer market which, as we know, has been vastly stimulated by a triple threat combination of low interest rates, the $8,000 first time home buyer tax credit and increased affordability. Together these incentives are finally getting buyers in the first time home buyer market off the fence and into the market which—once we get through the large number of REOs on the market—we should finally start to see some price stabilization.

But for those of you who are waiting for your homes to come back to their pre-recession values, be prepared to wait. A recent study that I read notes that real estate is now as affordable as its has been in the past 38 years (this of course relates to median homes when compared to median mortgage rates and incomes).

The fact is, the peak of unaffordability was in 2006, when an average family in the United States needed to spend 44% of their income to purchase an average single family home. Today, housing affordability in the United States is up to 73%. This means 73% 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.

A couple of other interesting articles of note this week:

- RISMedia’s First Time Home Buyers Grabbing Houses and Tax Credit (
http://rismedia.com/2009-06-03/first-time-home-buyers-grabbing-houses-and-tax-credit/)
- Realty Times Multifamily Builder Confidence Up From Record Lows; Interest From Prospective Renters and Buyers Rises (
http://realtytimes.com/rtpages/20090603_confidenceup.htm)
- Realtor.org Pending Home Sales Up For Three Months in a Row (
http://www.realtor.org/press_room/news_releases/2009/06/phs_up)

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

  • Boulder/Longmont—Our Boulder office reports Boulder county has been pretty steady for the last two weeks, despite a slight slowdown over the Memorial Day weekend. The large jump in both sales and listings that started the second week in May has continued. Agents continue to report tremendous activity in the first time buyer market with multiple offers on properties under $200,000 being very common, especially short sales. We're seeing more and more lender problems-deadlines missed, late and inaccurate appraisals and poor communications, so we are urging Agents to leave more time for closings. One agent reported a new listing (with future purchase) solely because he got a Facebook page! Our Longmont office reports we had a nice rebound on our showing activity for the last week. The number of homes under contract is holding steady. We have all heard the great news about the Denver area being one of the first areas to rebound. This news will help with confidence in our market. First time buyers are helping to make the rebound possible and Longmont has a good inventory for those buyers.
  • Evergreen/Conifer—Our Evergreen office reports we had two new listings during the week for a total of 17 for the month, totaling $7,500,000. Four listings went under contract including one for $2,200,000 in Evergreen. There were a total of 19 homes under contract for the month. Showing activity showed some improvement following the holiday weekend. There were sixty-four showings for a total of 324 for the month. We continue to experience an excessive number of contracts that fall due to a combination of factors including lender and appraisal issues and inspection problems. Our Conifer office reports we had one new listing during the week for a total of eight for the month totaling $1,200,000. Three listings went under contract including one bank owned. A total of eleven homes under contract for the month. Showing activity showed some improvement following the holiday weekend; 33 showinngs for the week for a total of 226 for the month.
  • Denver Central—Inventory continues to drop in the Denver area. We have several neighborhoods that continue to see some appreciation in home values. The Denver area is recovering a lot faster than other parts of the country this past week. The Today show talked about Denver being the #1 city for real estate recovery in the country.
  • Devonshire—The summer season has definitely arrive at Devonshire. The children are about to be out of school and parents are looking at homes in anticipation of getting settled prior to next school year. Showing activity has increased considerably. Sellers are now getting their homes on the market & are quite knowledgeable regarding staging and pricing. The homes below the $400,000 price point are moving well if they are in good condition & fairly priced. We are still seeing the upper end of the market is still slow on showings and closings but anticipate that that sector will loosen somewhat if the economic news continues to show some stabilization/upswing. Really great activity at open houses and with the warm weather we anticipate a very busy weekend.
  • Douglas County—Our Southwest Metro office reported our showings have picked up this past week. We had three listings that sold in 1 to 2 days of hitting the market. We had six properties with multiple offers. Our mortgage rep approved 10 buyers in one day. The feeling is that the buyers are now ready to buy and ready to write offers. Open houses were great last week and we had several Agents pick up buyers from their open houses. We're very excited to see that the activity is moving in the right direction. Our listing inventory is also starting to increase as sellers are ready to sell and I believe they are starting to feel good about our market.
  • El Paso County—Colorado Springs reports the buyer market remains busy and inventory is not being replaced as fast a sales are going. The under $250,000 range remains very hot. Rumor is that Hewlett/Packard may be returning to the area. Appraisals are coming in very low and not flexible on comps. Several small lenders have closed & several local banks have cut back on available programs.
  • Larimer County—Our Fort Collins/Loveland office reports homes are moving, and moving quickly at the lower price points. Several Agents have had buyers lose out on homes in bidding wars. The competition for well priced homes in good condition is heating up and we are seeing multiple offer situations. Most of this activity is in the $300,000 and under price point. A recent report for the SE part of Fort Collins revealed there are currently 14 homes on the market between $249,000 and $275,000 and of those homes, eleven of them are under contract. Inventory is stabilizing after the May boom but with graduations and primary schools getting out we expect to see a slight bump in the next two weeks.
  • North Metro—The average price range of our new listings continues to be around $250,000. There was an increase in the number of homes under contract in the past week. Our Previews market is moving slowly. Our office continues to lead the market in number of listings and sales in Westminster, Broomfield and Commerce City. Many Agents from this office are preparing for their Neighborhood Garage Sales. They will be holding these sales in at least ten communities around the Westminster/Broomfield area.
  • Parker—We had a very active last week of the month. We continue our trend of fast moving listings that are priced aggressively in the lower to mid market. The high end market is still down almost 50% and it will take some time to recover. Some of the neighborhoods are already stable in value and more should soon follow. The time may be running out soon to get those special deals.
  • Southeast Metro—It's not a buyer's market in desirable neighborhoods! The competition for homes in good condition in several desirable neighborhoods is fierce! One of our brokers wrote 25 offers for different clients in one week and was involved in multiple offer situations with every property. Open house activity is off the charts! One of our listings had 27 visitors last Saturday and fifteen visitors in one hour on Sunday.
  • West Lakewood—Sellers know that even though they feel they sold their homes at fair market value, the appraisal may come in below contract price. At this point buyers and sellers are back in a negotiating position. The market under $250,000 is very, very active. The number of properties under contract is steadily increasing.

I’d like to leave you with this. It is an excerpt of an article I found online that I think really should get us all thinking. As I visit our offices, what I hear from most is that things are changing and I think many of us agree—at least as far as the housing market is concerned—it seems we are on the path to recovery. Having said that, there are some buyers and sellers out there who continue to wait. For those of you (and you know who you are), please read on:

“…If you're a buyer, buy because you love what you're buying. Buy because the lifestyle you're looking to live can more easily be accomplished with the purchase than without. If you're selling, sell because you want to sell. Sell because you need to sell. Sell because your neighbor is driving you crazy. Sell because the house you've always had your eye on just hit the market. Sell to move up in the market. Sell to downsize. Sell to liquidate, but if you really want to sell, just sell already. If you're waiting to sell until markets rebound, please realize that doesn't mean to list in October. That means you'll be listing several years down the road, and the reason you were planning on selling in the first place might not exist at that magical time in the future. None of us are promised today, let alone tomorrow. Let alone 6 years from now when you can possibly sell your home for 15% more money.

If you're in no hurry to sell, do your neighbors a favor and take your home off the open market. If you're wanting to sell, be realistic in your asking price and aggressive in your hunt for a buyer. If you're a buyer, John Burns seems to be telling you that it's a pretty good time to buy. I'm telling you it's a good time to buy, and my reasons are not the same as Mr. Burns'. Buy because you want to. Buy because you can. Buy because you know the purchase will make you look like a real estate savant 15 years from now. Welcome to 2009 and the new rules of real estate. Sell low, hopefully buy lower.”

And with that, I’ll bid you adieux.

Until next week,
Make it a great one,


Chris Mygatt
Coldwell Banker Residential Brokerage Colorado

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