Thursday, July 9, 2009

Realtor.com Survey Tells A Lot About Today’s Housing Market

Earlier this week, Realtor.com released a survey discussing what is motivating buyers in today’s market. It was an interesting read and I thought I’d share the highlights:
  • “Price declines and low interest rates are motivating millions of home buyers to shop for bargains in the most affordable housing market in 28 years, yet at the same time only one in ten of today’s home owners say they have delayed selling their home due to those same market conditions.”
  • “Affordability is clearly driving more than two thirds (65.2%) of potential buyers back into today’s housing market. Nearly one of five prospective buyers (19.6%) say foreclosure bargains in their communities would motivate them to purchase a home, the most important reason they’re interested in buying in the near future.”
  • “An additional 15.5 percent said they’re motivated to buy soon because they think prices are as low as they will go and another 15.5 percent said they were motivated to buy before interest rates rise. For 14.6 percent of first time home buyers, the Federal $8,000 tax credit is the impetus to purchase a new home in the future.”
  • “The survey also found most Americans are not aware of how affordable homes are becoming in today's fast-changing housing market. More than three-quarters (76.4%) of consumers think a median income family can afford only 50 percent or fewer of the homes for sale in their area. However, in reality, a family earning the national median income of $53,182 can afford nearly 75 percent of the current homes for sale on Realtor.com.”
  • “In the past year, the Housing Affordability Index maintained by the National Association of Realtors has increased 29 percent overall and 19 percent for first-time homebuyers, and is higher now than at any time in the 28 year history of the index.”

"Value is clearly motivating potential home buyers, and today's new level of affordability is still an under-appreciated reality that needs to be explored," said REALTOR.com President, Errol Samuelson. "The variety and quality of homes currently within reach of the average American family is much greater than most people realize. Making credit available to responsible borrowers and building consumer confidence in the economy are now key factors in restoring vitality to the nation's housing market."

In other interesting news this week, for the second consecutive month, Denver fared the best among 20 U.S. cities reporting drops in home prices, according to Standard & Poor’s/Case home-price index for 20 major cities dropped 18.1 percent in April compared with April 2008.

Denver reported a 4.9 percent decline, better than Dallas and Boston, which were down 5 percent and 7.7 percent, respectively.

"This was the least painful decline in the last six or seven months," said economist Jeff Thredgold of Vectra Bank Colorado. "There is still some additional weakness to come, but most of the pain is behind us."

Also interesting to note, as the Denver Business Journal reported, “Home prices in Denver increased for the second consecutive month and show the lowest year-over-year decline of the 20 cities included in the closely watched S&P/Case-Schiller index.”

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

  • Boulder/Longmont—Our Boulder office reports sold activity in the Boulder area market has been very steady over the last few weeks despite the holiday weekend. New listings fell by about 15% week over week, but still remain fairly high. Agents report that the ongoing problem of late and inaccurate appraisals continues to be a problem and buyers and sellers are both wanting to negotiate price and terms more than ever. Buyers want huge price reductions, yet sellers point to the continued strength in many sectors of the Boulder County market. As a result, 4-5 offers and counteroffers are more common than ever. The Longmont office reports seasonality hit our market this last week. Showings were down, but the good news is that homes put under contract were down very slightly. New inventory (listings) are coming on the market very slowly. Short sales and foreclosure homes do dominate the end of our market. Many buyers are waiting for "bank approval" on homes they hope to buy. The process of purchasing a short sale is not user friendly. Be prepared to wait and wait and then hurry up to close. Showings on homes priced from $400,000 to $650,000 are slowly picking up. Now is the time if you want to be situated before school starts in the fall.
  • Evergreen/Conifer—We had two listings go under contract the past week including one short sale which had been under several times but failed due to delays in the bank approval-short sale approval finally obtained. We had a total of 62 showings on that property since original list date. There was a total of six buyers put under contract during the week including a 1st time home buyer in Denver, single family in Lakewood after only three days on market and a single family in Elizabeth after two years on the market. One client was the successful buyer among five potential purchasers of bank-owned property in Evergreen. During June, we had a total of 390 showings of our listings, approaching levels we typically experience during the summer season. Our Conifer office reports one new listing during the week at $5,250,000. Total of nine listings in June totaling $3,500,000. Two listings went under contract including one bank owned that went under contract after the first showing. Two buyers put under contract including one second home buyer, a cash deal that closed in four days. There was a slight decrease in showings during the week due to the holiday. Showings during June totaled 160 with the majority of activity in the $300,000 to $400,000 range.
  • Denver Central— The Denver real estate market continues to get positive national and local press. Recently Forbes magazine ranked Denver as the best city to buy real estate in America. The Denver Post ran an article on July 1 that Denver is fairing the best nationally out of 20 major cities based on the most recent Standard & Poor's Case-Shiller report. You can view the article at http://www.denverpost.com/business. Housing inventory continues to drop in the Denver area for the fourth consecutive month. We have seen an increase in the number of existing homes sold. This could indicate that the market has bottomed out and it is very encouraging for the future of real estate in Denver. Our office listings averaged 71 days on the market for the month of June. The lower-end market has certainly shifted to a seller's market with properties moving quickly. Properties that are priced aggressively are seeing multiple offer situations.
  • Devonshire—No information reported.
  • Douglas County—Our Southwest Metro office reported showings have really increased this past week. Our open houses were very successful. Several Agents picked up buyers and three potential listings. We had two Agents who converted their floor calls and wrote offers for them. We are seeing listings that are priced right receiving offers after only 1-3 days on the market. Agents are also reporting that there is an increased interest in the $8,000 credit. We are seeing properties over $400,000 not seeing as much activity as those below this price range. Our mortgage rep continues approving buyers which is a good sign. Agents are feeling that the market is starting to turn little by little. Showings were not as great as they have been over the weekend due to the 4th. We did see a good increase in listings & in buyer contracts. We had one home that sold in one day in Highlands Ranch and good traffic in our open houses that were held open during the week as opposed to the weekend. We are seeing multiple offers on our listings and many of our buyers are seeing themselves in multiple offer situations. The market mood seems very good right now and our Agents are very busy. We still are seeing homes above $400,000 on the market longer than the ones priced below.
  • El Paso County—No information reported.
  • Larimer County—Our Fort Collins/Loveland office reports the market has been relatively steady but we have seen a slight bump in sales this last week. However, this figures to be a seasonal "bump" but the inventory turnover is a positive sign for our market. Our under contracts for a single week were the highest they have been this year and our inventory coming onto the market is steady. Showings for June were the highest they have been for any single month of the year so far, again this may be seasonal but hopefully home sellers will see rewards in the coming months. The market is flat, but that's better than down!
  • North Metro—No information reported.
  • Parker—No information reported.
  • Southeast Metro—There has been a huge surge in buyer activity! In June we placed 170 properties under contract. Activity continues to hold at open houses & we are seeing multiple offers in all price ranges below $350,000. As in every area in the city, sellers are challenged by the appraised value of their homes. Luxury homes are seeing a slight increase in traffic.
  • West Lakewood— Properties priced $250,000 or below are flying off the shelf! Buyers who want to take advantage of the $8000 tax credit should be actively working to purchase now rather than in the fall when it will be even more difficult to find available properties.

I hope you all had a wonderful 4th of July. The summer selling months are abuzz with activity and this certainly is an exciting time to be in real estate. But, isn’t it always?

Until next week,
Make it a great one,

Chris Mygatt
Coldwell Banker Residential Brokerage Colorado

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