When I got home I decided to Google the news and I found this article on the NYTimes.com website: http://www.nytimes.com/2009/08/13/business/economy/13fed.html?_r=2&partner=rss&emc=rss&src=igw. The article reports, “Almost exactly two years after it embarked on what was the biggest financial rescue in American history, the Federal Reserve said on Wednesday that the recession is ending and that it would take a step back toward normal policy.”
The article goes on to note “Though the central bank stopped well short of declaring victory, policy makers issue their most upbeat assessment in more than a year by saying that the downturn appears to have hit bottom and that consumer spending, financial markets and inventory building by corporations all continued to stabilize.”
Well never one to solely rely on just one institution’s opinion, nor that of just one article, I decided to put my feelers out. I reached out to a loan officer colleague to get his take and to learn more about what our mortgage colleagues are seeing in relation to the current state of the economy. He had some comments that I tend to agree with noting that “Many are concerned we’re going to have a ‘W’ shaped recovery versus a ‘V’ shaped recovery. We don’t want to proclaim the recession is over, only to see the economy struggle for another year. It’s going to be a long, slow recovery. One month we may have positive economic news and the next, poor economic news.”
Having said that, here is what we tend to be seeing about the market:
- It does appear that the worst of the recession may be behind us.
- In all likelihood, the Fed is going to keep rates relatively low well into next year by continuing to purchase mortgage backed securities and keep the Federal Funds Rate close to zero. It is currently at .25%.
- In terms of conforming loan limits, as of right now, the higher conforming loan limits will end at the end of this year. There is some legislation that is pending to renew the higher loan amount through until November 2010 but as of right now, that is pending. The same holds true for the first-time home buyer tax credit.
Knowing this, what lies ahead? Well I would say it’s positive to know that the worst may be behind us, but in all likelihood there are still challenges ahead. There is still much recovery that needs to take place, so neither sellers nor buyers should be getting too excited with the news. Sellers still need to get a bit more realistic about price and buyers need to recognize a bargain when they see it.
And with that news in tow, let’s take a look at this week in real estate:
- Boulder/Longmont—The Boulder office reported our market has shown stable numbers in new listings taken annd sales. We continue to receive numerous calls having to do with the $8000 credit and how it works. Louisville is still showing strong sales and quick to go under contract compared to other areas. The financial market still limits us to lower price ranges to go under contract which is a much different trend in this area than usual. The Longmont office reported there has been a huge improvement in showing activity. We are are up 48% week over week. The activity was mainly in the $250,000 and under range however homes under $500,000 were also being shown! The favorable news about Colorado markets seems to be reaching the buying public. The summer weather has been stellar as long as you are not a hay farmer. Eastern Colorado is beautiful and green. This is a great time to become a homeowner in Longmont, Colorado.
- Evergreen/Conifer—Evergreen reported we had six new listings for the week. One listing, a vacant land parcel in Pine went under contract reflecting the continued improvement in land sales in the recent few weeks. There were 88 showings during the week representing a slight increase over the prior week. Conifer reported we had two new vacant land listings during the week.
- Denver Central The Denver real estate market continues to get positive national and local press on a weekly basis. We are very encouraged and excited about the future of real estate in Denver. July was another great month for sales in the Denver area. We continue to have substantial drops in housing inventory and we see an increase in the number of existing homes sold. We had an average of 83 days on market for listings (all price points) that went under contract in July. We've seen an increase in showings for the first two weeks of August. More buyers are taking advantage of the $8,000 tax credit with the December 1st deadline fast approaching. We are also seeing appreciation of home prices in several neighborhoods. 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 and an increase in cash offers on homes in the area.
- Devonshire— No information reported.
- Douglas County—Our Southwest Metro office reports showings were great this past week. We're seeing an increase in listings as well as buyer contracts. Sellers are feeling that it's a good time to sell their homes and buyers want to take advantage of the tax break and low interest rates. The agents feel that the good news regarding the housing market in Denver has helped sellers and buyers start to move forward. Open houses were very good this past week. Floor calls were good as we had several agents obtain leads. The office is very busy and Agents as well as their clients are feeling good about the market, especially in the price range below $350,000.
- El Paso County—Colorado Springs reports both our listing and sales activity are steady at the moment. Although showings have decreased slightly, we have a steady number of under contracts. As in previous weeks, we have received multiple offers (eight on one property) on the power priced listings.
- Larimer County—No information reported.
- North Metro— We are experiencing a little slower start in August with homes under contract than we experienced in July.
- Parker—The activity has slowed down and the inventory built up slightly last week. However, we still see a good number of multiple offers on energy priced listings & values have been steady for a while now in most neighborhoods. More than half of all resale listings are in a short sale situation.
- Southeast Metro—The SE Metro office reports our inventory has decreased by 7% since the first of the month and new inventory coming on the market is steady. First time home buyers are challenged with competing offers and desirable properties selling at well over the original list price. We're experiencing a slight increase in offers on properties priced above $700,000 and even some movement in the million dollar range. Overall there is a lot of energy in the real estate market right now and some brokers are experiencing a significant increase in business.
- West Lakewood—Buyers are quite frustrated with the current lending climate. In one instance, the buyer used a lender from MD which meant the appraiser was also from MD. Needless to say, the appraisal came in much below expected. Fortunately the buyer moved to a Colorado lender to resolve these issues. Our Agents are optimistic and are seeing signs of recovery.
In terms of marketing activity, in general, depending on the price range, most homes are on the market longer with discerning buyers waiting for the optimal home at the optimal price. A well-priced, well-presented home can still fetch multiple offers (especially if it is in the entry-level market), but it’s got to look appealing to the savvy buyers who are doing their homework. There is no sense in overpricing a listing – a buyer won’t even give a home the time of day if they sense the seller is being unrealistic.
Yet at the same time, there seems to be no better time to snatch up bargains in Colorado at all price points. We’re seeing five to 10 percent reductions in properties that are sitting on the market and in many cases the final offers are coming in below those reductions. That’s not to say buyers should throw out ridiculous numbers. Certain parts of Colorado, after all, have still held their value better than most of the country. Some sellers who don’t have to sell are holding firm, but time is running out for others. So, while it may take longer to get the buyer and seller to agree to terms, deals are happening and with open minds on both sides, we might start to see more positive movement for all.
Finally, I’ll leave you with this. Business Week released its “Strongest U.S. Housing Markets” list this week and Boulder was listed as the nation’s No. 1 safest housing market. Here’s a link to the story: http://finance.yahoo.com/real-estate/article/107509/the-strongest-us-housing-markets.html?mod=realestate-buy.
Until next week,
Chris Mygatt
Coldwell Banker Residential Brokerage Colorado
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