Recent Housing Upturn Sparked By Buyer Leverage

The latest S&P/Case-Shiller home price index reveals home price for 10 major cities rose 3.6 percent between April and July. So does this recent uptick in the housing market mean we are on the cusp of a housing boom?

I hate to burst your bubble but probably not. In all likelihood, the recent upturn in the housing market has been sparked by several competing factors:

· The impending expiration of the $8,000 first-time home buyer tax credit
· The recent uptick in the stock market
· Increased consumer confidence
· Continued low interest rates

Essentially, buyers are playing a leverage game. They’re watching the economic indicators and trying to determine the best time (for them) to buy. It seems many are now pulling the trigger which is causing sales figures and prices to go up.

Will it last? It’s tough to say. Right now we’re in a slightly unique position because some of the stimulus packages that the government instituted are working which may be causing a false front for the overall economy. The stock market is up. Consumer confidence is on the rise. The housing market is up. All of those are pointing to some current benefits in the market.
But, the fundamentals themselves haven’t changed. Foreclosures remain a major issue for our economy. And unemployment remains a major challenge. Until those two areas of the economy fully recovery, we may see continued economic volatility.

What I can say is I think the worst of the housing market’s problems are probably behind us. But the road ahead isn’t completely clear. One major factor that stands in our way is the impending expiration of the first time home buyer tax credit. This credit has helped to drive much of our recovery. But right now the debate on Capitol Hill continues and everyone is waiting to learn whether the credit will be extended, expanded or will it simply expire. Many on the opposing side believe it is too costly to finance. But NAR had this to say: “Each home sale pumps an additional $63,000 into the economy through related goods and services, so the benefits of extending and expanding the tax credit far outweigh the costs.”

If the opposing side gets their way and the credit simply expires, NAR had this to say: “All we can say for certain is sales will decline when the tax credit expires because we are not yet on a self-sustaining recovery path. It also raises a risk of a double-dip recession. Extending and expanding the tax credit is the best tool in our arsenal to encourage financially qualified buyers to stimulate the economy and help reduce the budget deficit.”

So there you have it. We’re in a state of flux as we await the results of the credit. As that debate continues, buyers seem to be leveraging today’s market advantages which is creating a welcome relief for our local market. Let’s just hope the leveraging opportunities continue.

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

• Boulder/Longmont—The Boulder office reported sales and listing activity were up very slightly in Boulder County last week both about 3%. Showings were down slightly, about 5%. A check of inventory in Boulder County over the past three months shows a disturbing trend. 297 new listings in July, 362 new listings in August and 395 in September. We'll see if the upward trend continues in October.
• Evergreen/Conifer—Evergreen reported we had two new listings for the week. Two of our listings went under contract. We had 61 showings during the week. Conifer reported there were no new listings during the week. No listings or buyers were put under contract. Showings decreased to 29 for the week.
• Denver Central – There has been an increase in 1st time home buyers looking for property and wanting to take advantage of the tax credit. The deadline has been extended for military service individuals. Since there has been an increase in buyers taking advantage of this credit we've seen an inventory shortage for homes under $200,000. We have also seen an uptick in the average sales price and we attribute that to more move-up buyers entering the marketplace. We continue to have low inventory levels in the Denver Metro market. The inventory is substantially lower than its highpoint in 2007. We're very excited about the future of real estate in Denver. Showings are continuing to increase year over year.
• Devonshire— We seem to be on the upward swing this week with showing activity picking up and buyers more active in the market. The cold weather seemed to motivate sellers to adjust their prices and for buyers to get down to business and put offers on the table. Perhaps that with the holidays fast approaching some momentum has been created. Sellers need to remember to keep their yards manicured so that buyers can see the landscaping under the leaves. Keeping gutters empty and leaves raked up makes the buyer feel that the home is well cared for & in good condition. Interest rates are still very appealing and there is still time to take advantage of the tax credit incentive. We're feeling optimistic about the rest of October and November.
• Douglas County—Our Southwest Metro office reports showings were down this past week, though we did see an increase in listings and many of our Agents reported that they had listing appointments as well. We're seeing 1st time buyers ready to take advantage of the low interest rates and the $8000 credit before it expires. Several Agents have reported that buyers are not finding the inventory as high as it was a couple of months ago and the quality of the selection is not as good. We're working hard to have our potential sellers list now rather than wait until next year especially with inventory low.
• El Paso County—Colorado Springs reports last week was the 1st sign of a slow market facing the upcoming Fall and Winter season. The last few buyers got under contract to close before the tax credit deadline of November 30th. A Coldwell Banker call for action was answered by countless real estate professionals from various companies in order to encourage our representatives to extend and expand the tax credit program. We hope that the call will be answered and atleast the deadline will be extended.
• Larimer County—The Fort Collins/Loveland offices reported new listings are up in Northern Colorado and showings are also up nearly 10% from the previous week. We're seeing an increase of bank owned homes in the last month and there are certainly some good deals. These homes are priced as high as $1,500,000 all the way down to $65,000. The boost in home showings seem to be coming from 1st time buyers looking to take advantage of the tax credit. Many of these new lower priced bank owned properties are already under contract. The move up buyer that has been sitting on the sideline is also getting involved somewhat as undervalued homes are being purchased. For example the bank owned home referenced above for $1,500,000 was previously listed for $3,200,000!! There are good deals to be had, so get out and find a new home today!
• North Metro—The overall activity for the North area has picked up again, which is important as we move into the fourth quarter. Our listings have continued to pick up as well. This last week we are averaging 6 to 7 listings per day. At the same time, the sales have increased from 3 to 4 per day to between 5 and 6.
• Parker— The showing activity continues to be steady and the sales activity is stable as well. The listing inventory is also constant as supply and demand seem to be more balanced in most neighborhoods and price ranges. The high end market is still very slow and on some listings about $1,000,000 we see no traffic at all. We are very excited about a big food drive our Agents are organizing and we are overwhelmed by the participation of the entire community.
• Southeast Metro— October is shaping up to be a great real estate month at our DTC office! We have 154 properties scheduled to close and sellers are enjoying an increase in buyer activity. Even with the colder weather, we're averaging over 500 showings a week so far for the month. The luxury home market is also seeing an uptick in traffic as 20% of our luxury home listings are currently under contract.
• West Lakewood— As you can imagine, with the 1st time homebuyer tax credit deadline nearing, agents are extremely busy showing properties to these excited buyers. We see multiple offers on many homes. There were numerous under contracts in the past week on homes that have been on the market less than thirty days. We see that investors are still very active in the market as well.

This week I’ll conclude with a few story highlights:

• USAA Praises Biggert Bill To Extend First-Time Homebuyers Tax Credit; Reuters
• Hopes Run High For Tax-Credit Expansion; MarketWatch
• Washington Report: $8,000 Home Buyer Tax Credit; Realty Times

Until next week,
Make it a great one,

Chris Mygatt
Coldwell Banker Residential Brokerage Colorado




The latest S&P/Case-Shiller home price index reveals home price for 10 major cities rose 3.6 percent between April and July. So does this recent uptick in the housing market mean we are on the cusp of a housing boom?
I hate to burst your bubble but probably not. In all likelihood, the recent upturn in the housing market has been sparked by several competing factors:
· The impending expiration of the $8,000 first-time home buyer tax credit
· The recent uptick in the stock market
· Increased consumer confidence
· Continued low interest rates
Essentially, buyers are playing a leverage game. They’re watching the economic indicators and trying to determine the best time (for them) to buy. It seems many are now pulling the trigger which is causing sales figures and prices to go up.
Will it last? It’s tough to say. Right now we’re in a slightly unique position because some of the stimulus packages that the government instituted are working which may be causing a false front for the overall economy. The stock market is up. Consumer confidence is on the rise. The housing market is up. All of those are pointing to some current benefits in the market.
But, the fundamentals themselves haven’t changed. Foreclosures remain a major issue for our economy. And unemployment remains a major challenge. Until those two areas of the economy fully recovery, we may see continued economic volatility.
What I can say is I think the worst of the housing market’s problems are probably behind us. But the road ahead isn’t completely clear. One major factor that stands in our way is the impending expiration of the first time home buyer tax credit. This credit has helped to drive much of our recovery. But right now the debate on Capitol Hill continues and everyone is waiting to learn whether the credit will be extended, expanded or will it simply expire. Many on the opposing side believe it is too costly to finance. But NAR had this to say: “Each home sale pumps an additional $63,000 into the economy through related goods and services, so the benefits of extending and expanding the tax credit far outweigh the costs.”
If the opposing side gets their way and the credit simply expires, NAR had this to say: “All we can say for certain is sales will decline when the tax credit expires because we are not yet on a self-sustaining recovery path. It also raises a risk of a double-dip recession. Extending and expanding the tax credit is the best tool in our arsenal to encourage financially qualified buyers to stimulate the economy and help reduce the budget deficit.”
So there you have it. We’re in a state of flux as we await the results of the credit. As that debate continues, buyers seem to be leveraging today’s market advantages which is creating a welcome relief for our local market. Let’s just hope the leveraging opportunities continue.
Now, let’s take a look at this week in real estate:
Boulder/Longmont—The Boulder office reported sales and listing activity were up very slightly in Boulder County last week both about 3%. Showings were down slightly, about 5%. A check of inventory in Boulder County over the past three months shows a disturbing trend. 297 new listings in July, 362 new listings in August and 395 in September. We'll see if the upward trend continues in October.
Evergreen/Conifer—Evergreen reported we had two new listings for the week. Two of our listings went under contract. We had 61 showings during the week. Conifer reported there were no new listings during the week. No listings or buyers were put under contract. Showings decreased to 29 for the week.
Denver Central – There has been an increase in 1st time home buyers looking for property and wanting to take advantage of the tax credit. The deadline has been extended for military service individuals. Since there has been an increase in buyers taking advantage of this credit we've seen an inventory shortage for homes under $200,000. We have also seen an uptick in the average sales price and we attribute that to more move-up buyers entering the marketplace. We continue to have low inventory levels in the Denver Metro market. The inventory is substantially lower than its highpoint in 2007. We're very excited about the future of real estate in Denver. Showings are continuing to increase year over year.
Devonshire— We seem to be on the upward swing this week with showing activity picking up and buyers more active in the market. The cold weather seemed to motivate sellers to adjust their prices and for buyers to get down to business and put offers on the table. Perhaps that with the holidays fast approaching some momentum has been created. Sellers need to remember to keep their yards manicured so that buyers can see the landscaping under the leaves. Keeping gutters empty and leaves raked up makes the buyer feel that the home is well cared for & in good condition. Interest rates are still very appealing and there is still time to take advantage of the tax credit incentive. We're feeling optimistic about the rest of October and November.
Douglas County—Our Southwest Metro office reports showings were down this past week, though we did see an increase in listings and many of our Agents reported that they had listing appointments as well. We're seeing 1st time buyers ready to take advantage of the low interest rates and the $8000 credit before it expires. Several Agents have reported that buyers are not finding the inventory as high as it was a couple of months ago and the quality of the selection is not as good. We're working hard to have our potential sellers list now rather than wait until next year especially with inventory low.
El Paso County—Colorado Springs reports last week was the 1st sign of a slow market facing the upcoming Fall and Winter season. The last few buyers got under contract to close before the tax credit deadline of November 30th. A Coldwell Banker call for action was answered by countless real estate professionals from various companies in order to encourage our representatives to extend and expand the tax credit program. We hope that the call will be answered and atleast the deadline will be extended.
Larimer County—The Fort Collins/Loveland offices reported new listings are up in Northern Colorado and showings are also up nearly 10% from the previous week. We're seeing an increase of bank owned homes in the last month and there are certainly some good deals. These homes are priced as high as $1,500,000 all the way down to $65,000. The boost in home showings seem to be coming from 1st time buyers looking to take advantage of the tax credit. Many of these new lower priced bank owned properties are already under contract. The move up buyer that has been sitting on the sideline is also getting involved somewhat as undervalued homes are being purchased. For example the bank owned home referenced above for $1,500,000 was previously listed for $3,200,000!! There are good deals to be had, so get out and find a new home today!
North Metro—The overall activity for the North area has picked up again, which is important as we move into the fourth quarter. Our listings have continued to pick up as well. This last week we are averaging 6 to 7 listings per day. At the same time, the sales have increased from 3 to 4 per day to between 5 and 6.
Parker— The showing activity continues to be steady and the sales activity is stable as well. The listing inventory is also constant as supply and demand seem to be more balanced in most neighborhoods and price ranges. The high end market is still very slow and on some listings about $1,000,000 we see no traffic at all. We are very excited about a big food drive our Agents are organizing and we are overwhelmed by the participation of the entire community.
Southeast Metro— October is shaping up to be a great real estate month at our DTC office! We have 154 properties scheduled to close and sellers are enjoying an increase in buyer activity. Even with the colder weather, we're averaging over 500 showings a week so far for the month. The luxury home market is also seeing an uptick in traffic as 20% of our luxury home listings are currently under contract.
West Lakewood— As you can imagine, with the 1st time homebuyer tax credit deadline nearing, agents are extremely busy showing properties to these excited buyers. We see multiple offers on many homes. There were numerous under contracts in the past week on homes that have been on the market less than thirty days. We see that investors are still very active in the market as well.

This week I’ll conclude with a few story highlights:

USAA Praises Biggert Bill To Extend First-Time Homebuyers Tax Credit; Reuters
Hopes Run High For Tax-Credit Expansion; MarketWatch
Washington Report: $8,000 Home Buyer Tax Credit; Realty Times
Until next week,Make it a great one,Chris MygattColdwell Banker Residential Brokerage Colorado