Thursday, November 19, 2009

Housing Stats and a Little Turkey Talk…Happy Thanksgiving!

Some good news was released this week from Fannie and Freddie: maximum loan limits will remain unchanged for 2010. The Federal Housing Finance Agency announced that the maximum conforming loan limits for mortgages originated in 2010 will remain unchanged from their 2009 numbers. The maximum loan limits for counties across the United States can be found here (116 pages).

The news in the media over the last two weeks has largely been about the potential benefits of the new expanded and extended home buyer tax credit which opens the doors for existing homeowners to take advantage of a $6,500 tax credit. There have certainly been quite a few articles regarding the tax credit over the last two weeks. I did come across an interesting article on which stated, “Up to 400,000 people bought a home for the first time due to the credit, boosting first-time buyers to a record 47 percent of sales over the past year, the National Association of Realtors has said. With the help of the credit, existing home sales will rise 2 percent this year and 13.6 in 2010, the group estimates.”

To say the least, 2009 was a very challenging year in real estate. The good news is that after a very rough 2008 and early 2009, we started to see a positive turn in the housing market as the year wore on, thanks in part to the first-time home buyer stimulus and indications that the economy was starting to improve. So now the big question of the day is, what will 2010 bring?

With the improvement we are seeing on Wall Street and the economic improvements we are seeing on a global scale, things seem to be moving in the right direction, which makes prospective home buyers feel more confident about their future and the home they may choose to buy. So much of our business is affected by consumer confidence.

Also on a positive note, the default notices are actually declining in Colorado.

But I would caution that we probably aren’t out of the woods as it relates to foreclosures. With unemployment figures still frighteningly high, there are still quite a few homeowners out there who are struggling with their payments. And now there is a great deal of evidence that it isn’t just in the entry level arena; it is also hitting the mid-level and luxury market, too.

The big question is when is the “shadow” inventory of already foreclosed homes going to be released, now that the government has lifted the moratoriums on foreclosures. Once we start to move through those properties, we should begin to see a better, more solid grounding for the real estate market.

For real estate, this feels like more of a long “L” shaped recovery than a “U” shape.

The fact is, we live in one of the most desirable regions in the world. Certainly we’ve taken our fair share of hits over the last three years, but our region’s desirability, economic vitality, culture, weather and overall market conditions make it a sought-after place to live. We generally have a much healthier economy. This, I believe will help drive our long, slow, modest recovery.

I am encouraged by the progress we are making in the real estate market. As we track sales activity, we are seeing more encouraging signs. Based on what we’re seeing, we’re estimating that we can expect sales to moderate to a more sustainable pace and we will probably see a modest rise in housing prices. Will it be the double digit appreciation we saw in the earlier part of the decade? Probably not. But this new normal is much more sustainable and a much healthier foundation to build upon. It makes me excited about the future and gives us all hope for a relatively modest and productive 2010.

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

  • Boulder/Longmont—Longmont reported this was the week of waiting for buyers and sellers. Everyone was standing still, waiting to see if the buyer’s credit was going to be extended, and it was! Yahoo! The housing industry can continue on with its help in assisting the turnaround of our sellers calling our Agents, ready to list even at this traditionally "slow" time of year.
  • Evergreen/Conifer—Evergreen reported there was a total of one new listing for the week. Two listings went under contract during the week one, a single family home in Aurora on the market for one day before receiving the offer. One buyer went under contract on a HUD property. We had a total of 53 showings during the week. For the month of October, a total of eleven new listings were taken and a total of 269 showings. Ten listings went under contract with a total of 107 days on market.
  • Denver Central – No information reported.
  • Devonshire—This week in the Devonshire office we've seen a definite slowdown in showing activity. There are still homes going under contract & closing but showings are down & open houses are showing the same decline in attendees. On a great note, the tax incentives have been extended & expanded which has created quite a buzz. Now that we know the perameters are for this incentive package, it will bode well for a surge of activity going forward in 2010. Sellers should do repairs/renovations/updating in anticipation of getting their homes on the market. We all know that the homes that show well & are priced competitively will sell in a timely manner. On behalf of all the members of the Devonshire office, we thank you for your business in the past & look forward to working with you in the future. Please join us for a complementary photo with Santa in the office December 5th from 10:00AM to 4:30PM.
  • Douglas County—No information reported.
  • El Paso County— Colorado Springs reports the diminishing urgency of 1st time buyers after the extension of the tax credit was felt on all levels. Showing activity as well as sales activity has dropped significantly. The fast approaching holiday season & the changing weather has also caused some of the sellers to hold off on listing their home. On a positive note, we expect activity to pick up strong after the 1st of the year. We also expect a great turn out for our annual office Holiday Photo Event.
  • Larimer County Showings are down as well as inventory since last week & winter is slowly making its way towards us. But not all is lost! The new home buyer tax credit offers a wonderful opportunity for not only the 1st time home buyers but also for the move-up buyer that have lived in their home for five or the last eight years. Keep in mind that you now have until April 30th to put your new home under contract and you must close by June 30th to receive the credit. Be sure to ask your local Coldwell Banker agent how you can take advantage of this opportunity before it's gone!
  • North Metro The North Metro office has listed 35 new homes this month. The average price of our listings this month is $274,000 which is an increase of 4% from the past month. Of the 48 homes that are under contract with us this month, we're seeing most of them under $225,000. Homes are difficult to find in this price range at this time & when available go under contract quickly. Much excitement surrounding the extended tax credit with agents reaching out to buyers that were uncertain about the outcome of this initiative but are now looking to buy.
  • Parker— After a last rush to get buyers under contract before the looming tax credit deadline the news about the extension & expansion calmed some of the buyers down & caused & also caused a number of sellers to hold off on listing their property. Agents are preparing for a strong first part of 2010 and are contacting their sphere with updates about the new limitations of the tax credit. The office preparations for the Holiday Photo Event are in full force & we expect a high number of clients to take advantage of this great opportunity.
  • Southeast Metro— The surge of first time homebuyers continues! We are experiencing multiple offer situations in several price points and specifically homes over $250,000. Some of the homes that have been in multiple offer situations have been on the market for awhile and are a direct result of the time crunch for the tax credit. We have placed 120 properties under contract this month and we will close over 150 units. November is looking great with 100 units already scheduled to close! Despite the unpredictable weather, open house traffic continues to be strong and serious buyers are out there!
  • West Lakewood— We are very pleased that the extension and expansion of the tax incentive program has passed. We haven't felt the increase in activity yet but are anticipating it in the next weeks and months. We may not feel the change until after the holidays when move up buyers start to move.

I’ll leave you with a few interesting articles of note from the week:

Finally, I’d like to take this opportunity to wish you and your families a very warm and blessed Thanksgiving. Despite the challenges in the market and the bumpy road we have taken to get here, we all have a great deal to be thankful for. Family. Friends. Health. Food. A roof over our heads. These are all things to hold close and cherish this special time of year. I for one am thankful for you and appreciate what you do each and every day. I feel so fortunate to be President of Coldwell Banker Residential Brokerage and am proud to be leading our team into 2010.

Happy Thanksgiving! Please enjoy the time with your family and friends and we’ll return the week of the 30th with another exciting edition of Weekly Market Watch.

Warm regards,

Chris Mygatt

Thursday, November 5, 2009

Exciting New Opportunities for Move-Up Buyers and First Time Home Buyers!

I have some good news to share with you. The U.S. House of Representatives voted by an overwhelming 403-12 margin to approve the Unemployment Compensation Extension Act (H.R. 3548) that included, as an amendment, the extension and expansion of the Homebuyer Tax Credit. The bill already passed in the U.S. Senate yesterday by a vote of 98-0, so now it will advance from Congress to the White House for President Obama’s signature. It is one step away from being signed into law, and the Administration already has signaled its support of the Homebuyer Tax Credit amendment as well as the President’s intention to sign the bill.

This is an historic moment for our industry as well as the culmination of more than a year’s worth of hard work and meetings with elected officials and policy makers on the part of Realogy management. I am both proud and appreciative of how so many of our employees, franchisees and sales associates participated in various grass roots outreach efforts with Congress. Our Company’s efforts on Capitol Hill truly helped make a difference on this issue.

Again, this bill is now one step away from becoming law. Our voices were heard in Washington, D.C., and we should be proud that our government is taking strong action to help our industry and the economy. Having an extended and expanded Homebuyer Tax Credit available to qualified homebuyers through the first half of 2010 undoubtedly will benefit our business and the U.S. economy.

The new bill calls for an incentive for buyers who have owned their current homes at least five years, making them eligible for tax credits of up to $6,500. First time homebuyers – or anyone who hasn’t owned a home in the last three years – would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010 and close by June 30.

The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.

The credit would be extended an additional year, until June 30, 2011, for members of the military serving outside the United States for at least 90 days.

As an industry, we are certainly pleased that the tax credit may be extended and expanded. The key to returning stability to the economy lies within the housing market, and we have crafted a meaningful credit that will create a strong foundation for future growth and make a measurable difference over the next seven months in our economy.

Furthermore, tax credits like this only work by creating the sense of urgency to take advantage of them. This is said to be the last extension of the home buyer tax credit and I urge people – whether they’re first time home buyers who’ve always dreamed of having a home of their own or someone who has been gridlocked in the challenges of our move-up market to take advantage of this opportunity.

In other real estate news, NAR released its pending home sales report this week which showed that pending home sales rose again, making eight consecutive monthly gains—the longest streak since measurement began in 2001.

The report showed pending home sales rose 6.1 percent to 110.1 from a reading of 103.8 in August and is 21.2 percent higher than September 2008 when it stood at 90.9. The gain from a year ago is the largest annual increase on record, and the index is at the highest level since December 2006 when it was 112.8.

I agree with NAR’s assessment that the momentum is based on a rush of first-time home buyers trying to beat the expiration of the tax credit at the end of November. We’re feeling that rush in many of our offices.

As to keep things in perspective I would like to point out NAR’s Chief Economist Lawrence Yun’s comments that “We’re clearly not out of the woods because an excess of homes remain on the market despite recent improvements,” he said. “Although current inventory is getting closer to price equilibrium, foreclosures will continue to enter the pipeline. An extended and expanded tax credit would help absorb this income inventory.” That truly is why we are so pleased with the potential of the bill’s passing.

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

  • Boulder/Longmont—The 3 day snowstorm caused a real blip in the numbers last week, with sales, listings, and showings all down. The good news to be gleaned is that even though sales and listings were both down about 20%, showings were only down a little over 10%, so there is still real buyer activity out there.
  • Evergreen/Conifer— All activity negatively affected by two snowstorms during the reporting period. Our office closed for 2 days. Snow totals ranging from 2 to almost 4 feet in market area. Activity gradually returning to more normalized levels. Total of 108 showings during the prior month- 35% of activity in price range under $200M & 25% from $200M- $300M. Noticeable increase in activity in $400M-$500m range as well as $500M-$750M ranges
  • Denver Central – No information reported.
  • Devonshire—No information reported.
  • Douglas County—Our Southwest Metro office reports showings were down but this had a lot to do with our weather this past week. Agents are very busy showing buyers homes as the deadline is very near for the 8000 tax credit. We are seeing sellers gearing up to list their homes by the beginning of next year. We did have success in our open houses this past weekend and floor calls have been great. Our agents are very busy trying to find homes for first time buyers and are very excited about the news of the extension of the program as well as the new credit available for current owners.
  • El Paso County— Colorado Springs reports we have experienced a drastic slowdown in showing and sales activity. The listing inventory is steady and a high number of closings is scheduled for the end of the month. The expected extension/expansion of the home buyer tax credit is taking some urgency off the buyers as well of some sellers that have planned to put their homes on the market before the holidays.
  • Larimer County—No information reported.
  • North Metro—No information reported.
  • Parker— Although showing activity has slowed down again, the sales activity is was steady even with the approaching deadline of the tax credit. It seems that buyers are confident that the extension/expansion will be passed in the House as well. Power priced listings still sell very fast. If the tax credit extension is going to be passed, we expect some sellers to hold off putting their home on the market until after the holidays. 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.
  • Southeast Metro— The surge of first time homebuyers continues! We are experiencing multiple offer situations in several price points and specifically homes over $250,000. Some of the homes that have been in multiple offer situations have been on the market for awhile and are a direct result of the time crunch for the tax credit. We have placed 120 properties under contract this month and we will close over 150 units. November is looking great with 100 units already scheduled to close! Despite the unpredictable weather, open house traffic continues to be strong and serious buyers are out there!
  • West Lakewood— No information reported.

I wanted to let you know that we are officially making Weekly Market Watch a once every other week publication. With the market changing very little from week to week we just felt it was an obvious choice. If news or the market warrants, we will return to once per week or we will simply provide you with special editions.

We will return with our next edition of Weekly Market Watch on November 19.

Until then,
Make it a great November,

Chris Mygatt
Coldwell Banker Residential Brokerage Colorado