Denver-area luxury housing market

Monday, November 30, 2009, 3:15pm MST

Denver Business Journal

The Denver area’s luxury-housing market declined in number of resales and selling
price in October year over year, partly because homeowners in that price range
haven’t been able to benefit from federal homebuyer tax incentives.
Sales of existing homes in the $1 million-plus price range dropped 15 percent in
October, to 44 homes, from 52 for the same month of 2008, according to the
Coldwell Banker Residential Brokerage of Colorado’s Denver Metro Area Luxury
Home Report, released Monday. Coldwell Banker’s data came from metro Denver’s
Metrolist Inc. multiple listing service (MLS).

October high-end home sales were down from 46 in September of this year.
Existing home sales, or resales, are those of homes that have been sold at least once
before. Median selling price decreased 8.5 percent to $1.22 million last month from $1.33 million year over year. The October sales price was down 16.5 percent, from $1.47 million in September of this year. Median selling price is the midpoint between highest and lowest sales prices. Some real estate professionals consider median a truer measure of price than average because it’s not skewed by highest and lowest prices. Sellers of luxury homes received 88 percent of their asking price on average in October, compared to 92 percent for the same month in 2008. Home sellers got 87 percent of asking price in September of this year.
“The high-end market continues to try to find its footing, as much of the activity in
housing is still in the entry-level market,” Chris Mygatt, president of Coldwell Banker in Denver, said in a statement. “Distressed property sales and the first-time
homebuyer tax credit have kept the mix of sales at the lower price ranges in many
areas.”
Sellers and buyers of higher-priced homes haven’t benefitted from the first-time
homebuyer tax credit generally because they’re not interested in living in lowerpriced
homes, and/or couldn’t meet the income and homeownership requirements.
(Housing investors don’t qualify for the credit.)
This year’s first-time homebuyer tax credit allowed buyers who hadn’t owned a home
in the last three years to get a tax credit of as much as $8,000 for buying a home.
The tax credit, which was to have expired Monday, was recently extended, and
another homebuyer tax credit was added by the U.S. Congress.
In addition to the first-time homebuyer credit, there’s now a tax credit of as much as
$6,500 for repeat homebuyers who have owned a home for the last five years. The
credits expire April 30, 2010, and home sales must close by June 30.
Income limits for credit users range from $125,000 for individuals to $245,000 for
joint filers.
Other October data regarding sales of luxury homes:
• It took longer to sell a house in October of this year — 130 days — than it did in
October 2008, when it took 84 days.
• The priciest sale of the month was a three-bedroom, three-bath house in Boulder
that sold for $2.4 million.
• Denver had the most $1 million-plus sales with 11, followed by Boulder with eight.
Total metrowide October resales were down 7.6 percent year over year to 3,958, from
4,282 in October 2008. Sales last month were up 2.9 percent from September
resales, partly because buyers wanted to take advantage of the first-time homebuyer
tax credit before what was to have been its Nov. 30 expiration.
Compiled by Paula Moore | pmoore@bizjournals.com | Paula's blog:
http://denver.bizjournals.com/denver/blog/real_deals/

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 Reuters.com 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:

Cheaper Prices—More Than Tax Credit—Motivating Home Buyers; U.S. News and World Report
Tax Credit Expands Home Buyer, Economic Opportunities; On Pace To Help 70% Of Potential Home Buyers; RISMedia
Housing Cooled In October; Tax Credit Extension Expected To Drive Improvements; RISMedia
Real Estate Outlook: Moving Towards Recovery; Realty Times

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

Friday, October 23, 2009
“U.S. Economic Recovery on Track”

While we await the results of the possible expiration, extension or expansion of the $8,000 first time home buyer tax credit, one thing is for sure, the economy is moving forward in full force—which is driving consumer confidence. Earlier this week, Reuters.com ran a very interesting story on the U.S. economic recovery and the result was very encouraging. Among the story’s highlights:

“The U.S. economy is firmly poised for a recovery from its deep recession but growth may be moderate and the job market will not revive immediately, senior White House aide Lawrence Summers predicted on Wednesday.”
“On the economy, Summers said the $787 billion stimulus package and inventory rebuilding by businesses were among the “dominant drivers” lifting the economy.”
“It will be some time before unemployment starts to decline. Once it declines it will take a long time to return to normal levels, given how elevated it is…The jobless rate is now at a 26-year high of 9.8 percent.”
“Most private economists think the recession, which began in December 2007, ended in the third quarter. But there is much disagreement about the path to recovery.”
“Some see above-average growth continuing through next year, arguing that deep recessions are typically followed by powerful recoveries, helped along by pent-up demand as consumers and companies resume spending.”
Obviously this is welcome news for the economy which ultimately benefits the local housing market. What I can tell you is that I am encouraged by the progress we are making in the real estate market. We’re beginning to see more days of progress than days of back stepping. We’re watching sales activity and consumer sentiment and we are expecting over the coming months a moderate to a more sustainable pace and we will probably see a modest rise in housing prices in the coming year. Will it be the double digit appreciation we saw in the earlier part of the decade? Probably not. But this new normal (as we’re calling it) is much more sustainable and a much healthier path 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—The Boulder office reported Boulder county showed a small shift in the right direction over the past week. New listings were down by about 7% with sales up 9%, so we have inventory headed down again. Although most of this was in the lower price ranges, there was a small flurry of sales over $800,000 including one at $2,750,000! Our Agents report multiple offers on bank owned properties. Showings on our listings remain steady with a 1% increase over the past week.

Evergreen/Conifer—Evergreen reported we had a total of four new listings for the week. Three listings went under contract during the past week, two of these were out of state buyers. Two buyers went under contract, both on short sale properties. There were a total of 64 showings during the week. Conifer reported we had only one new listing during the week. Four of our current listings were put under contract, two were REO properties and one was a short sale. None of our buyers were put under contract. The number of showings decreased to 22 for the week.

Denver Central – No information reported.

Devonshire— No information reported.

Douglas County—Our Southwest Metro office reports showings increased a little this past week. We did have several successful open houses and three great floor calls. Our Agents are very busy working with buyers and the market continues to be picking up for sellers and buyers both. Inventory continues to be low especially in the $150,000 range. Most are first time buyers trying to take advantage of the tax credit and sellers are starting to realize that this is a good time to list their home. We're working hard to get our sellers to list their homes now and not wait until the beginning of the year.

El Paso County—Colorado Springs reports although the showing activity has decreased by 15% over the last week, the number of properties under contract has tripled mainly because of the looming deadline for the first time buyer tax credit program. Therefore our listing inventory has decreased slightly as well. With the changing weather we expect the sales activity to slow down drastically, especially if the tax credit program is not going to be extended. The number of multiple offers on Power Priced listings has gone down drastically, which is an indication that most of the "great deals" are off the market.

Larimer County— Showings are down significantly last week as well as under contract homes in Fort Collins/Loveland. This is most likely a seasonal decline and is to be expected. On the plus side, we had an increase of new inventory coming on to the market and several homes were subject to multiple offers. Multiple offer situations are a great sign for sellers, as this situation typically gets an above listing price contract. To create a multiple offer situation you need to have three primary things going for your listed property - price, condition and location. These three items make for a perfect storm that will entice buyers to compete for your home. Finally, don't forget, only 40 days until the 1st time home buyer tax credit runs out!

North Metro— Even though it is October and the weather has been quite cold, we've not seen a slow down in activity. The Agents continue to list properties with an increase in average sales price of $267,000. The buyers wanting to take advantage of the tax credit are out looking, but properties under $250,000 are going quickly with multiple offers. It is a great time for seller's to get their homes on the market. With inventory low, their will be less competition for buyers.

Parker –The seasonal changes are showing their signs in number of showings and transactions. The activity has slowed down some more over the last week however. Web traffic is very steady and the number of leads on our listings from the internet is increasing. Our affiliates (Title & Mortgage) are preparing for a peak of business during November because of the tax credit deadline on the 30th. Agents are preparing for our next Client Appreciation Event coming up on December 6th. Free Holiday Photo.

Southeast Metro— The heat is on! First time home buyers who are looking to take advantage of the $8000 tax credit are storming the market! We're seeing an increase in the already fierce competition for all properties priced below $225,000. Last week we had one listing that had 105 showings in six days! That has to be some kind of record! And by the way, that same property received 45 offers! It's still a great time to buy, whether or not a buyer qualifies for the tax credit. Open houses are still enjoying lots of traffic in several price ranges.

West Lakewood— No comments provided.
This week we’ll conclude with a few articles of interest:

What Housing Bust?; CNN Money
Housing Tax Credit Working, So Keep Momentum Going, NAR Urges Congress; Realtor.org
Shape Of The Housing Recovery; CNBC
Real Estate Outlook: Mixed Signals; Realty Times
Posted by About Coldwell Banker at 9:11 AM

Friday, October 30, 2009
It’s On The Table!

There’s no question. The government’s first-time homebuyer tax credit has spurred a significant amount of sales this year and its positive impact on the hard-hit housing market warrants an extension. Latest estimates show that some 400,000 additional sales occurred this year due to the first time home buyer tax credit, which is about 8% of all sales this year.

The latest news in the saga, The Senate has reached a compromise on extending and expanding the $8,000 tax credit for first-time home buyers. While its passage remains uncertain, the agreement would extend the existing credit for first-time homebuyers, worth up to $8,000, while offering a new credit of up to $6,500 for some existing homeowners. The reduced credit would be available to all homeowners who have been in their current residence for a consecutive five-year period in the past eight years. Lawmakers in Washington also raised the qualifying income limits to $125,000 for single taxpayers and $250,000 for joint taxpayers, from the current $75,000 and $150,000. Under the Senate compromise, buyers must have sales agreements in hand by April 30, but they will have until June 30 to go to settlement, said the sources. The measure still faces votes in the full Senate and the House.

The U.S. Senate won’t vote until next week at the earliest. As soon as they do we intend to create a piece that will allow you to communicate the news to your clients.

Reports show that Senate action has been delayed by a Republican demand that a vote be allowed on an amendment to end the Treasury Department’s Troubled Asset Relief Program at the end of this year. But lawmakers say they want to prevent home sales from slipping as the economy struggles to recover. And as I mentioned in a previous edition of Weekly Market Watch, that is just what may happen if lawmakers choose to let the tax credit expire.

On the flip side, the Democrats, along with the Obama administration are backing it. “The success of the American economy is closely tied to the success of the housing market; by helping to stabilize the housing market, the homebuyer tax credit has helped to shore up the economy as it begins to recover,” said Baucus, a Montana Democrat. “This would enable an even greater number of potential homebuyers to take the credit.”

Thus far it seems to be doing its job. This week, Business Week reported “The broad improvement in the housing indicators in recent months leaves no doubt that the long-awaited housing recovery is finally under way.” The article went on to report: “Policy alone cannot explain the 24% gain in existing home sales since January, nor the 22% increase in new-home purchases, the 40% rise in single-family housing starts, and the recent upturn in home prices. The primary driver is historically high affordability. Fixed 30-year mortgage rates are at 5%, a multi-decade low, and prices have plunged a total of 30% since May 2006, based on the Standard & Poor's Case-Shiller Home Price Index. By that price gauge, homes are well undervalued relative to both rents and aftertax income.”

Next week I hope to report some positive news on the home buyer tax credit front. Until then, let’s take a look at this week in real estate:


Boulder/Longmont—The Boulder office reported new listings in Boulder county remained steady this week, but sales fell 17% from last week. This caused available inventory to climb. Showings on our listings fell about 4% but our top ten listings averaged one showing per day over the past week. The sales to list ratio in the Boulder/Louisville market remains steady at 98% (not including the over $1,000,000 market). The Longmont office reported the push is on for the "$8000 tax credit buyer" to be under contract. Lenders are pushing to get buyers qualified. Entry level homes are being shown almost exclusively. Our listing inventory for move-up homes is stagnant. The Colorado weather is adding to the uncertainty. Snow and cold early this Fall season makes the buyers less likely to venture out. Colorado is still looking good for employment possibilities. Our rate of unemployment is not reaching the levels seen on both coasts. This is a great time to start a real estate portfolio.

Evergreen/Conifer—No information reported.

Denver Central – Our under contracts for October continue to remain high. There has been an increase in first time home buyers looking for property and wanting to take advantage of the $8,000 tax credit. With the deadline fast approaching and the possibility of an extension not occurring buyers have to act quickly. Congress did extend the deadline for military service individuals. We continue to see inventory shortages in the Denver market which has created offer situations in the lower end market. The inventory is substantially lower than its highpoint in 2007. Over 50% of the home sales in the Denver metro area are under $250,000. If you're looking to sell a home priced under $300,000 this is a great time & take advantage of one of the better markets to move up into a higher priced home. We've seen many move-up buyers entering the market recently. Overall, we are very encouraged and excited about the future of real estate in Denver.

Devonshire— No information reported.

Douglas County—No information reported.

El Paso County—No information reported.

Larimer County— Showings are steady and primarily at the first time buyer price point, $250,000 or less. We've seen a slight upswing in new inventory coming on the market since last week. Unfortunately the cold weather has kept some buyers at home, but this only allows inventory to build. A word to the wise, if you are still looking to take advantage of the 1st time home buyer tax credit you may want to stay away from short sale transactions. We've had several agents report that short sales are still taking longer to complete. With any luck, the tax credit will be extended & those who are under contract but in danger of not closing prior to the Nov 30th deadline will still have a chance to get in on this great opportunity.

North Metro— No information reported.

Parker–No information reported.

Southeast Metro— The surge of first time homebuyers continues! We're 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 & are a direct result of the time crunch for the tax credit. We've placed 120 properties under contract this month & we'll close over 150 units. November is looking great with 100 units already schedules to close! Despite the unpredictable weather, open house traffic continues to be strong & serious buyers are out there!

West Lakewood— Activity is starting to taper off. Listings are dropping off. Under contracts are still steady and showings are dropping off perhaps because of Halloween weekend coming up
Posted by About Coldwell Banker at 4:24 PM

Thursday, October 1, 2009
S&P Reports On The State of the Housing Market

One of the founders of what has really become the industry’s (and media’s) bible for real estate statistics and forecasts, S&P Case Shiller, recently participated in a Q&A about the state of the housing market. Robert Shiller, a Yale University economist, discussed the housing market and the implications of lower interest rates. I found it quite conservative yet insightful and in my opinion, on target with what is going on in today’s market.


That is why for this edition of Weekly Market Watch, I am going to provide you with an excerpt from his interview:


Is the slump in U.S. home prices bottoming out?

Shiller: The situation has definitely changed. With our numbers — the S&P/Case Shiller home price index — going up sharply. It looks like a major turnaround. We’ve been watching that for three months now, and we have some concern that it could be an aberration and temporary. But, at this point, it seems to be evident in just about every city in the U.S. That suggests it’s real. But it probably isn’t the beginning of a major boom, just because the economy is in such bad shape. There’s also a chance that it will reverse. It’s still only three months old, so it’s very hard to be sure at this point. The most likely scenario is that it won’t continue at this high rate of increase, but that it will neither go down a lot, nor up a lot.

So the index will move sideways for a while?

Shiller: Yes, for a while, meaning five years.

What are the main factors driving U.S. house prices? What could push them up, or cause another slump?

Shiller: The main factor is the world economic crisis and the efforts of governments around the world to stimulate the economy. Parts of those efforts have been directed at the housing market. In the U.S., there is an 8,000 dollar first-time home buyer’s tax credit which expires at the end of November. That’s a reason for concern, as it comes to an end. Also, the Federal Reserve has a plan to buy $1.25 trillion worth of mortgage-backed securities to support the housing market. They are most of the way through the program and anticipate phasing it out at some time in 2010 - that’s another thing that will go away. We’ve yet to see how the housing market will continue. Part of the problem is that people are buying now rather than later. When later comes, there could be a downturn in the market.

Is there an oversupply of houses in the U.S.?

Shiller: That’s been a problem. The inventory of unsold houses has been high, but has come down a bit. On top of that, there will be more foreclosures, more homes are going to be dumped on the market as people default. Now, that may show down as home prices will start going up again. But I suspect that this isn’t going to happen. Also, banks have more REO, or real estate owned, that they’re holding on to for the time being. But eventually those REOs are going to be dumped on the market. So that’s why it doesn’t look particularly encouraging from a supply consideration.

Turning to interest rates, which are at exceptionally low levels: Is there a risk that this eventually will cause irrational exuberance?

Shiller: There is always a risk of that. Those things are hard to predict. However it seems like the present time is least conducive to bubbles of any time. We’re in what some people call “pretend-and-extend” economy, which means that banks that have commercial loans are often extending those loans and pretending that the property is worth something. That’s because they don’t face reality. This kind of economy isn’t really suited to a beginning of a real bubble. Now, everything could change… It’s surprising how strong the residential, single-family home market looks right now. It makes me think that it’s hard to predict animal spirits.

How long can central banks afford to keep expansive policies in place?

Shiller: In principle we can keep this in place for a long time. That’s what Japan did… But confidence is definitely coming back. The depression scare is over at the moment. So it would be plausible that central banks could be raising interest rates — both in the U.S. and Europe — [as early as next year]. But I just have a worry that this isn’t going to happen and that it’s not going to be so easy to extricate [themselves from the low-rate environment].

Will the sharp increase in global debt levels drive up inflation over the medium to long-term?

Shiller: My best guess is that we won’t have inflation, that central banks will pull it back as inflation starts to begin. But I think that there’s a chance of it; people have to be defensive in their investments. It always amazes me that people are so trusting and that they want nominal debt as much as they do… So a good long-term strategy is to invest a good part of one’s portfolio in inflation-indexed bonds, even though it doesn’t particularly look like the time to worry about inflation right now.

I tend to agree with Shiller on many of his statements, specifically that we are probably in the midst of a turnaround. Having said that, it is important to point out that this isn’t going to be a sharp “V” recovery with a sudden jump in prices or units. In all probability what we will see is a long “L” shaped broad recovery in which prices are relatively stagnant for some time before eventually inching up.

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

Boulder/Longmont—The Boulder office reported the biggest change in the Boulder County market over the past week was the big jump in showings for our office, up 18%. Listings and sales showed smaller changes, up 6% for listings, down 12% for sales. Increased showings seem to be the result of lower interest rates and Agents report more activity as first time buyers fear that the clock may run out on the $8000 incentive. The Longmont office reports showing activity is slowing just a bit. First time buyers and those in the lower price ranges are the main shoppers. Listings under $250,000 are being shown and sold. Right now, with the final push for the $8000 credit, any home under $250,000 that is NOT a short sales is snapped right up! Investors know that this is the time to buy. They are fine with the down payment. The rental market is strong. Now is the time to start your "Property Ladder"!

Evergreen/Conifer—Evergreen reported we had eight new listings for the week. Two listings went under contract including one single family home on the market for three years and one single family home from a floor call, both local buyers. Two buyers put under contract in the last week, one out of state buyer from MD and one local buyer purchase of single family home in Parker, a mid $200,000 property on the market for less than a week. There were 69 showings plus ten agent previews during the week. Conifer reported there were no new listings during the week. No listings went under contract and no buyers were put under contract. Our showing activity increased to thirty-four during the week.

Denver Central– There has been an increase in first time home buyers looking for properties and wanting to take advantage of the $8000 tax credit. With the deadline fast approaching and the possibility of an extension not occurring buyers are going to have to select a property within the next 30 days in order to close in time. The Denver real estate market continues to get positive national and local press on a weekly basis. We're very encouraged and excited about the future of real estate in Denver.

Devonshire— Now that our few days of cold, wet weather are over, we're excited about a good open house weekend. Our September was a little quiet as it usually is but October in the Devonshire office is always a busy month. Sellers are anxious to show their homes with fall decorations and turning leaves. Buyers this year are busy getting homes under contract and closed prior to the end of November. We're advising all buyers and sellers to close no later than November 15th if possible due to the rush to get homes closed by the 30th and it'll cause title and mortgage companies to be overloaded. Also, the 30th is the day after Thanksgiving holiday weekend and that in itself may cause backlogs and stress. We're excited to see the activity and energy that fall brings.

Douglas County—Our Southwest Metro office reports showings have been down the past three weeks especially this past weekend. Open houses were good and our Agents did acquire some good leads. Our Agents do have sellers gearing up to list their homes and do have buyers starting to become worried about the deadline for the $8000 credit. We feel that the public is in a holding pattern. They are waiting, especially buyers, to see if the $8000 credit will be extended or increased. We did have one Agent who had three of their listings go under contract in a week, one in 24 hours! We've had some great floor calls and also two walk-ins. Interest rates are good and we're seeing some buyers ready to start the process just in case the tax credit program is not extended.

El Paso County—Colorado Springs reports the listing inventory is still very steady, however buyer activity increased drastically last week. This could be an indication that more first time buyers are getting very motivated in order to take advantage of the tax credit which will expire on November 30th. For the same reason, we see a number of multiple offers on energy priced listings that are not short sales! We received twelve (!) offers on one bank owned listing!

Larimer County— New listings are up in both the Fort Collins and Loveland offices and the showing activity is also up from last week. Homes that went under contract this last week were listed as high as $637,000 down to $110,000 with most of the home sales in the mid-$200,000 range. There were also several homes priced in the $300,000 to $400,000 range. There are some great homes available and FHA rates are still at or near all time lows! More great news - There are still 70+ days to take advantage of the $8000 tax credit, but time is slipping away quickly. Realistically speaking, you need to be out looking at homes today if you hope to close prior to the November 30th deadline. You don't want to be closing at the end of November & risk having your closing pushed back past the deadline. Get out there and find your dream home at a great price and don't miss out on the $8000 tax credit!

North Metro— Overall business continues to be steady for the month of September. Listing inventories are decreasing as we move into the late summer. Buyers are continuing to take advantage of the buyer program and as a result we're seeing a lot of activity at the $100,000 to $225,000 part of the market. Average prices are edging up and we feel that this will stimulate the listing side of the business.

Parker— After a slowdown during August and early September, activity is picking up again. First time buyers are now very motivated to get under contract in order to close before November 30th to be able to take advantage of the $8000 tax credit. Power priced listings are still getting a lot of activity, multiple offers & some sell over asking price.

Southeast Metro— Showing activity has increased and we're back to 500 plus per week. Listing inventory is steadily decreasing and the number of new listings in the market is also on the decline. However, sales activity is busier than ever! We're scheduled to close over 150 properties this month, which is not our typical September. The luxury market continues to be sluggish, however homes in the $700,000 range are seeing more activity than the previous month.

West Lakewood— Appraisal problems still exist. An appraisal came in yesterday $55,000 below contract price. Anything under $250,000 is almost flying off the shelf on the west side of town. More $300,000 and up listings are selling. Buyers and sellers are calling our office for more information regarding current listings and to list their homes with Coldwell Banker.

Without a doubt, locally what continues to push our market in the right direction is the $8,000 first time home buyer tax credit. Currently in Washington D.C., real estate industry representatives and government officials are lobbying for either a $15,000 all home buyer tax credit or at minimum, an extension of the $8,000 first time home buyer tax credit but the result of that debate is still in the air. If the tax credit does disappear we are likely going to see an emergence of investors in the first time home buyer arena which may cause problems with housing prices and a continued erosion of the first time home buyer market. Please contact your local representative to call upon his/her support of this important initiative.


Next week I will release the October edition of Reality Check. This month’s edition will feature a Q&A from me on the local housing market and what we may expect for 2010.


Until then,
Make it a great week,


Chris Mygatt
Coldwell Banker Residential Brokerage Colorado

Friday, August 28, 2009
So Much for a Sleepy Summer

Generally speaking the Colorado real estate market has seen a bit of a bounce this summer with sales increasing in all categories—from the entry level homes and condos to the high-end market.

National figures showed June with an 11% increase in home sales. But, realizing that a majority of the spring home inventory has been introduced, we may start to see a little slowdown in August/September as old inventory is taken off the market and a smaller surge of inventory arrives.

In other words, there is still much recovery that needs to be taking place. Sellers still need to get a bit more realistic about price and buyers need to recognize a good bargain when they see it.

In general, 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, 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. 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.

For cash buyers or those with large (over 25%) down payments, now is a great time to pick up bargains in luxury homes. Sellers are still not giving away property but there are great deals available.

This week the National Association of Realtors released its monthly existing home sales report (http://www.realtor.org/press_room/news_releases/2009/08/strong_uptrend?LID=RONav0021) noting “For the first time in five years, existing-home sales have increased for four months in a row, according to the National Association of Realtors®.” The report went on to note, “Existing home sales – including single-family, townhomes, condominiums and co-ops – rose 7.2 percent to a seasonally adjusted rate of 5.24 million units in July from a level of 4.89 million in June, and are 5.0 percent above the 4.99 million-unit pace in July 2008. The last time sales rose for four consecutive months was in June 2004, and the last time sales were higher than a year earlier was November 2005.”

Lawrence Yun, NAR chief economist, said he was encouraged. “The housing market has decisively turned for the better. A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales,” he said.

Ultimately these are all very positive signs for our market and are a strong sign that we are moving in the right direction towards a housing recovery. Having said that, it’s important to keep things in perspective and not celebrate too soon. We all need to be realistic with our pricing, buyers and sellers.

A few other interesting articles of note for the week:

· Home Prices On An Upswing In The Second Quarter Of 2009 According To The S&P/Case-Shiller Home Price Indices; Case-Shiller
· New Home Sales Blast Past Expectations; CNNMoney.com
· The Housing Market: Has It Turned the Corner?; TIME Magazine
· Mortgage Applications Increase In Latest MBA Weekly Survey; Mortgage Bankers Association
· Home Market Shows Signs of Life as Declines Slow; Bloomberg

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

Boulder/Longmont—The Boulder office reported new listings in the Boulder County market took a 3% dip last week and new sales fell by a substantial 19%. Despite that, showings were up 25% last week so there is still a tremendous amount of buyer activity. Agents at the Boulder office report a sharp rise in creative and complex offers over the past week with a number of buyers asking for things like some degree of owner carry, right of refusal or extremely delayed closings. Some offers on listings as low as 70% of the asking price have been seen as well. This, in an area where the average sale price to list price ratio averages 96% in the under $1,000,000 market. The Longmont office reported once again, the showing activity is increasing. This "week over week" the mid week are the ones that had the highest increase. Weekend showings were off just a bit. Buyers are seriously looking. The start of school usually brings a brief decline in showings and contracts. Not this year! Some of the good press about the Denver area is filtering to Longmont. Our employment situation here is holding steady. Colorado has become a more affordable place to live. More companies are realizing our affordability makes this a great place to relocate their business.

Evergreen/Conifer—No information reported.
Denver Central –We are seeing an increase in the higher priced homes going on the market and receiving offers, which is a positive sign. The Denver real estate market continues to get positive national and local press on a weekly basis. We've seen an increase in showings for August and our August 2009 numbers are outpacing August 2008. More buyers are taking advantage of the $8000 tax credit with the November 30th deadline approaching fast. We are also seeing appreciation of home prices in several neighborhoods. The lower end market has certainly shifted to s seller's market with properties moving quickly.

Devonshire— No information reported.

Douglas County—Our Southwest Metro office reports showings were down this past week especially over the weekend. Agents attribute this to school starting and last minute vacations. Open houses were very successful and we had two walk-ins. We are seeing sellers ready to list their properties in September and this is a good thing as inventory is low at this time. We're also seeing buyers wanting to take advantage of the $8000 tax break before it goes away. Our mortgage rep is very busy and this is always a good sign. Properties are still not moving quickly above the $350,000 level. We're encouraged with the local and national news about the real estate market.

El Paso County—Colorado Springs reports our listing inventory and sales activity have been steady for a while now. Showings went down slightly last week and we need to watch if this is a sign of reduced activity because the end of summer is approaching. It seems like banks are starting to approve more short sales as we were able to get some prepared for closing. Prices in most neighborhoods are stable for now.

Larimer County—The Fort Collins/Loveland offices reported she summer season has nearly passed us by, but that doesn't mean that real estate sales have come to a halt. There's still some good inventory available in the Northern Colorado market. Both buyers & sellers need to be realistic about price & be willing to negotiate terms and conditions in order to put a sale together. Home prices are stable & recently Freddie Mac & Fannie Mae declared all the markets in Colorado stable. This should loosen some of the restrictions on conventional loan financing for buyers. Finally, time is running out to take advantage of the $8000 tax credit. Only a little over 90 days left to take advantage of this great opportunity.

North Metro—The North Metro office is experiencing increased activity with regards to new contracts. This is due largely to the urgency created by the first time buyer tax credit program. In addition, listing inventory should be picking up as some of the terms in the office are in the process of closing on some larger opportunities. The Agents are doing a great job of staying in front of their clients and working every lead. This is reflected in the increased dividends as we move into the 4th quarter.

Parker—What an incredible increase in showing activity last week - almost double from the week before! Our sales activity has increased as well and the listing inventory is going down. We are confident that this trend will hold past the end of summer and start of most schools.

Southeast Metro—The SE Metro office is experiencing a slight decrease in showing activity which can be attributed to the start of the school year for the surrounding districts. Our average days on market for listings is steady at 79 days and we are averaging 25 showings before a property is selling. Inventory continues to drop and there continues to be a shortage of desirable properties below $250,000. Luxury properties are seeing additional traffic as 10% of our Previews properties are currently under contract.

West Lakewood—The West Lakewood office is reporting "skinny" inventory by all price points. Buyers have more clarification and realize that the inventory is more limited than it has been. The reduction of inventory is making buyers more focused on their choices.

Please note that next week I will be taking a brief hiatus from Weekly Market Watch but I will return the following week.

Until then,
Make it a good one,

Chris Mygatt
Coldwell Banker Residential Brokerage Colorado

Thursday, August 20, 2009
Good News On Wall Street Doesn’t (Necessarily) Mean Higher Housing Prices on Main Street

I had an interesting chat with one of our Agents recently. She mentioned that many of our sellers in the upper-tier price point are seeing the current strength of the Dow as a sign that their home will probably fetch more in the early part of next year. Academically speaking, there is a belief that there is a direct correlation between the housing market and the stock market. But from an analytical standpoint, although the stock market and the housing market correlate well, there is a variable time lag. The time lag between housing underperformance and stock market performance can vary widely. The average is 18 months.

What we’re seeing, in some instances, is that some of the upper-tier clients are saying no to potential deals as they think if they wait another four to six months (thanks to the stock market’s recent gains) they may get more for their home. And while I understand the reasoning, I would caution sellers on this strategy. First, what we know is that in a “normal” market (of which this market is anything but), the average lag time between the two is 18 months (not four to six months). It’s also important to point out that we probably aren’t out of the woods as it relates to the volatility in the stock market. Many analysts are suggesting that our recovery will be “W” shaped rather than “V” so we may be looking at more changes ahead.

So while I understand the logic, I would caution sellers on this strategy and would ask them to focus less on the stock market and more on the level of supply and demand in their market and in their neighborhoods. In most markets, the upper-tier price point remains relatively soft so sellers should consider most deals that are presented to them. That’s not to say buyers should be throwing out unrealistic offers. The real story here is that across the board we’re starting to see increases in interest and buyer activity so sellers may want to consider taking advantage of that interest…before it’s too late.

For those who are focused on the stock market, my best advice to you is to look at it more as an indicator for the economy as a whole. With the DOW closing Thursday at just over 9,300, it may not be making housing prices go up, but it may mean that the recession is subsiding which is good news for us all.

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

Boulder/Longmont—The Boulder office reported small but steady increases in all the Boulder county market numbers last week. Listings were up by 12%, under contracts up by 17% (not bad) and showings up by 15%. Two good things to note here, although showings are up, under contracts are up by a higher number. Agents are also seeing no "end of summer" drop off of buyers yet. It's very unusual to see showings increasing as we approach September. The Longmont office reports showing activity continues to increase. The large increase in showing activity did translate into deals being written. Twice as many offers were accepted this week over last week. Listings also took a big rise. We are seeing some good listings going on the market that are not short sales or foreclosures. The upper end market still needs help. The $8000 credit for 1st time buyers needs to have a matching program for the upper end market to get it moving too. Loan issues continue to bring problems. We need at least 30 days to make it happen - 45 days to close is much more realistic for all.

Evergreen/Conifer—Evergreen reported we had a total of two new listings for the week. Three listings went under contract including one builder spec. One local buyer, one from Denver and one Texas. Three buyers went under contract, two local one one from Oregon. Three were a total of 81 showings during the week. The week was close to normal level for peak season. The majority of activity in three different price points - $200,000 to $250,000 for 1st time buyers and investors. The $300,000 to $500,000 is strong and recent strong activity in the $500,000 to $1,000,000 range. Conifer reports we had two new listings during the week. One listing went under contract - short sale pending bank approval. Showing activity increased to thirty-three during the week although that's still below normal levels for this time of year.

Denver Central – We are seeing an increase in higher priced homes going on the market and receiving offers which is a positive sign. The Denver real estate market continues to get positive national and local press each week. We're encouraged and excited about the future of real estate in Denver. We've seen an increase in showings the first two weeks of August and it's tracking better than July for showings. Our August 2009 numbers are outpacing those of last year. More buyers are taking advantage of the $8000 tax credit with the deadline fast approaching. We're seeing appreciation of home prices in several neighborhoods. The lower-end market has certainly shifted to s sellers market with properties moving quickly. Those that are priced aggressively are seeing multiple offer situations. We're also seeing an increase in cash offers on homes in the area. Many in the lower end go under contract within days of being placed on the market. The high-end market continues to be sluggish.

Devonshire— We seem to be in the August "hurry and take a family vacation" or "get ready for school" days. Showing activity is steady but both sellers and buyers are distracted with other activities. We are encouraging reevaluation of home prices, making price adjustments as necessary & freshening up both the interior & exterior of homes. September is always a good month for us at Devonshire as our clients are ready to move forward with purchases so they can be settled before the holidays. Mortgage rates are still attractive and consumer confidence seems to be sending somewhat of a positive message. We are feeling very positive about the remainder of 2009 and look forward to 2010.

Douglas County—Our Southwest Metro office reports we had a great week of showings. Open houses were very good this past week and we're seeing a steady increase of sellers ready to list their homes. Buyers, especially first time ones are looking to buy but the inventory is very low in the $250,000 range. There has been steady activity in homes priced below $350,000. We're experiencing a slight increase in the $350,000 to $450,000 range. We feel as an office that the public is ready to move forward to either purchase or sell a home. The Agents are getting the message to their clients/sphere that the $8000 tax credit needs to be used before December 1, 2009. The news on local TV channels has been positive and this has been a good tool to use on sellers & buyers.

El Paso County—Colorado Springs reports although sales activity has slowed down slightly, we still see a lot of activity on our listings which is also reflected by the strong increase in showings. There is some uncertainty about some military personal relocating from Texas to Ft. Carson. This relocation has been approved but now delayed after intervention from politicians in Texas.

Larimer County—The Fort Collins/Loveland offices reported the end of summer lull is here and families are getting the kids ready for school and the college students are rolling in from a nice summer break. Showings were down dramatically last week and this is to be expected based on the time of year. The good news is that there are still plenty of great homes to choose from and well priced homes are moving. Ft. Collins currently has over 1500 single family homes and Loveland offers 1000 plus homes. Come out and see the inventory. You won't be disappointed. It's hard to believe but we only have about 3 1/2 months left to take advantage of the $8000 tax credit. It is unclear whether or not this program will be extended so take advantage of it while you can!

North Metro—The North Metro office is humming with activity. We just received a letter from Bruce Zipf, President & CEO of NRT, that our office is in the Top 20% of offices for the 2nd quarter of this year. The Agents deserve this recognition as their activity continues to be very high. In the past month we've seen the price of our new listings increase from $275,000 to a current average of $325,000. Showings are picking up on homes priced over $250,000. We've put several homes under contract in the $400,000 to $650,000 range which is a recent change in our market.

Parker—Our listing inventory stays steady and although the showing activity has dropped slightly over the last week, sales activity has gone up consistently over the last few months. Our closed transactions were up over 50% last month year over year and we are up 15% year to date compared to last year. Douglas County was just rated #5 in the country for job growth and the towns of Parker and Castle Rock are #3 & #4 in most desirable places to live!

Southeast Metro—The SE Metro office is experiencing a slight decrease in showing activity which can be attributed to the start of the school year for the surrounding districts. Our average days on market for listings is steady at 79 days and we are averaging 25 showings before a property goes under contract. Inventory continues to drop and there continues to be a shortage of desirable properties below $250,000. Luxury properties are seeing additional traffic as 10% of our Previews properties are currently under contract.

West Lakewood—The West office is seeing more sales in the over $300,000 price range. Low appraisals are becoming less of a problem. If a buyer wants to take advantage of the $8,000 tax credit, they should act now! Do not wait! There is a shortage of inventory in these price ranges.

Until next week,

Chris Mygatt
Coldwell Banker Residential Brokerage Colorado