Denver Real Estate Blog

 

April 10, 2017

Talking Points April 9, 2017

Denver Real Estate Talking points -First Quarter 2017

1. Of the 13,173 homes shown as sold by REColorado, 2204 (or 16.7%) were cash sales.

2. 2017 March sales exceed 2016 March sales by 625 units.

3. Inventory has increased by 18.79 % over last March, but we have only 6 weeks of inventory.  A balanced market would be 20+ weeks of inventory.

4. Under contracts for March exceed last March by 705.

5. The median income ($68,436) in Metro Denver is not sufficient to buy the median priced home in the market with less than 20% down.  10% down requires an income of $80,712. This data from HSH.com also shows Metro Denver to be the 8thpricies market in the country, and the most expensive not on a coast.

6. A few things from the graph below:

            A. Days on Market (DOM) for properties valued below $300K have changed very little on the first quarter for the past 3 years.  First time buyers are still in a very competitive market.

            B. DOM for the $300K to $750 K market has dropped steadily for the past 3 years. 

            C. The Price point is moving up, as indicated by the median sold price now at $399,000    for single family homes.

April 14, 2015

Now We Have A Housing Crises

Depositphotos_10557964 with Sold resizedWay back in 2009 when the bottom had dropped out of the housing market, the media was all over the “housing crises”.  Of course, the media never seemed to understand the real story, which was Americans were suffering a “financial crises”.  Having mostly recovered from that crisis, we are now, at least in much of America, experiencing a “housing crises”.  Meaning, not enough houses available to purchase, at least in certain price ranges.  So, first to why, then, a few solutions.

The why is multifaceted, as most such societal events seem to be.  First, many home owners have no pressing desire to sell, as they have refinanced into great 4% or less loans over the past 3-4 years. If your low payment mortgage is attached to a house that serves your needs well, there is no good reason to endure the cost and hassle of moving. Second, at least in Metro Denver, is a severe shortage of desirable inventory.  Even if you want a larger, smaller, or better located residence, the shortage of inventory and the competitive market is discouraging. Third, while the economy is better than 5 years ago, it still seems somewhat shaky, and the lingering memories of the worst economy since the 1930’s does not easily fade from memory. Fourth, again somewhat unique to Metro Denver, is the current construction defects law, which has most multi-family builders avoiding the condo market, long the base level for home ownership. Fifth, there is considerable mis-information regarding the mortgage market floating around that has many sellers sitting on the fence. Sixth, while production home builders are certainly back in the market, large acreages suitable for those types of builders are located far from the city center, and in-fill projects tend to be very high priced.

So, what are the fixes?  For home owners that are relocating out of the area, most markets are not as super-heated as Metro Denver, so there is a good chance you can sell your Denver area home quickly and do well going most anyplace else. If your need is to up or down size, and you don’t relish living in a tent for 3 or 4 months, there are a few options.  First, sell with a delayed closing.  Knowing you have 60 to 90 days to find a replacement home takes the pressure off & works well in most cases. A second choice is to rent back after closing, say 60 to 120 days.  Both of these solutions makes a door-to-door move more likely, and lessons the emotional stress.

If you want to buy a new home, most builders are talking 6-12 months from contract to build, allowing you plenty of time to get your home sold, most likely with a rent back and a good chance of a door-to-door move.

Of course, all of these solutions require considerable coordination and preparatory work.  Buyers MUST meet with their preferred lender and obtain the latest in gilt edged loan pre-approval letters.  Before placing your house on the market, a thorough understanding of the desired replacement market is a necessity.  Your trusted Berkshire Group REALTOR can help you prepare a winning game plan to achieve the exact result you want, but 1 to 2 months lead time is in your best interest. By working together, we can prevent you from having a “housing crises”.

April 14, 2015

Denver Market Update for March, 2015

Mar 15 Band With properties priced below $200K representing only 7% of the market, the heart of the Denver area market is reflective of the median at approximately $35,000.
Mar 15 Zip Every Zip code area in the 7 county Metro Denver market is a sellers market, in some area there is less than a weeks supply of homes available.Mar 15 Res

Two thirds of the Denver market is priced above $300,000.
Mar 15 Condo High end condos are making a great comeback, as evidenced by the + $5ooK market strength.

Posted in Statistics
April 14, 2015

The Pulse - Denver Update for April, 2015

Commentary:

the pulse

  • The effects of low inventory (homes currently for sale in the MLS System) in the Metro Denver real estate market continues to support strength in valuation and the low inventory had no effect on total sales increasing by 19% over March 2014 with the average price increasing by 14.49% over the same month in 2014, and the median price increasing by 17.25% from 2014.  The continuing increase in the median price is an indication that the market is becoming increasingly unfriendly to first time buyers. More sales and higher prices is the norm in Metro Denver this month.
  • The normal winter decline in activity and prices simply did not appear in 2015. While that may be good for sellers in the immediate future, prices will slow their rate of acceleration in the coming years because of higher interest rates and a buyer pool that simply cannot afford the higher cost.  That said, the quarterly National Home Price Expectation Survey is projecting a 19.3% increase in national housing prices by 2019.
  • Metro Denver is not alone in the low inventory group, and, although some major markets are still trapped in a buyers market,  inventory nationwide is down to a 4.6 month supply, while Metro Denver has  5 week supply of resale housing. Although builders have their rate of sales and construction, new construction prices are being pushed up by material and  labor costs, and a construction labor shortage is making new home buying difficult.
  • 30 year fixed rate mortgage interest rates remain low, with rates at 3.65%  today after a high of 3.9 % a the beginning of January. Mortgage rates remain extraordinarily low in relation to the mortgage rate history of this country.
  • The prospect of  rates increasing to 5.0 % has now considered by most to have been delayed to late 2015. Rates remain low because of the continuing anemic national economy which, along with an increasingly onerous regulatory market, may tend to slow the rate of sales, although the lack of inventory will continue to favor sellers and maintain its brake on the velocity of the Metro Denver Market.
  • In the Denver Metro area, 95.5% of those that want a job have a job, and more people are re-entering the job market every day.This is the first time in a long while that local unemployment has been reported at less than 5%.  It may be worth considering the U.S Bureau of Labor Statistics U6 measure, which stands at 12.5% nationally and 10.1% in Colorado. The U6 measure is the total number of everyone that could be employed but are not.

 

New Home Permits (Metro Denver):

New Home Permits issued through February 2015:    1,180

New Home Permits issued through February 2014:       1,240

This is a .05 annual decrease over 2014.

(NOTE: This is the most recent data at time of publication.  Metro Denver multifamily permits are decreasing in 2015, down by .26% over last year. Builders may be shifting  away from multi-family buildings and increasing their efforts in the single family market. ALERT! Most new multi-family housing starts are rental units, as Colorado's Construction Defect Law is making condo building and sales financially prohibitive for builders. This will affect the market balance in future years. (The National Association of Home Builders reports statistics that are 2 months in arrears.)

Denver Area Residential Resale Statistics:

NOTE: Changes in the Denver Metropolitan Area Multiple Listing Service provider has resulted in differences in the reporting of resale statistics.  Residential data now includes both detached homes and attached (condos) homes.

[table id=94 /]

Note:  The average and median prices continue to trend up, with the volume of sales also increasing, with the available inventory remaining historically low, signifying considerable improvement in the Metro Denver market.  Seller's are beginning to enter the market, albeit slowly, due in part to available equity positions of many owners just now reaching levels to allow a positive equity sale.

  • Source: Metrolist, Inc.

Employment Statistics for the Denver-Aurora MSA through February, 2015:

[table id=95/]

Consider that as the economy improves, more people will return to the job market, so the number of unemployed may actually increase. In September, 2014, the State of Colorado unemployment was 4.7%, somewhat better than the national average. Note that many people are no longer looking for a job, and are not included in the employment statistics. It may be worth considering the U.S Bureau of Labor Statistics U6 measure, which stands at 12.5% nationally and 10.1% in Colorado. The U6 measure is the total number of everyone that could be employed but are not.  Colorado scores well in this area, but North Dakota scores best with a U6 measure of 5.4%.

 

  • Source: Colorado Department of Labor-the information is the most recent provided

Average National Mortgage Rates as of April 13, 2015

[table id=96 /]

Mortgage interest rates have increased  by .036% since the low of 3.35% in early May, 2013. The mortgage loan market continues to offer historically low rates for qualified buyers. Many homeowners have taken this opportunity to refinance, but that segment of the market has trickled almost to a stop as rates have increased.  Mortgage rates have remained low as we moved into 2015, but the mortgage rate bottom was most likely in May of 2013.  Actions by the Federal Reserve Bank indicate that the Fed is backing away from the mortgage bond business, which will increase the  rates, although increasing world attention to the U.S. debt may offer some unexpected rates.  Upward change is now visible on the horizon as the economy improves, but predictions now indicate rates in the 5% range in early winter of 2015.  All rates include a 0.4% to a .05% discount point. Rates quoted by any lender may not reflect momentary changes. Rates in the Denver area may be slightly higher or lower with a given lender at a given time. All rates noted in this report apply to the best qualified borrowers.

*The Pulse is a review of key economic statistics that affect the Metropolitan Denver Area real estate market.  The Pulse is offered monthly as part of The Berkshire Group’s Monthly Update, and is current based on the information offered by the credited sources. The database is the 7 county Metropolitan Denver SMSA:Denver, Adams, Arapahoe, Douglas, Broomfield, Jefferson, Elbert Counties.  All information shown is the most recent available from the quoted sources.   Tagged: ,

Posted in The Pulse
April 2, 2015

Denver Metro REALTORS Excellence Awards - 2014

Congratulations! DMAR 2014 Awards-resized
The Berkshire Group would like to Congratulate our own Charles Ward, Angela Fox and Vali Hooker, 2014 Denver Metro REALTORS Excellence Award Recipients. Please congratulate them on a great job!

Jan. 7, 2015

For Sale By Owner vs Real Estate Professional

FSBO

Nov. 11, 2014

Nothing on the Shelves

Every bit of residential real estate market data we have at hand indicates a continuing strong sellers’ market.  Recent sales activity in Metro Denver exceeds last year, Foot traffic through homes for sale is the highest in a decade, mortgage credit availability has been increasing, and mortgage loan approvals are happening with a continuing decline in credit scores.

November2014-11

So, the issue is not available buyers, because they are out there, especially in the price ranges below $500,000.  The issue, and the challenge for buyers, is finding something to buy.  Think of it this way. Imagine the Metro Denver home market as a TARGET® store.  The store is full of buyers, there are more waiting outside to get in, and more cars keep pulling into the parking lot. All of the customers have some money to buy things, some folks more than others, but they are all ready, willing and able to buy. But, the shelves are half full.  Any popular item, such as this years popular Christmas toy, disappears from the shelf as fast as the stock clerks place it on the shelf, and there is a fight among some customers for the best things. Some customers are sneaking in the back, trying to get items before they are placed on the shelf, and high-handed back room deals are not uncommon.  The manufacturers (the builders in the real estate world) are trying their best to get product to the store, but they have their own problems with material cost and availability, labor shortages, and onerous regulatory difficulties. Any desirable product that is available is being sold at prices that were higher than yesterday, or last month, or last year.

Of course, there are a few things that sit on the shelves longer than others.  Things with unusual colors, or bad packaging, and certainly products that are priced beyond what makes sense to a prudent buyer, those things sell slow, but even those things sell eventually, perhaps with a markdown in price, or repackaging.

Is the real estate market really like a variety store? Well, yes, in many ways, it is.  More choices, and mortgage lending complicates the process somewhat, but its important to remember that when we speak of a real estate market, we really mean “MARKET”.

So, if you are a home owner today in Metro Denver, you have an advantage. The Denver market has 3.3 months less available inventory than the National average.  Most owners have recovered from the low price index of January 2009, and, as we go into 2015, many home owners will have useable equity.  The peak of this extraordinary market may very well occur in the early summer of 2015, as builders increase inventory and interest rates begin to rise as predicted by the experts.  Remember our variety store? As more product is placed on the shelf, sales slowdown, because the demand has been met.  Rising interest rates slow the amount of cash available to buyers, so sales fall off.  That does not mean a drop, just less of a rise.

If you are thinking of selling in 2015, now is the time to start preparing.  Consider those little things that need repaired, splash a new color in the family room, make sure the mechanical items in your home are serviced and in good working order.  If repairs are needed, string them out over 4 or 5 months, both for less hassle, and ease on your bank account.

Call!!  As your real estate advisor, I can spend time with you now, giving you advise on what to do and not to do in preparing your house for sale, and we can work together to monitor the market. Like everything else on the planet, selling your home has become more complex, time consuming, and stressful.  Anything we can do in advance will lessen the stress.  Please give me a call as we approach the holiday season, and we can meet to discuss your situation and update you on your local market.

Nov. 11, 2014

The Pulse - November 2014

Commentary:

the pulse

  • The effects of low inventory (homes currently for sale in the MLS System) in the Metro Denver real estate market continues to support strength in valuation and the low inventory had no effect on the total sales increasing in October by 7.7%  with the average price increasing by 6.08% over the same month in 2013, and the median price increasing by 9.8%.  The continuing increase in the median price is an indication that the market is becoming increasingly unfriendly to first time buyers. More sales and higher prices. 
  • It is very possible that the normal winter decline in the local housing market may continue to experience increases in both prices and units sold over the winter of 2013, in other words, not much of a decline. While that may be good for sellers in the immediate future, prices will slow their rate of acceleration in the coming years because of higher interest rates and a buyer pool that simply cannot afford the higher cost.  That said, the quarterly National Home Price Expectation Survey is projecting a 19.2% increase in national housing prices by the end of 2018.
  • Metro Denver is not alone in the low inventory group, although some major markets are still trapped in a buyers market, and inventory nationwide remains at a 5.5 month supply, while Metro Denver has less than a two(2) month supply of resale housing. Builders are increasing their rate of sales and construction, but new construction prices are being pushed up by material labor costs.
  • 30 year fixed rate mortgage interest rates remain low, with rates at 4.02%  today after a high of 4.51% in January and still remain extraordinarily low in relation to the mortgage rate history of this country.
  • The prospect of  rates increasing to 5.0 % has now considered by most to have been delayed to mid 2015. Rates remain low because of the continuing anemic national economy which, along with an increasingly onerous regulatory market, may tend to slow the rate of sales, although the lack of inventory will continue to favor sellers and maintain its brake on the velocity of the Metro Denver Market.
  • In the Denver Metro area, 95.5% of those that want a job have a job, and more people are re-entering the job market every day.This is the first time in a long while that local unemployment has been reported at less than 5%.  It may be worth considering the U.S Bureau of Labor Statistics U6 measure, which stands at 12.5% nationally and 10.1% in Colorado. The U6 measure is the total number of everyone that could be employed but are not.  Colorado scores well in this area, but North Dakota scores best with a U6 measure of 5.4%.

 

New Home Permits (Metro Denver):

New Home Permits issued through September, 2014:    6,320

New Home Permits issued through September, 2013:       5,370

This is a 17.7% annual increase over 2013.

(NOTE: This is the most recent data at time of publication.  Metro Denver multifamily permits are decreasing in 2014, down by 6% over last year. Builders may be shifting  away from multi-family buildings and increasing their efforts in the single family market. ALERT! Most new multi-family housing starts are rental units, as Colorado's Construction Defect Law is making condo building and sales financially prohibitive for builders. This will affect the market balance in future years. (The National Association of Home Builders reports statistics that are 2 months in arrears.)

Denver Area Residential Resale Statistics:

NOTE: Changes in the Denver Metropolitan Area Multiple Listing Service provider has resulted in differences in the reporting of resale statistics.  Residential data now includes both detached homes and attached (condos) homes.

[table id=91 /]

Note:  The average and median prices continue to trend up, while the volume of sales is down, with the available inventory remaining historically low, signifying considerable improvement in the Metro Denver market.  Seller's are beginning to enter the market, albeit slowly, due in part to available equity positions of many owners just now reaching levels to allow a positive equity sale.

  • Source: Metrolist, Inc.

Employment Statistics for the Denver-Aurora MSA through September, 2014:

[table id=92/]

Consider that as the economy improves, more people will return to the job market, so the number of unemployed may actually increase. In September, 2014, the State of Colorado unemployment was 4.7%, somewhat better than the national average. Note that many people are no longer looking for a job, and are not included in the employment statistics. It may be worth considering the U.S Bureau of Labor Statistics U6 measure, which stands at 12.5% nationally and 10.1% in Colorado. The U6 measure is the total number of everyone that could be employed but are not.  Colorado scores well in this area, but North Dakota scores best with a U6 measure of 5.4%.

 

  • Source: Colorado Department of Labor-the information is the most recent provided

Average National Mortgage Rates as of November 10, 2014

[table id=93 /]

Mortgage interest rates have increased  by .065% since the low of 3.35% in early May, 2013. The mortgage loan market continues to offer historically low rates for qualified buyers. Many homeowners have taken this opportunity to refinance, but that segment of the market has trickled almost to a stop as rates have increased.  Mortgage rates have remained low as we moved through 2014, but the mortgage rate bottom was most likely in May of 2013.  Actions by the Federal Reserve Bank indicate that the Fed is backing away from the mortgage bond business, which will increase the  rates, although increasing world attention to the U.S. debt may offer some unexpected rates.  Upward change is now visible on the horizon as the economy improves, but predictions now indicate rates in the 5% range in fall of 2015.  All rates include a 0.4% to a .05% discount point. Rates quoted by any lender may not reflect momentary changes. Rates in the Denver area may be slightly higher or lower with a given lender at a given time. All rates noted in this report apply to the best qualified borrowers.

*The Pulse is a review of key economic statistics that affect the Metropolitan Denver Area real estate market.  The Pulse is offered monthly as part of The Berkshire Group’s Monthly Update, and is current based on the information offered by the credited sources. The database is the 7 county Metropolitan Denver SMSA:Denver, Adams, Arapahoe, Douglas, Broomfield, Jefferson, Elbert Counties.  All information shown is the most recent available from the quoted sources.   Tagged: ,

Posted in The Pulse
Nov. 11, 2014

Denver Market Update for November, 2014

Oct Band Chart The $200-$300 price range is the most active in the Metro area, with more homes selling than being listed.
Oct Price Res Average prices per square foot will exceed $200 consistently in 2015.
Oct Price Condo Condo prices per square foot will continue to rise as regulatory issues are strangling the new build market.
Oct Res Month Three quarters of the sales market is priced between $200 and $500 thousand.
Oct Condo Month In light of the construction defects situation, the market for higher priced condos is showing continuing strength.

Posted in Statistics
Oct. 14, 2014

Answers

Recent surveys and informal chats with our fellow REALTORS® give us a very strong indication of the concerns most consumers have regarding real estate. This month, we offer you a few questions, and a few answers:

1.  Are home values approaching a new bubble or will prices continue to appreciate? Rather than consulting our slightly damaged crystal ball, we instead turned to the Home Price Expectation Survey, a quarterly projection of the national market garnered from over 100 industry experts including economists and investors. Here is the latest graphic:

Oct Newsletter 2
On average, the experts predict a 19.5% increase in home values by the end of 2018, very consistent with the long trend of 3.3% appreciation annually.

2. Where will mortgage rates be in 12 months? Again, we cannot really predict the future, but the leaders and economists representing the organizations in the chart below are the best source we have at hand.
Oct Newsletter 1
Remember that rates today are 4.12%, so an increas of 1% in rates, coupled with the predicted price increase over the next year.

TABLE BASED UPON METRO DENVER AVERAGE SALES PRICE

[table id=90 /]

* This is 90% of the average price home in Metro Denver today, assuming a 10% down payment
** This is 90% of the projected price of the same home in October 2015
*** Principal and Interest Payment

3. Why can't we list at a higher price, since we can always drop it later? The best graphic for that answer is the foot traffic survey, or the number of prospective buyers actually looking at homes. While it may be reasonable to push prices a bit in the spring or early summer, most buyers today know almost exactly what a fair price is for your home. If there is great competition and low inventory, as we said in May of 2014, prices can be bid up, often beyond appraisable value. It is anticipated that the inventory in Metro Denver will increase slightly in spring of 2015 over 2014, but that remains to be seen. Markets are very sensitive, and timing is very important:
October Newsletter 1
The foot traffic in August of 2014 is an indicator of a more active winter than would be considered normal.

We hope that these few answers give you a good, current understanding of the Metro Denver real estate market. Of course, markets are local, actually hyper-local, so please call for the best answers for your situation.