Denver Real Estate Blog

1.  The first-time homebuyer tax credit has pulled renters off the fence in a big way - $8,000 is a great incentive to make a commitment to a property, and, especially in the $100,000 range as well as the $200-250,000 range, there isn’t anything left to show them!  Do you have a cute little condo that you are tired of renting out?  Are you outgrowing your home or your neighborhood?  Are you just ready to move on up the property ladder?  Now is the time, because that tax credit is expiring soon….properties have to CLOSE by December 1st to qualify.  So get it ready and get it on the market, already!  I think you will regret it if you don’t.

2.  Everything is so darn green and lovely right now.  I am loving showing homes with gorgeous green grass, blooming gardens, and luscious looking trees - these things sell houses, folks.  Don’t wait til September, when the kids are heading back to school and everything’s all brown and dry looking.

3.  Inventory is low, low, low.  In most of Denver’s urban and sububurban hoods, properties that are ready to go and priced right are receiving multiple offers straight away.  Isn’t that the market you want to sell your place in?  In December, you might sit on the market for quite a while, and then end up lowering your price several times, before you finally get a bite.

Listen, no one knows where the market is headed, but I can tell you this - I have been unlocking doors non-stop for the last month.  I am busier that I have ever been.  It’s because there are loads of buyers out there, looking for a house to call home!

In between an inspection and a closing this afternoon, we decided to stop by an Open House tour in one of Denver’s premiere neighborhoods - as two real estate agents who LOVE real estate, this is always a fun way to spend an afternoon, especially when the homes on the tour are around the $1 million mark. 

We were super surprised to find that the tour did not meet our expectations.  Out of the 6 homes that we visited, only one was in Open House ready condition.  Some were not staged, some were not tidy, and a few just looked downright run-down.  The one that presented well was hosted by the listing agent, who recently took over the listing, although it has been on the market for over a year.  She was nervous but excited and asked in-depth, smart questions about our opinion of the property:

 How did it show?  Was there anything she could do to improve the first impression?  How was the price?

The worst of the bunch wasn’t even staged, and the hosting agent barely even looked up as we came through the door.  She kept typing on her laptop, which was sitting on a folding card table,  the whole time we were in the property.  She didn’t ask for feedback, and she hadn’t bothered to sweep the floors or give the windows a quick cleaning.  The lawn was overgrown, there were no fresh flowers or hint of Febreze, nothing that made me want to show the house to a potential buyer, much less buy it myself. 

I had to wonder if the seller has any idea how the listing is being treated!  In any price range, it takes work to sell a home.  Especially in today’s unpredictable market, you can’t just hang up a sign and wait for offers to come rolling in.  Listing agents have to do a lot of leg work - marketing with a combination of both traditional and out-of-the-box tools - from postcards to print ads, to Facebook and Twitter - the game has changed.  Don’t you want a listing agent who knows the new rules?

In recent weeks, we have listed several properties - we have also cleaned, landscaped, staged, painted, and maintained those properties - because sometimes getting something right means doing it yourself - and the best agents understand this.  And I can tell you this: if you walk into an Open House hosted by one of us, you will not be ignored.  We will ask you what you think. We will thank you for taking the time to stop in.  And we will blog about it later. 

These are the new rules - get in the game.

NEW CARBON MONOXIDE DETECTOR LAW  HB1091:  This law was signed into effect on March 24, 2009 and will require that after July 1, 2009 all NEW OR SOLD properties in the state with a fuel fired heater or appliance, or an attached garage must have carbon monoxide detectors installed.  AT THIS TIME ALL RENTAL PROPERTIES MUST ALSO HAVE CARBON MONOXIDE DETECTORS INSTALLED.  There must be a detector on each occupied level and there must be a detector within 15 feet of the entrance of any area designated for sleeping. 

We’re working with several people right now who have their homes listed for not much more than they owe.  We’re OK with that.  Why?  THE MATH!  They’re movin’ on up…to a house in Highland they can actually afford…to a big suburban ranch where the kids will have room to roam…to a loft in the city…and they are all letting go of the home they aren’t all that happy in so that they can do it.  So, even though they might not get as much for their current digs as they would have 2 years ago, or 5 years from now, they are still making the move on up at the right time, because they are getting such good deals on their new properties.

Here’s an article from MSNBC that lays it all out:

After two years of married life in a 680-square-foot, one-bedroom Seattle condo, Lori and Chris Kirsten were ready to spread out in a real house with room for a home theater and a yard where the Labrador retriever they had always wanted could roam.

The Kirstens prepared to list their condo for sale and go house-hunting, banking on equity in the unit, which Lori had brought in 2003 for $130,000, to help with the transition to a larger place. Seattle’s hot real estate market had pushed the condo’s value to $215,000 or more at its peak in 2007.

But their home search lost some steam when their agent told them Western Washington real estate prices, although not in the freefall experienced elsewhere, had still declined to the point that their unit might now fetch $25,000 or $30,000 less than two years ago. When they saw condos comparable to theirs selling for as little as $170,000, “I thought, ‘I just can’t do it,’” Lori recalled.

Their mood brightened when they began shopping in the spacious neighborhoods of this suburb northeast of Seattle and found a 3,000-square-foot, four-bedroom split-level on a half-acre of towering fir trees that they wound up buying for $425,000. That’s $86,000 less than the $511,000 peak value placed on the home by real estate Web site Zillow.com, $64,000 below the original asking price of $489,000 and even well below the final asking price of $438,000.

Read the rest.

We’re feeling the recovery every day around here - downtown, in NW Denver, and even in Golden, Arvada, and Wheatridge, among other Metro areas.  Low inventory, low prices, low rates and rising demand are all helping to jump-start movement in D-town, and it’s even starting to feel like FLIPPING will pay off big time if done right!

Check out this article from BUILDER magazine:

John Burns always seems to be step ahead of the pack when it comes to forecasting the housing market, especially local demand. Among the first analysts to write that a major price correction was necessary before the market would rebound, Burns has since developed a local market forecasting tool.

Dubbed Housing Cycle GPA, the analytical model considers 29 years of history to determine a local market’s health. The primary drivers are local demand, supply, and affordability, along with what’s happening in the national economy. When two of the three local fundamentals rise, that usually means price appreciation is likely to occur, sometimes immediately, in other cases, over several years.

We asked the analysts at John Burns Associates to use the model to determine which five major home building markets might recover first. They produced a list that includes some metro areas with strong job formation, others where home builder competition is almost nil, and still others where price declines have made homes quite affordable.

1.

Washington, DC. Burns’ bullishness on this market boils down to a single word—jobs. “If a sector will be hiring, it will be the Federal government,” he says. D.C. was also among the first markets to have a price correction. “Within a reasonable commute of the Capitol, homes have become very affordable and supply is constrained.”

2.San Diego, Calif. “Most of the home builders and speculators have left town, and left a very supply-constrained market behind. The biotechnology sector is likely to lead an economic recovery that will be characterized by great affordability (by San Diego standards) and a lack of supply.”

3.Sacramento, Calif. “Although we expect housing demand in Sacramento to remain low due to state fiscal issues, much of the excess supply in both new and resale homes has been cleared out, and affordability is fantastic.”

4. Dallas, Texas. “Assuming mortgage rates remain low and GSE lending doesn’t change, Dallas’ housing market should stabilize due to increased demand from people relocating from the west to one of the most affordable markets in the country. North Dallas should recover long before South Dallas.”

5. Denver, Colo. “One of the best places to live in the country, Denver was just recovering from the telecom bust when it got hit by the national economic downturn as well. Housing is extremely affordable and foreclosure activity, which used to lead the country, is now much lower than most other areas of the country.”

Read the rest of the article.

From today’s Realty Times…

Green is good, and the Obama Administration and Congress believe it should be an integral part of pulling America out of its economic doldrums. According to the National Association of Home Builders, expanded tax credits for energy-efficient home improvements in the new economic stimulus package puts more money in consumers’ pockets by providing financial incentive for home owners to go green on their renovation projects in 2009 and 2010. While more efficient homes save on water and energy bills, these tax credits will make such home upgrades even more affordable.

The Internal Revenue Code section 25C tax credit for existing homes, which had expired at the end of 2007, was reinstated as part of the economic rescue package passed by the Bush Administration last fall. Homeowners could be rewarded for installing energy-efficient windows, doors, roofing and insulation as well as furnaces, air conditioners and heat pumps. But remodelers found that the terms of the 25C credit — equal to only 10 percent of the cost of each product and with a lifetime cap of $500 — weren’t strong enough to push enough homeowners off the fence and into action.

Now, the credit rate and lifetime cap have been tripled – to 30 percent and $1,500, respectively – the list of eligible improvements expanded, and the deadline for applying has been extended through the end of 2010. Congressional estimates indicate that the new rules for the tax incentive will increase aggregate remodeling activity by more than $6 billion.

“The new tax credit also aligns with industry research indicating that even the most aggressive efficiency goals for new homes won’t make a dent in overall energy consumption. Instead, remodeling and retrofitting the nation’s older homes is by far the more efficient solution,” said NAHB Remodelers Chairman Greg Miedema, CGR, CGB, CAPS, a remodeler from Tucson (AZ).

“These new tax credits are another way that home building industry can combat the potential effects of global climate change by encouraging home owners to make energy-efficient improvements to their homes,” said Miedema.

A 2008 California study revealed that 70 percent of the greenhouse gas emissions related to single-family envelope energy consumption can be attributed to homes built before 1983.

The bottom line: Retrofitting existing homes with energy-efficient features is four to eight times more carbon- and cost-efficient than adding further energy-efficiency requirements to new housing, the study showed.

Details on qualifying improvements are available at the IRS Web site at www.irs.gov. It is expected that homeowners will need to complete Form 5695 (Residential Energy Credits) and submit as part of their 2009 income tax returns to claim the credit. Further, homeowners should retain for their own records information that includes:

 
• Name and address of the manufacturer 
• Identification of the component 
• Make, model or other appropriate identifiers 
• Statement that the component meets the 25C standards 
• Climate zones for which the criteria are satisfied 
• Additional information for storm windows, if applicable 
• A declaration that the certification statement is true.

The Denver Metro is HOT right now, and I’m not just talking about the 70 degrees and lovely sunshine we had today…check out what the Business Journal had to say about the lastest Standard and Poor’s report…

Prices of existing homes declined less through 2008 in the Denver area than in any of 20 major U.S. cities, Standard & Poor’s reported Tuesday.

The monthly S&P/Case-Shiller Home Price Indices said average prices of existing homes in Denver fell 4 percent between December 2007 and December 2008, less than any of the other 19 cities in the report.

The average decline among the 20 cities was 18.5 percent, S&P said.

Among the 20 cities covered in the Home Price Indices report, Dallas had the second smallest year-to-year housing-price decline after Denver, at 4.3 percent, followed by Cleveland at 6.1 percent and Boston at 7 percent.

The cities with the greatest price declines were Phoenix at 34 percent, Las Vegas at 33 percent and San Francisco at 31.2 percent, S&P said.

The survey also indicated that Denver had the second-smallest decline in existing-house prices between November and December 2008, at 1.5 percent, behind only Boston at 1.3 percent. Denver’s decline between October and November 2008 was 1.1 percent.

Phoenix had the greatest month-to-month decline from November to December, 5.1 percent, followed by Las Vegas at 4.8 percent and Minneapolis at 4.6 percent, S&P said.

Nationwide, the S&P report painted a gloomy picture of steadily declining home prices.

“The broad downturn in the residential real estate market continues,” David Blitzer, chairman of S&P’s index committee, said in a statement Tuesday. “There are very few, if any, pockets of turnaround that one can see in the data. Most of the nation appears to remain on a downward path.”

The survey tracks changes in the value of the residential real estate market by comparing sale prices of specific sample homes in a city at two different times. Calculations are by Fiserv, Inc. using methodology developed by Karl Case and Robert Shiller.

The survey assigns an index number to each city and does not report actual home prices. The index is a measure of how much home prices have gone up or down in each market since January 2000, which has been assigned a price index of 100 in that market.

The report said Denver had a home-price index of 125.74 in December, meaning home prices have gone up 25.74 percent since January 2000. Home prices in Denver peaked in August 2006.

Six of the 20 cities had a lower price index than Denver, with Detroit at the bottom at 80.93. New York topped the list at 183.50.

The average price index for all 20 cities of 150.66.

Wow, with the New Housing Plan has come a ton of new business - both buyers and sellers are getting in on the action, and we are seeing the Denver market pick up at an unbelievable pace.  Case in point, the listing we put on the market last week already has a contract pending, and it had multiple offers for the list price.  So, if you have been sitting on the fence and waiting for the perfect time to buy or sell, jump down and join the fun - that time is NOW.

Of course, with the changes put in place by the Stimulus Plan, there are a ton of questions that our clients are asking…here are just a few:

- Should I refinance now, and will the New Housing Plan help me out even if I have never missed a mortgage payment?

The answer is maybe.  I like this summary from the New York Times:

Removing a limit on refinancing for “responsible homeowners”

4 million to 5 million households.

The bill will remove the current restriction on Fannie Mae and Freddie Mac that prohibits them from guaranteeing refinancing on mortgages valued at more than 80% of the home’s value. This will allow many more homeowners to refinance at lower rates.

Helping renegotiate loan terms for “at-risk homeowners”

3 million to 4 million households.

The bill creates incentives for lenders to modify the terms of subprime and other loans. Participating lenders will reduce payments to no more than 38% of borrower’s income, with the government matching further reductions down to 31%.

Who doesn’t qualify

There is also a good Question and Answer sheet posted on the US Treasury website: http://www.treas.gov/initiatives/eesa/homeowner-affordability-plan/ConsumerQA.pdf

- Are there areas in the Denver Metro that haven’t decreased in value over the past year?

Absolutely.  There are neighborhoods that have increased in value over the past year - and that are projected to keep on doing so.  Highlands, Berkeley, Sunnyside, Wash Park, Congress Park and Cheesman are just a few of the places where it’s still rare to find foreclosures - and still solid areas to invest in and live.   

- Is it still possible to make a profit by flipping?

Of course, but you have to be super smart about it.  You have to be careful about what you pay for the property, how much you put into it, how long you hold it, and how you price it to sell.  There is a ton of competition for great investment proeprties, so the best thing to do is set up an automatic search that will send you new listings the day that they hit the market.  If you see something that looks like a good investment, don’t wait - make an offer.  And create a net sheet that will allow you to project your profit so that you can budget for the flip accordingly.

Finally, some news that investors will benefit from!  Fannie Mae is shaking things up to get the market moving, and removing some of the ridiculous guidelines that barred some investors from helping the housing market to recover.  This is the beginning of the official announcement from Fannie herself:

 Fannie Mae is committed to providing financing opportunities for high-credit quality, bona fide investors. Experienced investors play a key role in the housing recovery and Fannie Mae’s continued support for investor borrowers is consistent with its mission to provide stability, liquidity, and affordability to the nation’s housing system.limits the number of one- to four-unit financed properties in which the borrower may have an individual or joint ownership interest to four financed properties when the mortgage being delivered to Fannie Mae is secured by an investment property or second home.  The limitation on the number of mortgages currently being financed applies to the total number of properties financed, not just the number of mortgages sold to Fannie Mae. Fannie Mae is modifying this policy to allow investor and second home borrowers to own five to ten financed properties if they meet certain eligibility and underwriting and delivery requirements…

Read the rest here.

From the Denver Business Journal this week:

Home prices in the Denver metro area declined 4.3 percent in November from the same month a year ago, a much slower rate of decline than the average in other U.S. cities, the Standard & Poor’s/Case-Shiller 20-city housing index reported Tuesday.

Nationally, the average decline for the 20 cities measured in the report was 18.2 percent between November 2007 and November 2008, a record decline since the “Home Price Indices” survey was launched in 2007. All 20 cities in the survey reported year-to-year declines.

Only Dallas had a smaller year-to-year decline in prices of the 20 cities — 3.3 percent.

In the Denver area, home prices have declined every month since July, the report said. Prices were slightly lower in the area early this year, it said.

Prices in Denver and across the nation have not been consistently as low as they are now since early 2004.

Home prices in Denver peaked in August 2006 and have declined 9 percent since then, S&P/Case-Shiller said.

Denver and Dallas “fared the best in November, in terms of relative year-over-year returns,” the survey says. “While in negative territory, their declines remained in low single digits.”

The survey also said Denver recorded the smallest month-to-month price decline of any city in the study, down 1.1 percent between October and November 2008.

As for the year-to-year decline, Phoenix stopped the 20 cities with a 32.9 percent drop, followed closely by Las Vegas (31.6 percent) and San Francisco (30.8 percent), Miami (28.7 percent) and Los Angeles (26.9 percent).

The survey tracks changes in the value of the residential real estate market by comparing sale prices of specific sample homes in a city at two different times. Calculations are by Fiserv, Inc. using methodology developed by Karl Case and Robert Shiller.

The survey assigns an index number to each city and does not report actual home prices.