On Tuesday my friendly neighborhood realtor dropped by. I asked her what her opinion was of the market right now since it seems that just a short while ago every house on the street was for sale. I find it interested to check my observances against those of someone in the business, against what the media reports. Below are some findings:
Me: So, I've noticed less for sale signs on my street, does that mean the market has slowed?
Coldwell Banker Realtor: It's definitely slowed down in this area. Houses comparable to yours are in demand and there is less inventory. That's good news if you're looking to sell. Are you thinking about selling?
translation: My house is currently valued at less than $350,000. In this price range it's easier to find qualified buyers who can get loans. The inventory is low so she's eager to get a house she can sell.
I look down my street again and notice that maybe there is one house on either side of the street for sale, so two houses. But I also see 4 rental signs. A year ago there was only one visible rental on the street. I know there are other houses that are rentals. They don't seem to have trouble being rented and never have signs on them. The additional signs tell me more properties are going this way, which I interpret as trouble for my home value.
To get another perspective I turned to another realtor I know who handles a more upscale area. Here is what Jenny Lane had to say:
I think the inventory is reduced because of the time of year. This is a desirable family community so many of the people who want to buy here are looking in the spring/summer months. What is actually hurting the most are higher priced homes, above $500K or so. Mainly this is due to lenders becoming more strict with their lending practices, the way it should have been all along. It's much more difficult for anyone to qualify for a loan these days since the interest rates are tiered based on a very high starting point (740+ is an "A" mortgage, whereas 675 or so used to be), plus a conventional loan which is what you'd need at that price, would require 10% down nowadays, maybe 5% but rare. Jumbo loans are also more expensive now, coupled with the % down payment, there are less buyers at that price range that can afford it now than before. Homes that used to be valued above $500K or so have become very devalued and that will continue. Overall inventory will continue to sell off and start to appreciate again, but the higher end homes will suffer the most.
And then I ran into this article on Mile High Urban Living that restates that the Today Show picked Denver as the #1 Rebounding Housing Market. Watch the video to learn how they picked Denver. I chose this Youtube version over the official Today Show video because it cuts out the advertising. The visual quality is poor but, the audio is perfect. If you prefer you can view the Today Show segment.
I think Jenny Lane really hits it for what's happening to the Denver Metro market. While the Today Show claims that homes in this area are going for around $193,000 I don't know where these houses are. This amount is not based on looking at actual homes and doesn't consider the needs of families or amount of work that might need to be done to the house. The median home price in Golden is $400,000 with still more sellers than buyers.
This quote is from the National Realestate Summary:
"Like the legendary phoenix which rose renewed from its ashes, the U.S. housing market appears to be on the verge of emerging from the worst real estate market in three years."