Sun Might be Shining on Colorado Housing Market

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."

Seller's Face Picky Buyers

The housing market looks terrific if you are looking to buy, but for sellers it can be stressful as competition tightens. I’m sure my street isn’t that much different from any other Denver metro suburb. At one end there are three houses in row with for sale signs. So how does a seller differentiate, particularly when most houses on the same street are mostly alike?

Beyond clean windows and trim landscaping sellers are challenged to have their homes “move in” ready. Buyers can be choosey and may reject your home’s plumbing repair needs over the house next door even if that other house needs the grass cut.

It might seem insignificant to make small repairs that could which make a big difference to buyers. But, for sellers, dealing with picky buyers can be a real pain. Just when you think you’re ready to go, some buyer starts complaining.

Some realtors are recommending that sellers pay for a home inspection before they’ve even got an interested buyer. It might seem like an unnecessary investment and every dollar put out takes away from your sale, but an inspection might give you a heads up to necessary repairs.
And if you’re thinking that you can just right in repair allowances into a contract (i.e. carpet allowance is common) forget it. Remember that “move in” expectation.

The Millionaire Party Could Be Ending

If you've read one "how to be a millionaire" book you've read them all. And if you haven't read the book maybe you caught some of the infomercial. Nearly everyone who brags about being a millionaire wants to sell you their secret formula for purchasing real estate at ridiculously low prices and reselling for profit.

Meanwhile, the foreclosure rate for the Denver metro area is up 9% over last year's all time high. For some people this misfortune has been a gold mine. Previously it wasn't that easy to find investment properties for less than $100,000. But with foreclosures more ordinary people have been able to add "investor" to their resume for less than half that.

photo by Martin Deutsch

But the new housing relief bill may be closing the window of millionaire opportunity. The measure includes $300 billion in new loan authority for the federal government to back cheaper mortgages for troubled homeowners. The goal of this funding is to help more home owners avoid losing their homes. And that means fewer deals for investors.

Now maybe that also means there will be less books published that try to trick us into buying them with promises of becoming a fast millionaire.

Don’t like the Housing Outlook? Move Over a Few Miles.

USA Today reports that Green Ranch near DIA is looking like ghost town as for the foreclosure plague moves in. But while the tumble weed may be blowing in the prairie it’s not indicative of the rest of the metropolis. We all know that Colorado, particularly the Front Range, is comprised of a multitude of micro-climates. Well, same goes for the housing market. And so, we seem to fit right into whatever media headline needs to be written.

Need a doom and gloom story? Just last week Forbes included Denver among the “riskiest housing markets”, but with a caveat…

Other spots, Denver, for example, exhibit negative characteristics like foreclosures, lending problems and vacancies, but are adding jobs, a sign that the local economy can better handle these difficulties.

And for a good time…Earlier this year Forbes nominated Douglas County as No. 5 in America’s Richest Counties.

And my point is? Denver seems to reflect what’s happening through the country. While some pockets continue to prosper others fail.

Let's hope that like most storms in Colorado this one passes quickly with beautiful times ahead. It’s a sweet time for investors and new buyers and sad for those who bought into bad loans.

photo by artbabee