Colorado Real Estate Resource

Housing sales slide to continue in 2008?

Rich Alpers (Colorado Private MLS) — Fri, 28 Dec 2007 10:14:28 -0600

Just read a fascinating report from CNNMoney about the prospects for the housing market in 2008. First, they talked about about all the major predictions for 2007 that were way off base. From Bernanke's speech in November of 2006 saying that he saw "encouraging" signs in the housing market, to NAR's prediction of a 1% drop in prices, to the most pessimistic prediction of Standard & Poor's David Wyss of a 7% drop in prices, most were way too optimistic. Depending on what you read, and how badly they've confused a drop in sales units with a drop in prices, sales were down about 12.5% in 2007, with prices overall down almost 7% nationwide. This is not much help to those of you who live in areas where sales were off 35% and prices down 15%, but as I've mentioned before, there were some parts of the country where sales were up and prices were up, and that softens the averages.

The scariest part of the report has to do with the Chicago Mercantile Exchange's futures contract for 10 major metropolitan areas. That's right, you can gamble on housing prices going up or down in various regions. By the end of 2006, these contracts were pointing to price declines of 5-7% nationwide. In other words, they were right on the money. The bad news is that these futures contracts are currently indicating price declines of 4-14% in 2008! Here's how I'm consoling myself when I look at these numbers. First of all, just because the CME was right about prices last year, doesn't mean they'll be right again. Futures contracts are indeed a gamble, and the house wins more often than not. Also, all real estate is local, and the west in general and the Denver metro area in particular seem to be improving. In my customer service job I get to talk to dozens of Realtors every week, and virtually all of them are reporting a significant increase in activity and closed business over the past 2 months. I know this isn't happening for everybody yet, but in this area at least, signs are pointing to a very healthy spring. Hang in there!

My holiday wish

Rich Alpers (Colorado Private MLS) — Fri, 21 Dec 2007 13:21:46 -0600

Dear Friends and Colleagues,

No matter how you choose to celebrate this holiday season, here is my wish to you. Take a moment and do something kind for someone. Even if it's letting them have the good parking spot - maybe just a friendly smile.

It will help to help to make the world a better place.

Thanks!

The #1 secret to getting a good deal

Rich Alpers (Colorado Private MLS) — Thu, 13 Dec 2007 12:25:48 -0600

Most homebuyers want a good deal. That's certainly no secret, and there's certainly nothing wrong with that. There are as many theories and strategies about how to accomplish that as there are homebuyers.

Fortunately, there is one simple tool that study after study shows to be the best way to get a good price on a home, and that is to use a buyer's agent. A quick history for you first time buyers :

Traditionally and historically, real estate agents always worked for the sellers of property. If a family was moving from Virginia to Colorado, and I took them around in my car for 3 weeks and took them to lunch and told them all about how great it is to live in Colorado, I was still supposed to work for the sellers of every house we looked at and represent the seller's interests. Since we all show each others listings, I usually did not know the sellers, so all I could do was protect their price. It was a HORRIBLE way to do business. Recognizing that buyers needed representation, California and Colorado led the way, and most other states quickly followed, passing laws that allowed the real estate agent to work in the buyer's interest. Now, with a level playing field, the seller had an agent and the buyer had an agent. There have been many legal refinements to this over the years, but this is only a thumbnail sketch.

Since a buyer agent's job is, essentially, to get you the best deal possible, the idea of calling the listing agent directly because "They won't have to split the commission" doesn't work anymore. The commision is a prior agreement between the sellers and their agent.

Walking into the model home in a new community without an agent doesn't work either. Remember, the listing agent's job is to get as much as possible for THE SELLER.

The bottom line? Studies by Money Magazine, Kiplinger's, The Realty Report, NAR and the New York Times all show that homebuyers represented by buyer's agents during 2005 paid an average of 5-7% less for homes, depending on price range and part of the country. On a $300,000 house, that's as much as $21,000!

I don't know about you, but there have been times in life when I would have wrestled an alligator for $21,000, when all I had to do was use a buyer's agent.

How to buy foreclosed houses without losing your shirt

Rich Alpers (Colorado Private MLS) — Thu, 06 Dec 2007 15:33:25 -0600

I get dozens of requests every week from people wanting to buy foreclosed property. Many have seen magazine articles or late night cable shows about making millions in foreclosed properties, and have only a vague understanding of how the process works. Here then, are a few basic ideas about the smart, safe way to buy foreclosed property.

Don't buy a list of foreclosed properties! Many companies sell subrictions to lists like this, but it's public information. Look at www.hud.gov for a complete list of government foreclosed homes. Also, Realtors can often set up the MLS system to send you new foreclosed listings automatically. (It is wise to use that Realtor when you buy and sell - they can only do so much work for free).
Don't buy sight unseen on the courthouse steps. You are competing with experienced pros and may end up with a house needing tens of thousands in repair or having to pay off other loans.
Proceed slowly and carefully, and do a lot of research. Find out about other sales in the neighborhood. Just because a property has been foreclosed on does not mean it's a good deal.
Talk to a lender first. Be armed with a pre-approval from a strong, stable lender. Any bank you buy from is going to require it anyway.

Like all good investments, the higher the return potential, the higher the risk. There are great deals to be had in many markets, just like there are great ways to lose a ton of money. Let's be careful out there.

Secrets to pricing a house to sell or "why the 900?"

Rich Alpers (Colorado Private MLS) — Tue, 04 Dec 2007 17:01:13 -0600

Here's a perfect example of how Realtor's thinking gets stuck in the past. Ever notice how many listings are priced at a number ending in 900? Such as $299,900 or $349,900. Does anybody believe that this kind of pricing costs you showings? Let me explain. Back in the dark ages when I started in real estate we all used the MLS book. If your listing was $100 less than the competition, you might appear on a previous page and get a few more showings. Now that it's all done on the computer, think about how listings are set up. If there is a group of buyers looking between $275,000 and $300,000, and your listing is $299,900, that's fine. What about the group looking between $300,000 and $325,000? Your listing might be perfect for them, but IT'S INVISIBLE! Many realtors will look in slightly higher range, assuming some negotiating will take place, but in these days of increased inventory, most do not look lower, because they have plenty of listings to show. Do your sellers a favor. Round up $100 (especially if you're at a multiple of 50,000 or 100,000), and catch a few more showings. By the way, expaining this to a potential seller makes you look much smarter than the competition.

No photos - no sale!

Rich Alpers (Colorado Private MLS) — Thu, 29 Nov 2007 14:52:13 -0600

Dear agents,

Please, please, please get out those digital cameras and add pictures to your listings. Virtual tours, too. As a customer service manager for a major real estate company, I'm amazed at how often homes listed for sale have no photos - often homes that have been on the market for months. This is by far the #1 complaint I get from consumers, and they often refuse to even consider a showing of a home with out pictures. Believe me, it's almost impossible to have too many. We live in an information driven world, and with minimal or no photos you look like you're trying to hide something. Along the same lines, let's take a quick look at the pictures that don't help.

Multiple shots of the front of the house from slightly different angles.

Believe it or not, taking one step back and to the left does not give a consumer more information.

2. The toilet close up.

This is my personal favorite. I know bathrooms are small, especially half baths. Unless there is something unique (like a gold plated toilet seat), if standing in the doorway only gives you a view of the toilet and the side of the tub, don't bother. We've all seen toilets. Most consumers assume that at least one will be included.

3. The window shot.

If you stand in a dark bedroom and point your camera at a bright window, you will get a picture of a black square with a window in the center of it.

These are just a few ideas. I know that when a house is vacant and the power is turned off, it's hard to get enough light for a good photo. I'm just asking for common sense (See #2, above). Don't forget about virtual tours! We know that homes with tours sell faster - we have a fiduciary responsibility to the seller, and yet I see hundreds and and hundreds of high end listings with no virtual tour. Yes, they cost money! It should be part of your marketing budget. I don't want to start ranting and raving about this, but I want you to know that this is what he buying public wants. I hear it every day. I wish more Realtors could hear it, too.

Denver real estate market shows signs of life

Rich Alpers (Colorado Private MLS) — Wed, 28 Nov 2007 14:47:30 -0600

I had the pleasure of spending Monday with several hundred Realtors from the front range range of Colorado in a state required update class. Yes, it can be boring, but I'm an information junkie and it's good to learn about new contract changes, recent legal decisions affecting home buyers and sellers, and the best ways to escape the foreclosure demon. The best part for me, though, was catching up with dozens of agents that I don't get to see anymore and find out about their lives. Incredibly, the vast majority of them had good news to report! NAR has been telling us that the Denver market is starting to come to life, but until I hear it from the mouths of working Realtors, I'm skeptical. Agent after agent mentioned that although the summer had been brutal, business was really picking up. One Coldwell Banker agent from my old office in Boulder said that after one closing in July and none in August he was considering a career change, but since then he had sold almost $4,000,000 in volume. I know that this is all anecdotal, and having a relative handful of Realtors report good news is not proof, but it sure felt very different from the past few "doom and gloom" meetings I attended. Any other Colorado real estate agents have good news to report?

Great tip for selling your listing

Rich Alpers (Colorado Private MLS) — Wed, 21 Nov 2007 11:28:20 -0600

What's Your Home's Story?

Chris Hardy

Used with permission

Every home has a story. Yet with all the technological advances of real estate marketing, the stories about our homes aren't being told. As humans, we crave story. It is that craving for story that compels us to go to the movie theatres and the book stores and that our children beg for at bedtime. Stories are one of the primary ways we make sense of our information-rich world.

Almost all of us can tell the story of Goldilocks and the Three Bears. We know how to describe beds being too firm, too soft - porridge being too hot or too cold and chairs that possess varying degrees of comfort and sturdiness. We might even throw in a few enhancements to our voice to really drive home Papa Bear's indignation that someone has entered his home and ransacked the place! Stories convey information - in a way that is meaningful, memorable, and engages our senses and emotions. That's why stories can be so persuasive.

More than a few of us have had the distinct pleasure of trying to memorize the periodic table of elements. One of the common devices my fellow chemistry classmates employed (before I dropped the class) was to make a story out of the elements to help with the memorization, you know, something like "Once upon a time a nice little Hydrogen atom was wandering through the forest when she came upon a small cottage inhabited by 2 Helium atoms. Inside the cottage were 3 Lithium ladles and 4 Beryllium bowls and 5 Boron baskets..." Just one example but you get the idea. Those cold hard facts out of context are difficult to remember and relatively meaningless to English majors trying to score some science credits.

The same is true with most homes for sale. The internet provides gigabytes of information: square footage data, room dimensions, photos, proximity to Old Town, estimated commute times, school districts, property taxes, etc., etc. I don't mean to diminish the importance of that information - but it is just that - information. Where's the context? Where's the piece of the puzzle that makes your home rise above all the others that are being scanned online? Where's the story behind the data? If you've ever bought a home, you know that it is a visceral experience. We very often make our decisions to buy a home on a ‘gut' feeling rather than just the data. That ‘gut' feeling usually comes from story - either the story the marketing information provides or the story we make up in our heads as we move through the home ("Honey, look at the size of this workshop! - If we bought this house, I could build our baby's crib that will become a family heirloom and be passed down to our children's children's children!").

My suggestion here is that when you put your home on the market - be sure that your listing agent not only knows your home's story but that the marketing material and the photos tell your home's story. The story needs to appear in as many places as it can. For example, why not have a nice welcome letter framed on a table in the entryway that could read something like this:

"Hi, we're the Nelsons. Welcome to the place that's been our home for the last 15 years. Enjoy yourselves as you tour our property. Be sure to linger on the rear deck. We've enjoyed glorious sunsets over a glass of wine in the summer and steaming hot chocolate in the Winter! We've loved this house very much and hope you do too!"

Even a brief story like this one about the deck will help others who visit the home identify personally with it and begin to make it their own. It is an opportunity to accentuate the positive and help foster an emotional connection that will be difficult for a potential buyer to set aside.

Currently, the most visited internet site with homes for sale is http://www.realtor.com/. At this site, listing agents are provided space for up to 2500 characters of description about the home. That's a lot of space to fill since all the raw data like baths and bedrooms and square footage is provided in the margins. Use that space to tell your home's story! Give your listing agent the back-story of how you found the house and why you fell in love with it. Tell her how you used the doorjamb to measure your children's growth spurts and how your kid's friends would gather in the backyard for summer twilight games of hide and seek or swing the statue. Tell the story of the 2007 snowstorms and how the neighbor with the 2-stage multi-horsepower snow-blower cleared the walks and the cul-de-sac out to the main road so people could get out to the store.

We all have great stories to tell and our homes deserve to have them told. When you're interviewing REALTORS to list your home - make sure that part of the marketing plan includes telling your home's best stories.

Chris Hardy is the Managing Broker for Coldwell Banker Residential Brokerage at 702 W. Drake Road in Fort Collins. If you have any questions about real estate or would like to contact him please send your emails to: chris.hardy@coloradohomes.com or by phone at 970-419-2201. Visit http://www.joincoldwellbankernow.com/.

Good News!

Rich Alpers (Colorado Private MLS) — Tue, 20 Nov 2007 14:17:31 -0600

Here are variety of good news pieces about real estate. It's not all doom and gloom out there! This is taken from an e-mail I got called "Postive angles"

Nov. 15, 2007 Issue No. 12

What are real estate professionals saying to homebuyers and sellers about current market conditions? The successful brokers and sales associates are talking about the strengths that exist in the market - not the negative media hype. Below are positive angles that appeared recently in the media and underscore why it is a good time to buy real estate.

Recent Quotes about the Positive Signs in the Real Estate Market:

NAR Housing Report: 2007 Ranks as the Fifth Best Year on Record

Ø "Places like Houston, the Kansas City area, Indianapolis, and the vast middle section of the United States offer affordable prices and continued job growth. On either coast, Seattle and Raleigh, N.C., remain solid. And markets that experienced recent growth declines - like Boston, Denver, and Washington, D.C. - have already shown signs of recovery."

Ø "For buyers who qualify for conventional financing, mortgages are available at favorable rates. Major FHA reform will also help first-time home buyers enter the market and will provide safer alternatives for many subprime buyers."

Ø "Buying a home is not a quick-in, quick-out investment, like buying a stock. Homeownership builds wealth over the long-term."

-- Lawrence Yun, chief economist for the National Association of Realtors®, "NAR Puts Housing Market in Perspective: 2007 Will be the Fifth Best Year on Record," Realtor.org, Nov. 13, 2007.

Foreign Investment Could Lift the Housing Market

The weakening dollar may be providing the fuel for one unintended - and very welcome - benefit: a rally in the housing market driven by foreign investors.

-- "Foreign Investment Could Lift Housing Market," Associated Press, Nov. 11, 2007.

Selling in a Slow Market

"If there are 2,000 houses on the market and 200 houses sold last month, that means it's taking 10 months to sell a house. That's pretty simple math, but nobody ever does it. If you price your house like everybody else, it might take 10 months to sell it. Given the cost of carrying your home and the risk prices might fall further, would it be cheaper to slash your asking price? If you're going to lower your price, do it right away - or wait until early next year."

-- Chris Mayer, director of Columbia Business School's Milstein Center for Real Estate, "Dump this House: Unloading Your Property in a Slow Market," by Jonathan Clements, The Wall Street Journal, Nov. 8, 2007

Where Housing is Headed
"The key to housing is the employment rate. As long as the employment stays basically full - say, under 5.5% - I see no major crisis in the housing market. Yes, we have a subprime issue. Yes, we have a lot of investors who got hung out, but I don't see the crisis the way the media portray it. We're building a lot less houses now. For many years, we averaged about 1.6 million houses a year. And then in the last four years, we went to 2.1 million. We're regressing to the mean. So there will be a period of indigestion but no crisis. No meltdown in the housing market. That's ridiculous."

-- Sam Zell, chairman of Equity International, "The Human Barometer," Time Magazine, Nov. 8, 2007.

NAR Survey Results: Consumers Very Satisfied with Agent Performance
The survey shows that 79 percent of home buyers and sellers used a real estate professional, up from 77 percent over the past three years, and nearly nine out of 10 buyers were very satisfied with their agent's knowledge of the process. More than eight out of 10 sellers and nearly nine out of 10 buyers would definitely or probably use the same agent again or recommend him or her to others.

-- "NAR Survey Shows Consumers Very Satisfied with Agent Performance," Realtor.org, Nov 13, 2007.

Regional Update: Good News from Several Markets Around the Nation

New Jersey Shore
"Home shoppers continue to stream in, even though the beach season is officially over. The number of sales we had was up 16 percent in Asbury Park this year in the period up to Labor Day, and so far, the fall open houses we hold every weekend are very well attended."

-- Gregory Demaras, a broker in Asbury Park, N.J., "Where Sales Are Buoyant," by Antoinette Martin, The New York Times (registration required), Nov. 4, 2007.

New York City
The average sales price for a Big Apple dwelling climbed to $782,000 in the third quarter of 2007, an increase of 20 percent over the same period a year earlier, according to a report released by the Real Estate Board of New York.

-- "Home Prices Skyrocketing in New York City," by David B. Caruso, Associated Press, Nov. 8, 2007.

Kentucky
"Healthy real estate markets in Kentucky and Midwestern states are being hurt by national news reports of problems in other areas. There is absolutely zero bubble in Central Kentucky, and the area's housing remains very affordable - maybe even undervalued."

-- Lawrence Yun, chief economist, National Association of Realtors®, "Kentucky Real Estate Holding Up," RISMedia, Nov. 6, 2007.

Arizona
"The housing market is correcting itself. The Federal Reserve cut interest rates two times. Major banks are changing and improving their guidelines as a way to encourage people to buy. There is talk about increasing Federal Housing Administration loan limits. There is so much growth in Arizona that I am optimistic change will continue as we approach 2008."

-- Ali Al-Asady, Realtor, West Valley, Ariz., "Housing Market Correcting Itself, Realtor says," by Erin Zlomek, Arizona Republic, Nov. 14, 2007.

Some dialogue all agents should learn

Rich Alpers (Colorado Private MLS) — Wed, 31 Oct 2007 15:37:39 -0500

Over the last 18 years I attended and taught hundreds of classes concerning what to say to buyers and sellers. With the benefit of hindsight, here's a little speech that all Realtors should memorize:

"Folks, before we go any further, I want you to think for a moment about this decision. I know the bank says they found a way to make this deal happen, but are you really sure that you can handle things if you have an economic downturn such as an injury or illness, or if your adjustable rate loan starts to increase rapidly? I want you to make sure you have enough of a reserve or a back up plan just in case of trouble"

I've never heard that one taught before.

Possession after closing

Rich Alpers (Colorado Private MLS) — Mon, 29 Oct 2007 11:27:42 -0500

Just read an interesting blog entry about sellers keeping possession of a house for 30 days after closing, and then not moving out. since there was no lease in place they had to be evicted which took several months. Ouch! We debate the "possession after closing" quite a bit in Colorado, because in some communities here it's traditional for the seller to keep possession for up to 3 days after closing. In fact, in the MLS for northern Colorado, you can put an entry in a listing that says "possession 1-3 days after closing" As an agent this always drove me bonkers! The listing agents would insist that they did this to protect the sellers. "After all", they would insist, "What if the closing falls apart at the table?. The sellers have had the expense of moving out." I'm sorry, but if loan approval (in Colorado we have "loan commitment") happens at least a few days before the scheduled closing date, and the sellers have repaired and cleaned as stipulated in the contract, then there is no reason for a deal to crash at the table.(I know it can happen, but it's pretty darn rare.)

Meanwhile, let's look at the problems that are created. #1: The sellers are now living in a house that doesn't belong to them. Should they pay rent for 3 days? #2: How about a security deposit? Damage often happens when furniture is being moved out. What if the movers slip with a large piece and put a hole in the wall or tear off some trim? Yes, the mover should be responsible, but who's going to handle the details? Remember, it's not the sellers house anymore, and they may be headed for Florida or New Hampshire. Good luck getting them to keep after the moving company. #3: What if the sellers suddenly don't get loan approval, so decide not to leave? (See example above) Every state is different, but even if the buyer has a clear legal right to the house there are a number of steps that must be taken. While that's happening, we often have a homeless buyer. #4: How do you do a walk through inspection before closing with a family still in a house with all their belongings? How many of us have found hidden damage after sellers moved out? I once found an entire can of red paint spilled on the wall to wall carpet that had been under an area rug. The sellers didn't say anything - maybe they thought we wouldn't notice!

I have a suspicion that the whole concept of possession after closing is left over from the days when everybody worked for the seller. If you've only been in the business a short time, this come as a surprise to you, but that's how it used to be. There are times when it's a useful tool, such as a seller having a new home built, but be careful! If it's the only way to put a deal together, spell out all the details, get a security deposit, and escrow funds at the closing against damage.

California fires

Rich Alpers (Colorado Private MLS) — Wed, 24 Oct 2007 12:20:27 -0500

To our brothers and sisters in California. Please know that our thoughts and best wishes are with you. The fear, frustation, and sense of helplessness is something we can all only imagine. It may not help much, but please know that thousands of us here in Colorado are sending good thoughts your way.

Let it snow and wax up the skis

Rich Alpers (Colorado Private MLS) — Tue, 23 Oct 2007 11:48:08 -0500

I spent the weekend in Breckenridge, CO where my 16 year old son was involved in a karate boot camp, up for almost 48 hours straight, and learned tons about bravery, how strong he can be be, and commitment. He's now a high brown belt, so he can legally beat the rap out of me, and I'm extremely proud of him.

The real point here is that a major winter storm moved in while we were there and I immediately went from lamenting that I didn't get in enough trout fishing this summer to the excitement that a new ski season always brings in these parts, and now that the Rockies will be playing in the World Series, there will be plenty of shots of snow capped peaks between innings, and maybe even shots of skiers - yes, several of the areas are open already. This is one of the real joys of Colorado living. It's very common for it it be 60 degrees down on the plains, just perfect for a round of golf in the morning, and yet perfect for world class skiing just 2 hours or less away. So let's sum up here - you can play golf in the morning, spend the afternoon skiing champagne powder, stop at the Buffalo Bar in Idaho Springs on the way home for a grilled buffalo burger and a locally brewed root beer, and be home in time for a quick soak in the hot tub before sleeping the sleep of the truly tired.

Why on earth would anybody want to live anyplace else?

Value Range Marketing

Rich Alpers (Colorado Private MLS) — Thu, 11 Oct 2007 15:46:42 -0500

I just read another blog entry about "value range marketing", an idea that's been tried by some real estate companies in the past to try to create more interest in their listings. The general concept is that a property listed in a price range of $375,000 to $400,000 will be seen by more people, and therefore create more offers, than one simply priced at $385,000. There are even stats that show this concept has created lower "days on market" for sellers. That may be, but I can't find anything showing that it creates more money for sellers - in fact, I don't see how it could. I understand that this has been very successful in the San Diego area, but once again, only in lowering days on market (feel free to comment if you know that market). Having worked in the Boulder County, CO real estate market for many years, I can tell you that one area franchise tried this for a few years, and almost went out of business! Here's the problem. Let's say you have a house to sell in Broomfield, CO. The market is pretty slow, and although a few years ago homes like yours were selling for $350,000, now things are down about 5%, so realistically, yours is now worth about $332,500. Like most homeowners, this is painful to contemplate, so telling yourself that the carpet you installed a few years ago and the water heater you replaced 6 months ago have added a ton of value, you decide to list your home for $340,000, even though your Broomfield Realtor tells you that you are being very aggressive in a market that doesn't support aggressive, and that you need to pay careful attention to market reaction. A month or so goes by with a few showings every week and maybe an open house, and then a lovely couple with 1 child and another on the way decide this is just the right house. They tell their buyer's agent that they really like the house and will pay a fair price, but not overpay. The buyer's agent research shows that comps support a price of $332,500, but suggests an offer below that to "test the waters". An offer of $328,750 is submitted, and the seller comes back at $335,000. Husband says OK, but the wife has looked more closely at the comps and the contract and says to her agent, "Tell them we don't see how it can appraise for more than $332,500, so that's our final offer, and they can take the washer and dryer- we just got new ones 3 months ago anyway" Bingo, we have a deal at $332,500, the real value of the home.

Now rewind to a "value range marketing" scenario. Your house in listed as "seller will entertain offers between $325,000 and $350,000. Of course, you really want that $340,000. Our young couple sees the house and figures, "Heck, houses in the area are selling for 97% of asking price, let's offer 97% of 325,000 - the ad says they'll entertain it" The problem is ,of course, that you won't, because that's only $315,250, but your Realtor beats you up enough that you come down to the real value of $332,500, and send off a counterproposal. Husband says "OK", but the wife says, "wait a minute - they want us to come up more than $17,000 - thats almost 5%! These people aren't realistic!. Let's find a different house"

I believe that VRM creates more scenarios like this - it certainly did in my experience. Realtors, is anything here not real world? I welcome your comments.

Real estate statistics

Rich Alpers (Colorado Private MLS) — Thu, 04 Oct 2007 15:50:26 -0500

Let's try to make sense of some local real estate statistics. If you work in the Boulder County, CO area, please try to explain this to me.

First of all, everybody knows that as the surrounding towns' markets rise and fall, Boulder stays pretty steady, because it's surrounded by open space so overbuilding is out, and so many people want to live there that the rest of the economy just doesn't matter. Now, ask anybody in the real estate business what the worst market in Boulder County has been for the past 3 years, and it's unanymous - everybody will tell you it's Longmont without the slightest hesitation. Last, but certainly not least, everybody also "knows" that Louisville has been red hot for 18 months. Listings sell like hotcakes. Now , let's back that up with some cold, hard facts.

In Boulder as of today, there are 421 single family homes for sale, and 60 of those are under contract or pending closing. That's 14%.

In Louisville, the red hot market, there are only 78 homes for sale, 21 of those are under contract. That's 27%

In Longmont, where you can't sell a house to save your life, there are 825 houses for sale! That's a huge amount of inventory, but look at this! 214 are under contract or pending, a nice healthy 26%.

Is the market in Boulder slowing? Is Longmont actually selling at the same rate as Louisville? It sure looks like it.

Just thought I'd mention it.

Go Rockies, Go Buffs

Rich Alpers (Colorado Private MLS) — Mon, 01 Oct 2007 15:20:38 -0500

Wow! What a weekend to be a Colorado sports fan! As unbelievable as it was to watch CU upset Oklahoma, it was a true joy to watch Todd Helton of the Rockies do the "Whoopie" dance across the infield after yesterday's win. After laboring on poor teams for so many years and never complaining, he looks like a kid in a candy store.

New home or used?

Rich Alpers (Colorado Private MLS) — Thu, 27 Sep 2007 15:10:56 -0500

I saw the report today about new homes sales being at their lowest rate in 7 years. Bad news for the economy, yeah, but what if you want to buy a new house? There are unbelievable deals to be had out there, especially on what's called "standing inventory". In other words, houses that have been built that the builder is carrying and making payments on. I was in a model home a few weeks ago that the builder was finished using and trying to sell. Remember that model homes are often upgraded to the max, and often have built in details that are not even offered as upgrades by the builder. This one was in a lovely master planned community with 7 builders, a world class clubhouse and pool, and gorgeous lakes and hiking trails, all within 30 minutes of downtown Denver.

The house had been listed at $349,900, but had just been lowered to $324,900. I spoke with the sales agent (like car salespeople, he was not allowed to make the final decision), who told me he would be happy to submit an offer to the builder of $285,000! Here's a direct quote from him - "They would squirm around a little, and then come back to you between $290,000 and $295,000". That's a 25% price reduction! Remember that the $349,900 price was simply the base price with the cost of the upgrades added in, so that's an honest to goodness price reduction.

As exciting as living in a brand new house is, there are some budget items to keep in mind that people often forget after looking at models (remember, upgraded and decorated as much as possible). Most builders will landscape the front yard, but not the back. Do you want a fence? The expense most people totally forget about is window coverings. Depending on yard size, quality, etc., these items can add up to over $30,000! Of course, if you're building from the ground up, you'll get to visit the design center to pick out cabinets, countertops, and flooring. Now these folks know how to sell! They often have sample rooms set up with stunning details and geegaws - all the most expensive stuff they have. Then your "design counselor" will say things like, "You don't need anything this fancy, let's go down a step or two". Wait till you see how much "down a step or two" costs. And you pretty much have to do it, because the base level items look awful.

I'm not trying to be cynical or negative here - New homes are a wonderful thing. I just think you need to be aware that passing an a pre-owned house because you don't like the paint colors may not be the most cost effective decision. Educate yourself! Find out the true costs. Rely on the advice of an experienced, reputable Realtor, and slow down. One of the benefits of a slow market is that you don't have to jump on the first livable house you see. Let's be careful out there.

Scared to buy?

Rich Alpers (Colorado Private MLS) — Fri, 21 Sep 2007 11:43:28 -0500

I'm kind of a news junkie - I usually read all the news magazines every month, and dig around on the internet looking for the story behind the story. I also spend a lot of time every day talking with real estate agents around the country. There seems to be a collective paranoia that has gripped the real estate buying public, and our friends in the news business are feeding that paranoia with constant headlines about the horrible real estate markets. Let's take a closer look. Yes, there are some parts of the country where the market is very soft - I understand that sales of coastal properties in Florida are down 50% from last year! Many talking heads report that as values being down 50%! These are totally different things. Yes, prices have gone down some 10-15%, but not near as much as the news organizations would have us believe.

I work in the Colorado Real estate market, and in metro Denver, sales are down 6% from last year. Despite that, in some neighborhoods and price ranges, prices have been going up! In Boulder, home to the University of Colorado, prices in many neighborhoods went up 6-8% over the past year. Back in the days of explosive growth in values (not so long ago), sales volume was often way down as prices skyrocketed. This is simply supply and demand. If there are loads of people who want to buy property, and not many listings available, prices will go up, but sales volume will be way down.

Consider the plight of the first time buyer. Let's look at a young couple who have been renting a 2 bedroom condo. They're secure and established in their jobs, and have been thinking of buying for few months. Every day they get bombarded with messages telling them of the crisis in the real estate market, and how mortgage companies are going belly up day after day. If I were in their shoes I would sure put my plans on hold. But does that make sense? Let's say they buy a condo or small house for 93% of asking price and it takes 2 years for the market to turn around, so it goes down in value 2% this year and another 1% next year. It seems like they made the right decision. Wait a minute, though - where will interest rates be in 2 years? If things heat up, will there be inventory available to buy? What if 2 years from now they have to pay 97% of asking price? Remember, they've been making mortgage payments for 2 years, helping build equity. I think that when you're in a market that's just had a correction, interest rates are terrific, and you have more inventory to choose from (and therefore more negotiating power), buying makes more sense than ever.