The most recent Case-Shiller report shows in their 10 City and 20 City Composite index that we will see a double dip in housing prices nationally in 2011.  Most of the gains we saw in pricing may be lost in the coming  year according to their current statistics.  The good news for the Denver Metro Market is that 12 of the 15 worst markets are in Florida and Arizona.   This however does give us some guidance for the our 2011 market.

The Denver Metro Market should outperform the U.S. Market in 2011

• The current inventory continues to fall in a seasonal adjustment to 21,168 total residential units
• Foreclosure filings for 2010 are lower in all Counties, except Eagle County in the mountains
• Colorado’s unemployment numbers are lower than most of the United States
• A solid tax policy should encourage employers to start creating jobs again in Colorado
• Jobs creation is the formula for consumer confidence and home purchases

Solid Under Contracts In the Upper Price Ranges for November

• Post election confidence creates a new and exciting activity in most price ranges
• A solid increase in the move up market as middle price ranges receive contracts
• Offers have increased in the $750,000+ market in November
• Buyers taking advantage of low prices and very low interest rates

How to prepare for and find Success in the 2011 Market

• Realize that the number of units sold should increase in the new year, but not prices!
• Sellers should continue to put their property in show home condition!
• Sellers must price their home correctly when they first come on the market!
• Buyers should take advantage of low interest rates, but realize rates are rising!
• Buyers may realize that certain price ranges are low on inventory, so don’t wait if you like the home!
• Take action on some of the best buying opportunities in generations!

Most importantly, enjoy the Holiday Season with Family and Friends!

All real estate data taken from Metrolist Inc. on December 4, 2010  Denver, Colorado and by Re/Max Professionals

“If the property is occupied, our foreclosure attorneys will suspend the eviction to provide a greater measure of certainty to families during the holidays,” says Anthony Renzi, executive vice president of single family portfolio management at Freddie Mac.

What is the current supply/demand of homes?

So, How’s the Market, Aug, 2010
All real estate data taken from Metrolist, Inc, on Aug 5-8, 2010. Denver, Colorado.

“What are the Most Important Facts Buyers and Sellers want to know about
Today’s Real Estate Market?”

There are 5 important questions posed to Real Estate Professionals from the buyers and
sellers in today’s marketplace that help them decide about what to do in their real estate
future. The consumer will ask about “How’s the Market” and it’s the brokers’ job to
share the real factual answers to provide the consumers the correct data to overcome the
fear of entering the market and take advantage of what could be the most opportunistic
housing market in Denver history.

Question 1

Answer:
Since foreclosed properties are typically sold, “As Is” buyers are
purchasing at slightly below market values which will affect the value of homes in the
same neighborhood for the short term. However, most neighborhoods have a small
percentage of sales that are foreclosures. In fact, foreclosed sales average 7% of homes
selling today and most neighborhoods have another 6% of short sales occurring. This
leaves 87% of all sales in most neighborhoods selling at market value holding the value
of your home closer to the current market conditions.

Rational Thought:
Foreclosures sales or short sales do negatively affect value
in the eyes of the homeowners living in the neighborhood. However, like any other non-
arms length transaction the reduction in value will be dictated by the number of
foreclosed properties in relationship to other sales over the last 90 days. Since most
banking experts and foreclosure services are stating that any additional numbers of
additional foreclosures entering the market are at the peak, the market will see less
valuation fluctuations moving forward then we’ve seen the last 36 months.

Question 2

Answer:
Knowing the supply and demand of any product predicts what the
opportunities are in the market. For example, there is a 5.45 month supply of homes
below $250,000 which means prices are going up in the lower price ranges. Conversely,
homes priced between $1 million and $1.5 million have a 26 month supply. What do you
think is happening to prices in that price range? Let me get a specific buyer supply/
demand number for your home?

Rational Thought:
Residential real estate is a very local market condition
better measured down to specific neighborhoods. One neighborhood could have a
different supply and demand dynamic than the entire market. When a homeowner asks
the question of supply and demand they are trying to “time” the market to maximize their
investment.
Metro Area Denver Single Family Supply and Demand for August 2010

Sold SF YTD
7.31.10
10146
6450
1098
298
174
48
23
5
13

Annualized SF Sold
Data for 2010
16364
10403
1771
481
281
78
37
8
21

Months Supply

5.45
8.55
14.5
24.99
26.35
45.07
39.56
162
82.85

SF Homes
Price
0-250K
250-500K
500-750K
750-1M
1-1.5M
1.5-2M
2-2.5M
2.5-3M
3M+

Question 3

Answer:
Prices have stabilized and interest rates are at 45 year lows. You
couldn’t have more buying power than today. In fact with rates at 4.25% today you will
typically save more than $30,000 over your ownership period if you buy today!

Rational Thought:
A buyer buying today has tremendous buying power. If
you take a $300,000 mortgage at 4.25%, the PI payment is $1,471 per month. If the rate
were to increase to 6.25% in 2011, which is still considered a historically low interest
rate, the PI payment is $1,838 per month or $367 more dollars! If the average person
lives in their home 7 years, that extra amount would equal $30,828 more money in
payments over the life of living in the home. What could a homeowner do with an extra
$30K+ in their pocket? They could save it, pay down principal, or invest in other
instruments.

Question 4

Answer:
This will be home sale that will sell for less than the mortgage
amounts owed against the property. This can help the homeowner sell when they are
distressed vs. waiting for a foreclosure. The shorter the marketing period or smaller
reduction in value helps maintain higher property values in the neighborhood vs. a
foreclosure and eliminates a vacant property on the street. Although nobody wants to see
someone be financially distressed, if a homeowner has a legitimate hardship, this is an
avenue banks and sellers of properties are using to solve the problem of not be able to pay
the mortgage.

Rational Thought:
Short sales do help homeowners get out from the large
payment with dignity. Although the homeowner could be responsible for the deficiency
of money not paid, this amount typically is smaller than if a foreclosure occurred. Short
sales help the lien holders garner some dollars now vs. trying to secure money via
foreclosure, which takes time. Short sales help other homeowners in the neighborhood
because the values do not drop as much. Many banks have figured the loss is less on a
short sale than a foreclosure, so the lending institutions have gotten better systems to
accept short sales.

Question 5

Active Listings
8.5.10
7943
7415
2141
1002
617
293
122
108
145

Is it a Good Time to Buy?

What’s a Short Sale?

How do I best protect my investment dollars in my home?

Consider Alternative financing methods if you have a property valued above
$500,000. Seek the advice of a professional to describe your options.
Position the pricing strategy of your home so it becomes attractive to buyers.
Have the best conditioned property on the market.

Lock your interest rate in to a low rate now if you plan on closing within 45
days. Buyers should not have an extra fee to lock the rate.
There are different financing packages. Pick the one that gives you the best
way to increase your equity position, like a 15 year mortgage or flexible
prepay principal type loans.
Know what the neighborhood supply and demand is to make an informed
buying decision.

Over 92 properties a day are closing in Denver. Find where buyers and sellers
need your help and work that market.
138 properties go under contract any given day, are your daily activities
getting you in front of buyers?
Learn about Absorption Rate Pricing of Homes and know the Supply and
Demand of the market and sub-markets.

Answer:
Part of my role as your real estate professional is to help you
improve the equity in your home. There are several ways to create a stronger equity
position and we can create a personalized Real Estate Financial Plan that I am versed in to
help you better improve the equity of your home.

Rational Thought:
Equity in future home ownership will be successfully
achieved by positively altering the principal payments of a loan, not just waiting for
appreciation to occur. Prepaying an equal principal amount per month reduces a 30 year
amortized loan by more than half the time. By adding just one full payment per year to
prepay the principal each year will reduce a 30 year loan to 22.4 years. Of course
utilizing a 15 year amortized loan achieves a similar type of savings to the homeowner.
Paying principal not interest is the secret to achieve higher equity positions. Equity gives
the homeowner lots of options for the future.

What should sellers do in today’s market?

•

•
•

What should buyers do in today’s market?

•

•

•

What should Real Estate Professionals do in today’s market?

•

•

•

Good Selling!

REASON Number One!   The buyer competition is lower than in earlier spring months, which benefits buyers.  Sellers have an opportunity to capture the buyers with creative terms.  Buyers will not compete with as many buyers as the previous month giving them a better negotiating position.  This looks to be a short term opportunity for buyers, as we would project more buyers entering the market as rates rise.

The tax credit pushed the buyer pool into buying in March and April and the lack of properties currently under contract in one month decreased by 2001 units.  This means that the pace of buyers buying has slowed down giving a buyer the buying opportunity in June 2010.  Each price range and location offers different data, but if you are a buyer today you have fewer buyers as competition this month.

REASON Number Two:        Interest rates hit historical lows in June in the mid 4.5% range for a conforming loan rate.  The buying power is off the charts for a buyer to really maximize their housing investment.  A $300,000 loan at 4.5% = $1514 dollars principle and interest per month.  That same $300,000 at 7% = $1984 dollars principle and interest per month or $470 dollars more payment per month or $5640 dollars per year more.  The average person lives in their home 5-7 years meaning the savings in payments over 7 years would be $39,480!  Although rates are expected to rise slowly through 2010, we suggest buying now to lock in historically low rates and avoid the rush of buyers who enter the market when rates to start to rise.  Is it worth it to you to save thousands of dollars in payments when you buy today?

REASON Number Three:       Sellers in entry level single family price ranges which is below $350,000, can position their home against fewer properties this year than previous years.  The tax credit absorbed quite a few entry level properties making for a unique “Move Up” opportunity for sellers.  Sell at close to list price on the entry level home and become a buyer in the upper price range and look for a discount.   The absorption rate for a single family home priced in Denver from zero to $500,000 is 5.1 months supply.   This makes the lower priced range homes a sellers market.  Conversely properties from $750K to 1 million and above have an absorption rate of 30 months with 2250 homes on the market and an annualize number of sold single family homes above $750K to be a projected 892 homes.  This upper end phenomenon creates a buyers opportunity not normally seen in the last 50 years.

REASON Number Four:        The last time the Denver market had 3 consecutive months of sold data that exceeded the previous year was 2005.

 Historically, 3 straight months of increased sold data would signal the market is on an upswing.  Since the Tax Credit artificially increased sales in April, watching this data over the next 3 months will be good indicators if Denver is on the rebound for appreciation or if we are still bouncing along the bottom of the market.  Either way, buying now assures you of buying at the bottom of the market.

REASON Number Five:         Denver is considered by numerous experts as the city that will out perform the national market in job growth and job stability for the next several years.  When there is a pool of jobs, people move to the city with the jobs.  When people move to a town it will lower inventory and when inventory reduces, prices go up.  There are three parts to a buyer making a buying decision:  1. Average Price.  2.  Interest Rates and 3. Job Stability.  When all three are aligned in favor of the buyer, like June of 2010 is, properties start to move and appreciation occurs.

CONCLUSIONS:

 Why Should You Considering Selling and Buying in June 2010? 

• Excellent Opportunity to Buy an Appreciable Asset at the lowest prices in years.
• Low Interest Rates Make Your Buying Power Exceptional.
• Building Costs are low for those who want to build their dream home.
• Sellers are more realistic to the market conditions and their Odds of Selling.
• The future of real estate will continue to be a solid investment and buying at the lower end of the market is Smart.  Do you wish you would have bought more real estate in 1988?  Don’t wish the same thing in 2028 about 2010.

 What should sellers do in today’s market?

 Only put your home on the market if you understand the Odds of Selling and Positioning Your Home where buyers are buying.

• Become a motivated seller by offering attractive terms to buyers
• Make your home a STAR Home!  Shows Terrific And Realistically positioned.

 What should buyers do in today’s market?

 Leverage your buying power with the low rates.

• Financing Terms could make an offer very attractive for you.
• Get Pre-Approved to Buy like a Cash Buyer.

When you’re looking for help buying or selling property, it’s important to remember that the terms “real estate agent” and “Realtor” are not synonymous. Realtors can provide an extra level of service and to be a Realtor you must be a member of the National Association of Realtors (NAR). The equivalent organization in Canada is the Canadian Real Estate Association (CREA). Both are non-profit trade organizations that promote real estate information, education and professional standards. The National Association of Realtors also has earned a strong reputation for actively championing private property rights and working to make home ownership affordable and accessible. The NAR and CREA members adhere to a strict code of ethics founded on the principle of providing fair and honest service to all consumers.

Realtor business practices are monitored at local board levels. Arbitration and disciplinary systems are in place to address complaints from the public or board members. This local oversight keeps Realtors directly accountable to the individual consumers they serve and therefore the consumer is more likely to find better service and accountability by using a Realtor.

Mistake #2. Complacent marketing when selling a home
 
When selling your home there are no guarantees that the ultimate buyer of your home will have simply walked through the front door. In many cases you may have to bring your home to the buyer. Effective marketing will help ensure that your property receives maximum exposure to attract a ready, willing and able buyer in the shortest period of time. Ask your Realtor to list for you all of the ways he/she intends to market your home and on what time-line. Also, be sure to ask about the home being advertised on the Internet.

Mistake #3. Taking for granted the “curb appeal” of your home

When you’re preparing your house for sale, remember the importance of first impressions. A buyer’s first impression can make or break whether they even want to go inside for a look. It is estimated that more than half of all houses are sold before the buyers even get out of their cars. With that in mind, be sure to stand outside of your home and take a realistic “fresh look” and then ask yourself what can be done to make the “curb appeal” improve. Also ask your Realtor’s opinion as to how to improve the curb appeal. It could make a huge difference in your final sales price.

Mistake #4. Forgetting about health and safety issues

Be upfront and disclose to your Realtor any problems with the property. The problems are going to be discovered anyway. A decade ago, health and safety issues were rarely a part of the typical real estate transaction. Today, however, it’s common for inspections relating to health, safety, and even environmental concerns to be a part of most sales contracts. Moreover, in many states, the seller must disclosure to the buyer any knowledge of existing property problems. In many cases, these issues have been or can be factored into the home’s listing price.

Mistake #5. Forgetting what you would want to see if you were the buyer of your home

Remember that although people can be different in personality, they tend to be the same when it comes to expectations at someone else’s expense. In other words, a prospective buyer would probably like to see a perfect home from top to bottom, inside and out, when it comes to your home. Try to do as many of the following items as possible to improve the likelihood of your home sale in an expedient way.

On the outside
 1) Sweep front walkway.
 2) Remove newspapers, bikes and toys.
 3) Park extra cars away from the property.
 4) Trim back the shrubs.
 5) Apply fresh, clean paint throughout.
 6) Clean windows and window coverings throughout.
 7) Keep plumbing and all appliances in working order.
 8) Maintain all sealant (window, tub, shower, sink, etc.) in good condition.
 9) Make sure roof and gutters are clean and in good condition.
 10) Mow the lawn frequently and plant flowers.
 11) Keep pet areas clean.

On the inside
 1) The kitchen and bathroom should shine.
 2) Quick once-over with the vacuum; carpets should be clean.
 3) Place fresh flowers in the main rooms.
 4) Put dishes away, unless setting a formal display for decoration.
 5) Make all beds and put all clothes away.
 6) Open the drapes and turn on lights for a brighter feel.
 7) Straighten closets.
 8) Put toys away.
 9) Turn off television.
 10) Play soft music on the radio/stereo.
 11) Keep pets out of the way and pet areas clean and odor-free.
 12) Secure jewelry, cash, prescription medication and other valuables.
 13) Enhance the spaciousness of each room.

Mistake #6. Thinking you need to be in the home to explain things to a prospective buyer

You will be better served if you allow your Realtor to do their job without you there. Most potential buyers usually feel more comfortable if they can speak freely to the real estate professional without the owners being present. If people unaccompanied by an agent request to see your property, you should refer them to your real estate professional for an appointment.

Mistake #7. Not knowing how to price your home to sell

Perhaps the most challenging aspect of selling a home is listing it at the correct price. It’s one of several areas where the assistance of a skilled real estate agent can more than pay for itself. Listing the home too high can be as bad as too low. If the listing price is too high, you’ll miss out on a percentage of buyers looking in the price range where your home should be. This is the flaw in thinking that you’ll always have the opportunity to accept a lower offer. Chances are the offers won’t even come in, because the buyers who would be most interested in your home have been scared off by the price and aren’t even taking the time to look. By the time the price is corrected, you’ve already lost exposure to a large group of potential buyers.

The listing price becomes even trickier to set when prices are quickly rising or falling. It’s critical to be aware of where and how fast the market is moving – both when setting the price and when negotiating an offer. Again, an experienced, well-trained agent is always in touch with market trends – often even to a greater extent than appraisers, who typically focus on what a property is worth if sold as-is, right now.

Mistake #8. Not planning your move earlier enough

Many sellers simply don’t plan their move early enough and then feel totally overwhelmed at the time of moving out of the house. If you are able to move at any time of the year, don’t wait until summer, the peak-moving season. Consider also that the first and last few days of the month are extra busy. If you plan to sell your house, get it on the market as soon as possible. Keep a record of all expenses related to the move, some of which may be tax deductible. Fill out the Personal Household Inventory for each room. This is important for establishing the amount of declared valuation for the shipment and as a permanent inventory for insurance purposes.

List, as nearly as possible, the year of purchase and original cost of each item. Attach any invoices or records of purchase to the completed inventory. Prepare a separate high-value inventory if the shipment will contain articles of “extraordinary” value. The following list includes items that might fall into this category:

• Antiques
• Art Collections
• Cameras
• China Collections
• Computer Equipment
• Crystal
• Figurines
• Firearms
• Jewelry
• Manuscripts
• Oriental Rugs
• Silver
• Stones Or Gems
• Tapestries
• TVs Or Stereos

Also, unless you have been given a binding moving estimate where a firm cost is established in advance, the exact cost of a move cannot be determined until after the shipment has been loaded on the van and weighed. The weight on which charges are based is calculated by weighing the van before and after loading. The total cost of the move will include transportation charges, any charges for declared valuation, plus charges for any extra services performed at your request. All of these charges are based on tariff rate schedules.

Mistake #9. Using a “convenient” Realtor rather than using an experienced Realtor

When working with a real estate agent, it’s critical that you have full confidence in that agent’s experience and education. A skilled, knowledgeable agent should be able to explain to you exactly why your home needs to be priced at a certain level – compared to recent listings and sales of homes similar to yours. Experienced agents also know exactly what the current pool of buyers are looking for in relation to particular styles and price ranges of properties. A skilled agent can recommend changes that will enhance the salability of your home, thus increasing the price – and/or decreasing the length
of time before a sale.

Do you want to get the best house you can for the least amount of money? Then make sure you are in the strongest negotiating position possible. Price is only one bargaining chip in the negotiations, and
not necessarily the most important one. Often other terms, such as the strength of the buyer or the length of escrow, are critical to a seller.

In years past, I always recommended that buyers get “pre-qualified” by a lender. This means that you spend a few minutes on the phone with a lender who asks you a few questions. Based on the answers, the lender pronounces you “pre-qualified” and issues a certificate that you can show to a seller. Sellers are aware that such certificates are WORTHLESS, and here’s why! None of the information has been verified! Oftentimes-unknown problems surface! Some of the problems I’ve seen include recorded judgments, child support payments due, glitches on the credit report due to any number of reasons both accurately and inaccurately, down payments that have not been in the clients’ bank account long enough, etc.

So the way to make a strong offer today is to get “pre-approved”. This happens AFTER all information has been checked and verified. You are actually APPROVED for the loan and the only loose end is the appraisal on the property. This process takes anywhere from a few days to a few weeks depending on your situation. It’s VERY POWERFUL and a weapon I recommend all my clients have in their negotiating arsenal.

Sell First, Then Buy

If you have a house to sell, sell it before selecting a house to buy! I haven’t seen a contingent sale work in the last 3 years, unless it’s with a new home builder who has other houses to sell and can afford to
put one on a contingency.

Let’s pretend that we go out looking for the perfect house for you. We find it and you love it! Now you have to go make an offer to the seller. You want the seller to reduce the price and wait until you sell your house. The seller figures that’s a risky deal, since he might pass up a buyer who DOESN’T have to sell a house while he’s waiting for you. So he says OK, he’ll do the contingency but it has to be a full price offer! So you see, you paid more for the house than you could have because of the contingency. Now you have to sell your existing house, and in a hurry! Otherwise you lose the dream house! So to sell quickly you might take an offer that’s lower than if you had more time.

The bottom line is that buying before selling might cost you TENS OF THOUSANDS of dollars. I always recommend that you sell first, then buy. If you’re concerned that there is not a house on the market for you, then go on a window-shopping trip. You can identify possible houses and locations without falling in love with a specific house. If you feel confident after that then put your house on the market.

Another tactic is to make the sale “subject to seller finding suitable housing”. Adding this phrase to the listing means that WHEN YOU DO FIND A BUYER, you will have some time to find the new place. If you don’t find anything to your liking, you don’t have to sell your present home.

Play the Game of Nines

Before house hunting, make a list of nine things you want in the new place. Then make a list of the nine things you don’t want. I call this “NINE OF THIS AND NONE OF THAT”. You can use this list as a scorecard to rate each property that you see. The one with the biggest score wins! This helps avoid confusion and keeps things in perspective when you’re comparing dozens of homes.

When house hunting, keep in mind the difference between “SKIN AND BONES”. The BONES are things that cannot be changed such as the location, view, size of lot, noise in the area, school district, and floor plan. The SKIN represents easily changed surface finishes like carpet, wallpaper, color, and window
coverings. Buy the house with good BONES, because the SKIN can always be changed to match your tastes. I always recommend that you imagine each house as if it were vacant. Consider each house on its underlying merits, not the seller’s decorating skills.

Don’t Be Pushed Into Any House

Your agent should show you everything available that meets your requirements. Don’t make a decision on a house until you feel that you’ve seen enough to pick the best one. Go to the Multiple Listing computer with your agent to make sure that you are getting a COMPLETE list.

In the late 1980′s, homes were selling quickly, usually a few days after listing. In that kind of market, agents advised their clients to make an offer ON THE SPOT if they liked the house. That was good advice at the time. Today there isn’t always this urgency, unless a home is drastically under priced, and you’ll know if it is.

Don’t forget to check into the SCHOOL DISTRICTS of the area you’re considering. Information is available on every school; such as class sizes, % of students that go on to college, SAT scores, etc. You can get this information from your agent or directly from the school.

Stop Calling Ads!

A word of caution – agents create ads solely to make the phone ring! Many of the homes have some drawback that’s not mentioned in the ad, such as traffic noise, power lines, or litigation in the community. What’s not mentioned in the ad is usually more important than what is. For this reason, I want you to be very careful when reading ads. Remember that the person writing the ad is representing the seller and not you!

The most important thing you can do is have someone on your side looking out for your best interests. Your own agent will critique the property with an eye towards how well it meets your needs and will
point out any drawbacks you should know about. So whether you decide to work with me or not, pick an agent you feel comfortable with and enlist the services of that agent as a buyer’s broker. Then you become a client with all the rights, benefits, and privileges created by this agency relationship, and you’re no longer just a shopper.

Did you know that many homes are sold WITHOUT A SIGN ever going up or an AD EVER BEING PUT IN THE PAPER? These “great deals” go to those people who are committed to working with one agent. When an agent hears of a great buy, who do you think he’s going to call? His client, who he has a legal obligation to work hard for you, or someone who just called on the phone and said “keep your eyes open”? So to get the best buy on a property, I always recommend that you hire your own agent and stick with him.