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Quick Stats
Denver Metro Single Family Housing Stats:
Active Listings: 13,712
- Down 8.5% from March ‘10
Under Contracts: 2,887
- Down 38% from March ‘10
Solds: 2,527
- Down 10% from March ‘10
Average Price: $273,877
- Down .4% from March ‘10
Average Days on Market: 117
- Up 36% from March ‘10
Denver Metro Condo Housing Stats:
Active Listings: 3,995
- Down 21% from March ‘10
Under Contracts: 684
- Down 46% from March. ‘10
Solds: 682
- Down 15% from March ‘10
Average Price: $159,853
- Up 1% from March ‘10
Average Days on Market: 125
- Up 40% from March ‘10
Real Estate News
As we enter the spring buying season one of the most under-performing segments of our real estate market deserves another look – condos. For years condos have lagged the market as buyers have been justifiably wary of troubled and broken Home Owner Associations (HOAs). Instead, these buyers have gravitated towards single family homes
But, what if you could analyze an HOA well enough to find a great property in a condo complex with a strong HOA? If you were able to correctly analyze an HOA you would have an edge on the market because the general market opinion is that all HOAs are weak, poorly managed, and in debt. Well, that’s exactly what Your Castle Real Estate has done!
We just concluded a massive research project in which we analyzed 17 large condo complexes in Denver and Aurora using six major Key Performance Indicators (KPIs) to determine the relative health of each complex. The KPIs included: Operating Income / Operating Expense; Operating Expense / Unit / Month; Months of Receivables; Bad Debt Expense; Reserves per Unit; and Percentage of Units that are Owner Occupied.
We’ve ranked each of the condo complexes in order from most stable and well-funded to least stable and least well-funded. This gives us invaluable insight into what condo complexes our clients should be buying into and which to avoid!
For Example, Hallscraft Village was a standout in several categories. Not only are there nice units in a nice complex, but our analysis shows their financials are in solid shape and they appear to be a very well-run complex. We concluded that eight of the 17 complexes we analyzed scored very well on the majority of our six KPIs. On the other hand, several of the complexes we looked at are mismanaged, underwater, and nearly defunct.
What this data means for you is that you now have an objective way of evaluating the underlying health of a condo complex. So instead of taking a blind risk on a condo, you have real data to help you make your decision. Give me a call and I can send you the whole list of condos we looked at it and show you how we analyze the data. It’s time to be a smart condo buyer!
Buyers
Savvy buyers know that it’s a strong buyers market right now and there are great deals to be had. So it’s not surprising that a question we often get is, “How much of a discount can I get off the asking price?” Well, the answer may surprise you. In both good times and bad the average discount hovers right around 3%. Why? It’s simple seller psychology.
Sellers HATE to give a large discount to a buyer. They have a tangible, emotional resistance to dropping the price too much to meet an offer. But, after having their property sit on the market for awhile with no bites, many grudgingly come to realize they have to drop the price to move it. Here’s a typical scenario:
Consider a property that went on the market for $200,000 on March 1. For two weeks it has no showings, then Bob Buyer sees it and offers $180,000 (a 10% discount). Horrified, Sally Seller refuses (in a huff of resentment!).
A month later there have been just a couple of looky-loo showings so Sally Seller meets with her listing agent to strategize. The listing agent describes the state of the market and Sally Seller finally agrees to drop the price to $185,000 to get some action on the property. Bob Buyer sees it again, and again offers $180,000. Sally Seller accepts! The discount she gave was only 3% of her FINAL asking price, so she’s ok with it. Bob Buyer’s patience got him a solid deal and now YOU better understand market psychology. Strange as it may seem, this dynamic plays out over and over again in the residential real estate market.
To learn even more about how buyers and sellers think drop me a line and let’s talk about it.
Sellers
You’ve heard it before, but it bears repeating: the most important thing you can do to prepare your home for sale is to get rid of clutter. One of the major contributors to a cluttered look is having too much furniture. When professional stagers descend on a home being prepped for market, they often whisk away as much as half the owner’s furnishings, and the house looks much bigger for it. You don’t have to whittle down that drastically, but take a hard look at what you have and ask yourself what you can live without.
Other jobs, like repainting rooms, more than pay for themselves in increased sale price and reduced time on the market. One of the leading home staging companies found that houses that have been staged spend about a month on the market, versus more than four months for homes that haven’t been staged. This is the best return on investment you can make when selling a house.
Success Story
A client of ours is selling a house out of state (which we’re not involved with) and she recently vented to us that her agent is not doing the things she said she would in terms of marketing, effort, quality of work, and communication.
Our client isn’t familiar with the selling process and didn’t know what to expect. We gave her some suggestions about what to ask her out-of-state agent.
She recently sent us this note: “THANKS for all the great advice. This is our first time going through this and honestly if it weren’t for seeing how you are, I wouldn’t even know the agent here wasn’t doing her job so well. We appreciate it, I don’t feel so lost now. I have a direction and I’m going to start working on the plan to get this house sold.”
We’re happy to help you too with any of your real estate needs so don’t hesitate to drop me a line if I can help in any way.
Investors
The market continues to be kind to landlords as rents rise for the third straight quarter. And this isn’t just a short-term local phenomenon. Nationally, rents are starting to rise dramatically, and in every major metropolitan area they are expected to rise from 3% to 10% in 2011 and beyond.
Rising rents reflect increasing demand and constrained supply. Nearly 80 million aging boomers are entering their prime renting years, along with 4.5 million people who lost their houses to foreclosure. Yet multifamily construction starts plunged from nearly 350,000 units annually before the 2008 financial collapse to barely 100,000 annually. Private developers may want to create rental housing to meet the exploding demand. But without sufficient long-term financing options, few can take the risk of starting construction. What this means for the foreseeable future is low vacancy rates, rising rents, and an overall strong landlord market.
Success Story
A client of ours got a great deal on a rental house last month on the 900 block of S. Wheeling Street in South Aurora. The bank was asking $100,000 for this three bedroom, one bath, 936 sq. ft. house with a one-car attached garage. We offered $85,000. They countered at $96,500. We countered at $89,000. They countered AGAIN at $91,500. We said we’d take it for $90,000, and we got it!
This property has a newer roof, newer appliances and is in overall solid shape. It needs general clean up, paint and a refinishing of the hardwood floors – about $4,000 worth of work.
Putting 20% down our client’s monthly payment (including taxes and insurance) is $510. His rental income is $1,100, which results in $590 of monthly cash flow! Call me if you want to go take a look at properties just like this.
YCRE In the News
Your Castle is proud to sponsor our 2nd Annual Investor Success Summit! Free up Saturday, May 7 on your calendar and come join us for another FREE full day of real estate education with NO SALES PITCHES!
We will have three dynamic speakers, two awesome investor panels (one on Financing and another on Landlording), and 15 great vendors to help you learn about real estate investing from local experts. Our focus this time is on building a portfolio of properties one at a time to achieve your long-term real estate objectives. Bring your questions, we are holding nothing back! All proceeds from the event (donated by our generous vendors) will go to a most worthy cause: the Tennyson Center for Children. To find out more, call me!
Registration at the Embassy Suites (4444 N. Havana St., Denver 80239) begins at 8:00 a.m. and the action starts at 8:30.
Mortgages
It is a great time to get a mortgage! With some of the amazing opportunities available in the real estate market, whether you are a first time buyer or a seasoned investor you should be looking into buying a property with a fantastic mortgage rate. Mortgage rates continue to hover at all-time lows, but many experts in the financial community agree that this is not sustainable and we will eventually see rates increase. For a free consultation with one of our mortgage experts, contact us on our lending hotline at 303-809-7769, or email us at lending@yourcastle.org.
Neighborhood Spotlight
Castle Rock is HOT!
In the past 12 months the median price of a house in Castle Rock has fallen from $241,000 to $219,000. There seems to be a huge backlog of shadow inventory. In 2006-2007, new home builders in the Meadows subdivision were selling 1,600-2,400 sq. ft. homes with a blended interest rate above 8% in the $240,000-$350,000 price range. However, in our current economy, home owners simply cannot afford their mortgages, providing unique opportunities to savvy buyers. We are seeing these houses back on the market with a $50,000-$100,000 mark down. Houses that were selling for $275,000, even newer ones built in the last 10 years, are now in the $220,000-$190,000 range!
This condition may only be a temporary drop and a great opportunity for investors to buy some real equity.
Centura Health began building a new hospital district last year. There will be several medical facilities throughout the area, and a new town center is in development. When the demand rises from these long-term infrastructure improvements, the inventory levels in the area will dry up, demand will increase, and prices will rise. What’s more, there is currently a shortage of rental houses which has of course increased the rental rates of late. All of these factors lead to good cash flow and positive equity. And taken together, these factors have made Castle Rock a hot commodity for buyers!