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September 2011 Metro Denver Real Estate Newsletter

J. David Lampe, Realtor

Quick Stats 
Denver Metro Single Family Housing Stats:

Active Listings: 13,436
· Down 25% from August ’10

Under Contracts: 2,552
· Up 11% from August ’10

Solds: 3,177
· Up 28% from August ’10

Average Days on Market: 96
· Up 2% from August ’10

Average Price: $284,065
· Down 4% from August ’10

August Denver Metro Condo Housing Stats:

Active Listings: 3,195
· Down 40% from August ’10

Under Contracts: 985
· Up 27% from August ’10

Solds: 796
· Up 32% from August ’10

Average Days on Market: 111
· Up 11% from August ’10

Average Price: $168,500
· Down 5% from August ’10

Real Estate News
On September 12th the Denver Post ran a front page article with the headline “Denver Housing Market Tightens.” I was thrilled to see that for once the Denver Post got it right! The mass media has often been accused of perpetuating the doom and gloom in the housing market for their own narrow purpose of selling more papers, commercials, and ad space. So it was great to see the story behind the story on Page 1 that in fact the housing market in Denver is actually very tight, and quality homes are selling at a premium. To quote the article:
For six months, Casey Schorr has struggled to find a home to buy in Denver, contradicting everything he has heard about it being a buyer’s market. “Everybody seems to be saying there are all these properties,” Schorr said. “But if you are looking for something updated and in a decent neighborhood, the stuff that is available is going quickly.” A lack of inventory — or, more precisely, “compelling” inventory, as some agents call it — has complicated homebuying for people such as Schorr and added yet another strain on a long-stressed housing market. The number of homes listed for sale in Denver is down by about half since the frenzy surrounding the April 2010 deadline for a homebuyer tax credit. The inventory of homes available for sale in metro Denver in August was down 23 percent from August 2010, and down 5 percent from July. There were 18,164 homes and condos listed for sale in metro Denver, compared with 23,615 in August 2010. Many sellers are on strike, in that they don’t have to sell and won’t until prices improve. Other sellers might prefer to sell but owe more than their homes are worth and can’t afford to bring money to the closing table.
About ½ the homes listed for sale are distressed – either bank-owned properties or shortsales. These properties tend to be in poor shape physically, and also problematic to purchase since getting a contract accepted on a shortsale takes months. So buyers that are looking to move into a move-in ready property – and can’t wait 6-9 months for a shortsale to be accepted – are finding there is very little inventory available to them. Consequently, quality, non-distressed properties are selling quickly and close to full price. These are unique times in the housing market so feel free to contact me anytime so I can sit down with you and show you how today’s market is affecting both buyers and sellers.

We discussed at the top of the Newsletter the lack of quality inventory on the market, helping private sellers move their properties quickly and for a good price. So if you’re a buyer, how do you play this market? There are at least two reasons why buying in the near future could make a lot of sense for you.

The first is that homes prices are still down from their highs in 2006. They’re down about 32% nationally and 8% locally. Add to the equation record low interest rates and the result is that housing affordability is at the lowest level on record! To repeat: the combination of lower prices and record low interest rates means the average buyer in Denver has NEVER seen homes more affordable than today. That alone is what’s getting many of my clients off the fence and interested in looking for a home again.

The second reason is that while there certainly is a lack of move-in ready, non-distressed properties on the market, there are still LOTS of bank-owned and shortsale properties for sale. So if you’re looking for a deal and don’t mind waiting out a shortsale (or putting on your overalls and painter’s cap) you just might get a phenomenal deal. Buyers who are willing to put up with these hassles can get a terrific buy on a home at very low interest rates and position themselves wonderfully for the inevitable housing recovery. It does take patience. It does take grit. But if you’re willing to sift through the chaff to find your golden nugget of wheat call me and let me show you what’s out there.

Sellers reported that Denver was the fastest selling city in the nation again in August, for the 5th month in a row! Our median age of housing inventory in August was just 39 days, whereas the national median was 103 days. So why do we keep hearing that the market for selling a home is so bad? Partly, it’s because the media has a built-in incentive to produce and promote drama – catastrophic headlines sell more papers. Which is why it was so refreshing to see the Denver Post report correctly on the tight market for move-in ready homes. The other reason is that there’s a big difference between the market in its entirety and you just trying to sell your home. Here’s why.

There are currently about 17,000 houses and condos on the market in Metro Denver. About ½ of them are distressed – either shortsales or bank-owned properties. Most distressed properties have problems; that’s why they’re called distressed. Clearly, most home buyers don’t want to buy a beat up and dated bank-owned property or go through the frustration of trying to get a shortsale under contract. Would you? Though the problems and hassles with distressed homes are usually fixable, most buyers aren’t looking to buy a project or wait forever to close on it. They’re looking to buy and move into their next home and get on with their lives.

So, of the 17,000 single family homes and condos currently on the market, only about 8,000 are non-distressed sales. And, of these properties only a fraction are fixed up, move-in ready, and marketed to their best effect. The result is a lack of quality properties on the market! And these quality listings are the very properties that the vast majority of home buyers want. There just aren’t enough of them out there! That’s why the Denver Post is right when they say that home buyers are surprised to see there’s not much on the market right now that that makes sense for them. David Crowe, chief economist for the National Association of Home Builders puts it this way, “Inventory levels are the best gauge of where your market is headed.” The inventory of quality homes is low, low, low.

So if you’re thinking about selling give me a call and let’s discuss your options. You might find that there are not many non-distressed, quality properties on the market in your neighborhood and buyers just might be scrambling to find one likes yours.

Fixing and flipping has gone out of vogue the past few years as investors claim they can’t find properties cheap enough to make the effort and risk worthwhile. But it turns out that the gross margin for fix and flip has actually RISEN over time, making us think that perhaps it’s time to relook at this investing strategy. Look at the data below and give me a call if you want to discuss investing in real estate.

Success Story
One of our investors purchased a fix and flip property in Arvada back in the spring for $95,000. She did a major fix up project and produced a very nice product. We put it on the market in June. We had several offers that didn’t pan out but ended up selling it in August for $165,000, giving her a solid profit. We’re now out looking for our next project.

YCRE In the News
RE/MAX Alliance continues to be the leader in real estate education to the general public. We have a wide variety of classes, all free of charge, where you can learn how to be a better real estate buyer, seller or investor. No matter what your Real Estate needs or situation, we’ve got you covered. Classes we’ve taught recently include: Denver Real Estate Market Trends, Why Buy a Home… Now? 13 Reasons Why Now is the Best Time to Buy!, Rental Property Acquisition & Management, Don’t Lose Your Shorts on Your Fix-up: Learn to Analyze fix-and-flip and fix-and-hold deals the right way, Trust Deed Investing in the Denver-Metro Market, Financing Your Fix & Hold Properties for Sustained Cashflow, “Under The Hood” How we minimize risk in a volatile market, Diversified Portfolio & Real Estate Investing Using Your Self-Directed IRA, and many, many more! For our full calendar of upcoming classes go to and click on Training/Seminars. Or just give me a call and I’ll let you know what classes are coming up!

Interest rates for FHA and conventional loans are still at record lows! There are many technical reasons for this: the continued lack of strength in the U.S. economy, the deteriorating situation in Europe – particularly in Greece, Spain, Ireland, and Portugal, lack of strength in the overall U.S. housing market, and political pressures to “do something” to turn the economy around. Whatever the reasons, interest rates have never been lower and homebuyer’s purchasing power has never been higher. If you don’t have a lender already give me a call and I’ll put you in touch with someone you can trust so see about qualifying for your next home.

Neighborhood Spotlight

Welcome to Highlands Ranch!

Located just 12 miles south of Denver, Highlands Ranch is a 22,000 acre master-planned community in Douglas County that features something for everyone. Consisting of primarily single family homes, the median homes sales prices is currently $295,000. One of the things I like most about Highlands Ranch real estate is that there are options for all buyers, from first time homebuyers all the way up to custom build luxury homes.

When the community of Highlands Ranch was developed back in the late 1970’s, it was designed for a significant portion of the land to be used for non-urban uses that included open space and recreation. This luxury comes in the form of parks, walking trails, beautiful scenery and open mountain views that benefit all residents of the Ranch.

Another added perk of living in Highlands Ranch is that we have four amazing Rec Centers that are free to all residents. These centers feature state of the art workout equipment, exercise classes, hockey rinks, batting cages, pools, hot tubs and much more!