October Denver Metro Single Family Housing Stats:
Active Listings: 11,504
- Down 30% from Oct. ‘10
Under Contracts: 3,068
- Up 4% from Oct. ‘10
- Up 9% from Oct. ‘10
Average Price: $269,503
- Down 6% from Oct. ‘10
Average Days on Market: 102
- Even from Oct. ‘10
October Denver Metro Condo Housing Stats:
Active Listings: 2,652
- Down 46% from Oct. ‘10
Under Contracts: 776
- Up 4% from Oct. ‘10
- Up 25% from Oct. ‘10
Average Price: $160,723
- Up 1% from Oct. ‘10
Average Days on Market: 102
- Down 7% from Oct. ‘10
Real Estate News
Is 2012 the year housing will recover? The National Association of Realtors (NAR) thinks so. According to NAR, gradual improvement in the housing market is expected next year, with existing home sales edging up 4% to 5% and new home sales getting an even bigger boost off this year’s record lows.
“Tight mortgage credit conditions have been holding back homebuyers all year, and consumer confidence has been shaky recently,” Lawrence Yun, chief economist of NAR, said. “Nonetheless, there is a sizeable pent-up demand based on population growth, employment levels and a doubling-up phenomenon that can’t continue indefinitely.”
Yun, who made his comments during the annual NAR conference for real estate agents in Anaheim, Calif., projected mortgage interest rates would gradually rise from record 2011 lows to 4.5% by the middle of 2012. “Very favorable affordability conditions will dominate next year as well, which will probably be the second best year on record dating back to 1970. Our hope is that credit restrictions will ease and allow more homebuyers to take advantage of current opportunities.”
With falling inventory in both the metro Denver market and nationally, the median home price should rise in 2012, he said. “Home prices have yet to show a definitive stabilization pattern in most areas. Still, given an over-correction (downward) in prices, there likely will be moderate appreciation in 2012.”Accurately predicting the bottom of the housing market is like finding the proverbial needle in a haystack. But Yun is right, the fundamentals do bode well for a recovery in the near future. Interest rates are still at record lows, the inventory of homes on the market in metro Denver is at a 14-year low, unemployment is dropping locally and there are very few new homes being built while builders wait for definitive signs of a recovery. Add it all up and it makes the perfect environment for a market recovery. Exactly when it will happen no one knows, but all the ingredients are in place for the housing market to finally strengthen.
As the real estate market is poised to begin a long, slow recovery it’s important to remind ourselves that buying a home should be a lifestyle choice, not a get-rich-quick scheme. Here are five great things about home ownership that you should keep in mind:
1. Equity. Homeownership is about building long-term wealth. When you pay rent, you never see that money again. But you will when you own you pay off the mortgage over time. What’s more, homes appreciate about 4% to 6% per year which goes right to your bottom line. A home bought for $10,000 in 1960 is most likely worth 10 times that in today’s market.
2. Relationships. As a homeowner, both you and your neighbors stay put longer allowing fruitful relationships to develop over time.
3. Predictability. If you get a 30-year fixed interest rate at today’s record low rates your Principle + Interest payment NEVER changes. If your mortgage payment is $500 today, then it will still be $500 a month in 10 years. This allows for you to budget and make solid financial plans.
4. Ownership. America was built on the sanctity of private property and homeownership. Most renters are stuck with the same beige walls and beige carpet that has been standard apartment decor for 20 years. When you buy a home it’s yours. You can renovate, update, paint, decorate, plant trees, or anything else you want to do to make your house your home. You can’t do that with an apartment.
- 5. Great Deals. Home affordability is at the highest rate ever recorded in metro Denver. Fully 76% of homes are affordable for a family making the median income!
If you live in an apartment and are tired of beige carpets give me a call! I’d be happy to show you what home ownership is all about.
A couple of months ago I described how the inventory of homes on the market was at a 14-year low, much to the surprise of most of my clients. Ask around, everyone thinks it’s still a buyer’s market. But it’s not! As inventories continue to fall, homes in move-in condition, especially under $300k are selling at a premium. You know this already if you’re out looking to buy one of these properties. I’m seeing multiple offers and bidding wars on my listings, and most of my buyers are shocked that they often have to bid more than list price to get the home they want. While there were 17,000 houses and condos on the market in metro Denver in October, now we’re down to just 14,000.
As I said a few months ago, about half of them are distressed – either shortsales or bank-owned properties. Most distressed properties have problems – and most home buyers don’t want to buy a beat-up bank-owned property or go through the frustration of trying to get a shortsale under contract. 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 just looking to buy and move into their next home. Consequently, of the 14,000 properties currently on the market, only about 7,000 are non-distressed sales. And, of these properties only a fraction are fixed up and move-in ready. There just aren’t enough of them out there so well-kept properties are moving fast.
So remember, if you’re thinking about selling give me a call and let’s discuss your options. It’s likely the market for your home is better than you think.
Apartment vacancy rates continue to decline as so many homeowners become renters. “Vacancy rates remain near 10-year lows and the vacancy rate has dropped year-over-year for the past eight quarters in a row,” reported Ron Throupe, an assistant business professor at the University of Denver. As economics tend to do, scarcity drove up price. The median monthly rent in metro Denver rose to $881, a 2.9% hike from the third quarter of last year, when the median rent was $856. Concessions, discounts and delinquencies fell from 13.6%last year to 10.4% for the same quarter this year. “We’re starting to see concessions go away and all those offers for free rent are becoming rare as vacancies fall,” according to Colorado Division of Housing spokesman Ryan McMaken.
This, of course, is great news for local real estate investors. As both home prices and interest rates remain low, investors are picking up bargains and taking advantage of record low vacancy rates and rising rents to produce terrific cash flow. Our clients are buying these properties with the intent to hold them for a number of years, producing income every month and paying the mortgages down over time. Some of our clients plan to wait until the market turns, get some appreciation, then cash out and move their money into other investments. Others are thinking long term by using the cash flow to pay off the mortgages and holding the properties for retirement. Either way, prudent investors are taking advantage of this once in a generation opportunity to buy quality homes at bargain prices. Call me if you want to discuss how you can do the same thing!
YCRE in the News
Thanks to all of you who attended our 3rd biannual Investor Success Summit in November! We had 400 attendees, 20 vendors, 13 speaker presentations, and lots of fun. The event was sponsored by our vendors and free to the public. All proceeds went to a great local organization called Mercy Housing to whom we presented a check for $2,000 at the end of the day. We’ll have another Investor Success Summit in the spring, so call me for details.
Good news for buyers using FHA loans! The U.S. House and Senate restored FHA loan limits to the level they were at before they were allowed to expire at the end of September. As a result, the limits will rise to 125% of the area median home price from 115% up to a maximum of $729,750, from $625,500. “The reinstated loan limits will help provide much needed liquidity and stability to communities nationwide as tight credit restrictions continue to prevent some qualified buyers from becoming home owners and the housing market recovery remains fragile,” said NAR President Moe Veissi.
Lake Arbor is a quiet neighborhood in the northeast corner of Arvada, developed in the 1970s. The neighborhood has only four entrances between its boundaries of Wadsworth to the west, Discovery Trail to the east (near Lamar), 88th to the north, and 80th to the south. Many of the streets within the development are cul-de-sacs. The homes that surround the lake are made up of two main subdivisions; Lake Arbor Homes north of the lake, and Lakeshore Homes south of the lake.
The lake at Lake Arbor Park is the main attraction, surrounded by a 1.25 mile paved path with mountain views, a playground and basketball court, picnic tables, wildlife, and plenty of grass and trees. It’s rare not to find someone walking on the path, playing at the playground, or fishing at the lake. Just to the west of the Lake Arbor Park and lake is an undeveloped dirt field that generations of kids have enjoyed grooming and biking on. If you enjoy walking, jogging or biking, you can access the Discovery Trail right in the neighborhood. In short, you will never be bored in this neighborhood!