February 2013 Quick Stats
Denver Metro Single Family Housing Stats:
Active Listings: 8,834
* Down 30% from Jan. '12
Under Contracts: 3,535
* Up 24% from
Solds: 2,343
* Up 17% from
Average Price: $301,827
* Up 11% from
Average Days on Market: 80
* Down 22% from
Denver Metro Condo Housing Stats:
Active Listings: 1,260
* Down 40% from 
Under Contracts: 896
Solds: 610
* Up 28% from
Average Price: $170,769
* Up 17% from
Average Days on Market: 70
* Down 35% from
Real Estate News – The Blistering Hot Seller's Market
What
a difference a year makes! Just 12 months ago our real estate market had
started its recovery but was moving forward at a snail’s pace. Inventory was
down from its peak but no one was certain whether the recovery would fully take
hold or the market would remain flat for a long period of time.
Fast
forward to today and everything has changed. We are entering our 11th
straight month of record-low inventory (homes for sale) and the market is
surging upward in a fashion we haven’t seen in metro Denver for many years.
I’m
frequently asked where the market is headed and when we will get back to some
kind of equilibrium. The truth is it’s extremely difficult to predict the
future but here’s what I do know. Right now we are experiencing the strongest
seller’s market since at least the high points of the 1990’s, and perhaps of
all time. The reason is simple: we have much more demand for homes (buyers)
than we have supply of homes (sellers). What’s fascinating to watch is the
dynamic build on itself. It looks something like this:
- Buyers make offers on homes and
continue to lose out to higher offers.
- Buyers get increasingly
frustrated and begin to get more aggressive with their offers.
- The momentum builds on itself
until we see what is occurring today, with multiple offers on a property
the norm rather than the exception.
- The multiple offer dynamic
almost always bids prices higher than the original asking price.
- The buyers that lost the bid
learn from the experience and become more aggressive on their next offer.
- Then back to Step 1, until the
buyer bids high enough on a property to finally get an offer accepted.
The
result of course is the tremendously strong seller’s market we are experiencing
today. And this seller’s market is going to last for a while, at least until we
get back to some kind of balance in the market. I don’t see that happening for
at least a year, perhaps several years.
Buyers – How to Be a Great Buyer in the Market
The
theme of this Newsletter is the remarkable seller’s market we’re currently
experiencing. So where does
that leave you, the buyer? Actually, it leaves you in a pretty good position if
you understand what you need to do as a buyer. If you react to the market
appropriately and follow a few simple rules you’ll be able to buy the house of
your dreams at the low interest rates that still exist today. And the great
news is that since the seller’s market is driving prices higher, once you buy
your home you stand a great chance of building equity with home appreciation.
Here’s
how to be a great buyer in today’s environment:
- Understand the real estate
market. I can help you understand where the market is and how you should
respond to it. It is critical that you understand the data in order to
make appropriate offers.
- Write clean offers. There are
infinite nuances in the Colorado Contract to Buy. The better you
understand what to put into a contract and what to leave out the more
likely you are to get your offer accepted.
- Get a great prequalification
letter from your lender. When a seller gets a number of offers, one of the
differentiators will be who looks most qualified to purchase the property.
Working with a reputable lender and having a rock solid prequal letter
will help your chances a lot.
These are just a few
of the ways I work with my buyers to help them get their offers accepted. Give
me a call and I’ll be happy to teach you more about how to be a great buyer.
Sellers – Time to Trade Up?
Homeowners
today understand what a strong seller’s market it is and are taking advantage
of the market. But when they sell their home they need to move somewhere else and
their logical question is ‘won’t I then experience the market in reverse as a
buyer?’. The answer is usually yes, but there’s one big caveat most sellers
don’t take into consideration – today’s extremely low interest rates. As a
rule, a .25% decrease in the interest rate increases buying power by about $10,000.
This means a 1% decrease in the interest rate increases buying power by $40,000
and a 2% decrease increases buying power by $80,000! Many of my sellers bought
their homes years ago when rates were much higher. If they have an existing
5.5% interest rate on the home they’re selling, that means they could sell
their home and buy another home that costs $60,000 more and have about the same
monthly payment! As incredible as this sounds it’s true and we have clients
doing exactly this. Feel free to give me a call so I can walk through this with
you and see how you can take advantage of the low interest rates.
Investors – High Quality Residences Have Great Returns!
A
lot of investors think that investing in rental properties only works in low-end
neighborhoods with beat-up houses and scary tenants. Nothing could be further
from the truth! Your Castle has done a great deal of research lately and found
that buying and holding properties in quality locations like The Spire can
yield tremendous returns down the road. Using very realistic numbers, a two bedroom
condo in The Spire has a CAP Rate of 6.1%. An investor in a combined marginal
tax bracket of 40% can yield an average annual return of 16%. Try making that
in your savings account! As long as interest rates stay absurdly low (which
cannot last forever), high quality buildings will generate enough rent to cover
most/all of their direct costs. You can get twice the return at a quality
location like The Spire or other similar high-end residence than you can with
the stock market. Your Castle is going to begin a series of classes to describe
the opportunities and walk through the numbers so let me know if you’d like to
learn more
Title Spotlight - What to Do when you can't attend the Closing: Proper Use of Powers of Attorney and Resolutions to Appoint a Signer
If
you have been watching the news lately I’m sure you have seen that the stock
market is hitting record highs. The problem is this tends to push mortgage interest
rates higher. The rate for a 30-year fixed-rate loan has increased each week
for seven of the last eight weeks. Gone are the days of the 3.5% fixed-rate,
but 3.875% is still available and that is still VERY low! However if the
stock market and the economy continue to improve we may see rates go back above
4%.
As
we discussed earlier, for the average homeowner an increase of .25% in interest
rate can equate to a loss of as much as $10,000 in buying power. For
example if you qualified for a $200K loan at a rate of 3.75% and then your rate
increases to 4.0% you may now only qualify for a $190K loan.
For more information contact Lorena Tankersley at Your Castle Real Estate,LLC atLorena@yourcastle.org or call 303-981-6539. If you want information specific to your neighborhood, please let me know. www.Lorena.Yourcastle.org
