Tag Archive for: Congress Park homes

Tracy Shaffer
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Real Estate Market: Bubble or No Bubble?

BubbleAs a Realtor, out on the town I’m always asked, “How’s the market?” It’s the follow-up question where it really gets interesting.

The last seven years have seen a surge in the metro Denver real estate market as record numbers of buyers look for homes, which in turn has caused prices to jump. The strength in the market has been so pronounced that people are beginning to ask “Are we in another bubble?” It’s a reasonable question given the horrendous experience of the housing crisis, and while no one can ever predict the future with certainty, I see no evidence that we’re heading for a dramatic downturn in the real estate market any time soon. Here’s why:
1. Even with the continued increase in metro Denver home prices (up another 8 percent in the past 12 months) the average inflation adjusted PITI (Principle, Interest, Taxes, and Insurance) payment made in metro Denver is actually BELOW our 35-year average. This means that while prices have steadily risen, buyers are still able to afford their monthly payments, providing plenty of room for continued home price increases.
2. The number of transactions relative to the population of metro Denver is just about at the 25-year average. At the peak of the bubble in 2006 the number of home sales was about 20 percent above the historical average. When we see the number of closed transactions well above our historical average that’s an indication of an overheated market, as it was in 2006. The number of closed home sales is actually DOWN 12 percent in the past year due to the low inventory. No sign of a bubble here.
3. In 2006, many of the deals were closed with low or no documentation mortgages (“liar loans” or “no doc loans”). Today, mortgage underwriting standards are among the toughest they’ve been in decades. This prevents unqualified buyers from purchasing property, which mitigates the chance of the market overheating (fewer buyers means fewer purchases means less chance of the market frothing into bubble territory like it did in the past).
4. Because of relatively high home affordability it’s a lot cheaper to buy than rent in our market. This would not be true in a bubble. For housing price affordability to return to the average level that we saw in the years between 2000 and 2004 either home prices would have to increase an additional 35 percent or interest rates rise to 6.6 percent. Neither is going to happen any time soon.
5. The imbalance between buyers and sellers we’ve seen recently in our housing market (too many buyers/not enough homes for sale) is due to a lack of inventory, not illogical/unrealistic/unsustainable demand from buyers. “Much of the price increases we are seeing are the result of rising demand among investors and homebuyers for a still-limited supply of homes for sale,” said Anand Nallathambi, president and CEO of CoreLogic. This imbalance is a logical correction from years past when we had too FEW buyers in the market. This is how markets are supposed to work, always regressing to the mean over time.
6. Rising mortgage rates will help to temper the possibility of a bubble as well (they are still near 50-year lows but are expected to rise someday). “History shows that a rapid rise in interest rates tends to have little correlation with home prices. Rather, rising rates are more likely to contribute to a decrease in home purchase volume,” wrote Mark Palim in a Fannie Mae commentary. So the positive side of a rise in mortgage rates is that it will reduce the number of buyers and therefore lower the chance the market will rise out of control and end up collapsing in a bubble.
Click on the monthly market snapshot, the inventory of metro Denver homes for sale continues to fall; it’s down another 5 percent from a year ago. Since the inventory is still extremely low (about 5,520 homes on the market where about 18,000 is a balanced market) I am all but certain the demand will still exceed the supply for the next several years and prices will continue to rise for the foreseeable future. No bubble on the horizon yet… Stay tuned!
June 16 - Market Snapshot [5608]

Buyers
If you agree that we’re not headed for a bubble any time soon what does this mean for you as a buyer? I think it means you should consider buying a home IF it makes sense for you to do so. Are you running out of room at home? Expecting a baby? Have an awful commute? Want to live in a nicer neighborhood? Looking for a better school district for the kids? There are a lot of great reasons to move. But don’t buy a home to speculate on the market; buy because it’s time for a new home. Call me anytime to discuss what your options are and how I can help you find a wonderful place to live.
Sellers
We have been discussing the incredible strength in our housing market. If you’re looking to sell your home this should be very welcoming news! The inventory of homes on the market is at an all-time low and prices are up. Call me and I’ll be happy to run a complimentary Comparative Market Analysis on your home to let you know what it might be worth. It’s great information and costs you nothing.
Investors
The most recent “Metro Denver Area Residential Rent and Vacancy Survey” shows the great news continues for landlords. According to the report:
“The overall vacancy rate for the metro area for the fourth quarter of 2015 was 3.1 compared to 3.9 percent for the previous quarter, and 1.5 percent for the fourth quarter of 2014. It was 2.0 percent in the fourth quarter of 2013, 1.7 percent for the fourth quarter of 2012, 2.1 percent for the fourth quarter of 2011, 2.0 for the fourth quarter of 2010, 5.5 for the fourth quarter of 2009, and 4.9 percent for the fourth quarter of 2008.”
In the U.S., more millionaires owe their wealth to real estate investments than any other single source of income. Today’s market could not be better for long-term buy –and-hold investors. Call me to find out more.

Vacancy Rates
Adams 3.9%
Arapahoe 4.0%
Boulder/Broomfield 2.7%
Denver 3.1%
Douglas 1.7%
Jefferson 2.6%

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Tracy Shaffer
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The Zing of Zillow

Everybody loves Zillow. I love Zillow. I love how excited it gets buyers and sellers when they see a home they love or what a neighbor’s house is selling for; a useful tool in many ways, for better or worse, it empowers the consumer. I look at Zillow to see what my clients/potential clients are taking as accurate information… and then I do my homework. The #Denver #realestate market is moving so quickly that even agents and appraisers can have a hard time keeping up. Public record algorithms don’t have the ability to distinguish the differences in the quality of one property from the other, upgrades, location, or if there’s a crack house next door. Algorithms don’t call other agents to inquire about that “Coming Soon” sign or have the latest data on solds as it takes some time to record.
The Los Angeles Times recently published an article that lays it out quite clearly. Though a “Zestimate” can have a low margin of error, it can also be alarmingly high. Imagine a scenario where you’re meeting with your perspective agent thinking that your home is worth 26% more than what it will really sell for.
Sellers, armed with the Internet, often have an idea in their heads about their home’s value. When I pull comparable properties, show them what the list vs sold prices are and how many days on market it’s taken those homes to sell, they may find a different story. Sometimes the news is good, based upon my data, their home may be worth more than they think. Other times it can be a let down.
Buyers burn the midnight oil searching Zillow then send me a link to their dream home. When I hit the MLS at 7 a.m. most often I find that this dream home is under contract… or sold three months ago. If you’re looking to buy a home, I’ll send you to REColorado, the consumer website linked to the Denver Matrix MLS I use so we can work together efficiently. It’s updated throughout the day, has great home search capabilities and saves me time looking for your real home, not the one someone’s already moving in to.
All this to point out that you now have access to a lot of information about my business. A lot of it is helpful and a whole lot of fun, but none is as accurate as hiring a professional; one who specializes in finding the right home in the right neighborhood that suits your needs. If you’d like an “Exact-i-mate” about what your home might sell for in today’s Denver market, give me a call I’d be glad to sit down with you and show you your market value and why.

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Tracy Shaffer
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2015 Real Estate Market Review

new-year-2015As the clock ticks toward year’s end, it’s time to review the 2015 real estate market.
When someone asks me how the real estate market is, the cocktail party answer is that it’s been a very pleasing 12 months and future looks bright and shiny. Because the economic news is good our Denver Metro real estate market is projected to stay strong but not overheat. I’ll share some of the metrics I use to evaluate the market and understand it better, describing what 2015 looked like and where I think we’re headed.
Market strength–2015 was an extremely strong seller’s market. The market strength peaked in the spring when the bottom dropped out of our inventory and multiple offers were all the rage. Frustrating for buyers who felt they had to give away so much to stay competitive, the good news is that the market reacted appropriately and became more balanced as the year progressed. With prices on the rise, sellers were motivated to sell as we approached the fall so the market cooled with the start of school and the weather. It is still a strong seller’s market, but far more in balance. I expect 2016 to continue along this line and see no sign of a major imbalance that could lead to any sort of ugly peak and crash. Sellers should get a good price for their homes and replacement properties should not be as hard to find.
Buyers– Real estate website Trulia says that buying an average home in Denver is a whopping 38 percent cheaper than renting a home! For the average home, the interest rate would have to skyrocket to 11 percent for renting to become cheaper than buying, meaning that it is currently MUCH more affordable to buy than to rent. Even with current prices and current rents, interest rates would have to nearly triple to make renting more affordable than owning. (Call me if you want to talk about this.)
Sellers-Can’t say this enough: the most important thing to prepare your home for sale is to get rid of clutter. This includes furniture. You may have learned to live with that cherished armchair stuffed into the corner but a professional stager will often times whisk away half of your furniture. The house looks so much bigger for it, leaving space for a buyer couple and their agent to tour the home without bumping into each other, and space for their imaginations to make it their own. You don’t have to go “Stager drastic” but take a hard look, be objective, and see what you can live without. Painting always pays for itself and statistics show that springing for a staging company is often a good investment.
Rental Vacancies– The rental market is stronger than it has ever been in metro Denver. The vacancy rate for 1- to 4-unit properties is an extremely low 2 percent. That’s a drop from the already 4.7% we’d been experiencing for the past few years. On top of this, rents are rising faster than ever, up 30% in the past three years. With rents equaling a mortgage payment, we’re seeing more renters making the decision to buy. Why live waiting for another rent increase, tough competition and another application process without building any equity? Many homeowners who lost their homes in the downturn and have been renting, are becoming eligible to purchase once again. This is great news for the market and will certainly lead to more sales in 2016, though the influx of buyers insures a continuing seller’s market.
Interest rates– No one knows exactly what interest rates will do in the future but my best guess is that they may rise a little in 2016, but only a little. Remember that the Federal Reserve has control over only short-term, not long-term interest rates. Even if the Fed raises rates, that doesn’t directly affect the 30-year home buyer interest rate you are concerned with. Long-term interest rates are affected by the bond market (as bond prices decrease, interest rates increase) which, frankly, is not predictable. Understand though that interest rates are at near 50-year lows so they are highly unlikely to fall any further. All we know for sure is that someday they will go up.
The Economy– No matter what you may hear in the months leading up to the election (places hands over ears), right now the metro Denver economy is very strong. This is fueling our terrific real estate market and the rising population of our city. The unemployment rate is extremely low, about 3.5 percent. Inflation will stay in the range of 1-2 percent, our population is rising at a rate of 50,000 people/year and consumer confidence continues to rise. Nothing can be better for the housing market than a strong and steady economy.
Mortgage -The single most important number for a home buyer is their FICO score. For good or bad, your FICO plays a major role in your ability to finance your home purchase. Your credit score is a snapshot taken by the three leading credit bureaus, TransUnion, Equifax and Experian, to help lenders determine what sort of credit risk you are. Your FICO is a number between 300 and 850 and is calculated by a complex algorithm assessing your past credit history. Most home lenders will consider a score over 700 to be excellent while scores below 600 are considered poor. The better the score the more credit will be extended, at better terms, with a lower interest rate. The best credit terms are extended to consumers with scores above 740. Therefore, it’s critical to understand what your FICO is and what you can do to improve your score. When I work with buyers I help them understand the factors affecting their score so they can work to improve them. I can’t think of a better investment in your future than to spend a little time working on your FICO score.
Here are a few tips I give my clients:
1.Don’t max out your cards, try to keep them under 50% of available credit. Running high balances can severely impact your FICO.
2.Continue paying your bills on time.
3.Don’t apply for new credit or cancel an old card because length of credit helps.
4.Pay down high balances.
5.Dispute and resolve any inaccurate items in your credit report.
6.Invest in a credit monitoring company to track the changes to your score.

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Tracy Shaffer
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Denver Real Estate Market Trends

july newsletter 15
From Page 4
4. The Investor Real Estate Market: Denver is still a great place to invest in real estate. The fix and flip market is strong for those who can find underpriced homes to buy and repair. They’re out there but it takes tools, patience, and work to find them. Once you get one fixed up, selling is the easy part because of the lack of competing inventory. The buy and hold market will continue to be extremely profitable for long-term investors. Interest rates and vacancy rates are still near record lows and rents continue to rise – a record 10.8 percent per year the past three years. It’s not difficult to buy a rental property in today’s environment and put it on the path to be paid off in 12-15 years. Just think how your life would change if you owned a couple of rental properties free and clear! For building long-term wealth it’s tough to compete with rental property ownership. That’s the one thing that will never change. CLICK ON MAP TO ENLARGE
july 15 map

Need more info? Boy you are a real estate geek! (and I love it) CLICK LINK for the metrics from Matrix. 15-0705 DSF Data CITY – Copy

If you would like a personal real estate consultation, have any questions about the market, your home’s value or need more specific information about your neighborhood please give me a call.
Until next month… use your sunscreen!

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Tracy Shaffer
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Denver Summer Housing Market

Five Essential Things You Need To Know About the 2015 Summer Home Buying Market
This year has kicked off with an array of experts trumpeting the Denver housing market’s strength and resilience. Inventory is at record lows, home prices continue to rise, and foreclosure activity has ebbed to lows not seen since before the 2007 downturn. Spring and summer is the time for selling houses. The months of April, May, June, and July typically account for more than 40 percent of all housing transactions annually, thanks in large part to good weather.
1.Inventory shortages: “The story of the day is on the inventory front,” stresses Lawrence Yun, chief economist of the National Association of Realtors (NAR). It’s a sentiment echoed by many. The number of available homes in metro Denver has plunged to a record low, thanks to both an abnormally small supply of existing homes for sale and a dearth of new construction not keeping pace with the current demand.
2. Increased Competition: In addition to a dwindling supply of available homes, the number of buyers has surged. And not just traditional buyers – investors have comprised a sizeable chunk of the buyer pool since the downturn and continue to do so. Real estate investors are responsible for about 25 percent of the existing home sales each month. You, the prospective buyer, need to be prepared to move fast if you find a property you’d like to buy. “Buyers need to be patient because many will be outbid by others and might have to bid on multiple homes,” cautions Jed Kolko, chief economist of Trulia. Yes, indeed.
3.Cash is Still King: Given the steep competition, all-cash buyers who can close a deal relatively quickly offer great incentive to sellers. “Cash will still be king if there are multiple bids because from a seller’s view, they want a deal with fewer hiccups, “says Yun. My sellers are surprised to hear that about 30 percent of home sales each month are all-cash purchases.
4.The Good News: Lending Tree chief executive Doug Leboda says in light of the recently unveiled new home-lending standards, lenders are slowly starting to make it slightly easier to get approved. Talk to a couple of lenders, they’ll tell you things have improved over the past few years on the loan front.
5.More Good News: We are seeing a definite correction in the appraisal business. A few years ago appraisers were consistently under-valuing properties, reacting to the over-conservative nature of their shell-shocked underwriter patrons. Today we are seeing the vast majority of appraisals coming in at value, killing far fewer deals than in the past.

Buyers– If you’ve been considering buying a home it’s critical to understand the amazing tax benefits you’ll enjoy. Talk to your CPA to get professional advice, but here’s a brief look at some of the tax benefits of home ownership:
1.The Purchase. The IRS says that in most cases loan discount points and origination fees are tax deductible to the buyer, regardless of who pays them.
2.Mortgage Interest. In general, you can deduct interest charged on a loan used to acquire or improve your principal residence in the year that it is paid. In the early years of a loan, most of your monthly payment is interest, so this can really add up. If you are in a 28 percent federal tax bracket, this can have the effect of lowering your borrowing costs by almost a third.
3.The Sale. If you have owned and occupied your principal residence for at least two of the past five years, you can earn up to $500,000 on the sale of that house and pay no federal income tax whatsoever. That’s assuming you are married – singles get up to $250,000 tax free. You can do this as often as every two years for the rest of your life with no limit on the number of times you do it! The one restriction is that you MUST own and occupy the house as your principal residence.
Sellers– Month after month in this newsletter we have discussed the incredible strength in our housing market. If you’re looking to sell your home this should be very welcome news! The inventory of homes on the market is at an all-time low and prices continue to climb. Call me and I’ll be happy to run a complimentary Comparative Market Analysis on your home to let you know what it might be worth. It’s great information and costs you nothing.
Investors -For years our clients have been buying rental properties in metro Denver to build their long-term wealth. Our record low vacancy rate is a big driver of why rental property has performed so well. First, the lower the vacancy rate the higher the demand for the property. More demand means landlords can be more selective with prospective tenants and can also charge higher rents. Rents have skyrocketed the past few years because the vacancy rates have remained so low. One of the reasons vacancy rates are so low is that many people still cannot qualify for a loan. I don’t expect this to change in the foreseeable future. We’ve had a huge shakeout in the lending industry and lending guidelines are still much stricter than they were a few years ago. Until lending standards ease up more I expect vacancy rates to remain low and keep my investor clients happy. If you’ve ever thought of investing in a condo or house as a rental property call me and I can show you what the numbers look like and what options you might have. Graphic Mortgage The mortgage market continues to remain strong with historically low interest rates. Low rates combined with low home inventory are making this a great time to sell your home and move up to a larger home with the same or lower monthly payment. We have several recent examples of clients selling their current homes and purchasing new ones costing $40,000 – $50,000 more with the exact same monthly payment. Drop me a line and I’ll do a free analysis to see if this might be a good scenario for you to take advantage of!

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Tracy Shaffer
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May Shows Denver Real Estate Market’s Upward Trend

6217_s_josephine_way_MLS_HID853570_ROOMkitchen2Notes from the Denver Real Estate Market trenches: I’m seeing a lot, and I mean a LOT of multiple offer situations and better luck shopping for homes during the week rather than the weekends. Savvy listing agents are holding open a date when offers will be presented to allow maximum exposure and showings, then driving buyers to compete and close. Buyers, tired of this cycle and anxious to get under contract, are getting good at moving quickly and great buyers’ agents (that’d be me 😉 are adept at writing strong offers that will get accepted. A few oddities I’ve noticed: homes are coming “Back on Market” after being Under Contract and I’m seeing price reductions. The first tells me that Buyers may be getting caught up in the feeding frenzy and, wanting to win, may offer more than they’re comfortable with. There could also be inspection issues but what I’m seeing doesn’t look like it fits into that time frame. The second one, price reductions, indicates that there may be listing agents and sellers who enter the market over-confident with their pricing and need to adjust.
Remember, a house is not a hamburger. You can’t just show pretty pictures and charge what you like. A house is an emotional commodity and only worth what a buyer is willing to pay for it. So… even in a Sellers Market, the Buyer dictates the price. Now, on to the data from Metrolist:
May 2014 Snapshot Image 669x310

DENVER – June 6, 2014 – Signaling the start of the summer buying and selling season, the real estate market for the Denver metro and surrounding area saw increased activity in May as buyers scooped up available inventory despite near record prices.
The pace of home sales picked up during the month of May, as the number of sold properties rose 19 percent month over month. In particular, demand for single-family attached homes saw a marked increase, rising 25 percent over last May.
Inventory in the Denver area continued its upward trend, as active listings increased 15 percent from April, and the number of new listings climbed 11 percent month over month. However, the market is still very competitive, as days on market saw a 17 percent decrease in May. Homes are moving quickly, averaging only 29 days on the market.
“We have seen a very active start to the summer selling season. The market is moving quickly, but an increasing inflow of new listings is a positive sign,” said Kirby Slunaker, president and CEO of Metrolist. “The market absorption rate highlights a high level of demand for properties and a reduction in days on market.”
The average single-family attached+detached property spent just 29 days on the market in May, down 34 percent over last year. There is currently a supply of just seven weeks’ worth of inventory in the Denver metro and surrounding area.
Continuing a 36-month trend, average sold prices were up 2 percent from April. Prices for single-family attached+detached homes reached $333,955, up 8 percent.
“As the largest MLS in Colorado, we are committed to providing agents and consumers with innovative tools and resources to navigate their way through this fast-paced sellers’ market,” said Slunaker. “In addition to having the most accurate, current and up-to-date property information, REcolorado.com is providing new innovative tools such as INRIX Drive Time™, which is available to assist consumers in making educated decisions as they work with their REALTOR®.”

May Stats Bar Graph 754x480

About REcolorado.com
Before entering the market, buyers and sellers can get free access to up-to-the-minute housing information throughout the state of Colorado at REcolorado.com. The website offers advanced search features and filters for price and location, as well as home values and scheduled open houses. This comprehensive local resource enables both buyers and sellers to enter the housing market well informed.
About Metrolist: Metrolist is the largest MLS in the state of Colorado, supporting the largest network of REALTORS® with the most comprehensive database of real property listings throughout the Front Range. Realtor-owned since 1984, Metrolist provides leading technology solutions to real estate agents and brokers to better serve buyers and sellers. More information about Metrolist is available at www.REcolorado.com.

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Tracy Shaffer
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Denver Home Prices Rise Again

According to the latest monthly Case-Shiller Home Price Index, Denver-area home-resale prices rose an average 9.1 percent in March from a year earlier. Prices were up 1.4 percent from February, reaching an all-time high. One reason for this, as you may well know, is that our inventory is still incredibly low. Last spring, when the market suddenly turned, we thought this was a fluke but a year out, this seems to be the new norm. Click here to read more in the Denver Business Journal.
What does this mean for you? SELL! I have clients who made a move up during the leaner years and if they were able to hold on to their first property and buy their second, that’s what I’ve encouraged them to do. Rental income and market appreciation made this a wise move for many and now that equity is allowing them to sell at a tidy profit. I’m all for real estate investing and for having a buy and hold strategy in your portfolio, but you need to ask yourself if that is the best use of your money right now. Sometimes an investment has peaked and/or life has changed drastically, providing other options or shall we say ‘rearranging priorities’?
Buyers and sellers are often hesitant to sell for fear of finding a replacement home and though the market is swift like a snowmelt stream, I’ve yet to move one of my clients into a hotel or a shelter. All things are negotiable.
So if you’re looking, or thinking about looking., selling or wondering if selling is your best option, I’d love to sit down and have a conversation with you.

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Tracy Shaffer
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Doesn’t Take a Crystal Ball to See Where Denver Real Estate is Headed

psycihicDenver real estate market is strong and hot like a cup of coffee. After years of waiting for home prices to rise, the Denver real estate market is elevated. So why are buyers and sellers so hesitant to make their move? Let’s blame it on the media. Screaming headlines make money when the sky is falling.
For those of you who are considering buying or selling a property, understanding the big picture is critical. So let’s take a look at where in the real estate cycle the Denver market stands.
You may think this tremendous seller’s market and super tight inventory is something new, something that’s going to come to a head and suddenly erupt overnight. Not true. We are FOUR YEARS PAST THE BOTTOM of our last real estate cycle. This is a logical continuation of a market that is reacting strongly to the overselling we saw between 2007 and 2009, and finally bottomed out in 2009. It’s doing exactly what real estate market cycles do, go up and go down over long periods of time. Remember, over the past 40 years residential real estate appreciation has averaged 6 percent per year and there is no reason to think that is going to change over the next 40 years.
If you think of market cycles in the short-term, spiking and crashing over short periods of time it’s easy to see the sweet meteor of death hurling toward your swing set, but a quick look at the last market cycle shows clearly this is not how real estate works. Real estate cycles over the past 40 years, tend to move in much broader periods, 7-10 years typically. This is why predicting short-term market movements can be very difficult, whereas assuming the market will move in 7-10 cycles is a bit more realistic.
The past four years of the upswing has been largely a sellers’ market. Plummeting inventory, rising prices, nervous buyers often involved in multiple offers, and happy sellers often getting the price they wanted. Buyers can be very nervous, reading news articles, watching TV reports, and figuring the market is teetering on the brink of a crash and being afraid to buy. Rents are skyrocketing, up 8 percent this year alone and renters may confuse the short-term media screeds about this tremendous market with the long-term patterns of market cycles, thinking that the minute they buy a home the market is going to crash.
woman-with-crystal-ball
I don’t see this. And unlike my clients who may buy or sell a home ever 5-10 years, I work in real estate every day. No one can predict the real estate market with 100% accuracy. I can’t, the Federal Reserve can’t, the banks with all the money can’t, no one can. But, understanding how market cycles work, and recognizing how low our current inventory is, I can say with confidence I do not see any impending weakness in the market over the next couple of years. We are four years into what will probably be a typical 7-10 year cycle of low inventory and rising prices. I can’t tell you what the Dow Jones will finish at next Monday. I can’t tell you if the Rockies will win their fifth game of the season. I can’t tell you what the weather will be on June 15th, but I can say with confidence that real estate tends to move over predictable long-term trends, and this market cycle has a long way to go.

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Tracy Shaffer
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Denver Real Estate Market News

sunriseThere’s a lot of talk in Denver about this “crazy new real estate market”, how “everything’s different than it used to be”, and after six years of heartbreak, I say “thank god”. For those interested in real estate, and for those who might be considering buying or selling a property, understanding the big picture is critical. So here’s where it stands.
Most people think this tremendous seller’s market and that the super low inventory is something new, or that the market’s going to suddenly erupt overnight. Neither is true. Here’s the truth: we are FOUR YEARS PAST THE BOTTOM of our last real estate cycle. Just because the Denver Post is suddenly aware of the real estate market, or Zillow writes screeching articles about the tight market in order to sell ad space don’t be fooled. It’s not new. It is a logical continuation of a market that is reacting strongly to the over-selling we saw between 2007 and 2009 (which finally bottomed out in 2009). It’s doing exactly what real estate market cycles do. They rise and fall over long periods of time, but historically (and I mean over the past 40 years) residential real estate appreciation has averaged 6 percent per year and there is no reason to think that is going to change over the next 40 years.
We tend to think of market cycles in short-terms, spiking and crashing over short periods of time, but a quick look at the last market cycle clearly shows this is not how real estate works. Real estate cycles tend to move in much broader periods, 7-10 years are typical over the past 40 years. This is why predicting short-term market movements can be very difficult, whereas assuming the market will move in 7-10 cycles is a pretty good guess. During these past four years, as we continue the rise from our low, we have seen more of a seller’s market. Plummeting inventory and rising prices drove nervous buyers into multiple offer competitions with happy sellers getting the price they want. In fact, look at Chart Y and you’ll get a great perspective of how strong our market is. You see that the metro Denver 2013 Closed Dollar Volume of all residential sales hit a new high which translates into a record amount of money in the pockets of sellers. Good times for sellers!
Many of my buyers are understandably nervous. Rents are skyrocketing (up 8% this year) but news articles and TV reports claim the market is teetering on the brink of a crash, creating a “Fear of Buying”.
So let me be clear: no one can predict the real estate market with 100% accuracy. I can’t, the Federal Reserve can’t, the banks with all the money can’t (obviously!), no one can. But, understanding how market cycles work, and recognizing how low our current inventory is, I can say with confidence I do not see any impending weakness in the market over the next couple of years. We are four years into what will probably be a typical 7-10 year cycle of low inventory and rising prices. I can’t tell you what the Dow Jones will finish at next Monday. I can’t tell you if the Rockies will win their fifth game of the season. I can’t tell you what the weather will be on April 3rd. But I can say with confidence that real estate tends to move over predictable long-term trends, and this market cycle has a long way to go.

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Tracy Shaffer
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Housing Market Predicted to Rise in 2014

market forecast
The National Association of Realtors just wrapped up their 2013 Conference & Expo. Chief economist for the organization, Lawrence Yun offered his insight on what to expect for the 2014 housing market: steadiness in existing-home sales over the next year as prices continue to ascend.
Based on what has happened in 2013, Yun says he expects existing-home sales to be up about 10 percent in 2013 to 5.13 million and that 2014 will hold fairly even at about 5.12 million.
We in the Denver housing market, predict continued growth in the number of homes sold, with the accelerated appreciation of 2013 to level out in ’14 to around 4 percent.
National median existing-home prices should end this year about 11% higher than 2012, while next year’s growth is expected to nearly half of that. Those who’ve been following the return of the housing market know that the past two years have shown a 20% cumulative increase in existing-home sales with prices rising an average of 18%. Incomes have not kept pace, rising between 2-4% in the same period.

“We’ve come off of record high housing affordability conditions in the past year, and are now at a five-year low, but conditions are still the fifth best in the past 40 years,” Yun said, noting that the median-income family should still be “well-positioned” to buy a home in 2014 in many areas.

Affordability, limited inventory (especially in metro Denver), stringent mortgage standards and rising interest rates will all factor into the expected gains over the coming year. Housing starts are predicted to fall short of the underlying demand, while sales of new homes are expected to total 429,000 in 2013 and 508,000 next year.
Based on Lawrence Yun’s forecasts,the top 10 markets to watch for a housing turn around in 2014 are Salt Lake City, Utah; Naples and Tampa, Florida; Atlanta, Georgia; Boise, Idaho; Houston, Texas; Charlotte, North Carolina; Denver, Colorado; Seattle, Washington; and Tucson, Arizona.

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