I got the call that they were relocating to Denver from Indiana in a month, coming in for a long weekend to buy a house. I knew it was much more than finding a house, we needed to find them their home. “Power shopping” in 90 degree heat, we toured ten properties. With their wonderful parents and a great son in tow, these buyers were champs! At day’s end we went for tacos at North County and discussed the top contenders over delicious margaritas. The next day, loaded up with snacks and water, we set out to see another ten. End of the day, our last showing was in Castle Rock. And it was PERFECT! Our offer was accepted and yesterday our new Colorado residents (and my new friends) moved into their gorgeous home. Congratulations, Nick, Katie, and Jake!
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.
As 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.
I fell in love with this cute little brick ranch home in Denver’s Montclair neighborhood the moment I opened the door! There was a sign in the yard, FOR SALE BY OWNER but I just knew I had to list it! The front of this brick ranch home is sweetly elegant. There are three bedrooms/ two baths, beautiful hardwood floors, a very charming vintage full bath upstairs and a bright white kitchen.Your kitchen window overlooks Kittredge Park so you’ll always have the feeling of open space and natural light streaming through your windows. The basement is fully finished and has a non-conforming bedroom, nice sized great room and nifty little space for an office, study or guest room (I love the custom built-in bookshelves!). The back yard is private and just the right amount of space; not too much to keep up, but plenty of room for the gardener, the dog, or both. Enjoy a summer party under the covered patio and give me a call when you do! Did I mention the giant garage? Well it has a really nice, big garage. Click the link above to see the video and call me if you’d like to see it. Or just call and say hello!
Notes 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:
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®.”
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.
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.
In a market as tight as we have in Denver today home buyers need to write strong offers if they want to get them accepted. Low, low inventory can’t satisfy buyer needs, making the multiple offer situation more commonplace. With only one winning offer, savvy home buyers learn quickly what makes a strong offer. In the run for the real estate roses, it takes an experienced Realtor who understands how to write a powerful offer that will be seriously considered. Home buyers need to know what makes a strong offer so they can prepare to win.
1.) Get pre-qualified by your bank or a competent loan officer before writing any offers. I used to take buyers out home shopping before they’d talked to their lender, not anymore. I want you ready to go and ready to compete. If I have a strong lender letter in hand, it strengthens your position and makes the process easier.
2.) Often times the seller needs time to move. Using one Realtor to coordinate the timing of a sale and purchase is wise. When working with a buyer, I always call the listing agent to inquire about the seller’s timing needs. If your schedule permits, we can accommodate the seller by writing an offer with a 30-60 day rent-back period. This takes some of the pressure off of the seller, easing stress, and allowing them to stay in the home after closing to close on their replacement home.
3.) Up the ante. A good agent will never lose the earnest money you put up, so showing the seller you’re serious by adding more green to the pot will make them more likely to accept your offer.
4.) Use a cashier’s check for the earnest money. It makes no practical difference but subtly indicates to the seller you really are serious enough to take the time to get a cashier’s check.
5.) Write an Escalation Clause into your contract that says your offer will beat any other verifiable offer by, say $2,000, up to your top dollar amount. An escalation clause, when written correctly, asks the sellers to provide evidence of a credible higher offer so that you know you’re being dealt with fairly.
These are just a few of the strategies I employ to get your offer accepted and knowing how to stand out in a crowd of home buyers is key. Be prepared to compete. Because it’s always more fun to wear the tiara than the runner up sash.
There’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.
Mid-Century Modern homes are a hot commodity in Denver. Many of them have been remodeled through the decades, often by owners who didn’t realize that what felt outdated would eventually hold the home’s value. This beautiful Mid-Century ranch home has been restored with respect for the flair and detail of 1960 without being kitchy or “retro”. Sleek lines and a serene palette make it feel young again. Situated on a hill with mountain views, this 4 bed/2 bath home is a short walk or roll to Trader Joe’s, Streets of Southglenn, Goodson Rec Center and open space. Come on by.