Market Snapshot september I’m frequently asked where the real estate market is headed and when we will get back to some kind of equilibrium. The truth is it’s extremely difficult to accurately predict the future but here’s what I know: Right now we are experiencing one of the strongest seller’s markets in our history and we’re a full six and a half years into this market recovery. 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:
1.Buyers make offers on homes and continue to lose out to higher offers.
2.Buyers get increasingly frustrated and begin to get more aggressive with their offers.
3.The momentum builds on itself until we see what is occurring today, with multiple offers on a propertythe norm rather than the exception.
4.The multiple offer dynamic almost always bids prices higher than the original asking price.
5.The buyers that lose the bid learn from the experience and become more aggressive on their next offer.
6.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 have experienced for the past several years. And this seller’s market is not going to change any time soon, at least not until we get back to some kind of balance in the market between buyers and sellers. I don’t see that happening for at least several more years. In the meantime, if you’ve thought about selling your home, now might be a great time to find out what the market is like in your neighborhood and see what your home is worth. It’s almost certainly worth more than it was just a few years ago. Drop me a line and I’ll put together a professional Competitive Market Analysis on your home so you have the data to make the right decision.
Another question my potential sellers often ask is if they sell today, can they find a replacement home in time to move? In a market like ours this is a very good question. Fortunately, there are a number of things savvy sellers can do to take advantage of the seller’s market and put themselves in a good position when looking for their replacement home.
Here are a few:
1.First and foremost, work with an experienced agent to write a strong, professional offer on the home you want to buy. In a dramatically competitive market like we have now, weak, poorly written, unprofessional, and bad offers just aren’t taken seriously. There is both an art and a science to writing a strong offer. Call me and I’ll explain more about how to write an offer that has a great chance of getting accepted.
2.Add a contingency clause to your contract to buy another home. The clause would say that you will close on the home you are purchasing once your own home sells. The problem with this is that it somewhat weakens your offer as many sellers don’t want to accept a contingency when they can sell quickly to the next buyer. But occasionally we do run across a seller that is in no hurry and is happy to wait for the buyer’s home to sell.
3.Lease the home you just sold from the buyer for a period of time while you are looking for your new home (this is called a lease back). Some buyers do not want or are not able to move into their new home immediately and this permits them to earn rent from you for the period of time you are shopping for your next purchase, a win-win situation. 4.Look into a new construction purchase. Builders are building as fast as they can in this market to keep up with demand and there may be inventory of completed or soon-to-be-completed homes that could suit you. 5.Arrange to stay with family or move into short-term rental housing until you find your next home. While not a perfect solution I believe it’s far better to inconvenience yourself for a short period of time than to settle for anything less than your dream home!
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“Denver apartment rents rising three times the national average”

This was the Denver Business Journal’s Sept. 2 headline. Denver rents have increased another 7 percent in the past year, which is three times the national average of 2.3 percent. And given the continued lack of rental inventory, rents are expected to continue increasing at a strong pace. Sooooooo…. 1.If you’re a renter it might be time to consider looking into buying a home to get out of the rental market madness! 2.If you’ve ever thought about buying a rental as a long-term investment now might be the time to learn how to purchase a safe, cashflowing property. Interest rates are still near record lows and rents havenever been higher, a wonderful combination for any real estate investor.

Mortgage rates continue to hover at near-record lows. For homeowners looking to upgrade to a larger, better home, low rates combined with low home inventory are making this a great time to upgrade to a larger home with very nearly the same monthly payment. We have several recent examples of clients selling their current homes and getting into a $40,000 – $50,000 more expensive home with the exact same monthly payment. Please give me a call or send me and e-mail and I’ll do a free analysis to see if this might be a good scenario for you to take advantage of.

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!

What’s new in the Denver Real Estate Market?
The question I’m asked all the time by friends, colleagues and clients who are still renting is whether it’s too late to buy a home. “Are we heading for a big downturn?” and “Are we too deep in the market cycle to buy?” they wonder. For those of you who read my newsletter and know me well the following will sound familiar but it bears repeating: timing the real estate market perfectly is extremely difficult (maybe even impossible) and those who try usually fail. So don’t try to time the market. Instead, look at factors like the ones below to see if homeownership is right for you.

1. You should buy a home when you feel it’s the right time in your life to do so. Don’t try to time the market, instead time your life. Are you getting married? Sick of paying skyrocketing rents? Looking for a bigger place for you and your family? Want your own backyard for the kids to play in? Want to be part of a neighborhood community? Plan on staying in one place for a number of years? Want to build long-term wealth? These are the types of questions you should ask yourself when considering whether you want to own a home. To the extent you say yes, home ownership might be the answer for you.

One important stat to keep in mind is that the average rental household in the U.S. has a total net worth of only $5,500. In contrast, the average homeowner has a net worth of $195,500 — that’s 36 times those who rent! Over the past 15 years, this multiple has ranged from as low as 31 times to as high as 46 times the net worth of renters. You don’t want to try to time the market, but over the long term home ownership is the tried and true path to wealth accumulation and financial security. (So is owning rental property, by the way. Call me if you’d like to learn more about that as well.)

2. Interest rates remain at record lows but this can’t last forever. No one knows when they’re going to rise (remember, you can’t time the market!), but rise they will at some point in the future. Though home prices have gone up the past several years, low interest rates continue to make homes relatively affordable (especially compared to renting). Once interest rates do rise the window of home ownership affordability will truly begin to close for a lot of potential buyers and they will be sorry they didn’t act when interest rates were at 50-year lows.

To illustrate the numbers, assume you are purchasing a $210,000 home with a 5 percent down payment. The Principle + Interest payment at 4 percent interest would be $952 per month. Just a 1 percent interest rate increase to 5 percent would result in a payment of $1,070 per month for a total increase of $128/month and $1,416/year. Now assume that rates tick up to 6 percent. That increase would result in a 21 percent increase in payments from $952 to $1,196. Where you really see the effect of these increases is when you hold the property for the full 30 years. On a $200,000, 30-year fixed-rate mortgage that increases from 4-5 percent, the borrower who obtains the 5 percent loan would pay an additional $42,772 in extra interest as opposed to the borrower who paid just 4 percent interest. That’s 21.4 percent of the total loan amount! This is why a lot of folks who don’t purchase a home while interest rates are near record lows are going to regret it down the road.

3. The main reason the average home owner has so much more personal wealth than the average condo owner is that over time, homes appreciate in value. Over the past 44 years, homes in metro Denver appreciated 6 percent per year, about 1 percent above the inflation rate. If you buy a $200,000 home, you can expect over the long term its value to rise about 6 percent every year. This means you’d make $12,000 in appreciation the first year, an additional $12,720 the second year, another $13,483 in the third year, and on and on. It’s that simple. So if you want to build wealth, your best bet may be to take advantage of these numbers and buy a home for the long term. I can help you do this. Call me and let me show you how.

Olive Exterior

Brick Ranch For Sale in Montclair (Click here).

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!

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:
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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.

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.

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.

rsz_166-beauty-queen-1957 no effect 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.
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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.

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.