Category Archives: Real Estate

Will the Tax Credit be revived?

Posted on August 30, 2010 | Leave a comment

Jay Thompson, Real Estate Blogging Rockstar has a brilliant (as usual) post today. Jay asked the question “Will the Homebuyer tax credit return? Should it?”

It might surprise some that I don’t think it should. I am for select government intervention. I am for select forms of stimulus. I am for bread on my own table. But I don’t think the tax credit is the right route for aiding the recently sorrowful market.

In our market, the first wave of the credit did draw down inventories beautifully. We had active listing inventories down to a number within 1% of January 1, 2006 on January 1, 2010. But since that time we’ve had a 53% increase in listings. The first wave worked; the 2nd wave created a false excitement / illusion of success that undid all the good of the first wave.

The credit here essentially worked too well. It gave sellers the perception that selling was easy again, or at least getting easy. Because the market had returned to balance (we were at just over 6 months of inventory January 1st) sellers voluntarily came rushing back into the market who had sat on the sideline, that “other shadow inventory”. Some of this was logical: the chance of a seller successfully selling was 47% in 2007 and 2008 in our market. Last year ended at 53.6%. That isn’t a 6.6% gain… that’s a 14% gain in probability. Last year’s uptick in probability of sale must be seen as the motivation behind so many sellers electing to return to the market this year. But now… through July of this year, the odds of a home selling were at only 44%. The tax credit can be applauded for the first improvement and ridiculed for the later developments.

Giving people cash doesn’t help them make good decisions. The savings on a $200,000 loan at 4.25% versus 5.25% are $43,000 over the life of a 30 year loan; in other words, the mortgage market today provides a buying opportunity that is significantly better than last year. The value of 30 year interest savings if 5 times that of the tax credit. The monthly payment difference is 8 – 11% lower now than it was one year ago. There is more inventory to choose from. But it is so much easier for a consumer to think short-term and “get $8000 with tax return”.

One of the major costs of market tinkering is the sacrifice of trust and good will. NAR lobbied relentlessly for the tax credits (including requests for the tax credit to be $15,000, not $8000) and real estate agents and mortgage brokers insisted that rates would skyrocket later this year once the Feds stopped buying treasuries. “Better lock in now, because rates will be at 6% by year’s end” stimulated the March/April rush on the market, the premature buying panic that got people in a.) under the tax credit deadline but also b.) ahead of the presumed upward trend on interest rates. Well rates today are six tenths of a percent LOWER, not higher than they were in the Spring. I tremble to think what future goodwill could be traded for more short-term spikes in sales due to renewed lobbying efforts. It is all reminiscent of “buy now or be priced out of the market forever”, another notorious industry statement from 2005.

A concerted effort among brokers to properly educate their clients and consumers on home-ownership and personal finance WILL NOT remedy the market quickly (because that’s all we’re interested in these days, isn’t it, the quick fix?); but it would go great lengths to helping the market make a durable and sustainable recovery. It would help restore some semblance of professionalism. It would increase the individual broker’s permission asset. We can look to the outside for help… or alternately… we in the biz can be the help ourselves.

Each month when I publish the Stat Pack, I start with “The Rules”. The Rules…don’t…change. Here they are:

LOCATION, LOCATION, LOCATION
MONEY IS MADE ON THE BUY
SELLERS SET ASKING PRICES; BUYERS DETERMINE VALUE
BUYERS BUY VALUE
THOSE WITH POWER HAVE FEW NEEDS. THOSE WITH NEEDS HAVE LITTLE POWER
THE HARDEST THING TO GAIN IS TRUST; THE EASIEST THING TO LOSE IS TRUST
REPUTATION AND ETHICS ARE VALUE-ENHANCING ATTRIBUTES
THE BEST NEGOTIATING POSITION: WINS

Mmm...Devil's Food.

A new tax credit doesn’t necessarily violate the rules… but you’re supposed to eat your dinner before your cake, and the tax credit is just the butter-cream icing on top of the cake. Better butter-cream doesn’t make anyone, or anything, any healthier.

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Market Report July 2010 (Mid-Year Stat Pack

Posted on July 13, 2010 | Leave a comment

Click For July 2010 Stat Pack

The First-Time Buyer Tax Credit perhaps worked too well: it fueled a sequel that provided both excess optimism and (later) damaging conditions that reversed much of the good accomplished. The intent and purpose of the tax credit was to activate the most easily activated segment of consumers (people who didn’t own homes, but aspired to own one) and convert them to homeowners. In the process, they would draw down the record inventory of homes, buy up and fix up bank-owned and distress-sale residences and help the market find equilibrium. A stable housing market would trickle to other segments of the economy and eventually stem the tide of the Great Recession. After November 30th, when the first version was to have expired, there were only 4301 listings for sale.  Despite the dreadful beginning to 2009’s sale year, the calendar year ended up 400+ units in sales,  and with 794 sales in November, the market had actually moved past equilibrium to a seller’s market: an equally-beneficial market is considered to be sitting at six months of supply, and November ended with a mere 5.4 months.
Today, during what is supposed to be the peak demand season of mid-summer, inventory is at 6.4 months. Last year at this time it was at 5.9 months. This is not a huge change, but it presents a serious problem looming ahead. This is shown in the first graph on Page 2, Single Family Home Comparison: in May and June of this year, the bottom fell out of the pending sales (ready to close escrow contracts) indexes once the second wave of tax-credit fever expired. In March and April, 1477 sales went to a pending status. In May and June, when the market demand should still be accelerating, only 1067 went to pending. In May and June last year there were 1360 pending sales. Instead of peak demand numbers in July, when they normally occur, it is fair to assume this year that July will be 10 to 25% off the pace it was at last year.
The real problem with a 10 to 25% downturn in volume is that it convinced a fair number of sellers (and agents) that homes were easy to sell again. What followed was the largest six month run-up in inventory in the PPAR MLS history: a 51% increase in only six months, and today 2000 more properties populate the MLS than started the year. With a 15% increase looming and a 10 to 25% decrease running the other direction, the market enters the second half of the year once again out of balance.

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The Relevance of “New” to Seller’s in Today’s Market

Posted on July 12, 2010 | Leave a comment

Through May 2010, Single Family Building Permit activity was 45.8% ahead of the same pace in 2009. June 2009 was the month that single family permitting actually returned to life, so the first five months of this year presents a very valid point of reference for one of the major ramifications effecting the marketplace: the value of new.
Actively marketed sellers need to examine for themselves what the same dollars might buy somewhere else in El Paso County. This might seem ridiculous and foolish: why compare downtown Colorado Springs to Lorson Ranch in Fountain? Why compare Peregrine to Pine Creek? How can Falcon in the $300,000’s compare to Gleneagle? Would an appraiser ever compare these two areas? Never. But is a buyer? Maybe. Okay, probably. Okay… most likely. Hey, if you wanted to sell a ’99 Benz for $10,000, and a buyer could get a 2006 Honda Accord for the same price and mileage… that’s how consumers tend to think.
There are 515 homes for sale from $225,000 to $250,000. The average sales price market-wide in June improved to $237,000 and change. So why is there an 8 month backlog of sell-time in this price-range? Consider: Classic Homes is no longer the city’s largest builder. The same company that produced more than 1200 homes in 2005 now has less market share than two companies that did not even exist in the market in 2004 (Journey Homes and St. Aubyn Homes). These two builders, along with Challenger Homes, account for 1/3rd of the marketshare among new home builders. Classic is now fourth. These Top Three builders are all producing homes in the $200,000’s (and no, that’s not the advertised “from the $200K’s… those are closed values). No, they’re not in Oak Valley Ranch, Divine Redeemer or even Springs Ranch areas where homes in this price range should be flying off the shelf (but aren’t)… but it begins to explain why resale homes are struggling to sell from $200,000 to $300,000.
Classic Homes builds entry level homes, but their average sales price is $375,000. The new-build focus from 2002 to 2006 shifted to a higher and higher price bracket due to the ready availability of cheap credit, especially jumbo credit. After the market freefall and credit crunch, the game had to change dramatically. While Saddletree/Symphony is still making a profit, and Keller, Vantage, Acuff and Classic all seem to have “survived” the downtown, the growth is not in their price range: it’s in the average-priced-home available with a two car garage, new HVAC efficiencies and shiny new appliances.
Of severe significance: average now equates to a custom experience for the home buyer. At average price… they can pick their colors; their trim; their flooring; their appliances; their landscaping. Double that average price point, and how special does a resale home have to be when there are granite slabs to be chosen, wet bars to be designed, 16″ tile to be selected for the two-person shower? In the higher price brackets, a new built $500,000 home is not the same as a new built home from four or five years ago. First, it is probably energy-star rated. The added insulation and HVAC inspections cost more money. The counters are probably slab granite. The appliances are probably standard stainless. The lot has probably been discounted. It might have a standard basement finish. The builder has trimmed work forces and had to trim their profit margin on the building. This all adds up to a property that probably offers 10% more value than the same product purchase three or four years ago.
Add to that money leverage. Every one percent drop in interest rate increases a buyer’s buying power by 11%. Consider this crazy reality: the market has fallen in value 5% to 20% depending on neighborhood. It is fair to say in general terms that prices are about 8 to 10% less than they were two summers ago. Rates at that time were 6%. Rates today are as low as 4.5%. That means buyers have 25% MORE BUYING POWER than they did just two years ago.
Add to that the fact that buyers still control the market. A balanced market has 6 months of inventory: neither buyers nor sellers control the market at 6 months. Below six months, sellers control the market and appreciation is likely. Above six months, buyers control the market. Appreciation is less likely due to increased supply. Buyers correspondingly hold out for… MORE.
That “MORE” that buyers hold out for is critical. They are operating in a whole other realm of reality and possibility right now with 25% more buying power this summer than two summers ago. With that come heightened expectations. The first place that is made manifest is in the house itself. Yes, that lot might have value. Yes, that location might have value. But buyers simply will not tolerate: outdated carpet and paint; 80’s/90’s fixtures; lack of cleanliness; lack of snappy curb appeal; prices that are even slightly out of line.

Sure, it’s the Great Recession. But take one look at the Promenade Shops at Briargate parking lot any day of the week and you’d never know. New and New-On-Sale are today’s consumers two favorite categories.

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Why I don’t SEO

Posted on July 12, 2010 | Leave a comment

I’m pretty loyal to my media mentors.

I technically shouldn’t put periods after their names, but really, they’re deserved. These are game-over, end-of-story professionals that have re-written the game because they do something the majority does not do: provide relevant content. Yeah, in the case of Kawasaki, Alltop is an aggregation of other people’s ideas, but the ideas they put out there are click-through’s: there’s a lot of quantity, but a pretty fair amount of unique quality too. These four have built their reputation on quality over quantity. They’re not one hit wonders or spammers: they’re gifted and relevant.

I spent the most fruitless week of my real estate career in 2008 attempting to maximize my blogs and sites with all sorts of keyword, SEO backlinking and other terms I’ve now, thoughtfully it turns out, forgotten. It’s hard to do something complicated and monotonous if your passion behind the project is unwilling. At the end of the day, I’d rather be uniquely relevant than wildly popular.

Joel Burlsem writes in the 1000Watt Blog today: “Content creation is hard. Great blogging is tough. And the rewards remain fleeting. So that’s why I’m calling it, on the eve of Real Estate Connect 2010: The death of the real estate blog. July 9, 2010. It’s over.”

Let’s Hope.

According to someone in the know, Seth Godin has over 500,000 unique readers a day on his blog. Seth has nothing that optimizes his site. He is Seth. His relevance is big. His ability to create content is nearly unprecedented. He has 500,000 readers not because he is duping Google, but because of the merit of his ideas. Jay Thompson (aka @PHXREGuy) is the same thing in real estate. He can’t help but publish brilliance.

In the end, a real estate business worth managing will accomplish more with 100 to 200 loyal fans that can be organized around quality information, ideas and causes then one that must go after the disaffected and unloyal massess. Almost 70% of all buyers and sellers want to work with their agent again, and yet only 11% do. Blogs should tighten the community and tighten the bonds. In my book, SEO-focused blogging has nothing to say and creates a large number of disposable clients.

My clients aren’t disposable.

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Selling for Maximum Value: Podcast

Posted on May 25, 2010 | Leave a comment

I’m using the buyer hiatus at the moment to improve my systems and deliverable goods. Here is my new video for www.BenjaminDay.com on the Maximum Value Home Selling System.

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After the Tax Credit. What now?

Posted on May 11, 2010 | Leave a comment

The first listing I sold was 1620 N. Nevada in March, 2000. After pricing the house at $325,000, I looked up the public record to see what the seller paid for it back in 1989: $88,000. 370% appreciation in 11 years!

A present downtown listing

Was that lovely 1898 Victorian Grand House shiny and new in 2000? Or was the value of that property something established by something fundamental? Examples: there are photos of it in the Pioneer’s Museum; Old North End dirt has been considered valuable for 125 years. Why is that house now today probably worth $500,000? Hint: it has nothing to do with the kitchen counters!

I predicted that the market would hit 9200 sales this year. That is exactly the pace the market is on. But I no longer think the market will hit that number. Statistically, fewer homes sold the first four months of 2010 then in 2008. Anyone care to remember the real estate bliss of 2008? I had a moderately bullish forecast in January due to supply and demand trends that no longer exist. The market is better now than it was in 2008 or 2009: but those were lousy years. Comparative analysis requires thoughtful honesty. If the market was actually “improved”, the market would have less than 6 months inventory right now which would catalyze summertime appreciation. It is at 6.5 months despite a massive 1500+ under contract properties. With the 31% increase in listings year to date, it might not get below 6 months this year . More at The Stat Pack.

I financially benefited from the tax credit. This has personally been one of my most successful years in the business. Yet it has also been the most puzzling. 1.) A great number of the listings that soared onto the market this spring were trying to capitalize (too late) on the move-up tax credit. Will these people stay on the market without a $6500 government incentive? 2.) Shiny and new is always popular, but it is also always depreciating. Why oh why is there a 15 month supply of housing of pre-1950 housing $200,000 and up downtown, while there is only a 5.5 month supply of housing of 1998 or newer over $200,000 in Powers? Yes, there are more buyers for properties in PWR than CEN, but we’re comparing 77 active listings downtown to 275 in PWR, and still there is 1/3rd the months of inventory out east? Consumers are habituated to buying disposable things, like a flat screen TV, a Starbucks, or a car with a loan. This behavior seems to be alive in real estate purchasing. I am guessing that the “sale” aspect of the tax credit encouraged it.

The real value of buying in 2010 is to leverage REMARKABLE. Prices went down for 3 years. Buying power is  25% better than it was in 2007 when you account for pricing drops and money leverage. This opens up a lot of 1620 N. Nevada scenarios for a lot of people.

Location is the first and greatest real estate fundamental. Prime location areas have not sold well year to date. It’s not just Broadmoor and upper Peregrine, but downtown, Manitou, Old Colorado City and places where the value is in the dirt.

If you are choosing to sell or buy, qualify your “WHY.” Why are you doing this?  If you are selling and can seize other opportunities, then get it over with. If you are buying, what’s the most remarkable area you can afford?

Real estate isn’t fair; never is, never was. Removing the carrot from before the horse helps consumers more honestly assess their wants and needs.

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Real Estate Brokerage 3.0: Points of Inspiration

Posted on March 18, 2010 | Leave a comment

A friend told me yesterday how mobile search apps are not just the rage in Miami, but if you didn’t have that, your business had no street credibility. He theorized that Colorado Springs was just a cowtown since it relied on personal referral and known permission assets to transmit quality performance from consumer to consumer.

The real irony? This was the same guy who turned me on to Purple Cow, now more relevant than ever.

Dan Pink, Author of DRIVE

On another business book frontier: Daniel Pink is more than Al Gore’s former Speechwriter.

He’s more than a guy who writes Bestsellers.

He’s an ad hoc revolutionary, making sense of what science says business must do, and educating persuasively on the Right-Brained Future. Mobile Search Apps, Easy-to-Refer Businesses, and Outlandish-Performance Art all share something in common: they delight the right brain.

Real Estate Brokerage can delight the right brain. That is, if it chooses to embrace the inner artist.

Prophets have gathered proclaiming the demise of the real estate industry for the better part of two decades. On an example of the relevance of Windows 95, Bill Gates predicted that the real estate industry would no longer exist in an online economy by the end of the Decade. I have frequently pointed out the poorly-veiled self-interest at play in the Freakenomics posts, ones that equate REALTORS to either The KKK or a Pimp (funny, I think I prefer the pimp analogy, but that was the best follow-up they could come up with after going straight for the historiographic jugular back in 2006).

All of their sentiments are right if all the REALTOR does is:

  1. Take someone’s money
  2. Not have a documented, repeatable system
  3. Remain in the box with their thinking and rely on pre-packaged solutions rather than customized outcomes
  4. Makes a contribution to their own bloodlines exclusively, without setting foot in the realms of civilization, arts, culture, humanity, sport and play

The reality is, really good real estate brokerage looks a lot like OK-Go.

If you want “synergy”, if you want “inspiration”, you must head to the right-side of the gray matter. If you want sustainability, empathy and a language to communicate deep smarts, experience and instinct, go to the right brain.

If you want a real estate brokerage that is more than an empty slogan, ego, or a one-time-in-space transaction… the right brain is the right place.

Brokerage can look like this. From smashing televisions, to windmilling parasols, to a final explosion of paint guns. Those are good outcomes. True artistry realizes the power of crescendo: a smile should start in the corner of the mouth, by 2:12 have spread across all lips lowering the bottom jaw to a slightly slackened position. By 3:24 the eyebrows and eyes should be effervescent, the neck posture slightly contorted, the shoulders seizing in anticipation of the outcome.

If a broker can do that for people… that broker is worth talking about.

If your interested in this revolutionary, ad hoc dude Pink… here is his recent Ted Talk.

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Where to Buy 2010 Part VI: Red Lights

Posted on December 7, 2009 | Leave a comment

The post that makes enemies faster than friends. In the interest of covering my own fanny, this is analysis based off of data that measures multiple metrics and then draws conclusions when comparing one set of data to another set. It is a formula set designed to assist buyers with purchasing decisions where their home-ownership may be less than 3 years. If that’s the case, The Red Light Properties have supply and demand trends that look like they will continue to put negative pressure on value. If you simply “must have this neighborhood”, or “must have this home”, or you plan on this being your last home purchase and you don’t care if it loses value or not… this post will mean nothing to you. This is a cold, calculated presentation of data as to whether or not these areas will appreciate (or depreciate further) in 2010. My forecast is that the average sales price all of these areas will continue to lose value next year.

To read about the Goal of This Where-to-Buy Series of Posts, Click Here.

To find out the recommended areas that have probably swung past the bottom of the pendulum and are already appreciating, read about The Green Lights. To see the Data for the Green Light Neighborhoods, that is found HERE.

For the bigger risk takers (but probably where the timing favors a turn to appreciation in later 2010), The Yellow Light areas are documented HERE. Note: I accidentally omitted Gleneagle in that post, which has stabilized pretty significantly in the last 18 months and will probably be in appreciation-mode by 3rd quarter, 2010. Up-to-Date Market Data is found here at THE STAT PACK link of www.BenjaminDay.com.

RED LIGHTS

The Red Lights for the most part represent neighborhoods where the average selling price is over $400,000. In some cases, even in the boom years of 2004 through early 2006, it was more probable that a home would fail to sell than actually sell in a ultra-high-end neighborhood like Kissing Camels or Broadmoor Resort. But the impact of the Great Recession, consumer pessimism, tightened underwriting and Jumbo Loan Regulations starting on any loan over $417,000, and the investor-fueled 1.5% to 3.0% penalty in interest-rate since September, 2007 has had a huge effect on the higher end. These are the same factors that have driven down the average sales price in Colorado Springs from over $270,000 in July, 2007 to $213,000 today: there is not only less demand for a high-end home, it’s just plain hard to buy one.

A Few Good Buys, but New and Expensive will Sit Forever:

Jackson Creek, Stone Crossing/Middle Creek, Erindale/Pulpit Rock and Sunset Mesa/Saddlerock all have average on-the-market values considerably higher than the year to date average sales price. All four have had less than a 47% probability of sale each of the last two years. All four have an average year-to-date sales price that is less than the six -year average. Of the four, Stone Crossing has withstood price pressure the most, only off a couple hundred dollars from the six year average. But the average sales price is only $20,000 higher than the year-to-date sales price and with 15 year-to-date sales and 18 on the market (15 months of inventory), the supply is overwhelming demand and will force values down.

Jackson Creek 2004 2005 2006 2007 2008 2009 Avg
Sold 89 89 99 82 50 46 76
Avg Price 306786 336210 369368 358065 349981 340884 343549
Expired/Failed 31 46 62 77 93 85 66
Total Units 44 135 161 159 143 131 142
Probability Sale 64% 66% 61% 52% 35% 35% 54%
Listed 34
Avg. List 363882
Sunset Mesa/Saddlerock 2004 2005 2006 2007 2008 2009 Avg
Sold 84 85 61 43 35 41 58
Avg Price 291665 308965 330695 329555 305382 304813 311846
Expired/Failed 78 60 68 64 61 47 63
Total Units 44 145 129 107 96 88 102
Probability Sale 64% 59% 47% 40% 36% 47% 57%
Listed 24
Avg. List 463612
Stone Crossing 2004 2005 2006 2007 2008 2009 Avg
Sold 40 44 31 25 24 15 30
Avg Price 393924 471618 526273 516762 467600 474296 475079
Expired/Failed 4 6 17 23 37 21 18
Total Units 44 50 48 48 61 36 48
Probability Sale 91% 88% 65% 52% 39% 42% 62%
Listed 18
Avg. List 501788
Erindale/Pulpit Rock 2004 2005 2006 2007 2008 2009 Avg
Sold 37 40 48 36 28 23 35
Avg Price 259744 291983 276232 269205 283110 249856 271688
Expired/Failed 42 29 39 38 37 28 36
Total Units 79 69 87 74 65 51 71
Probability Sale 47% 58% 55% 49% 43% 45% 50%
Listed 14
Avg. List 304339

Interestingly, all four areas have a pretty large price spectrum, from as little as $180,000 in Pulplit Rock to $600,000 along the cliff edges, $225,000 in Jackson creek to $650,000 for a newer Saddletree with huge lot and views. So to some degree, there are some very good buys in these neighborhoods. Homes priced less than the average sales price have a greater probability of sale. Homes priced 15 to 30% above average sale price however will have greater difficulty.

The Monument Funk

Woodmoor, Bent Tree/Higby and King’s Deer are Slow, Pretty Slow and Very Slow. Each of the last 3 years they have averaged less than a 47% chance of sale, and all have a year-to-date sales price that is significantly lower than the average price of all listings presently for sale. There is a 9 month supply of housing in Woodmoor, 16 months in Bent Tree and 20 months in King’s Deer. With so much of the “average” property in these areas valued at more than $500,000, the ramifications of the jumbo limit capped at $417,000 are huge: not many buyers have $80,000 or more to put down on a home. The rare, secondary financing that is available to buyers usually is no more than $50,000. So a home asking $550,000 in one of these areas will be competing with another, average-priced home. A buyer shopping in any of these areas could wield enormous leverage in terms of negotiating a lower price.

Bent Tree/Higby 2004 2005 2006 2007 2008 2009 Avg
Sold 27 22 23 14 11 10 18
Avg Price 623984 618202 752679 714000 718938 548322 662688
Expired/Failed 20 13 16 22 40 21 22
Total Units 47 35 39 36 51 31 40
Probability Sale 57% 63% 59% 39% 22% 32% 45%
Listed 15
Avg. List 870120
King’s Deer 2004 2005 2006 2007 2008 2009 Avg
Sold 28 45 30 22 21 15 27
Avg Price 553852 649716 669242 778349 613447 690833 659240
Expired/Failed 49 21 43 42 72 54 47
Total Units 77 66 73 64 93 69 74
Probability Sale 36% 68% 41% 34% 23% 22% 36%
Listed 27
Avg. List 787683
Woodmoor 2004 2005 2006 2007 2008 2009 Avg
Sold 219 216 171 136 121 91 159
Avg Price 365452 413316 421580 428742 388008 393657 401793
Expired/Failed 172 111 114 153 149 142 140
Total Units 391 327 285 289 270 233 299
Probability Sale 56% 66% 60% 47% 45% 39% 53%
Listed 77
Avg. List 454801
Bent Tree/Higby 2004 2005 2006 2007 2008 2009 Avg
Sold 27 22 23 14 11 10 18
Avg Price 623984 618202 752679 714000 718938 548322 662688
Expired/Failed 20 13 16 22 40 21 22
Total Units 47 35 39 36 51 31 40
Probability Sale 57% 63% 59% 39% 22% 32% 45%
Listed 15
Avg. List 870120

AWOL Demand, Decent Supply

Three well known luxury areas have seen buyer demand dry up to the tune of a 1 in 3 probability of sale.

Upper Skyway 2004 2005 2006 2007 2008 2009 Avg
Sold 48 58 36 40 38 17 40
Avg Price 613814 620878 698243 602640 558110 569867 610592
Expired/Failed 25 35 34 58 32 35 37
Total Units 73 93 70 98 70 52 76
Probability Sale 66% 62% 51% 41% 54% 33% 52%
Listed 30
Avg. List 1136400
Cedar Heights 2004 2005 2006 2007 2008 2009 Avg
Sold 8 9 6 4 4 11 7
Avg Price 537611 600550 712333 560875 560875 544850 586182
Expired/Failed 18 9 14 20 19 20 17
Total Units 26 18 20 24 23 31 24
Probability Sale 31% 50% 30% 17% 17% 35% 30%
Listed 8
Avg. List 767112
Unviersity Park 2004 2005 2006 2007 2008 2009 Avg
Sold 29 24 22 15 15 12 20
Avg Price 502279 521746 621344 623465 629780 463813 560405
Expired/Failed 23 23 40 39 33 31 32
Total Units 52 47 62 54 48 43 51
Probability Sale 56% 51% 35% 28% 31% 28% 38%
Listed 22
Avg. List 642754

Cedar Heights is actually rebounding somewhat and has only 8 months of inventory right now. That’s reasonably low for Cedar Heights. The problem however is that the average asking price is a full $200,000 above what has been the average selling price. Recent sales have submarined values to 2004 levels and today’s buyers will likely make similar demands on the present listing inventory. Upper Skyway and Skyway Heights makes a somewhat surprising appearance. Broadmoor Bluffs and the Spires has registered a dramatically higher sales rate in 2008.  Companion neighborhoods Stratton Forest and Stratton Preserve just saw their first sale in two years last month. Perhaps it is the age of the inventory or the difficulty in access, but 2009 has not been a great year near Bear Creek Park. The most heavily impacted area by far, and possibly in the city, is University Park. University Park has a large number of million dollar dwellings and lots valued at over $250,000. However… there has been a 29% chance of sale over the last three years and the average selling price this year is well below the average in 2004. Worse news for present sellers: the average asking price is $180,000 above the average selling price year-to-date. Sellers today will very likely have to make big price concessions to move their property.

The Ultra High-End

The massive economic upheaval and how consumer values have changed (and how they have stayed the same) is readily evident in three neighborhoods known for million dollar properties. The Broadmoor and Kissing Camels are hard places to sell a home, but are showing signs in 2009 that traditional neighborhoods commonly associated with luxury (the Broadmoor) and locations with a true, one-of-a-kind location (Kissing Camels) have value, even in a bad economy. The Broadmoor Resort meanwhile shows the difficulty of selling in a true custom-home neighborhood: one man’s custom, is another man’s consolation. There is a single MLS sale recorded in the Resort this year (translates to 14.8 years worth of inventory). There are additional new homeowners this year in the Resort, but the idea of buying someone else’s home has less value when builders are willing to build “exactly” what they want… and charge less than they did four years ago.

Broadmoor Resort 2004 2005 2006 2007 2008 2009 Avg
Sold 6 17 17 9 6 1 9
Avg Price 1068448 1299786 1392895 1637777 1306333 790000 1249207
Expired/Failed 31 28 16 15 13 18 20
Total Units 37 45 33 24 19 19 30
Probability Sale 16% 38% 52% 38% 32% 5% 32%
Listed 16
Avg. List 1921875
Kissing Camels 2004 2005 2006 2007 2008 2009 Avg
Sold 12 16 24 16 6 9 14
Avg Price 736666 790402 971606 1055814 935000 826700 886031
Expired/Failed 15 19 34 21 36 32 26
Total Units 27 35 58 37 42 41 40
Probability Sale 44% 46% 41% 43% 14% 22% 35%
Listed 28
Avg. List 930487
Broadmoor 2004 2005 2006 2007 2008 2009 Avg
Sold 36 40 21 19 27 24 28
Avg Price 750302 807591 1086173 1085915 825496 673337 871469
Expired/Failed 44 37 35 45 25 29 36
Total Units 80 77 56 64 52 53 64
Probability Sale 45% 52% 38% 30% 52% 45% 44%
Listed 28
Avg. List 1420785

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Where to Buy 2010, Part V: 59% increase in unit sales

Posted on December 7, 2009 | Leave a comment

All the data is Posted Here.

The hurry-up to the analysis is here…

Did the Gazette just describe the real estate market as “Soaring?” What happened to “plummet, freefall & plunge?
Remember November, 2008? There was not a cable-news network minute that went by without some new bank showing signs of weakness, some new stock plummeting, some new unimaginable sum in the billions of dollars being dedicated to a bailout of some enormous, household name entity that was ruled too big to fail. It was being called the biggest Wall Street Panic since the Great Depression and calling it the Great Recession seemed to be a euphemism for investors that were losing money to the tune of 30 to 60% in a single year. Terminology like plummet, freefall and plunge was routine. It was accurately applied to housing as average selling prices lost over 15% in 4 months and demand shriveled up.
December 2nd, 2009: Sales Increase 59%. Last November was the worst November in 15+ years in the Pikes Peak MLS. Numbers are numbers. A cynic looks at that increase and says, “that’s like the Broncos posting 10 points last week in a loss and winning with 16 the next. So what? The offense is still broken.”
In some regards, the system is still broken. There is less than 4 months supply of housing under $250,000 (that is NOT broken, that’s actually a hot-market). But there is over 10 months supply above $250,000 (that’s pretty slow, even for late Fall). If the numbers are used just to describe where things are today as compared to the recent past, the story is told halfway. It is better now than it was then; but how could it really be worse?
Where the numbers start to really illustrate and tell the whole story is when they are mapped and analyzed for trends. Months of Inventory has not been below 6 months on December 1st since the heyday of the boom market in 2005. That’s where it is now. Average price citywide is about $20,000 less than that time and interest rates are a full percent lower. And there are tax incentives to stimulate more demand, most importantly from first-time buyers who by definition, do not have a home to sell. The December Jobs Report showed a significant decrease in the rate of unemployment filings and durable goods orders are coming in ahead of forecast. Baby it’s cold outside… but the sun is shining. Consumers are cautious and value-oriented… but they are no longer terrified.
What Lies Ahead?
Be prepared for lots of forecasts and lots of media attention in the slow December News Cycle to be dedicated to the green shoots of a housing recovery. Some of this will be helpful, some of this will be accurate and a lot of it will paint with a brush broad enough to cover all 50 states in a minute and five seconds. The Real Estate Bust has definitely shown that real estate can move downward as a nation just as it can move upward as a nation. But the extremes of the market have been in coastal areas and places that posted unsustainable rates of growth. Middle America, places where population has continued to grow, places with lower than national rates of unemployment and neighborhoods that were less impacted by the explosive growth of new construction from 2003 to 2006 are the places where the recovery has already sprung. All of the above market conditions apply to Colorado Springs greater metro area.
“Value” will be the operative phrase to describe any recovery. The 2009 Profile of Home Buyers and Sellers showed that the overwhelming reason First-Time Buyers chose to buy a home in 2009 was NOT the First-Time Buyer Tax Credit. Over 60% had the desire to own a home. The 2nd reason? Affordability (10%). Third? Change in Personal Situation (8%). Only 6% sited the tax credit. And yet look at those November sales when the tax-credit was initially supposed to end. It is a nice carrot that helps propel buyers past the tipping point of personal desire, decent selection, low interest rates and real estate at a four to seven year low in price. The tax credit is eventually unsustainable and it certainly does borrow buyers from the future and activate them in the present. But what better time to do that than when housing affordability is at one of it’s highest levels in record? Who else will consume the inventory of properties of willing (or unwilling) sellers who either need to move or hope to change their real estate investment? It greases the wheels of recovery so that the majority of participants can once again begin to buy and sell real estate.
Make no mistake, the old days will not return and the market has changed in nature and what consumers consider “valuable”. Over 90% of 2009 buyers started their search online; 37% found their home via the internet, and only 33% by their REALTOR. That sends an enormous message to sellers: BUYERS WON’T BE FOOLED. Buyers want thorough property descriptions of high-quality properties and will not waste time looking at over-priced and under-conditioned properties. Affordability has increased. Probability of sale will begin to increase. But that will happen only for properties (and sellers) deemed a better value than their peers.

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Just Listed: 4510 Granby Circle in Mountain Shadows

Posted on October 21, 2009 | Leave a comment

Superb Condition properties can come in a variety of forms.

There are the homes that have been updated with lots of new bells and whistles, with a litany of features to advertise.

There are homes that are brand-new where the perceived value speaks for itself.

Then there are homes that were built by superior builders and have been maintained and kept up in a pristine condition. The new listing at 4510 Granby is one such property.

Built in 1999 by Saddletree Homes the Orleans Plan is one of the more popular plans ever to arrive in the Colorado Springs Marketplace. At just under 3000

Island & Pantry Kitchen

Island & Pantry Kitchen

total square feet, the home features 9 foot ceilings on the main level, a large formal living room, equally spacious family room, over-sized kitchen with island and pantry, big casual dining area, upstairs laundry, 14′ x 11′ secondary bedrooms, and a master with 10′ x 12′ office/retreat, five-piece bath and generous walk-in closet. That’s on the base plan.

At 4510 Granby, the upgrades are almost too numerous to list… OUTSIDE… there are four different outdoor gathering areas, including a raised veranda off

Master Veranda View

Master Veranda View

the master retreat that features a straight-on view of Pikes Peak… a back deck with city light views… a covered front porch large enough for entertaining at the end of the cul-de-sac… and a lower level stamped basement patio that is hot tub-friendly due to the 6 foot privacy fence and views of Ute Valley Park and city lights. That’s in addition to the dimensional shingle roof, stucco exterior and walkout lower level. INSIDE… extensive hardwood flooring unites the family room with dining area and island kitchen… built-in speaker wiring and a giant built-in area accommodates modern media…high quality window coverings with 4″ blinds set the scene for appropriate natural lighting.

Situated in the prestigious Mountain Shadows community, this is a rare find in terms of newly built, and rare find in terms of Saddletree Construction (who typically builds from $500,000 to $1,600,000′s in neighborhoods like Cordera, Flying Horse and Cathedral Pines), but also at a price ($290,000) that is significantly lower than the neighborhood average. Priced to move, this is turn-key, peace of mind that can not be missed.

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Posted in Cathedral Pines, Colorado Springs, Colorado Springs Real Estate, Flying Horse, Mountain Shadows, Real Estate