Where to Buy 2010, Part IV: Yellow Lights

In my recent post, Where to Buy 2010, Part II: Green Lights, I documented two dozen areas that were showing positive enough signs of life to conclude that:

  • Price Depreciation was likely over
  • Supply and Demand was weighted slightly in favor of Demand increasing (or better)
  • The probability of sale was increasing
  • Values would like begin increasing by the end of first quarter, 2010 (if they were not already actively appreciating)

Now comes the harder part. Offending people who live in places where these important stabilizing factors are less evident. These are “the Yellow Lights” areas where:

  • Price Depreciation may still be occurring
  • Supply and Demand is not clearly favoring an increase in demand and an over-supply may exist
  • The probability of sale is at the market average (47%) or worse
  • Prices may not start appreciating in first quarter 2010. It might take until late 2010 for that to happen

Very quickly, anyone who can read through my cautious language will notice “may”, “maybe” and “might” all dominate the language of this post. The Yellow Lights are areas where there can still be some excellent buys. But a smart buyer who wants in on one of these areas needs to quantify their decision making. Is the home I’m interested in below the median value for the area? Are there any fatal flaws that would possibly hinder appreciation (near or backing to a busy road, non-conforming floorplan, etc.). Am I buying upgrades or dirt? (because the dirt is where the value is)

The ALMOST THERE…

These three areas all had one little glaring problem that kept them from Green Light Status.

OCC 2004 2005 2006 2007 2008 2009 Avg
Sold 186 216 199 149 109 122 164
Avg Price 169046 180837 171750 170945 152462 154462 166584
Expired/Failed 152 143 152 177 155 91 145
Total Units 338 359 351 326 264 213 309
Probability Sale 55% 60% 57% 46% 41% 57% 53%
Listed 58
Avg. List 220220
Tamarron 2004 2005 2006 2007 2008 2009 Avg
Sold 37 41 22 23 27 23 29
Avg Price 224281 240781 247860 263530 239940 228813 240868
Expired/Failed 17 9 19 22 19 20 18
Total Units 54 50 41 45 46 43 47
Probability Sale 69% 82% 54% 51% 59% 53% 62%
Listed 15
Avg. List 257420
Newport Heights 2004 2005 2006 2007 2008 2009 Avg
Sold 31 47 37 31 21 24 32
Avg Price 241980 265093 261895 296119 258056 246493 261606
Expired/Failed 31 14 22 21 17 10 19
Total Units 62 61 59 52 38 34 51
Probability Sale 50% 77% 63% 60% 55% 71% 62%
Listed 6
Avg. List 256933

In the Old Colorado City area, the probability of sale has increased and demand has picked up. But price has taken a beating every year since 2005. That’s odd that average price in this boutique and unique area started to drop two years ahead of other market. The consumer demand has been largely for less expensive properties. Qualifying the unique qualities of an over $200,000 home will be important for a 2010 buyer in Old Colorado City. Likewise, pricing has taken a hit in both Tamarron and Newport Heights. While the probability of sale has never dipped below 50%, it is interesting to note that surrounding areas have performed better.  When Tamarron (D20) is compared to Pinon Valley or Oak Valley Ranch (both D11), a larger, similarly priced property has had a lower chance of sale in the normally more appealing D20 area. Newport Heights average list price is actually below the 6 year average sold price. One difficulty here however is that the area is small and has many streets impacted by road noise (proximity to Dublin and Austin Bluffs). Homes on the inside and near open space will sell much more easily.

The, “These can’t possibly stay Yellow Light for Long” areas

Cheyenne Meadows 2004 2005 2006 2007 2008 2009 Avg
Sold 74 70 64 45 42 30 54
Avg Price 192149 204087 214987 211952 218016 209383 208429
Expired/Failed 31 22 28 30 48 35 32
Total Units 44 92 92 75 90 65 76
Probability Sale 64% 76% 70% 60% 47% 46% 64%
Listed 12
Avg. List 212041
Northgate 2004 2005 2006 2007 2008 2009 Avg
Sold 67 54 53 41 25 16 43
Avg Price 320870 382583 352463 333648 338654 344293 345419
Expired/Failed 23 30 28 39 33 23 29
Total Units 90 84 81 80 58 39 72
Probability Sale 74% 64% 65% 51% 43% 41% 59%
Listed 19
Avg. List 355089
Crystal Hills 2004 2005 2006 2007 2008 2009 Avg
Sold 15 18 25 12 20 18 18
Avg Price 280953 308650 345796 336833 315120 337027 320730
Expired/Failed 4 6 11 19 17 19 13
Total Units 19 24 36 31 37 37 31
Probability Sale 79% 75% 69% 39% 54% 49% 59%
Listed 14
Avg. List 346792

I was scratching my head looking at Cheyenne Meadows. That’s right up next to Ft. Carson and an always popular area with junior officers. With an average sales price similar to the city and high rental rates, this can’t possibly stay down long. But the probability of sale is lousy and price has reset to 2004 levels. Weird. Very similar circumstances north of New Life in Northgate (collectively Trailridge and Deer Creek). Prices are at the 6-year average and the probability of sale has been low for four years running. This despite a superb location and near many of the destination D20 schools. Then there is Crystal Hills. The only suburban-style neighborhood in Manitou, the problems here are a lower than expected probability of sale and higher than usual inventory. With the price reset to the six year average and an over-supply heading into winter, pressure is down on price (for the short-term). All three of these areas have something somewhat extraordinary to extremely special in their location. That will have to make a measurable impact on a return to better value sometime in 2010.

High-End Areas where the worst is probably over (but boy what a hit)

Mountain Shadows and Peregrine have both seen demand sour substantially in 2009. At one point in October of this year, Mountain Shadows had only 3 properties that had sold for over $400,000 the entire calendar year. For a long stretch of the summer, a half dozen Peregrine properties were in a race to the bottom in price, starting around $650,000 before settling between $575,000 and $615,000. And for the last several years, the Old North End has been characterized by very low demand over $500,000.

Mountain Shadows 2004 2005 2006 2007 2008 2009 Avg
Sold 77 87 74 48 57 44 65
Avg Price 323627 356627 374161 381103 378998 332717 357872
Expired/Failed 42 25 37 71 46 52 46
Total Units 119 112 111 119 103 96 110
Probability Sale 65% 78% 67% 40% 55% 46% 59%
Listed 26
Avg. List 440203
Peregrine 2004 2005 2006 2007 2008 2009 Avg
Sold 53 65 73 56 38 22 51
Avg Price 445883 520341 573800 528103 526349 471336 510969
Expired/Failed 34 25 32 41 37 44 36
Total Units 44 90 105 97 75 66 80
Probability Sale 64% 72% 70% 58% 51% 33% 64%
Listed 30
Avg. List 561746
Old North End 2004 2005 2006 2007 2008 2009 Avg
Sold 42 54 56 46 41 20 43
Avg Price 352358 376357 430213 406895 400573 384725 391854
Expired/Failed 40 28 34 27 30 25 31
Total Units 82 82 90 73 71 45 74
Probability Sale 51% 66% 62% 63% 58% 44% 58%
Listed 33
Avg. List 769969

In all three of these areas, the average list price remains above the six year average. But the year to date sales price has dropped below the six-year average. In all of these areas, a home under $500,000 is very much worth looking at. Homes asking over $650,000 though will have to offer the buyer something extraordinary. That is, until inventory levels shrink even more.

The Million-Dollar Drag

Pine Creek. Spires. Flying Horse. All of them have taken a beating with direct competition with new construction. All of them have a lot of inventory sitting on the market. All of them have a lower than expected probability of sale. Broadmoor Glen has the added nuance of present new construction that is starting at twice the average of the rest of the neighborhood.

Pine Creek 2004 2005 2006 2007 2008 2009 Avg
Sold 102 97 107 96 63 48 86
Avg Price 412235 456217 491999 491366 468159 429007 458164
Expired/Failed 56 59 61 93 81 82 72
Total Units 158 156 168 189 144 130 158
Probability Sale 65% 62% 64% 51% 44% 37% 54%
Listed 36
Avg. List 667759
Spires/B Bluffs 2004 2005 2006 2007 2008 2009 Avg
Sold 108 87 68 98 50 44 76
Avg Price 551509 575448 586949 579556 580599 520501 565760
Expired/Failed 58 47 65 85 85 69 68
Total Units 44 134 133 183 135 113 124
Probability Sale 64% 65% 51% 54% 37% 39% 61%
Listed 50
Avg. List 776643
Broadmoor Glen 2004 2005 2006 2007 2008 2009 Avg
Sold 32 24 18 19 17 11 20
Avg Price 340134 358016 392818 392647 452308 582500 419737
Expired/Failed 5 7 10 14 21 16 12
Total Units 37 31 28 33 38 27 32
Probability Sale 86% 77% 64% 58% 45% 41% 62%
Listed 8
Avg. List 602100
Flying Horse 2004 2005 2006 2007 2008 2009 Avg
Sold 16 57 48 36 32 38
Avg Price 491533 490972 491940 448718 417985 468230
Expired/Failed 2 13 44 61 38 32
Total Units 18 70 92 97 70 69
Probability Sale 89% 81% 52% 37% 46% 54%
Listed 34
Avg. List 912304

In all four areas, the “average” property for sale requires not just jumbo financing, but super jumbo financing or a cash buyer. There are not many of either. Since all three areas have homes from $400,000 to well over a million, even talking about them as “areas” requires a discussion of areas within areas. A home on the Golf Course in Pine Creek with a nice lot and great upgrades will probably sell at a respectable price. A home that isn’t on Paisely (where it seems everything is for sale near the top) and is in the low $600,000’s will likely sell in the Spires. In Broadmoor Glen homes can move very quickly… or take forever. The price span is largest here, with home starting around $300,000 (selling very well) and an over-supply of million dollar new construction in the Canyons (one to three units selling per year). Flying Horse is having a hard time selling anywhere north of $500,000, but under $450,000 is actually moving faster than 6 months. In all three areas, the bottom of the neighborhood in price seems to be activated; but the majority of the present listings are quite a bit more than “average”. These will take a year or more to see improvements.

The operative term here is “Yellow Light”. Many drivers see yellow light and hit the accelerator. That means change is about to happen, and if they act quickly, they can beat the change. That might be the case in some of these places. The safe money is found in the Green Lights. The Curve-Beating money is found when the light is yellow.

3 responses to “Where to Buy 2010, Part IV: Yellow Lights

  1. Ben, am I crazy or did I miss Part III?

  2. Pingback: Where to Buy 2010 Part VI: Red Lights « Colorado Springs Real Estate Market Data

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s