Tag Archives: Market Peak

The Market Peak: First Quarter 2013 by Individual MLS AREAS

Here is a review (at times staggering) of the price trends for the 8 MLS areas we most frequently list and sell in. Values are compared to First Quarter 2012.

The Market Peak: First Quarter 2013

In April 2006, a very bored manager of a little real estate outpost on Library Lane (yes, that is the street name) decided to stick his toe back into the kiddie pool of real estate. Between reviewing contracts and making sure sellers were signing Addendum A’s, this agent went looking at the data, remembering the puzzling and vexing questions of his client, Chandra Narumanchi, who, the previous year, had the audacity to demand to know the months of inventory in his neighborhood, and what the probability of his house selling might be.

This manager made a fateful and foolish decision. He embraced his inner nerd. He began churning out data. He began to wax eloquently (and sometimes, quite opinionatedly) about the market and it’s trends. He sent out a two page SEND-ALL email written in Word with a mess of numbers. He printed it off and distributed it at a company sales meeting. He called it “The Stat Pack.”

That month, April 2006, was also a fateful month in local real estate. It was the same month that the real estate market tipped from the gonzo insanity of “buy know or be priced out forever” (a quote from former NAR lead economist David Lereah, author of 2005’s fateful “Why the Real Estate Boom Will Not Bust“). That single month, asking prices rose, sales prices mysteriously dipped, inventory soared and so did interest rates. By the end of June, there were 1200+ more listings for sale than the same time the year before. This Stat Pack thing just happened to launch at the same moment that the market tipped.

The Stat Pack has officially been retired. There are three reasons. The first is that my old (yes, the geek and the manager and the author are all one in the same. Back to first person singular) brokerage that I left three years ago insists on producing a document of the same name. The second is that documents suck and video, even bad video like mine, is better. The third is that the market has changed. We are now at a 13 year low in inventory. We are at the lowest supply of housing after first quarter in MLS history (3.5 months to sell through all of it). We are at the highest rate of sale in 6 years. And the house money of 3.6% interest rates is still out there.

Anything decent will not only be gone by Monday, but will have a bidding war take it out. Here are the cold hard facts in moving graphic form, narrated by yours truly:


Skin in the Game: What The Big Dogs are Predicting for Colorado Springs Real Estate

I just self-audited and have 12 more hours of continuing education to take before August 4th. Hello VanEd. Most of it will be legalistic and boring, and not as relevant as the 4 hours I got from The Real Estate Yoda last Thursday, Mr. Larry Kendall. It’s always a good few hours with Larry, and he actually had a few new tricks in the “showing is better than telling” gear bag.

Let’s pause: 2006. I’m managing agents and hating my life. I have just started the Stat Pack in April and can tell the market is on the edge of a cliff. We had gone from 3800 summertime listings to 6000, and unit sales were dipping. I’m meeting with the owner of a company when another agent comes in with his pitch of “it’s a great time to buy.” This was the same guy who beat me up about frequently doing deals as a Transaction-Broker because my clients had a pretty good idea of what they wanted to do in that rapidly appreciating market… here was Senor Client Advocate blazing the trail of foreclosure for his clients. What has happened since market peak in early 2006 is basically this:

  • We have been in a perpetual heavy-inventory market (3900 summertime listings compared to 6052 last year… over 7000 in 2007).
  • Annual sales units have effectively been cut in half (13,000 single family sales and another 4000 non-MLS new builts in 2005… compared to under 8200 in 2010).
  • Average sales price has dropped 12%, or $30,000 on an annual basis
  • Unemployment has doubled from around 5% to around 10% locally

One of my images from the July 2008 series on the soon-to-come pricing wars. Correctly predicted.

It’s been a real barrel of fun.

Larry’s tribe of Ninja’s don’t plaster their cars with “it’s a great time to buy!” stickers that fade, crack and wear out and are replaced with “Need to Short-Sell? Call Me!” We work with people that are motivated by pleasure or pain and lay out strategies that are customized for their needs and sustain their futures. We are present to the now. So when Larry went to the “this is the best real estate market I’ve seen to buy into in my 38 years” I about short-circuited. Was Yoda really saying rush in and storm the castle?

As usual, Yoda was speaking more along the lines of “the market is best in 38 years it is… your choice is what?” He then proceeded to show, and did so by citing, The Big Boys.

I will post follow ups to this, but here is the executive summary:

Fortune, April 2011: The Return of Real Estate

Fortune Magazine‘s April 2011 Issue announced it as “the time” to return to real estate. Interesting. I’m so used to media doomsaying about my industry, to see the content line as “Forget stocks. Don’t bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing” is almost like a time warp. I halfway expect to see the next article on CNN about Kerry and Edwards.

Federal Housing and Finance Authority’s analysis of the Colorado Springs’ Real Estate Market shows it is poised for recovery with lower inventory and stable demand (check and check so far in 2011 with no reason to believe otherwise).

Federal Housing and Finance Authority Annual Appreciation COS 1981 to now

Private Mortgage Insurance, cats who truly have skin-in-the-game, have the downside risk of future depreciation in the Colorado Springs market at only 16.8%, one of the lowest in the country. The affordability index is just over 150%. Case in point: clients who closed this month and took advantage of PMI’s one-time fee-option paid 1.34% at closing to eliminate their mortgage insurance entirely with only 5% down. They had good credit and bought in a strong area, and PMI said “no problem”. Colorado Springs has been removed from PMI’s declining market’s index for over a year.

Then there is Case-Schiller.

Case Schiller Return to Max Value Predictions, Dec 2010

I have not once said that I thought Case-Schiller was being overly optimistic, but the Top Ten percentile of areas where they predict a return to maximum value by 2013 includes three counties in Colorado: Boulder, Larimer and El Paso. That would be us. I don’t agree with them, we have to stop depreciating in order to spin around, and I think a two-year surge that out-paces four-years of declines is unlikely. But by 2014 or 2015… I think that’s probably right.

So is it a great time to buy? I need to flush this out in more teachable posts. The answer is yes, it is a great time… as long as you’re heavily informed, risk-tolerant, can shut out the nay-saying voices, have good credit, a stable job, and you’re not going anywhere for at least three and more like five or six years. That alone ought to cut the 2005 buyer-binge by half if not more.