Tag Archives: Saddletree Homes

Real Estate Isn’t Fair: Part II, Power of the Pen

Real Estate is ultimately a customer service profession.

Customer service has many descriptions (no, there is not one single definition, and no, “the customer is always right” is not the definition). Like a weird Supreme Court decision, “you know it when you see it.”

  • Customer Service is repeatable.
  • Customer Service is Durable (there’s that word again).
  • Customer Service is meant to deepen a connection and increase loyalty. This is very different from “brand-awareness”.
  • Customer Service succeeds when it makes the recipient feel 1.) heard 2.) understood 3.) worth attending to 4.) worth keeping 5.) kinda remarkable (or better).

What does this have to do with real estate not being fair?

I got two pieces of snail mail today. Two. That’s about as many pieces as I’ve received all year (amazing how big companies like ERA Shields get spammed with print mail, and little boutiques like Selley Group get nothing generalized. More on that later). Both were from peers in the real estate industry.

One was a recruitment letter. It was on cheap paper. It didn’t have the company indicated on the return address. The business card was ugly. All it spoke about was the stats of the real estate company. It addressed me as “Dear Benjamin” (no one calls me “Benjamin” unless they don’t know me. I use “Benjamin Day” on my business cards because Ben Day Consulting in Boston dominates SEO and the Re/Max Properties Front Desk always – ALWAYS – thinks Ben Gay is setting up a showing when I leave off my “jamin”) so instantly I knew this was circular-file material. Except I kept reading. Not only was it not concerned at all with me, it was obsessed with them. It was NOT oriented around any of the rules of  how customer service succeeds, not one. The only thing “remarkable” was that it made me feel like my special purpose in life was to have a pulse and a NRDS (our REALTOR ID #) to occupy one of their cubes. As long as I had a pulse and a NRDS, that’s all they needed. Who cares what I need?

Worse, I knew Hannah received one last week. So if I got mine this week, I knew I was a tier 2 candidate. I mean, who wouldn’t want Hannah Parsons over Benjamin Day (I’m totally serious, the former is much easier to broker!)? But I used to recruit agents, I did this stuff (I have the scrapbooking paper to prove it!), and when one company goes out on patrol for agents, EVERYONE you could want knows about it within a day. So you better hit all the good ones at once. While this letter was far from flattering, I already knew they had a first wave of “choice” agents that they thought were most recruitable, and I was not in that group. Save the best for later? No. It does not work that way.

The second piece of mail I received today was a handwritten thank you note. From Lee Bolin. Lee owns Saddletree and Symphony Homes. He has for 15 years. My clients said of Lee “I want him to be my Daddy, I love that guy.”

"I _____ Bigger than you, Ben. And, Thanks for bringing your people by"

Lee is like a friendlier version of Jack Palance’s Curly.

Lee wrote me a handwritten note. And mailed it to me. The dude has no email address. But he has the power of the pen.

Now you tell me: when one of these companies is involved in future real estate transactions, which one has my attention? Which one has the greater opportunity for success? Which one is more durable? You tell me. I think the answer is pretty obvious.

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

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.

Where to Buy 2010 Part VI: Red Lights

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.


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