Denver Colorado Real Estate

Pending Home Sales Slip in July but up Strongly from One Year Ago

From RISMEDIA:

Pending home sales declined in July but remain well above year-ago levels, according to the National Association of REALTOES®. All regions show monthly declines except for the West, which continues to show the highest level of sales contract activity.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, slipped 1.3 percent to 89.7 in July from 90.9 in June but is 14.4 percent above the 78.4 index in July 2010. The data reflects contracts but not closings.

Lawrence Yun, NAR chief economist, says sales activity is underperforming. “The market can easily move into a healthy expansion if mortgage underwriting standards return to normalcy,” he says. “We also need to be mindful that not all sales contracts are leading to closed existing-home sales. Other market frictions need to be addressed, such as assuring that proper comparables are used in appraisal valuations, and streamlining the short sales process.”

Read the entire article here.

The one thing that you need to remember here is that the tax credit had just expired in June of last year and I believe that there was a tax credit hangover that slowed market movement last summer.  It is good to see that numbers are above where they were last July and maybe people are getting over not having the tax credit anymore.  And, I do agree that we will continue to see strength if they ease the mortgage underwriting standards a little bit.  Don't get me wrong, we still need standards, but they are so strict right now that it has definitely hurt the residential real estate market here in the Denver Metro area and the economy as a whole.

The Week in Review (Ending August 26, 2011)

From Fidelity National Title:

The Week in Review

MONDAY, August 22nd

With no economic data scheduled for release today the markets and economists were looking ahead to a fairly light economic calendar this week that will conclude with remarks from Fed Chairman Ben Bernanke from their annual gathering in Jackson Hole. Stocks ended modestly higher after a see-saw session that started with early gains. The Dow was up 0.3% to close at 10854; The NASDAQ and S&P were also slightly higher by 0.2% and 0.1% respectively. West Texas intermediate was up roughly $2 to $84 a barrel while gold rallied once again to breach $1900 a troy ounce.

TUESDAY, August 23rd

New home sales fell 0.7% in July to an annualized pace of 298k, compared to market expectations for a small increase to a rate of 315k. New home sales are now 6.8% above their year ago level in July 2010. At just under a 300k annual rate, new home sales remain exceptionally weak. The inventory of new homes available for sale fell 0.6% to a record low level of 165k which represents a 6.6 month-supply at the current sale pace. Home prices were up from one year ago; median sales prices gained 4.7% from July 2010 to $222,000 as average prices gained 8.0% to $272,300. New home sales remain slow and continue to face competition from the large number of distressed properties on the market. Demand remains constrained by slow job growth, tight credit and higher energy costs. It will be a rebound in the broader economy that would restore demand drivers and get homebuilding and new home sales back on track.

WEDNESDAY, August 24th

The MBA mortgage applications index fell 2.4% to 699.1% for the week ending August 19. This was the first decline in the past four weeks leaving the index 19.7% below its year ago level. The purchase index dropped 5.7% on the week as the refinance index slipped 1.7%. Application activity remains weak and range-bound, fluctuating in response to rate movements. Contract mortgage rates moved higher last week with the 30-year fixed climbing to 4.39% from 4.32% previously.

New orders for durable goods jumped 4.0% in July, better than expectations for a 0.2% gain. The increase was led by surging transportation orders for civilian aircraft and motor vehicles. Excluding the transportation sector, durable goods orders rose 0.7% last month. Stronger demand for big ticket items bodes well for the economy. Capital investment will likely provide a boost to third quarter GDP.

THURSDAY, August 25th

Jobless claims rose 5k to 417k for the week ending August 20. Additionally, claims were upwardly revised in the prior week. Claims remain stubbornly above the 400k level indicating fairly stagnant labor market conditions with continued layoffs and little net hiring. Layoffs remain at a relatively high level with little or no trend improvement.

FRIDAY, August 26th

Second quarter GDP was revised lower to a 1.0% rate of growth in the preliminary estimate from the original, advance estimate of 1.3%. Favorable adjustments to consumer and capital spending were more than offset by downward adjustments to inventory investment and net exports. The revisions to GDP show that the economic recovery had very little momentum last quarter with the exception of corporate profits, which rose 3.0%. Stronger profitability could provide a much needed lift in growth and jobs heading into the third quarter.

Fed Chairman, Ben Bernanke, in a speech today from the Fed's annual conference in Jackson Hole said that the recovery from the shocks to the economy of the past four years has been weaker than expected but he believes the economy can return to its full growth potential over time. The Fed Chief did not speak directly about a third round of quantitative easing but asserted that they have additional tools to use if necessary and that the September FOMC meeting will be expanded to two days to discuss it. Bernanke also called for coordination of fiscal policy and monetary policy to better meet current economic challenges.

More of the same.  Weak numbers, but we haven't fallen off the cliff yet.  A couple of weeks ago the initial jobless claims were below 400K for the first time in about 19 weeks, but that glimmer of hope was just a blip.  And, with Bernanke just saying that it will take time leaves me less than inspired.  So, I guess we shall see what we shall see...nothing very positive, but maybe the economy can heal itself?

Back on Market - New Roof - Nicely Remodeled - Price Reduced $18,000

New Price - Reduced $18,000!!!  New roof to be put on in early September 2011.  Brand new gutted kitchen with new stainless appliances including a built-in microwave.  Also, a new solid surface countertop and new maple cabinets w/ pull-out drawers.  New 3/4" brazilian oak hardwood floors thru-out main floor.  3 bedroom, 3 bathroom home. Kitchen is open to family room.  Nice, relaxing yard.  Quiet street with minimal traffic.  Access to all 4 Highlands Ranch recreation centers.  New carpet and much more.

 

www.549Arden.com

 

Search Metro Denver Area Real Estate Foreclosures Easily

Search all Metro Denver Area Real Estate for Sale

 

 

Sean Patrick Reilly

Cherry Creek Properties

303.520.8700

Wacky W - A Fun Bike Ride(s) to Support a Great Cause

From the Douglas County Examiner:

The First Annual WackyW bike race will be held September 10, 2011 (9-10-11) to directly benefit Douglas County Schools. The race has three options, the family course of 7 miles, the long course of 34 mile and the longer course of 55 miles.

Pricing for the races is as follow with $5 of the family race and $10 from the long and longer races going directly to the school of your choice.
Family Ride - $35 - August 12 - Sept 9 ($40 - day of event)
 
Long/Longer Route(s) - $60/70 - August 12 - Sept 9 - $75/85 - day of event

"The cool thing about this event is participants pick the school where their money goes and the $$ are straight to PTO's - nowhere else!" Susie Wargin

Read all about the race here - links to register can be found here.

This looks like a lot of fun to ride or volunteer.  Plus, it supports the Douglas County school system.

Vacancy Rates Remain Low in the Metro Denver Area

From the Denver Post:

The vacancy rate for for-rent condos, single-family homes, and other small properties in metro Denver fell from the second quarter of 2010 to a new second quarter low of 2.6 percent during 2011, the Colorado Division of Housing reported today.

The vacancy rate was 3.8 percent during the second quarter of 2010 and was 1.4 percent in the first quarter of 2011.

According to the report, the vacancy rate varied among types of property.

Triplexes had a vacancy rate above 4 percent while the vacancy rate for detached houses was 2.3 percent and 3.7 percent in rental condominiums.

Duplexes had the lowest vacancy rate at 1.2 percent.

Read the entire artilcle here.

From my experience of seeing how quickly homes that my investors have rented, I have to agree with this - there is a huge demand for rental properties right now.  In fact, one investor I work with put an ad on Craigslist to rent his home at 7 am and had to pull the ad at 9 am because he could not handle the calls.  He ended up renting the home for his asking price for 2 years with an option for the third your to a very viable renter.  The rental market is red hot right now - call me if you have interest in adding a rental property or two to your portfolio.  Or, click here to get started searching for a rental home.

Housing Affordibility at Highest in 20 Years

From Realtor Magazine:

Housing affordability continued to be near record highs in the second quarter, hovering near its highest level in the 20-plus years it has been recorded, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index.

About 72 percent of all new and existing-homes sold in the second quarter of the year were affordable to families earning the national median income of $64,200, according to the index. The record high remains 74.6 percent, which was reached last quarter.

"At a time when home ownership is within reach of more households than it has been for more than two decades and interest rates are at historically low levels, the sluggish economy and the extremely tight credit conditions confronting home buyers and builders remain significant obstacles to many potential home sales," says Bob Nielsen, chairman of the National Association of Home Builders. "That said, however, some housing markets across the country have stabilized and are beginning to show signs of a budding recovery."

Read the entire article here.

Residential housing prices as affordable as they have been in 20 years and interest rates at or near historic lows - one would think that the real estate market is turning, or at it's bottom.  I'm not ready to quite say that, but if you are thinking about buying sometime in the future, now really is not a bad time to take a look.  Interest rates may or may not bounce in the near future, but if they do, you will be paying a bit more for your home.  If you are financing $250,000 @ 4.5% on a fixed rate 30-yare loan, your monthy principal and interest (does not include taxes, HOA's, Insurance, MI, or anything else) would be $1,267.  If interest rates rise 1.0% to 5.5%, then your payment would be $1,419 - a difference of $152/ month, or $1,824 / year.  Real Estate is a longer term investment - the market may go lower, but do you know where it will bottom?  Also, with the low vacancy rates here in the Metro Denver area, one would imagine that rental rates will continue to rise - a fixed interest rate loan guarantees that your principal and interest payments will remain the same for 30 years (insurance, taxes, and HOA's can flucutate but typically not by much).  Start your real estate search here.

Investors Renting Out More of their Homes

From Housing Wire:

Investors are pulling back from the housing market as the flipping model loses speed on weak homebuyer demand, according to the latest  Campbell/Inside Mortgage Finance survey.

The HousingPulse Tracking Survey showed demand for properties is low, forcing investors to rent out half the homes they acquire. With few investors satisfied with this model, July investor activity declined, making it the third consecutive monthly drop.

Investors accounted for 19.6% of home purchases last month, down from 23% in April and the lowest level in the 12 months.

Read the entire article here.

I don't think the flipping model here in the Metro Denver area is dead, but you have got to find the right deal and you really don't have any room for error in your fix-up costs.  Also, you have got to price the home right for re-sale and that really needs to be priced on the lower end if you want to sell it in a quick manner.  Investors, however, who are buying, fixing and renting homes here are making great returns as we are at or quite close to the lowest vacancy rates that we have seen in a long, long time.  There are neighborhoods where you can buy a home for close to $100,000, put $10,000 - $20,000 and rent it out for $1200+ to qualified renters.  If you have any interest in further information regarding buying a home and renting it out, give me a call at 303.520.8700.

The Week in Review (Ending August 19, 2011)

From Fidelity National Title:

The Week in Review

MONDAY, August 15th
The NAHB housing market index was unchanged at a level of 15 in August from July. Homebuilder sentiment has been very weak with the index score remaining around these all time low levels for about two years now suggesting little has changed in the housing market during that time. In August, there was a slight upward slant in single family home sales and buyer traffic through model homes but sales projections six months from now were downgraded. It looks like more of the same going forward with weak demand for homes expected despite high affordability conditions.

TUESDAY, August 16th
Housing starts fell 1.5% in July to an annual pace of 604k, and are now 9.8% above their year ago level. The fluctuations in the level of housing starts have been relatively subdued, averaging an annual pace of 582k for the past two years. The outlook is for a tepid pace of construction activity to continue with uncertainty surrounding the time when the housing recovery will gain traction. Housing permit issuance, often used as a proxy for future construction activity, fell 3.2% in July to a 597k annual rate suggesting that new construction will continue slowing somewhat in the near term.

WEDNESDAY, August 17th
The MBA mortgage applications index rose 4.1% to 716.4% for the week ending August 12. The gain was led by an 8.0% jump in refinancing applications; purchase applications declined 9.1% on the week. With all upheaval in global financial markets, the safe haven bid for Treasuries this week resulted in much lower yields and mortgage rates followed suit. Contract mortgage rates fell with the 30-year fixed rate down 5 bps to 4.32% last week.

The producer price index rose 0.2% in July as energy prices fell 0.6% last month. Overall, producer prices are up 7.2% over the past year but have dropped off dramatically in the past three months. Excluding food and energy costs, the core PPI shot up 0.4% on the month and has gained 2.5% over the past year. Some modest inflationary pressures have built up at the wholesale level but they are expected to ease the balance of this year as energy costs continue to recede.

THURSDAY, August 18th
Jobless claims increase 9k to 408k for the week ending August 13. Except for last week when claims were at 399k, initial claims for unemployment have been above 400k for 19 weeks straight. The level of claims indicates very sluggish labor market conditions with little improvement in the pace of layoffs since March.

Existing home sales fell 3.5% in July to an annual rate of 4.67 million compared to market expectations for a small increase to a level of 4.85 million. This was the third decline in the past four months related in large part to a high number of contract cancellations. The NAR cites tight lending standards and valuations coming in below negotiated prices as the reasons for so many contract failures. Even with the recent declines, existing home sales are up 21.0% from July 2010. Distressed sales were 29% of the total; first-time buyers comprised 32% of the total up from 31% in June while investors made up 18% of all transactions. All cash sales, which come from all of the above categories, accounted for 29% of transactions. Existing home sales are weak but remain within the range seen in the last couple of years. The housing market recovery continues to be thwarted by a weak economy and stagnant labor market conditions. Economists expect home resales to bump along the bottom the remainder of the year with a price and sales recovery possibly beginning sometime in 2012.

The consumer price index jumped 0.5% in July, higher than an expected gain of 0.2%. The CPI is now 3.6% higher on the year but the annualized gain is only half that or 1.8% in the last three months. Price gains were broad based across most categories. Excluding the volatile food and energy categories, the core CPI gained 0.2% on the month and is up 1.8% on the year, well within the Fed's target range for inflation.

FRIDAY, August 19th

No news.

Again, noting really new to report here.  I still feel like we are bouncing along the bottom and I am not sure if the bottom is going to give way, or we will start to claw out from here.  I would certainly like to see us start to claw out of this mess, but there has been no real catalyst to get that started.  I feel like it's a fend for yourself atmosphere.  Ultimately, the economy should correct itself, but I am getting the feeling that it's going to be later rather than sooner.  As I have said all along, it's the jobs!!! But, the initial jobless numbers have jumped back over 400K after showing somes signs of life last week - falling to 399K.  The economy needs jobs and someone needs to get that figured out soon.

Rates on 30-Year Mortages Drop to All Time Low

From the Denver Post:

WASHINGTON—The average rate on a 30-year fixed mortgage has fallen to its lowest level on records dating to 1971.

The rate on the most popular mortgage dipped to 4.15 percent from 4.32 percent a week ago, Freddie Mac said Thursday. Its previous low of 4.17 percent was reached in November.

The last time long-term rates were lower was in the 1950s, when 30-year loans weren't widely available. Most long-term home loans lasted 20 or 25 years.

Read the entire article here.

Amazing.  Mortgage rates here in the Metro Denver Area continue to trickle down.  How far will they go?  Who knows at this point, but this truly is amazing.  I know there is really not much good news about the economy and the residential real estate market has been beaten on by news outlets without mercy, but things will change.  The question is when?  And, the other question is where will interst rates be when the market does turn around?  Let's say you want to finance $250,000 at the going rate of  4.15% - that will equate to a monthly principal and interst payment of $1,215.  If the residential market drops 10% and that $250,000 you were going to finance is now $225,000, but the interest rate is at 5.15% (say 1% higher), your payment on the reduced amount at the higher interest rate would be $1,228.  I am just using this as an illustration as to the effect that interst rates have on you overall payment.  Will interest rates rise 1.0% and property values drop another 10%? - I truly don't know.

While it would be nice for buyers to see prices continue to drop and interest rates drop or remain the same, it doesn't always work out that way.  Buying a home is a long term proposition for most and while there may still be some volatility in the residential real estate market - can you pick the bottom?  Better yet, can you pick the bottom of where interest rates will be and the bottom of the real estate market?  If so, leave me a comment and let me know.

Want to play around with some mortgage calculators that allow you to see the effect of interest rates versus purchase prices, or the true value of owning versus renting?  Click this link and go to my mortgage calculators page and play around for a bit.

Freddie Offers Cash Incentives for Buying Condos

From Realtor Magazine:

Freddie Mac’s HomeSteps unit is offering cash to buyers willing to purchase one of its foreclosed condos that has been lingering on the market. HomeSteps is hoping to unload some of its high inventory of foreclosed condos through the incentive program, known as HomeSteps Condo Cash.

Through the “Condo Cash” program, condo buyers of HomeSteps properties can get up to $1,500 to help pay for standard home owner association dues.

Read the entire article here.