Coldwell Banker Weekly Market Watch, June 10

What’s Next For Colorado Housing? cbwesternregion | June 10, 2010 at 10:56 pm | Categories: Uncategorized | URL: http://wp.me/pKanM-2x

This week I was interviewed by the Denver Post which did a large spread on the recent fall of homes under contract.  Some of the specifics:

• The number of homes put under contract in May dropped sharply compared with the previous month, largely an effect of the expiration of the first-time-homebuyer tax credit
• There were 3,883 homes under contract last month, a 41.3 percent decline from the 6,616 homes under contract in April, according to an analysis of Metrolist data released Tuesday.  The number was down 27.3 percent compared with the 5,343 homes under contract during May last year.

As I mentioned in the interview, these are numbers we were expecting because of the incredible frenzy to get properties under contract in April as part of the home buyer tax credit.  We were all so busy closing tax-credit-related deals in April, we had little time to put more properties under contract.  Now, as you know, we’re getting back out there and calling clients.  I anticipate that we should bounce back up in June.

What I am watching is inventory levels right now.  There were 22,016 homes on the market last month, up 6.2 percent from 20,734 in the same month last year and up 2.1 percent from 21,565 in April.  A month from now we’ll look at this number again to compare.

Also recently released was the S&P/Case Shiller indices for the first quarter, which indicated some weakening in home prices nationwide.  The National Home Price Index fell 3.2% in the first quarter of 2010, but remained above its year-earlier level.  Analysts said housing prices have rebounded from crisis lows, “but recently have seen renewed weakness as tax incentives are ending and foreclosures are climbing.”

Interestingly, Denver is one of the anomalies.  In fact, we saw nearly a 1% increase in prices from the year earlier and a 4% increases year over year.

So what to make of all of this?  A couple of things: First of all, these reports are a strong reminder that real estate – like politics – is a very local business.  By all signs, the housing market recovery is slowly moving forward but the speed and degree of the rebound varies from region to region, from county to county and even from town to town.

While the S&P/Case-Shiller indices show our local region’s prices up modestly from last year’s crisis levels, many of our cities have seen even higher increases.  What’s really happening is that the mix of homes that are selling in our region is changing.  A year ago, most sales seemed to be foreclosures and other distressed properties.  Today, we’re seeing many more sales in the mid- and even upper-end of the market which is driving up median prices for the region.

In our recent Coldwell Banker Residential Brokerage luxury report, the number revealed that million-dollar home sales in the Denver metro area rose sharply in May.  A total of 55 homes sold for more than $1 million in May, up nearly 62 percent from May 2009’s total of 34 sales.  Home sales were down slightly from April’s level of 58 transactions.  The median sale price of luxury homes last month was $1.28 million, up 6.7 percent from the previous month and up fractionally from a year ago.

Also encouraging, homes are selling faster than they did the previous month and a year ago.  May closings took an average of 122 days to sell compared to 140 in April and 131 in May 2009.  And home sellers are getting a higher percentage of their asking price – 93 percent compared to 90 percent in April and less than 83 percent a year ago.

So, while the improvement in the market so far this year gives us reason for optimisim, we must be mindful that we have our share of storm clouds overhead.  The federal home buyer tax credit has ended and it’s uncertain what that will mean to the market.  We won’t really know for at least three more months.  The financial markets, while greatly improved over last year, are still seeing a lot of volatility of sale.  And our unemployment rate remains stubbornly high.  Nonetheless, it’s important to remember that economic recovers are rarely smooth.  There will be potholes along the road, and lots of fits and starts.  But given all the data in recent months – and what I’m hearing from Agents and buyers out in the market – I’m cautiously optimistic that our local market is indeed on the road to recovery.

Now, let’s take a look at this week in local real estate:

• Boulder/Longmont— Longmont reports traditionally, May and June are the months that our buyers and sellers are on vacation or have family events, graduations, reunions, camping and enjoying all that Colorado has to offer.  Showings on our listings are holding steady.  The listing prices or properties being shown are still all across the range from entry level to high-end.  Now that the great Colorado summer weather has arrived there is renewed energy in the air.  Sellers are becoming more reasonable on the pricing of their homes…buyers are also more realistic about what they are getting for their money.  Prices are still very reasonable and interest rates are low.  Now is the time to buy!!
• Colorado Springs— Our showings are starting to pick up again now that school is out and summer is in full swing.  Though sales activity has ticked down, our inventory still holds strong.  We just had a unit return from their yearlong tour of duty and hopefully they will be looking to take advantage of the extended tax credit for deployed military personnel.
• 

  Evergreen/Conifer— Evergreen reported there have been a total of 104 showings and previews in the month which reflects an earlier resumption in the normal level of activity than anticipated following the typical seasonal slump in mid-May.

• Denver Central – No information reported.
• Devonshire— With interest rates being extremely good at this time, it’s really helping to drive the market.  We still would benefit from more houses hitting the market as it would appease the pent up demand.  With yards looking great & flowers blooming homes are looking to be in good shape & very appealing to buyers.  Jobs reports are unsettling and hopefully  we’ll see an upswing in new jobs which will further help with consumer confidence. We’re still optimistic about a steadily improving real estate market and a good summer season.
• Loveland— The showings on our listings are down week or week, about 10%.  The average sales price remains in the low $200,000s for the area.  There continues to be great opportunities to buy a home at a very aggressive price.  Loveland saw a nice volume of entry level buyers taking advantage of the tax credit.  These buyers will be finalizing their purchases by the end of June.  Summer has arrived in the Rockies, the mountains are beautiful and now is a great time to find that new home and finance it with low interest rates.
• North Metro— Though May showed slightly fewer closings and new listings as compared to April, we’re beginning to see a resurgence of activity in June.  We have 15 new homes on the market for June with prices anywhere from $70,000 to $850,000.  The number of showings decreased slightly the last part of May but now with school out, we believe the showing activity will pick up.  The agents report that there continues to be multiple offers on homes that are priced around or under $200,000.  Inventory is lower at this time, which makes finding the right home for the buyer a bit of a challenge.  Open house activity is picking up as is the number of calls we have been receiving in our office from buyers.
• Parker— Listings have increased over the last week with only 1 in 4 being short sales. (Mortgage lender must approve the contract between buyer and seller).  We have about the same amount of buyers as the last couple of months because of very low interest rates, under 5.5%.  Showings have decreased about 35% and that is a yearly occurrence because of graduations and families going on their summer vacations.
• Southwest Metro – Our showings have been down for the last two weeks.  Listing opportunities have been good however Sellers are waiting to place their homes on the market.  We are still busy with Buyers despite the tax credit expiring.  Floor and open houses have been very steady & we have been able to obtain good leads from these two sources.  We’re seeing more activity with our higher price listings than the ones below $250,000.  It feels that people are just still busy with graduations and vacations.  We’re seeing clients waiting to list their homes.

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