In recent weeks, I’ve been visiting offices and getting updates on the market. In this week’s edition of Weekly Market Watch I felt it appropriate to provide you with a Q&A with answers to many of the questions I am asked as I make my visits. I hope you enjoy this edition of Weekly Market Watch:
- What will the industry do to adjust to the new market demand or lack thereof?
- I think we’ve been adjusting in recent years as the market has struggled with the economic downturn.
- But at Coldwell Banker we’ve grappled with the challenging market by working to grow our business.
- We’ve launched a number of new initiatives, such as our relationship with Comcast, as well as CBConnect and more.
- We’ve instituted far-reaching new customer outreach campaigns both at the corporate level and through our agents.
- And we’ve launched more focused marketing campaigns, especially e-marketing, and deployed more advanced technology for our agents.
- Additionally, we’ve looked at this as an opportunity to recruit outstanding agents to join our team – people who have a strong track record of success and have been through these cycles.
- Although we’ve certainly had our challenges like everyone else, I’ve been encouraged by how we’ve weathered the storm and actually have grown business and market share in some regions.
- I guess I’m also optimistic that we’ve seen the worst of the downturn. Our market figures and reports from the field tell us things have improved tremendously over the past year.
- 2. How much more contraction can we expect?
- No one has a crystal ball, but the data I’ve looked at from our offices and the market in general tells me that we’ve seen the worst of the downturn and are heading back.
- I don’t mean to say that we’re back to normal – far from it. But we’ve seen solid improvement in many of our markets.
- Last year, much of the gains came from bargain hunters buying up foreclosures and other distressed properties…
- But since last fall, and especially this year, we’ve seen strong improvement in the mid-range and even some of the upper levels of the market.
- Our monthly million-dollar housing report found high-end home sales here in the Denver metro area jumped to their highest level in two full years in June.
- Still, I also realize that as much as we’d all like it, I don’t think we’re going to have a V-shaped recovery in the economy or the housing market.
- This rebound is looking like it will come in fits and starts – more of a stair step improvement than a straight line.
- We’ve certainly bounced sharply off last spring’s recessionary lows. But growth has slowed in the aftermath of the federal tax credit expiration.
- We also face economic headwinds in the months ahead – high unemployment, very slow GDP growth and consumer spending, and concerns about the debt markets.
- Nonetheless, I’m optimistic by improvement we’ve seen in sales in Colorado.
- Couple that with an improving stock market, affordable home values and record-low mortgage rates and I think you have a solid foundation for a steady housing recovery.
- 3. What continues to insulate or separate the Denver metro area from other markets?
- The Denver metro area’s housing market has long been one of the most sought-after– not only in Colorado, but across the country.
- The demand for housing here has historically been far greater than most other regions for a number of reasons:
- First and foremost, the astounding entrepreneurial success that continues to spawn high-paying jobs and affluent employees looking for homes.
- Also, there’s a tremendous quality of life here that few regions in the world can match – outstanding schools, a wealth of recreational activities, five-star restaurants…and so much more.
- Also, we have some of the very best universities in the world here in Denver and in Colorado – institutions that are producing tomorrow’s entrepreneurs.
- Buyers have always been willing to pay a premium for homes here, and sellers have historically received strong returns on their housing investments.
- Our latest Denver million-dollar home sales report illustrates this point: Not only were sales up to their highest level in two years, sellers got on average 90% of their asking price.
- So while the Denver metro area has not been immune to the economic and housing downturn of the past few years, this region may be bouncing back stronger than other parts of the country.
- I would say that long-term investors who have waded into the market of late will be rewarded for their efforts with solid returns over the years.
- 4. What influence does the nation’s economic crisis have on real estate?
- It’s an interesting question. It will be hard for the market to come all the way back to normal until we get our house in order, both in terms of the economy and what’s happening in the government.
- With a large budget deficit, the government must find a way to begin closing the gap. The only two ways of doing that are by cutting spending and increasing revenue – most likely both.
- Increased revenue will come as the overall economy recovers, but in the meantime it could mean increased taxation – perhaps sales and income tax.
- On the reduction side of the equation, closing the gap will likely mean job cuts and more unpaid furloughs of state employees.
- Both scenarios mean less disposable income for homeowners and potential homeowners to spend on housing.
While all of this will certainly have an impact on the housing recovery, I honestly believe it’s more than offset by the positives we’re seeing: buyers taking advantage of record-low mortgage rates and attractive prices, as well as a slow but steady improvement in stock portfolios, the jobs picture and the overall economy.
Overall, the long-term future of real estate is bright.