Tuesday, November 25, 2014
A Buyer's Market for Luxury Homes?
“Inman Connect” is a semi-annual national conference for real estate agents. At the most recent gathering in June of this year, held in the beautiful city by the bay (San Francisco), we heard a lot of discussion about the luxury home market.
What is a luxury home? Are different strategies required when you are buying and selling in this market segment? Is it a good time to make a move into or out of this part of the market?
A common definition of “luxury” is that it is the top 10% of any market. It got us wondering about what that looks like in Denver. What is your guess – what is the home price that puts you in the top 10% of the market?
You’ll find the answer below, but make your guess first.
Don’t peek!
Do you have your answer?
The answer for metro Denver is $525,000. Ten percent of the residential properties in metro Denver that sold from October 2013 through September 2014 had an asking price that was above $525,000.
Does that surprise you? It surprised us. We thought the number would be higher.
Here are some additional facts. The cutoff for the top 5% is $600,000. Move up to $1,001,000 and you are in the top 2%. If you lay your head down at night in a place that has a price tag of $1.5 million, then 99% of the properties in the metro area are less expensive than yours.
The supply and demand pattern is different also. While houses with a price at $525,000 or above make up only 10% of the closed transactions over the last 12 months, they represent 37% of the currently available inventory.
In other words, almost 2 out of every 5 houses on the market right now have an asking price over $525,000. This represents 7.8 months of supply, meaning that it would take 7.8 months to sell all these homes if no more came on the market. In contrast, there is only 1.5 months of supply for homes under that price point.
Traditional wisdom says that inventory of less than 3 months indicates a seller’s market while inventory greater than 6 months indicates a buyer’s market.
We see the effect of this large inventory in the time it takes to sell upper end homes, which is 80 days on average. In contrast, half of the homes under $525,000 that come on the market will find a buyer within 11 days.
What does it all mean if you are in that “luxury” market of $525,000 and above? If you are a seller, you are in a buyer’s market. You have to be more accurate with pricing and you’re very unlikely to have the multiple offer feeding frenzy you hear so much about these days.
If you are a buyer … well, it is a buyer’s market. It is an excellent time to make a move up into this range, especially if the house you have to sell is in that heart of the market at $350,000 and below. You get to sell in a seller’s market and buy in a buyer’s market. In other words – it’s pretty much real estate heaven.
Courtesy of Mike Cooke of Colorado Home Realty (c)
Monday, November 24, 2014
Landscaping "Gifts" As Winter Sets In
Everyone knows to winterize sprinkler systems when cold temperatures arrive.
However, did you know that your landscaping could benefit also from some winterization and tender loving care during the winter?
It is worth spending some time and effort on your landscaping. We did a recent blog post about the fact that landscaping can contribute greatly to your property value – you can check it out here: Landscaping Improvements Protect Property Values.
Since landscaping can be an important feature in both the value and enjoyment you get from your home, we interviewed retired Master Gardner Jackie Burghardt to get some tips. She gave us some great tips on how to take special care of your landscaping during the winter season.
Here is the list:
Rake leaves from lawns and out of plant and shrub beds. Leaves left on the grass promote mold growth. Letting leaves remain in planting beds give a place for plant pests to over-winter. When spring comes, they attack your budding and blooming plants with a vengeance.
Do any of your trees need attention by a tree trimming company? Get it done during the winter. Prices are cheaper as winter begins because the arborists are not as busy as they are in the spring, summer and fall.
Think about planting bulbs. The beginning of winter is the time to plant tulip, hyacinth, crocus and daffodil bulbs if you want these plants to be part of your spring and summer landscaping in 2015.
Conversely, think about digging up bulbs. Dig up canna lily and dahlia bulbs after the first freeze, when the leaves turn black. Put them in sphagnum moss in a bag in the garage. The bulbs of these species won’t survive the winter in the ground but they will survive when stored properly in the garage. Replant them when spring arrives.
If we have two to three weeks with no moisture and the daytime high gets up to 42 degrees or more, give plants and trees some water. Use a soaker at a low flow rate so that is can soak into the cold ground.
Water lawns once or twice during the winter using a garden hose when temps are in the 40s. It will help them come back faster in the spring.
Follow these simple recommendations and your landscaping will reward you with health and color when spring arrives. It will increase your enjoyment of your property and will reward you financially if you are thinking about putting your house on the market next year.
Courtesy of Mike Cooke of Colorado Home Realty. (c)
However, did you know that your landscaping could benefit also from some winterization and tender loving care during the winter?
It is worth spending some time and effort on your landscaping. We did a recent blog post about the fact that landscaping can contribute greatly to your property value – you can check it out here: Landscaping Improvements Protect Property Values.
Since landscaping can be an important feature in both the value and enjoyment you get from your home, we interviewed retired Master Gardner Jackie Burghardt to get some tips. She gave us some great tips on how to take special care of your landscaping during the winter season.
Here is the list:
Rake leaves from lawns and out of plant and shrub beds. Leaves left on the grass promote mold growth. Letting leaves remain in planting beds give a place for plant pests to over-winter. When spring comes, they attack your budding and blooming plants with a vengeance.
Do any of your trees need attention by a tree trimming company? Get it done during the winter. Prices are cheaper as winter begins because the arborists are not as busy as they are in the spring, summer and fall.
Think about planting bulbs. The beginning of winter is the time to plant tulip, hyacinth, crocus and daffodil bulbs if you want these plants to be part of your spring and summer landscaping in 2015.
Conversely, think about digging up bulbs. Dig up canna lily and dahlia bulbs after the first freeze, when the leaves turn black. Put them in sphagnum moss in a bag in the garage. The bulbs of these species won’t survive the winter in the ground but they will survive when stored properly in the garage. Replant them when spring arrives.
If we have two to three weeks with no moisture and the daytime high gets up to 42 degrees or more, give plants and trees some water. Use a soaker at a low flow rate so that is can soak into the cold ground.
Water lawns once or twice during the winter using a garden hose when temps are in the 40s. It will help them come back faster in the spring.
Follow these simple recommendations and your landscaping will reward you with health and color when spring arrives. It will increase your enjoyment of your property and will reward you financially if you are thinking about putting your house on the market next year.
Courtesy of Mike Cooke of Colorado Home Realty. (c)
Monday, November 3, 2014
DON'T GET BURNED BY SOLAR
Solar energy is HOT, pun intended. It's getting
lots of attention these days.
Solar is also COOL! A bit of a
status symbol & statement to
the world that you are "going
green".
We're big fans of solar, in theory.
We're sure that 100 years from now the
world will largely run on solar power. It's the wave of the future.
However, it may not be the wave of the immediate future. We
are having some issues when it comes to selling houses with
leased solar power installations. Here's a summary:
Issue No. 1: You are not going to get more money for the
house due to the solar installation when you sell it.
There is a big solar leasing company telling people that solar
increases the value of their home by 15%. We're pretty sure the
researchers that came up with that figure were taking advantage
of Colorado's new liberalized marijuana laws at the time they
were completing their evaluation.
A valid comparison involves looking at homes with solar
compared to nearby homes without solar. Let's look at one
example:
The property at 16437 East Hialeah Drive is a 2,021 square foot
2-story home with unfinished basement. It had solar and it sold
for $316,000 in September 2014. The house next door is also a
2-story home with 2,347 square feet and partly finished
basement. Being a little bigger and with some basement finish,
you'd expect it to sell for $10,000 to $15,000 more - and it did
just that with a sale price of $329,000 in July 2014. The solar on
the first house did not create any increased value for it.
We've done this for a number of paired home sales around metro
Denver and pretty much find the same result -- almost no value
can be attributed to the solar installation.
Issue No. 2: You've got to get the buyer of your house to
assume the lease when you sell it. No big deal, right?
Actually, it can be a big deal. First of all, the buyer has to qualify
to assume the lease. The buyer must also want to assume the
lease. This can be an issue due to the lease buyout provisions.
Every time the house changes hands, the seller risks paying a
huge buyout cost if the buyer will not agree to take over the
lease. The buyouts often run $10,000 to $25,000. We've seen
one where the buyout was over $30k!
Many buyers balk at taking on this liability. Even though the
buyout cost decreases with time, the leases run for 20 years and
buyout costs remain high during the first 10 years or more. Many
buyers are concerned about what will happen when they go to
sell the house. They wonder if their buyer will want the solar or
will they get left holding the bag. This leads right into Issue No.
3.
Issue No. 3: We're pretty sure that solar technology is going to
change and evolve rapidly. We worry that the solar cells being
used in today's products will be out of date in a few years.
After all, how much can you get for your five year old computer
compared to what you paid for? Probably nothing and you may
even have to pay to dispose of it since you can't just dump
electronics in your trash can.
We can imagine that the same may be true of today's solar
panels. They may be close to worthless in five years and yet
you'll still have a huge lease buyout cost. This should make you
and any subsequent buyer think twice about the advisability of
solar.
Conclusion: We are sure there is much more to solar than just
the three items listed here. We have not done extensive
research. However, we wanted you to be aware of some issues
that have come up.
Courtesy of Mike Cooke, Colorado Home Realty (c)
lots of attention these days.
Solar is also COOL! A bit of a
status symbol & statement to
the world that you are "going
green".
We're big fans of solar, in theory.
We're sure that 100 years from now the
world will largely run on solar power. It's the wave of the future.
However, it may not be the wave of the immediate future. We
are having some issues when it comes to selling houses with
leased solar power installations. Here's a summary:
Issue No. 1: You are not going to get more money for the
house due to the solar installation when you sell it.
There is a big solar leasing company telling people that solar
increases the value of their home by 15%. We're pretty sure the
researchers that came up with that figure were taking advantage
of Colorado's new liberalized marijuana laws at the time they
were completing their evaluation.
A valid comparison involves looking at homes with solar
compared to nearby homes without solar. Let's look at one
example:
The property at 16437 East Hialeah Drive is a 2,021 square foot
2-story home with unfinished basement. It had solar and it sold
for $316,000 in September 2014. The house next door is also a
2-story home with 2,347 square feet and partly finished
basement. Being a little bigger and with some basement finish,
you'd expect it to sell for $10,000 to $15,000 more - and it did
just that with a sale price of $329,000 in July 2014. The solar on
the first house did not create any increased value for it.
We've done this for a number of paired home sales around metro
Denver and pretty much find the same result -- almost no value
can be attributed to the solar installation.
Issue No. 2: You've got to get the buyer of your house to
assume the lease when you sell it. No big deal, right?
Actually, it can be a big deal. First of all, the buyer has to qualify
to assume the lease. The buyer must also want to assume the
lease. This can be an issue due to the lease buyout provisions.
Every time the house changes hands, the seller risks paying a
huge buyout cost if the buyer will not agree to take over the
lease. The buyouts often run $10,000 to $25,000. We've seen
one where the buyout was over $30k!
Many buyers balk at taking on this liability. Even though the
buyout cost decreases with time, the leases run for 20 years and
buyout costs remain high during the first 10 years or more. Many
buyers are concerned about what will happen when they go to
sell the house. They wonder if their buyer will want the solar or
will they get left holding the bag. This leads right into Issue No.
3.
Issue No. 3: We're pretty sure that solar technology is going to
change and evolve rapidly. We worry that the solar cells being
used in today's products will be out of date in a few years.
After all, how much can you get for your five year old computer
compared to what you paid for? Probably nothing and you may
even have to pay to dispose of it since you can't just dump
electronics in your trash can.
We can imagine that the same may be true of today's solar
panels. They may be close to worthless in five years and yet
you'll still have a huge lease buyout cost. This should make you
and any subsequent buyer think twice about the advisability of
solar.
Conclusion: We are sure there is much more to solar than just
the three items listed here. We have not done extensive
research. However, we wanted you to be aware of some issues
that have come up.
Courtesy of Mike Cooke, Colorado Home Realty (c)
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