THE DENVER POST NEEDS A BIT OF CHEERING UP OVER LOW INVENTORY

The Denver Post had an article recently about the low inventory in the metro Denver real estate market: "Metro Denver Struggles with a Record Low Supply of Homes for Sale", dated February 13, 2015.

They are feeling a bit "gloomy" about the whole matter.

If you are a regular reader of the CHR Buzz, the news of low inventory comes as no surprise to you.

The Denver Post was accurate about the historically low inventory. However, they failed to comment on the cause. The cause is not a DECREASE IN SUPPLY. In fact, about 3% more properties have changed hands in the first 45 days of this year versus the same period last year.

The cause of the low inventory is a significant INCREASE IN DEMAND, which causes the slightly increased supply to get sucked up as soon as it comes on the market.

There is good news in these supply & demand patterns!

The increased demand is a sign of a healthy economy. In addition, agents are finding ways for buyers to be successful in spite of the low inventory challenge as evidenced by more sales actually occurring so far this year.

We don't want you to be depressed!

Courtesy of Mike Cooke, Colorado Home Realty (c)

Wrap Up And Welcome 2015!

Its certainly going to be a chilly one, but a trip to Denver this New Year's Eve will not leave you cold! From the zoo, to parties and balls, to spectacular fireworks, Denver covers every member of the family.

http://www.denver.org/things-to-do/denver-holiday-events/denver-new-years-eve/

I wish you a fun and safe New Year's Eve and a very Happy New Year!

The Myth Of The Winter Slump

Here is a piece of conventional wisdom about real estate: It is slow in the winter. The holidays are busy. People are preoccupied with other things. No one is thinking about real estate.

Not so fast.

The stats tell a different story. If we look at the winter months of late December thru late March, it is not uncommon for 20% of the yearly sales to occur during this season versus the spring, summer and fall periods.

The supposed winter lull in real estate activity turns out to be more myth than reality. The truth is that each season of the year offers both opportunities and challenges. There is no perfect time to buy or sell and there is no time that is horrible either.

All of this is good news if you need to sell or buy a home in the next three months. You can be successful at wrapping up a winter real estate deal.

Let’s think about the situation for buyers first. While there are a lot of closings that happen during the winter selling season, it is true that there are fewer properties on the market during this time frame. It makes finding the place you want a little more problematic.

What can be different and favorable for buyers is that winter sellers tend to be serious and motivated. We don’t have a lot of discretionary sellers during the winter. Some sellers who have been overpriced make price adjustments and get very serious about consummating a sale. All things being equal, you can negotiate more aggressively.

The situation for sellers is not all that dissimilar. There are fewer buyers floating around but also fewer sellers with whom you must compete. In addition, the buyers that are active at this time of year are often people with deadlines. Something is driving them to take time during a busy season of the year to get out there and find a home. It is a good time of year for sellers to reevaluate just a bit and make a small price adjustment that will attract the attention of the serious buyers.

Myths die hard. The winter IS as good a time for doing real estate as any other time of year.

 

(c) Colorado Home Realty

Should You "For Sale By Owner"?

The article, "5 Reasons You Shouldn't For Sale by Owner,"

makes some interesting points about the disadvantages that arise when an owner sells a house without the help of an agent. However, a couple comments are in order.

Like most articles we see on this topic, the author cites studies that show that houses sold directly by an owner typically sell for substantially less money -- exactly 20% less in this case. The study that allegedly shows this is not referenced.

  

While it is true that For-Sale-by-Owner (FSBO) houses sell for less money than those with an agent involved, the differential is not nearly that large. Our own in-house studies show that For Sales By Owner properties in metro Denver typically sell for prices that are 4% to 6% less than the sale prices of houses sold where an agent is involved.

  

This differential is substantial and significant. Most agents charge sellers a fee in that range. Bottom-line: It turns out that most owners that sell without an agent end up doing all the work themselves, but don't put any more money in their pocket for their effort.  They are out their time and don't have any more money to show for it.

  

One of the reasons that By Owner properties sell for less money is because of Items #2 and #3 in the article. Through Multiple Listing Services, networking with other agents and internet agreements, real estate agents get much more exposure for a given property. Increased exposure means greater likelihood of finding a better and more motivated buyer than is found with limited exposure as a For-Sale-by-Owner seller. 

Be sure to read Item #1 in the article. It makes an excellent point that many By Owner property owners do not consider. 

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)

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)