Nation-wide, the housing market continues a return to proper form from the sickly state of nearly 5 years ago. Everywhere one turns, new indicators can be seen as to support this claim. In a Denver market where housing inventories are tight, highly motivated buyers are creating an environment where multiple bid offers on listed properties are becoming the norm. This growing trend is reflected by home prices that in turn are steadily on the rise both here at home in the 5280 city, and across the country.
As indicated by the following chart, the housing recovery continues across 20 cities covered by the S&P/ Case-Shiller Home Price Indices.
At year’s beginning, the composite was -as a whole- up 8.1% from 12 months prior. What this means is that of the 20 major cities included, the average home price increased slightly over 8% year-over-year (YOY). This gain is the greatest YOY gain experienced since June 2006 when home prices peaked
Well, The S&P/Case-Shiller Home Price Index measures the average change in value of residential real estate given a constant level of quality. It is included in the S&P/Case-Shiller Home Price Index Series which seeks to measure changes in the total value of all existing single-family housing stock. The Index can be qualified into single city areas as to gain specific quantifiable information.
The thing that is so exciting about the Case-Shiller Home Price Index –Both from a Consumer and Broker’s standpoint- is that the data is a “third party” source that provides unbiased data on the state of the industry. The index is followed closely by agents, brokers, investors, and other real estate industry professionals as to gain a feel of overall trends within various markets.
According to Denver’s Case-Shiller, home prices in Denver have rebounded to their 2007 levels.
Why is this exciting?
Well, the home price index for January, 2013 was 134.17, meaning that the local market home resale prices averaged 34.17 percent higher than they were in the bench mark year of January, 2000. The last time that Denver had reached this price level was back in October of 2007 when the Index was reported at 136.09. As most can attest, a lot has happened between then and now so this return to a strong showing in housing sales pricing comes as a joy to many.
The numbers do not lie.
Year-Over-Year, home prices in Denver rose 9.2% in January 2013.
As data from non-biased parties such as S&P Case-Shiller continue to roll in, the current “housing recovery” continues to be supported. Denver seems to be holding strong in the midst of the city’s current record price appreciation that goes back to 2011. January marked the 13th straight month of year-over-year gains, which were preceded by 18 straight months of declines.
Being that the Denver market is running so lean on inventories, prices are sure to keep steadily on the gain. Gains that are expected to reach double-digit returns in the very near future. With Denver mortgage interest rates being so low (As of March 26th, 2013 3.46% avg.) this will undoubtedly continue to create a feverish environment with a hyper-affordability appeal.
These factors -coupled with the understandable element of pent-up buyers that have been patiently waiting for the market to show improvement and lend steady signs of stability before re-entering- further prove that (pardon the cheesy cliché) NOW, MORE THAN EVER, IS THE TIME TO BUY!
For years we’ve heard economists say the housing market will never recover until the overall economy recovers. Guess what, now the experts believe the housing sector may actually be the driving influence in the recovery.
Here are four reports published in the last month that affirm this idea:
“In terms of its contribution to real GDP, residential fixed investment has been a positive – albeit modest – force over the most recent four quarters, marking its longest span of back-to-back positive results since 2005.”
“The [overall] resumption in residential activity cannot be understated as the long awaited housing recovery should help buoy consumer confidence and provide a mild lift to second half economic output after what was likely a disappointing first half of the year.”
“The data from the past month collectively point to decelerating economic growth, but growth nonetheless…However, despite signs of deteriorating momentum for economic activity, housing continues to be a bright spot as news from the housing market has been relatively upbeat, presenting a rare upside boost to the economy.”
“As we look back at previous major housing recoveries, 1975 and 1991 began with negative jobs growth…In each case, the home sales recovery was fueled by home price improvement, driving new job growth and those jobs creating a fresh wave of demand that supported a multi-year recovery in housing.”
Forget what experts used to say, the housing market is NO LONGER a victim of the economy … It may even be the cure.
While we all take time off this month to go on vacation or just to celebrate the 4th of July, I’ve got some good and some bad news to share about the local real estate market.
The bad news is Colorado faces a potential new wave of foreclosures as banks prepare to file foreclosure paperwork on a slew of distressed properties. Low prices and a recently settled federal lawsuit that targeted bank foreclosure practices led lenders to hold back on new filings until now.
More Waves Never Good
This is never encouraging news, especially when you consider there are 4 million foreclosed properties about to hit the market nation-wide. The reality is once we move the 4 million off the books, there will be another wave. And another wave. Prepare for it.
Cleansing our system of these distressed properties may take years. So don’t try to wait it out if you need to act now.
Now For The Good News
Because YES there is a silver lining to all this gloom. All these foreclosed properties that are about to flood the market? They will not shake the overall housing recovery. It’s still going to rebound, especially here in the Denver Metro area. Yes, it’sprobably going to take years to completely purge but overall the local and national markets are still poised to grow.
Why such optimism in a face of a distressed property tsunami? Chew on these numbers.
Denver HPI On The Rise
ReMax recently surveyed 53 real estate markets to gauge the relative health of local housing markets. In 48 of the markets polled, housing sales were up annually, and in 46 markets, home values had increased annually.
The recent CoreLogic home price index report says the same thing — Denver’s home sales prices are continuing to rise. The report, released Monday, shows the Denver-Aurora-Broomfield area saw home prices increase by 6.5% in May compared with May 2011. That figure includes distressed or foreclosed sales. This makes the fourth month in a row metro Denver’s HPI has posted year-over-year positive gains. This is good news folks.
Want More Good News?
If those 2 reports weren’t enough, how about last week’s Case-Shiller report from Standard & Poor’s, which states Metro Denver’s May HPI (excluding distresses sales) rose 4.5% from May 2011. The Denver area’s HPI even beat the national average. In the Denver area, home prices, including distressed sales, increased 5.1% in April 2012 from April 2011, and rose 4.1% in March 2012 from March 2011.
Don’t listen to the fear-mongers. When three reports from three different organizations report the same findings, you should pay attention. The fact are: Home sale prices are up nationally but especially here in Denver-metro area. This is a great indication that we are prepared to weather the storm of foreclosures about to hit the market.
Many of us in the real estate business have touted the arrival of the echo boomers into the market for a few months now.
Obviously we jumped the gun. The latest statistics aren’t exactly making the argument that “Boomers Will Make A Splash” in the near future. In fact it’s just the opposite.
But there is hope from the Ivy League. The Joint Center for Housing Studies of Harvard University just released their annual report on the matter: the State of the Nation’s Housing 2012.
The report states, starting this year and continuing through 2032, the echo boomers (born in the late 70s and early 80s) will drive the housing market up because they’re the next generation in the prime age ranger for first home ownership.
“After several false starts, there is reason to believe that 2012 will mark the beginning of a true housing market recovery.”
Echo Boomers Back On The Couch, For Now
As we reported in our InfoGraphic on Friday, adults under the age of 35 have decided to stay at home with their parents instead of purchasing a home of their own. As the Harvard report states, it is not because they don’t believe in the value of homeownership:
“Although young households have increasingly opted to rent in recent years, most still aspire to homeownership. The late-2011 Fannie Mae National Housing Survey found that 86 percent of renters aged 18–34 believe they will ultimately own homes. In addition, close to 70 percent of respondents to both the Fannie Mae survey and the University of Michigan Survey of Consumer Attitudes felt that it was a good time to buy. In fact, the monthly mortgage payments for the typical home currently compare more favorably to rents than at any time since the early 1970s.”
The report projected the effect of echo boomers entering the housing market over the next twenty years:
Over the next 10 years…
“… the most important drivers of household growth are the size and age structure of the adult population. Assuming the economic recovery is sustained in the next few years, the growth and aging of the current population alone— including the entrance of the echo boomers into adulthood— should support the addition of about 1.0 million new households per year over the next decade.”
Over the next 20 years…
“Over the next 20 years, the echo boomers have the potential to spur new home demand to an even greater extent than their parents did beginning in the 1970s. The good news for housing production is that this new generation already outnumbers that of the baby boomers at the same ages. With even a modest lift from immigration, the echo-boom generation will grow even larger as its members move into the prime household formation years.”
Don’t let the current statistics fool you, the echo boomers may be down but they’re not out of the housing market. In fact, as housing affordability reaches historic lows, we believe more and more echo boomers will take the plunge into homeownership and raise all boats. It’s just going to take time.
If you want to sell a home in today’s market, you need to distinguish your property from the rest of the competition. What makes your property stand out?
That’s why we’re on the subject of green homes this week. A new study by McGraw-Hill Construction shows significant growth in the green residential industry.
Sellers shopping homes that are not only green, but also of higher quality and better value, have a major competitive edge over traditional homes on the market.
Green Homes Offer Competitive Edge
Green housing has never been more popular. New and remodeled green homes already accounted for 17 percent of the construction market back in 2011 (or $17 billion), nearly three times the amount under construction in 2005.
If the market continues on its current pace, green homes could grab up to 38 percent of the residential market by 2016 (with a market share of $87 to $114 billion).
Numbers don’t lie. Green is here to stay – and not just because of a desire to improve the planet.
Though green home additions can be more expensive to purchase and install - they can save you lots and lots of money!
Green Homes Save Money
It’s not like the country has suddenly developed a social conscience. The three biggest reasons to make green additions to your home that are cited in the study all relate to saving money.
It doesn’t matter if you believe in global warming or not, saving money appeals to everyone.
Most Popular Reasons To Green A Home
- Improve your home’s air quality
- Conserve water usage in your home
- Improve overall efficiency to lower energy usage
All in all, the biggest selling green home improvements relate to sustainability, improved waste management practices and use products made from post-consumer materials.
Builders Going Green
Improving your home’s indoor air quality is extremely hot right now, just ask your builder. 60 percent of the builders surveyed believe all the efforts to improve indoor air quality has made homes more efficient than they were even two years ago.
Half of the home builders surveyed consider durable materials one of the most important features in new homes today. Durability and better materials are key reasons why green homes and remodeling projects are considered of higher quality.
Remodelers also emphasized greening their properties as often as possible. So what are you waiting for?
If you want to improve the value of your home and save energy, look into making green addition to your home to make it rise above the rest.
And if you missed my last post – check it out to learn more about how to finance your green projects; and save the planet while saving your pocketbook, with a green home improvement.
In this market what happens when you change the listing price of your home? Good question. The answer is nothing good for the seller.
Yes, there are plenty of shady broker/agents out there who will happily fill a sellers’ head full of bad advice on this subject. Don’t take bad advice from con artists out for a quick-buck.
Really Want To Change Your Listing Price?
If all of this is news to you – I urge you to remain calm and clear-headed all the way through the home selling process, and to fire your real estate agent.
Just The Facts, Ma’am
I know, I know, who can you trust? The answer is no one but ‘me’ naturally, so listen up all you information starved home owners.
We all know how elusive the truth can be when wading into the treacherous world of home buying and selling – so here are 3 undisputed facts from an objective expert that may change your life.
1) On average, homes that change listing price take longer to sell.
2) On average, homes that change listing price recoup less money than comparable houses who do not change their listing price.
Set Your Own Asking Price. Once.
Naturally, the most important part of this equation is how you start out. It is crucially important for you to establish the right price from the beginning.
Remember, there is a fine line between confidence and hubris, optimism and delusion. Don’t let anyone fool you and don’t fool yourself. Remain calm and clear-headed throughout the process.
In This Case, Change Is Bad
It doesn’t matter if you raise or lower your asking price, the direction of the listing price change does not matter. Simply changing one way or the other leads to longer marketing times and lower prices. Again. Facts.
3) If you overvalue your home at the outset, your property will most likely experience a listing price change much worse than you envisioned yourself.
Smart People Make Smart Money
Don’t forget your mantra home-sellers: List too-high and you’ll be the one who pays… List too-high and you will be the one who pays.
Got it? Good. Now don’t let anyone tell you otherwise!
Don’t Change A Solid Listing
If you’ve done your homework and worked with a reliable broker/agent, you can find a sweet spot in the pricing spectrum and feel comfortable. If you are unfortunate enough to be with one of those afore-mentioned brokers/agents who carelessly throw homes on the market, thinking you will ‘get the price right later’ – here is a newsflash: you’re broker is making more work for both of you – and frankly not doing you (as the seller) any favors.
Establish the right price for your home at the beginning! Whether you’re a seller or a broker/agent, do your homework: analyze the market, be realistic and don’t go changin’ your listing price unless absolutely necessary.