Denver, Colorado
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December 2006
Dec. 12, 2006
Categorized in: Buying a home...
 Now that the congress has changed colors from red to blue, it's nearly a certainty that one of real estate's bugaboos will become a thing of the past in 2007. Both the House and the Senate passed a bill which included a Federal deduction for PMI, a considerable monthly sum going to lenders when borrowers have less than 20% of their own funds invested in their purchase. The real estate community has been pushing for such a deduction for years, but the Republican controlled congress was never a big fan of giving buyers a tax break on their PMI. The bill is almost certain to be signed by the President, giving home buyers an incentive to wait till January 2007 to close on a home.
Broderick Perkins explains the details in an article in Realty Times. Check it out for how it will affect you.
Update: The Rocky Mountain News has an in-depth article this morning about the implications of the new mortgage insurance deduction.
Update 12/23/06: Another in-depth article about the new law in the Wall Street Journal.
Dec. 11, 2006
Categorized in: Buying a home...
 People often ask me if they need insurance when buying a condo. The answer is yes, you need insurance, but not the same kind you'd buy if you were buying a stand-alone home.
A great explanation of the difference between a residential homeowner's insurance policy and a condo insurance policy is offered at Realty Times by Benny Kass of the Washington Post. Benny explains why you need a condo insurance policy and a suggestion about who to buy it from. Check it out.
Dec. 7, 2006
Denver’s average residential single family home price in November was up 1.39% over October, and 2.35% over November 2005, a surprising though slight uptick during what has been a downward trend. The median price for a single family home was $240,000, down from October’s $247,600, a 3.06% drop. The average price was $310,562, up 1.39% from $306,307 in October. Average days on market for a single family home is 103, and for condos is 134, up considerably over last year this time.
The average price for condos in the Denver market is $195,747, also up over October 2006 and November 2005. The median price is $155,750, up from October 3.46% and from last year this time a whopping increase of 13.56%.
The market shows a flattening, with the median sale price dropping, while the average rose due to a few high-end home sales that tend to skew the average. The median is a better measure of market activity, with as many sold below the median as above.
The number of unsold homes on the market, 27,530, was up 5.5% from last year, but down 8% from last month. And the number of homes in foreclosure reached a new high giving sellers acid reflux when thinking about putting their homes on the market in December. In many cases ellers are having to accept much less than what they owe. Foreclosures on the market arent' expected to be absorbed for the next year and a half to two years, perhaps longer.
Meanwhile, buyers are finding real bargains. Sellers are still having to offer concessions to buyers and lower their prices to meet lessening market demand..
This is the holiday season, so figures could change in January and February. Stay tuned to what’s going on in the Denver real estate market.
Dec. 6, 2006
Categorized in: Denver Suburbs
Castle Rock, Colorado, has been named one of the nation's top 25 affordable suburbs, according to Business Week, with a median home price of $240,000, a cost of living index of 133, and a low crime rate. Castle Rock school report cards indicate mostly highly rated schools. As reported in the Real Estate Journal (of the Wall Street Journal), these suburbs may not be the least costly, but all things considered they're among the most desirable and most affordably priced in the U.S.
Read all about Castle Rock at my website. It's a place to check out!
Dec. 5, 2006
 A significant record has been broken in the Denver area market (John Rebchook, Rocky Mountain News). There have been more foreclosures in the first 11 months of 2006 than there were in 1988 at the height of the oil bust when it seemed like every other home for sale was a HUD (federal Housing and Urban Development) listing.
A mitigating factor is that as a percentage of total homes on the market, the foreclosure rate is still lower than it was in 1988. And the Colorado economy today is much stronger than it was then. The unemployment rate in 1988 was 6.4%, whereas today it’s 4.2% (October).
Where is all this heading? Until the high number of foreclosures is absorbed, home prices will continue to fall. The highest rate of foreclosures is in the northeast Metro area of Montbello and Green Valley Ranch, Adams and Weld counties and north Aurora. As noted yesterday, some neighborhoods in the Denver metro area haven’t been affected by foreclosures.
Is it a good time to buy? If you believe, as I do, that values will again rise and you can keep your home without selling for a few years, you’ll do well. But if you’re expecting to buy now and treat your home like a cash cow as buyers have been doing over the last decade, then you’ll be disappointed. Buying a home is a great investment over the long run. In the meantime, it sure beats renting.
What about buying a home in the foreclosure process? If you can find a good home in a good neighborhood for under market value, then it can be a great buy. But be prepared to wait weeks, maybe months, to hear back on your offer. And be prepared to endure a lot of frustration as you wait, not just to hear on your offer, but also to meet all the deadlines including when you get to move in. Give yourself lots of time and have a place to live in the meantime.
I have two clients waiting to hear on their offers. One has been waiting since September 29th when they made the offer. The other made their offer last week, but the listing agent had said it wouldn’t be long before we heard, so they’re anxious, especially since a competing offer came in at the same time. Another client just closed on a property they offered to buy in early October. Before we closed we had changed the closing date three times, causing the buyers to have to change their plans right up till the day before we finally completed the transaction. It’s a frustrating business when you want to buy a foreclosure. Be sure you’re positioned to do so.
Dec. 2, 2006
If you want to know what’s going on in Denver’s first-tier suburbs, Westword, the Denver metro area’s alternative newspaper, has an in-depth article by Jared Jacang Maher about Northglenn’s past and future. Northglenn can easily be seen as a stand-in for Lakewood, Arvada, Wheat Ridge, the northern part of Aurora, the older part of Highlands Ranch, Applewood, parts of Thornton and Commerce City.
These once booming suburbs are beginning a period of decline, where the original owners, now older, are experiencing a rise in foreclosure and rental housing, and a general deterioration in the appearance of the neighborhood.
Bill Sullivan, Director of the Northglenn Neighborhood Development Corporation established by the Northglenn City Council in 2004, has been making heroic efforts to turn the suburb’s decline into renewal, and has a vision for the community that could result in a remarkable revitalization.
If gas prices continue on their upward climb, likely to happen as supplies diminish, these first-tier suburbs could well attract homebuyers worried about energy costs. According to a study done in October by the Center for Housing Policy (the research arm of the National Housing Conference, which is a non-profit public policy and affordable housing advocacy group), “for every dollar saved on housing [by buying further out from the city], 77 cents is spent on increased transportation costs.”
Other factors not mentioned in the Westword article are the metro area’s 6-year drought, which has left urban and suburban landscaping in a shambles. Only homeowners and municipalities that can afford to keep up care of the landscape are not experiencing decay. And the remodeling boom of the 90’s and early 2000’s has evaded many older homeowners who haven’t reckoned with the need to improve their homes so that when it comes time to sell the home will appeal to younger buyers.
Anecdotally, I’ve seen many homes that have gone the route of natural decline due to homeowner neglect. Buyers want homes they can move into and not have to put time, money and effort into rehabilitating a home. They take one look at these homes in a state of deterioration and they walk out without a second glance.
You might think that these are homes on the low end of the price scale. But neighborhoods with $500,000+ homes have succumbed to the same deterioration.
I tell all my buyers to be sure not just to keep the house in good repair, but also to upgrade it and improve it over the life of their ownership. Recently I walked into a home with an asking price of $425,000 that was in pristine condition – if the 1960’s is your style. As one of my clients said, it was like walking into a “time warp.” Everything was in perfect condition, but nothing had been changed since the house was built in the 60’s. The house was described by the listing agent as “lovingly maintained by original owner.” I know now that the listing agent’s description was a euphemism for “you’ll need to spend a lot of money to bring this house up to date.”
 If you’re looking to buy in one of these deteriorating neighborhoods be sure you know where to go for any information you need about the neighborhood. Federal Fair Housing Laws forbid real estate licensees to discriminate in any way against anyone seeking to purchase a home or any homeowner who has a home available for purchase. These laws have many nuances, too many to go into here. Licensees want you to have the information you need, but they also don’t want to be in the business of discriminating against home buyers or sellers. Drive around the neighborhood, call the local police department, talk to neighbors, check out the town’s website for plans for renewal. You can look at the schools in the neighborhood you’re interested in to see how they fare in Colorado’s Accountability report.
You’ll have to decide whether a neighborhood is for you or not.
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