Thursday, January 15, 2009

It Won't Happen Overnight...But We're On the Right Path

By Chris Mygatt

In continued display that the President-elect will hit the ground running when he takes office in just four days, Obama met with Congress on Tuesday to ensure he’ll have more than a trillion dollars at his disposal within weeks of his inauguration to begin rebuilding our ailing economy. Just two days later (on Thursday), the President-elect secured access to the second half of the $700 billion financial rescue package after the Senate voted 52-42 against a measure that would have blocked the funds’ release—many members of the Senate felt the Bush administration wasted the first half and were concerned that the Obama administration may do the same.

The President-elect says he hopes to have the ability to tap into a portion of that money within days of becoming President. His plans with the money as well as a stimulus package he hopes to see lawmakers approve, shortly, include:

  • Creating more than three million jobs, many of them in construction and manufacturing
  • A focus on helping homeowners avoid foreclosures
  • Stimulate housing investment and help current homeowners
  • Provide needed liquidity to commercial mortgage markets to ensure that financing is available
  • Work more to help people get student loans and car loans
  • Make sure that the taxpayers’ money didn’t go to high salaries or bonuses for Wall Street executives
  • Requirement of continues reports on earning, repayments and lending practices from institutions that receive bailout funds

Obama’s economic aids assure that the incoming administration will be responsible with its spending of the Troubled Asset Relief Program (TARP) funds and pledged to commit some $50 billion to $100 billion to address foreclosures.

As we well know, one of the biggest challenges currently affecting our market is the difficulty of even the most qualified buyer to secure financing. The goal of TARP is to open the housing and financial system so buyers—especially those with good credit—are able to once again secure financing.

Several weeks ago in my Reality Check message I made reference to the fact that real estate was in probably one of the best positions—industry wise—for a correction. This is thanks to the fact that lawmakers realize that because housing makes up 20% of the GDP, our economy cannot be fixed without fixing the housing sector. With Obama’s recent outreach to Congress and the TARP funds now available, we’re starting to see the first in what I believe to be several outreach efforts to fix the hard hit housing industry.

Now don’t be fooled. This won’t happen overnight. We’ve got a long road ahead and depending on what forecast you are reading, some say we’ll start seeing a turnaround in mid-2009 and others say we may not see it until 2010, but the good news is that we are on track and our country is finally moving in the right direction.

Locally, we are also heading in the right direction. Just this week, named Denver the second most popular destination in the country for people looking to make a long distance state-to-state move—reinforcing what we already know—that though we’ve all been hit hard by the recession, people are still drawn to our market due to our remarkable weather, scenery, infrastructure, jobs and of course, lifestyle.

And I hope none of you missed the fact that Men’s Fitness Magazine just named two Colorado cities (Colorado Springs [2] and Denver [4]) as the top five most fit cities in the country. Gosh, we live in a beautiful place! Doesn’t it make you proud?

Now, on that positive note, let’s take a look at this week in real estate:

  • Boulder County— Our Boulder office reports that 2008 ended steady and early January is about the same. Agents seem to be busy and the office is predicting that new, lower rates should help the year start fair. Our Longmont office notes that lenders are telling of increased activity—both appointments for new loans and refinancing. We are starting to see activity in all price ranges—not just lower-end homes. Floor calls are also picking up and many Agents are seeing activity on listings.
  • Clear Creek County—We’re seeing the word “Increasing” across the board from our Evergreen office with increases in listing inventory, sales activity and showing activity. Our Evergreen office reports 13 new listings during the week including a six lot subdivision plus a $1.8 million spec home. We also listed a $5.2 million estate in Soda Creek. The Agents in Evergreen have been very busy, too, with 52 showings (plus five Agent previews) during the week compared to just 44 last week. Floor activity is increasing with two walk-ins and four floor calls during the week. Activity is picking up so buyers and sellers be aware!
  • Denver Central—Our Denver Central office is reporting decreased listing inventory and steady activity in sales and showings. We are seeing multiple offers on about 10% of deals—most of which are bank owned and short sales. The city of Denver is enjoying a relatively balanced market with about a 5-6 month supply. We’re also seeing an increase in the amount of listing appointments—a good sign of good things to come over the next several weeks. This week we did see some spikes including 102 showings on Friday but the market has been a bit slower—probably due to the 3-5” of snow we received.
  • Devonshire—We have seen a huge change over the last two weeks in showings and in contracts presented and accepted. We have a house in Washington Park that went on the market last Wednesday and had three offers by Friday—with an accepted offer by Friday night. Now that the holidays are over, the market is picking up some steam.
  • Douglas County—Another market in which we are seeing increases across the board, our Southwest Metro office is reporting that it is doing well for January. Showings have increased each week and listings are increasing. Buyers seem to be ready to move. Our inventory in Highlands Ranch has been low and is growing at a steady pace.
  • El Paso County—Our Colorado Springs office reports increasing sales activity and showing activity. Buyer activity is picking up. This week we had six contracts written by our Colorado Springs team. The office reports that buyers are out there and inventory as a whole is starting to decrease in the market. There are still many short sale and bank owned properties on the market that are driving prices down but as we push through that inventory we will begin to see prices stabilize.
  • Elbert County— Our Parker office is noting increases in activity, showings and listings as well as five multiple offers. Activity is still increasing throughout our market. However there are still several areas with some significantly declining values. Wherever we have a good portion of new construction, the values have decreased between 5% and 20% (Pradera 15%, Idyll Wild 20%). The established areas are stable right now. Bank owned properties are still moving quicker and homes that are priced more aggressively are getting more energy and we are seeing more success with short sales.
  • Jefferson County—Our Conifer office is reporting new listing this week and multiple offers on two of our listings. We also saw a significant number of price reductions during the week and the office reports 34 showings this week bringing us to a total of 54 month to date. Our West Lakewood office notes that listing inventory and showing activity is increasing and sales activity is steady.
  • Larimer County—Our Fort Collins and Loveland offices are reporting steady listing inventory and sales activity though showing activity is on the rise. The market remains in a seeming holding pattern. We have seen an uptick in showings but nothing that would support a trend. We have heard that some buyers are waiting for the 4.5% 30-year fixed to appear long enough for folks to take advantage of it.
  • North Metro—Sales activity is down but showing activity and new listings are up which are good signs of great things to come over the next several weeks. We expect to see some good contract activity over the next few weeks.
  • Southeast Metro—Last week we reported that the office was abuzz with activity. Well good news, nothing’s changed! Listing inventory and showing activity is on the rise and this week our Southeast Metro @ DTC office is reporting 12 multiple offers. The office is extremely busy with showings and Agents are having some difficulty in the market below $350,000 actually finding homes for buyers. We have listed 51 new properties as of today and we have 75 transactions scheduled to close this month. Wow, hang on folks!

Overall, we are seeing a lot of variances in the market—depending on the region.

There is still the public perception that the market is not good which is a good reminder for Agents, buyers and sellers alike that they should focus less on what the media is saying and more on their desire to purchase or sell their home. One important note to consider, especially, is that most media outlets are reporting on national and/or regional data and as we well know, real estate, like politics, is local. Every community and neighborhood is different and relying on regional and/or national data—often which is outdated by at least six weeks—may be a big mistake especially as we grow closer to a real estate turnaround. Remember, now is a great time to buy—but that won’t last forever!