What is the Impact You?The month of October saw a continuation of the trend of lower inventory levels and higher sales.  I fully expect that next months sales will be much lower because of our current economic difficulties and seasonal patterns.  This however, does not mean that our recovery will falter substantially. Give us your analysis by posting your thoughts at restell.featuredblog.com.  This MonthFinancing for homes up to $419,000 is still readily available.  Many assistance plans are available that could allow you to move into a new home with no money down and very competitive rates. Loans in excess of $419,000 are considered “Jumbo Loans”.  Sales in this category have slowed somewhat due to higher interest rates required by investors.  The hardest hit segment is homes in the $750,000 and above range.  If you are in the market for a home in this price range, now is the time to get a great buy. Sales in October were 11% better than the same period last year, signaling an improving sales climate.  Inventory is also down 20% over the same period and now is at a level not seen since mid 2005.   So What?Right now nothing says the economy will bounce back before the first of the year.  But, in real estate,  the formula of reduced inventory and increased sales put an upward pressure on prices. Just like the stock market, we don’t exactly know when prices will improve.  The only way we will see it is in the rear view mirror, after it happens.  When the market turns it will turn rapidly.  Real estate prices are not as volatile as the stock market, but it is very easy to miss the first fruits of a upswing. 

In contrast to economic reports, home sales were up significantly compared to September of last year.  14.1% to be exact.  And it is also 10% over 2006. But, year to date sales remain 6.7% under last. Inventory continues to decline.  This month we are down 8.9% on a year to date basis.Again this month condominium and townhome sales were significantly lower than the composite statistics.  3 & 6 Month Moving averages of Inventory to sales continue to tell us that a home on the market today 

Loan Availability

Yes, loans are available.  FHA loans can now be obtained up to $406,250.  Down payment requirements are 3.5% effective 10/1/08.Have you owned a home in the last 3 years?  If not, you may qualify for down payment assistance.Yes, conventional loans are still available.  Even with current economic uncertainty.  Are you curious to know if you might be able to take advantage of current market prices?  I’ll give you three references of mortgage lenders that I know to be ethical. So, Shouldn’t I Wait? Right now nothing says the economy will significantly improve for some time.  So, the question becomes how do your needs impact the move question.  You might be pleasantly surprised that a move could make sense.   Let’s talk about it.  There are circumstances that could work for you. 

 Will Fannie & Freddie Impact You?

Interest rates are widely expected to drop to as low as 5.5% in the coming weeks.  If you wanted to buy a home and had been pushed aside by rising interest rates, this may be your opportunity to re-enter the market.  If you are a seller, national observers expect a boost to home sales.    The market is not right for everyone to make a move, but many will find this shift to their benefit.  I offer myself as an information source for anyone that might be wondering if this is the time for them to make a move.  I don’t pressure.  I answer questions in a manner to provide you with the information you need.  If now is not the time to make a move I’ll let you know.  Call me for a free, no obligation, no cost consultation.   This Month Average monthly inventory of detached, single family homes in Metro Denver has declined steadily since May & this month was nearly 18% lower than for the same period last year.  This is significant, average months of inventory has declined to 2005 levels. Condo and Townhome inventory was down  26% and sales down nearly 10%.  This segment remains solidly in a buyer’s market and continues to attract investors.  Lower interest rates will be welcome especially to first time home buyers in this market segment and should stimulate sales.    FHA Loan Changes FHA permits a seller and other parties to make contributions toward a buyer’s closing costs and financing concessions.  Allowed is a maximum of six percent of the sales price of a property.   The buyer must provide 3% of the purchase price as a down payment, increasing to 3.5% effective October 1st.  Nehemiah assistance programs are scheduled to end October 1st also, stay tuned.  New Foreclosure Analysis -Mixed Regional Results There were differences in delinquency and foreclosure rates by state.  While delinquency rates rose across the country from the first quarter to the second quarter of 2008, not all states experienced the same pattern.  The top fve states with the highest quarter-over-quarter increase in delinquency rates were Delaware (104 basis points), Mississippi (103 basis points), Massachusetts (100 basis points), Maryland (96 basis points), and Indiana (92 basis points).  On the fip side, the states with the smallest change in delinquency rates were South Dakota (20 basis points), North Dakota (27 basis points), Wyoming (32 basis points), Colorado (33 basis points), and Oregon (34 basis points). Get a free detailed analysis of US housing trends, send a blank email to trends@RonEstell.com

Learn How to Get A Tax Free Loan 

How would you like a $7,500 interest free loan?  If you have not owned a home in the past 3 years or are a first time home buyer you may qualify.  Call me for details or send an email to request the information. Mortgage interest rates have been holding relatively steady at about 6.5% this month.   This MonthAverage monthly inventory of detached, single family homes in Metro Denver through July on a year over year basis declined 12.6%.  This is the lowest July inventory level since 2005.  That has been excellent news for sellers and propelled single family sales up nearly 8% from last month and 6.5% over July of 2007. Condominium and Townhome inventory were down nearly 23%.  Unfortunately this segment continues to show weak sales activity.   Not all condominium/ townhome sales areas show weakness.  Half of the reporting areas are showing year to date growth over last year.  Some of the largest gainers are Highlands Ranch, Stapleton and Central Jefferson County.  Along with the growth, these areas are seeing upward price pressures. Investment activity is flourishing.  In the $200,000 and below category represent over 40% of all single family home sales.  Half of all Condo/Townhouse sales are in the $150,000 or less range.  Again, these properties are not evenly distributed across the city and not in every community.   Jobs AnnouncementAlthough Denver seems to be faring better than many cities, it is not without needs.  Jobs are the one commodity that Denver needs.  Vestas, a renewable energy venture, will build a $290 million wind-turbine complex in Brighton that will employ 1,350 workers, according to the Denver Post.  This will have the potential of spurring growth in the beleaguered northern part of the city.  Production dates and incremental hiring targets have not yet been announced. 

Are Things Changing?Mid June mortgage interest rates popped up from 6% to 6.25%.  The increase is driven by national economic conditions and seasonal rate patterns. The uptick in sales month over month continued  in June.  Again this is due to normal seasonal patterns. Sales however continue to lag on a year over year basis. 

 This MonthAverage monthly inventory of detached, single family homes in Metro Denver through May was down 5% year-over-year.  June actual reflect a 10% decrease in inventory. As I stated last month, aggressive reductions in inventory will eventually force home prices up. Home sales are off 6.7% year over year.  Still, over 5,100 properties sold during the month.Continued signs of an underlying strength are reflected in decreased days on market, from average 110 to 105 year to date.Condos & Townhouses monthly inventory has fallen 15.6% over last month.   Actual sales in this category are down 12.8% on average for the first six months of the year.Investment activity is flourishing.  In the $150,000 and below category more than twice the number of single family detached homes have sold year to date as sold through June of any year since 2004.  For Condo’s the booming range was $50,000 and below.PMI AnnouncementPMI Mortgage Insurance Co’s announcement this week, ranking the nation’s 50 largest metropolitan statistical areas according to the risk that home prices will decline further during the next two years rated the Denver Metro area as having less than a 1% chance of declining.This was a significant announcement.  PMI bears the risk of conventional loan insurance when less than a 20% down payment is made on a mortgage.  For the area PMI is seeing little risk.

Awesome news for the Denver Metro area.  After seeing high inventories and falling prices, the leading Mortgage Insurance Company says things are changing. 

14 Markets With Nowhere to Go but Up

PMI Mortgage Insurance Co., has ranked the nation’s 50 largest metropolitan statistical areas according to the risk that home prices will decline further during the next two years.

The highest risk is in areas where home price growth was the greatest during the housing boom. The lowest risk of prices declining further is in areas where affordability has increased.

PMI identifies these areas as having a less than 1 percent risk of home prices declining further (read the whole list of metro areas ranked on the risk index):

• Milwaukee-Waukesha-West Allis, Wis.
• Cleveland-Elyria-Mentor, Ohio
• Austin-Round Rock, Texas
• Denver-Aurora, Colo.
• Charlotte-Gastonia-Concord, N.C.-S.C.
• Kansas City,Mo.-Kan.
• Columbus, Ohio
• Cincinnati-Middletown, Ohio-Ky.-Ind.
• Indianapolis-Carmel, Ind.
• San Antonio, Texas
• Houston-Sugar Land-Baytown, Texas
• Pittsburgh, Pa.
• Dallas-Plano-Irving, Texas
• Fort Worth-Arlington, Texas

Source: PMI Mortgage Insurance Co. (07/01/2008)

 Dashboard

▲ Hud Mortgage limits increased.

► Interest rates edging up.

▲ Potential investment opportunities.

 ▲Fewer Days on Market.

 ▲Inventory decreasing.

 ▼ Low job formation growth

Key:▲ -Good!
 ► -Neutral Impact
▼ -Negative Influence

 We are seeing an uptick in sales month over month, which reflects normal seasonal patterns, but still a bit slower than last year.

Are Things Changing?

Interest rates have continued to drift up from 5.75 percent last month to a current 6.5%.  Wall Street expects the Fed to increase interest rates charged to banks in upcoming months.

 Personal note:  In preparing a viewing schedule for clients this last week, I pulled a list of homes to view.  Of 13 homes, I was told by the listing offices that 4 of them had gone under contract since the previous evening.  It has been awhile since that has happened to me. This MonthAverage monthly inventory of detached, single family homes in Metro Denver through May is down 5% year-over-year.  This reflects a continuing trend that will eventually force home prices up. Homes under contract remain high compared to last year, but actual sales continue to be off almost 6% percent on a year over year basis.  Still, over 3,700 properties sold during the month. Continued signs of an underlying strength are reflected in decreased days on market, from 117 to 109 year to date and pent-up demand indicated by the number of outstanding offers which remain up 1.4% year-over-year. Condos & Townhouses average monthly inventory has fallen 12%.  For the month inventory is down 20%.  Actual sales in this category are down 16% on average for the first five months of the year. While fix and flip strategies are not working well right now, investment opportunities for rentals are taking center stage.  If you have ever considered purchasing an investment property, now may be the right time.  I can help you find a good lender & talk to you about the pros and cons of being a landlord. The only thing that is holding back a faster rebound of the real estate market in Denver is jobs.  More jobs create housing demand and there have been no recent major job announcements.  The Democratic Convention may help to bring jobs on a temporary basis and perhaps more long term growth from business owner participants.  How Will You Know?How will you know which way the market is going to turn?  Media reports tend to sensationalize market conditions and report national statistics that do not impact your homes value.  Subscribe to the electronic version of this newsletter by emailing subscribe@RonEstell.com and entering “How’s The Market?” in the subject line. 

Check out 5280 Magazine this month.  There is a very good article on various areas in Denver that are doing well in this market.  Areas mentioned include Highlands Ranch, Louisville, Washington Park, Bonnie Brae, Highlands, Ken-Caryl Valley, May Fair, Congress Park and others.

Interest rates remain stable but are tending to drift a bit higher.  They had been pretty steady at 5.75% but recently have been quoted at 5.8%. We continue to see more buyers actively looking this year and an uptick in offers.  People with the thought of investing in rentals are on the outlook for income property.  First time buyers and folks looking to upsize or downsize their homes are beginning to think that this is an opportune time for change. 

This Month

Average monthly inventory of detached, single family homes in Metro Denver through April is comparable year over year with 19,068 last year and 19,337 this year.  Homes under contract remain high compared to last year, but actual sales continue to be off seven percent on a year over year basis.  Like last month lending standards continue to be tight and lending institutions are not moving rapidly in approving offers on bank owned properties. Continued signs of an underlying strength are reflected in decreased days on market, from 117 to 109 year to date and pent-up demand indicated by the number of outstanding offers. Condos & Townhouses average monthly inventory has fallen 12% vs the the first three months of the year which were previously reported at 10%. On a year to date basis the number of contracts and units sold have declined.  Year to date sales were 3,436 in 2007 and 2,965 this year, ending 3 months of improving statistics. 

The one thing that does not seem to be paying off well for investors right now is to “fix and flip”.  This market takes more of a long term approach and is benefitting the landlord. 

If you are thinking of selling, make sure that you present your home in the most appealing manner possible.  Start with curbside appeal (landscaping, entry doors, fresh paint), then work on the interior.  Clean out all the things you don’t need right now and move them to storage.  Freshen up the paint in the interior and if your carpet is worn go ahead and replace it before you put your home on the market.  If you would like more tips let me know.

Littleton, Colorado real estate professionals on ActiveRain.com

How’s The Market?

This year the stock market has taken back the gains it posted last year. All investments are cyclical as ‘fix and flip’ investors found during the past 2 years. 

Would you like to invest in the stock market or real estate and end up with an appreciating asset? The old principal of investing low and selling high still applies. Many ’fix and flip’ investors bought high and are now selling low. This was not a productive strategy.

Although many investors have given up significant assets during the downturn, I now believe that there is a strengthening in long term investing. The reason I believe this is that I have observed over the past few months median condo prices have fallen significantly. Median condo prices have stabilized over the last 3 months at about $140,000 versus the last two years median price during the same 3 month period that ranged from $150,000 to $165,000. Days on market, on the other hand, have declined from a 2006 average of 122 days to 114 days in 2007. That number compares well to the 2005 average of 111 days on market. While sold properties did not exceed 2006 levels a shortfall of only 80 units makes the future look promising for long term investors.

We are seeing a number of HUD properties coming to market that investors are finding attractive. HUD homes sell on a bid basis. Each week that goes by without a sale causes HUD to reduce the asked price. For example, there is currently a HUD single family home in Highlands Ranch for $208,000 advertised with 1,794 square feet of living space (source Denver Metro MLS on 1/20/2008).

The Fed action to lower interest rates and the government’s willingness to wade in on mortgage issues may be pointing to recovery in the coming year. I’ll keep you posted with each month’s actual.

MortgagesOn the topic of mortgages, interest rates are very favorable and have been on the decline. Positive news.

If you know anyone that is experiencing problems because of a variable rate mortgage adjustment, the new FHA Secure program will insure conventional loans and allow the home owner to refinance providing they can otherwise meet other loan criteria even if they currently do not have sufficient equity to otherwise refinance their loans. If you have questions about FHA secure you can discuss your situation with program representatives at 1-885-995-HOPE.

 I’d like to be your friend in the real estate business. I offer facts, no pressure.