BlogFun Facts May 28, 2021

Calculated Risk

The economic research blog called “Calculated Risk” just completed a fascinating study on home prices.

Specifically, they looked at the correlation between home price growth and inventory.

They used price data from the Case-Shiller Home Price Index and inventory data from the National Association of Realtors.

No surprise, they found that the lower the inventory the higher the home price growth.  Also no surprise, as inventory goes up, price growth slows down.

This all correlates with simple economic rules of supply and demand.

The interesting part of their research is this:  at a certain level of inventory, prices have the potential to go down.

That level, according to their research, is six months of inventory.

That means, prices don’t have a chance of decreasing in a market until there is at least 6 months of inventory available for sale.

To put that in perspective, today there is two weeks of inventory on the market along the Front Range.

So, there would need to be 12 times the amount of homes for sale on the market for prices to even have a chance to go down.

BlogFun Facts May 17, 2021

5.5 Million Short

New home construction is behind by 5.5 million homes over the last 14 years.

Since 2007, new home starts have lagged significantly behind the long-term average.

The Census Bureau started tracking National new home starts in 1958.

Between 1958 and 2007, an average of 1,102,938 new homes were started each year.

Between 2007 and 2020 the average fell to 708,186 which represents a shortfall of 394,752 per year.

That adds up to a total shortfall of 5,526,525.

The under-supply of new homes is of course a significant reason why the market is under-supplied overall.

credit Inman News as the source of this story

BlogGardner Report April 29, 2021

Q1 2021 Colorado Real Estate Market Update

The following analysis of the Metro Denver & Northern Colorado real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere Real Estate agent.

REGIONAL ECONOMIC OVERVIEW

Following the decline in employment last winter, Colorado has started to add jobs back into its economy. The latest data shows that the state has now recovered more than 219,000 of the 376,000+ jobs that were lost due to COVID-19. This is certainly positive, but there is a long way to go to get back to pre-pandemic employment levels. Denver and Fort Collins continue to have the greatest improvement in employment, but all markets show job levels well below pre-pandemic levels. With total employment levels rising, the unemployment rate stands at 6.6%, down from the pandemic peak of 12.1%. Regionally, unemployment levels range from a low of 5.6% in Fort Collins and Boulder to a high of 6.7% in Greeley. COVID-19 infection rates have started to increase again, and this has the potential to negatively impact the job market. I am hopeful that the state will not be forced to pull back reopening, but this is certainly not assured.

COLORADO HOME SALES

❱ 2021 started off on a bit of a sour note, with total sales down 1.2% compared to the same period in 2020. Sales were 29.2% lower than in the final quarter of 2020 as 8,645 homes sold.

❱ Sales were higher in four of the counties contained in this report, were essentially flat in one, and dropped in seven. It was pleasing to see significant sales growth in the large counties of Denver and Adams.

❱ Another positive was that pending sales, which are an indicator of future closings, were 4.8% higher than in the fourth quarter of 2020 and 5% higher than a year ago.

❱ The disappointing number of home sales overall can primarily be attributed to the woeful lack of inventory. Listings in the quarter were down more than 61% year over year and were 40.6% lower than in the fourth quarter of 2020.

 

COLORADO HOME PRICES

❱ Prices continue to appreciate at a very rapid pace, with the average sale price up 16.5% year over year, to an average of $556,100. Home prices were also 4.4% higher than in the fourth quarter of 2020.

❱ Buyers appear to be out in force, and this demand—in concert with very low levels of inventory—continues to heat the market.

❱ Prices rose over last year across all markets covered by this report, with the exception of the very small Gilpin County. All other counties saw sizeable gains and the trend of double-digit price growth continued unabated.

❱ Affordability levels are becoming a greater concern as prices rise at a far faster pace than wages. Even though mortgage rates have started to rise, they haven’t yet reached the level needed to take some of the heat out of the market.

 

DAYS ON MARKET

❱ The average time it took to sell a home in the markets contained in this report dropped 20 days compared to the first quarter of 2020.

❱ The amount of time it took to sell a home dropped in every county contained in this report compared to the fourth quarter of 2020.

❱ It took an average of 25 days to sell a home in the region, down one day from the fourth quarter of 2020.

❱ The Colorado housing market remains very tight, as demonstrated by the fact that it took less than a month for homes to sell in all but two counties.

 

CONCLUSIONS

This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.

The relatively low level of home sales is not a surprise given how few choices there are for buyers. Sellers are certainly benefitting from strong demand, as demonstrated by the significant price growth. I maintain my belief that there will be an increase in inventory as we move through the year, but it is highly unlikely that we will see a balanced market in 2021.

Given these factors, I am moving the needle a little more in favor of sellers, as demand is likely to continue to exceed supply.

ABOUT MATTHEW GARDNER

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

BlogFor Buyers April 15, 2021

Working with a Buyer’s Agent

What is a Buyer’s Agent?

A typical real estate transaction involves a buyer’s agent representing the buyer and a listing agent representing the seller. A buyer’s agent helps the buyer identify potential homes to pursue, advises them on negotiations, and helps navigate any hurdles during the buying process. Once they are under contract, the buyer’s agent will work to close the sale, monitoring all the key dates and deadlines along the way. Once the transaction is complete, buyer’s agents split the commission of the sale with the listing agent.

Advantages of Working with a Buyer’s Agent

Find the right home

A buyer’s agent not only possesses expert knowledge of local market conditions, but they also have access to tools that will help their clients see the widest array of available homes, and eventually, find the right home. By exploring the Multiple Listing Service (MLS), they can access the vastest network of available listings, and receive up-to-date alerts on open houses. They are usually the first to know when a home hits the market and are sometimes aware of homes that are scheduled to list in the near term.  Buyer’s agents can advise their clients on how a home’s outstanding repairs and improvements could affect their decision to purchase, whether the home is in need of an inspection, and discuss the necessity of a home warranty.

Save time

Buying a home takes time, but a buyer’s agent will help streamline the buying process. This includes paying close attention to their client’s budget and preferences in order to focus their home search to only those listings that match their needs. Buyers can then decide which homes they would like to view in-person and their agent will contact the corresponding listing agent to set up showings. Buyer’s agents are founts of knowledge, able to provide or track down information a buyer may not be able to readily access on their own. Additionally, they are connected to a network of professionals and can produce references for mortgage brokers, real estate attorneys, inspectors, and more as needed.

Making an Offer

Once you’re ready to make an offer on a home, the importance of working with a buyer’s agent kicks into high gear. There are many different elements that impact an offer’s success, and this is where a good buyer’s agent’s specialty lies. Through their expertise, they can help their clients craft a more competitive offer and negotiate as needed. Sometimes the most competitive offers are not just about the price. Offers can win when a buyer’s agent has researched the seller’s needs and pulled together an offer that speaks to those needs. Any advantage buyers can gain to make their offer stand out will strengthen their case. This is especially important in competitive markets when multiple competing offers are on the table.

Throughout the process of making an offer on a home, a buyer’s agent is there to answer any questions that may arise and pore over the details so that nothing goes unnoticed. This is critical since sellers will likely toss aside any offers that come in with missing documents, errors in the contract, and other inconsistencies. When buying a home, buyers often fear that they will miss something during the buying process, that they are going to pay too much, that there will be something wrong with the house after they buy it, or that they’ll lose the home to another buyer. Buyer’s agents help to alleviate these stresses and make sure the buying process runs smoothly.

When determining which agent to work with, it’s important to ask questions to gain an understanding of their expertise, see their personality, and get a gauge of how well they understand what you’re looking for in a home. If you would like some help, let me know.  I am happy to help!

BlogFor Sellers April 13, 2021

7 Costly Mistakes in the Selling Process

Sellers dream of a flawlessly executed home sale where everything goes smoothly, and they end up with a satisfied buyer. To achieve this ideal end goal, it’s important to be aware of the mistakes along the way that could potentially derail the sale. Mistakes in the selling process come in all sizes, but some can be more costly than others.

 

1. Incorrect Pricing

Simply put, sellers want to get the most value for their home. Inaccurately priced homes create complications in the selling process and can be costly. Overpriced homes are unable to compete with other homes in a more expensive bracket, reducing its appeal to buyers. The longer a home stays on the market, the more likely the seller will have to lower the price, and this could result in a final asking price that is well below what the home is worth. Underpricing can be used as a strategy to generate added interest among buyers and thereby drive up the home’s market value, but it requires that a bidding war take place among buyers.

 

2. Underestimating Selling Costs

There are many costs associated with selling a home that can easily pile up if not planned for. Commission fees take up a significant portion of selling costs, typically between five to six percent of the sale price. Sellers must budget for home inspections, making repairs, and staging the home to get it market-ready. During closing, sellers need to prepare for various costs including sales tax, attorney fees, and any fees related to the transfer of the title, and more. Not accounting for any of these costs can come as an unpleasant surprise.

 

3. Selling When Underwater

It may be tempting to think of selling a home solely as a revenue-generating event. However, if a seller still owes more on their mortgage than what their home is worth, or if the property has gone down in value, they still may not make enough money on the sale to pay off the mortgage. Any homeowner who finds themselves underwater on their mortgage should consider building more equity before they sell.

 

4. Selling FSBO

Selling a home “For Sale By Owner” (FSBO) presents sellers with the opportunity to save on commission fees but is a complex and risky process that can easily lead to serious costs. Not only does selling FSBO mean that the seller will incur all costs an agent would have taken on to market the home, but they are accepting added liability as well. If any mistake occurs during the offer process, negotiations, or closing, the seller finds themselves without the representation of an experienced professional. This leaves a great opportunity for costly mistakes that could potentially jeopardize the sale.

 

5. Failing to Disclose Repairs

If a seller fails to disclose any outstanding repairs and issues inherent in the home, they will likely come to light during the buyer’s inspection and can create a very costly situation for the seller. These losses can be avoided by being transparent about what repairs are needed ahead of time. Sellers can also opt to conduct a pre-listing inspection, which can be especially helpful in competitive markets. Disclosure rules vary by state.

 

6. Neglecting to Stage Your Home

Home staging is a critical element for getting the most value for a home and selling it quickly. By neglecting to stage, sellers are opening the door for lowered offers and reduced sale prices. The staging process is also the perfect time for sellers to inspect their home for any minor or cosmetic repairs that can be addressed quickly.

 

7. Not Choosing the Best Offer

Naturally, the highest offer received on a home may seem like the most enticing. But just because an offer may be higher than another doesn’t mean it’s the best one. It’s critical for sellers to communicate with their agent about the full terms of the offer to understand its contingencies, how it affects their bottom line, and how those components align with their needs and preferences.

 

If you’d like more information on selling your home and how to avoid costly mistakes, reach out to me today.  I am ready to help!

BlogFun Facts April 2, 2021

New Rate Prediction

Windermere’s Chief Economist, Matthew Gardner has made his new mortgage interest rate prediction for 2021.

You can see his breakdown of interest rates and other economic factors by clicking on the image below and watching his newest video.

By the end of the year he predicts rates will rise to 3.63%.  By the end of the 3rd quarter, he sees rates at 3.48%.

This would be a 0.5% increase by year-end compared to today.

What this would mean for home buyers is a 5% higher monthly payment compared to today.

BlogFor BuyersFun Facts March 27, 2021

96 Weeks

Mortgage rates have been below 4% for 96 weeks in a row.

Today, the average 30-year fixed mortgage rate sits at 3.17%.

This is 0.5% lower than January and exactly 1.0% lower than March 2020.

Rates recently ended a 31-week streak of being under 3%.

Over the last 5 years, rates have averaged 3.8%.

Most experts believe that rates will continue to creep higher as the year goes on.

BlogFor Sellers March 15, 2021

Finding the Right Agent to Sell Your Home

Showing

Selling your home is a collaborative effort between you and your real estate agent. As you prepare to sell your home, it’s important to find an agent who not only can answer your questions throughout the selling process, but who also cares about the happiness and goals of you and your household, as well.

Before You Begin Your Agent Search

 Once you’ve made the decision to sell, there are some things to consider before selecting an agent to work with.

Communicate your reason for selling

  • Behind every homeowner who decides to sell their home there’s a story, and every story is unique. In the early stages of working together, your agent will be processing a lot of information about your timeline and financial goals. Having these details ironed out and ready to communicate will help them understand your motives and guide the process effectively.

 Think about selling strategy

  • Part of a real estate agent’s expertise is knowing the optimal selling strategy to pursue, but no one knows your home better than you. Putting time and effort into thinking about things like how your home will be marketed and how showings will be conducted will help inform your agent’s strategic advice.

 

Finding the Right Agent for You

You and your agent will be communicating throughout the process of selling your home. You’ll be relying on them for updates and information each step of the way. Though your goal in working together is ultimately the sale of your home, your agent’s ability to connect with you on a human level through the emotional ups and downs of the selling process is just as important as their professional attributes. Accordingly, you’ll want to consider what qualities you’re looking for in an agent.

To set yourself up for identifying good candidates, talk to people you trust who know your personality and goals. Get referrals from your family, friends, colleagues, and neighbors. If they recommend someone, follow up with that agent to see if they are a good fit for you.

Searching for an Agent

To give yourself the best pool of potential agents, conduct your search both online and in-person. Exploring an agent’s social media profiles and reading reviews online can be useful in assessing whether they’re someone you want to work with. If in-person showings and open houses are occurring in your market, consider dropping by to get a chance to interact with the agent first-hand. After you have narrowed your agent search, ask for client references to get more insights into what it’s like to work with them.

Agent Certifications

Some agents choose to earn additional certifications or designations that showcase their commitment to additional training, coursework, and learning to help them specialize and advance their capabilities. Depending on your specific needs, certain designations may appeal to you as you go about finding the right agent to sell your home. The National Association of REALTORS® offers the largest number of professional designations. Explore them here: NAR Designations and Certifications

 

Economics 101For SellersFun Facts March 12, 2021

Enormous Equity

Hot off the press is the Core Logic Homeowner Equity Report.  This is their quarterly look at what is happening with homeowners’ equity across the country.

Here are the staggering numbers coming out of their research:

  • Collectively, U.S. homeowners with mortgages have realized a $1.5 Trillion gain in equity over the last 12 months.
  • Only 2.8% of all mortgaged properties have negative equity meaning the home is worth less than the loan amount.
  • In Colorado, just 2.5% of homeowners have negative equity.  For comparison, the percentage in Louisiana is 10.7%.

This research is one of many reasons why we don’t see any sort of impending housing crisis like we experienced in 2009.  In the fourth quarter of 2009 for instance, 26% of all homeowners had negative equity.

BlogHousing Trends March 8, 2021

DIY Remodeling vs Professional Remodeling

Deciding whether to DIY a remodeling project or leave it to a professional is a matter of weighing the risks and rewards, time, and budget. Before you start applying a new coat of paint or go about knocking down a wall, create a plan for your remodel to help you decide which projects you can handle, and which ones belong in the hands of a pro.

Create Your Remodeling Plan

Knowing your plans for your remodel will help to determine your timeline and budget, which will inform your DIY-vs-Pro decision-making. Set specific goals for each project so you’ll know when you’re getting off track but remain flexible in your planning to leave room for any unexpected hurdles that will inevitably pop up in the remodeling process. Your budget will also help you decide who should execute certain projects. For example, if you’re budgeting more for a kitchen remodel than any other project, that is a likely candidate for professional help.

If you’re having trouble deciding the best route to take with your remodeling projects, ask yourself the following questions:

  • What risks am I comfortable taking on?
  • How much time am I willing to dedicate to this project?
  • Does this project require a permit?
  • Do I have any experience with this kind of remodel?
  • Am I comfortable giving up control of this project?

 

DIY Remodeling Pros and Cons

Pros: Taking a DIY approach to remodeling projects pays dividends in many ways. Without having to pay labor costs, you stand to save significant money by tackling a project on your own. Going DIY also allows you to set your own schedule for the project. And of course, the sense of ownership and pride you will feel knowing you completed the project on your own is a priceless feeling for a homeowner.

Cons: DIY projects can be consequential. Mistakes at any point in the renovation process can lead to greater costs and sometimes, hiring a professional to fix the mistake. Unfortunately, this can result in the loss of significant time and money.

 

Professional Remodeling Pros and Cons

Pros: Professionals are inherently more experienced, bringing their specialization to the table on every home renovation project, so you can expect them to perform high-quality work that will increase the value of your home.

Cons: Getting professional quality work means paying for it. When budgeting, expect higher costs for any project you’re thinking of outsourcing to a pro. Bear in mind that, especially for large-scale renovation projects, your home will become a construction site. Accordingly, you may need a back-up plan, such as a temporary kitchen set-up or a short-term rental home .

 

DIY Remodeling vs Professional Remodeling: Around the House

The following list breaks down which projects are typical DIY candidates and which ones homeowners commonly opt for professional help to complete. However, the decision is ultimately up to you. If you have your heart on tackling a project on your own, gather your tools and make it happen!

Kitchen

  • Professional: Any large-scale structural changes, new gas lines, or new plumbing projects should be handled by a professional.
  • DIY: Simpler kitchen projects like a backsplash or faucet replacement and any cabinet finishing tasks are perfect DIY candidates.

Bathroom

  • Professional: Plumbing installation, running electricity, or any projects involving an expansion or alteration to your bathroom structure.
  • DIY: If your bathroom is simply in need of some new tile work, basic medicine cabinet restoration, or minor flooring improvements, roll up your sleeves and DIY.

Backyard

  • Professional: Consider hiring a professional for any significant outdoor projects like concrete builds, in-ground pools, and technical deck work.
  • DIY: Common backyard DIY projects include building a garden tool shed, building a fence, and refinishing a deck.

General

  • Professional: It is best to hire pros for new roofing, any foundation work, and extensive demolition projects. For asbestos and drywall finishing, it’s easiest, and safest, to go with the pros.
  • DIY: Any interior painting projects, basic electrical work, or simple trim and door upgrades.

If you’re planning on going through a remodel while you live at home, read this first. For more information on how certain renovations may impact the value of your home, talk to your Windermere agent.