Own a Piece of Denver History

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I just listed this beautiful Potter Highlands Victorian home. It was built in 1896, and it has been lovingly restored/remodeled in a way that combines historic charm with modern amenities. There's a large beautiful kitchen, a master with walk-in cedar closet and master bath with Italian marble, a cozy attic/loft, a finished basement, and a full carriage house/apartment in the back! Check it out here.

Even Within Denver, Some Areas Are Doing Better Than Others

I have a buyer who's trying to decide between Thornton and the northwest Denver Highlands area. Well, he's actually pretty well decided, but I did some research anyway, to demonstrate that all real estate is TRULY local, right down to the neighborhood. I checked sold statistics for each area over the past 12 months. What I found was fascinating.

Let's start with Thornton, a suburb north of town. I have other buyers under contract up there, and I've been amazed at how much house one can buy up there for around $200,000. No wonder. Prices have come down significantly. Over the past 12 months, the average home price in Thornton has decreased 7.7%, while the median price is down 5%.

Meanwhile, in the Highlands neighborhood, the average price is UP 17%, while the median is up 16%.

Of course, it's important to keep in mind that there is a lot of scraping going on in the Highlands neighborhood, which can skew the price statistics. If you scrape a $100,000 house and erect a $750,000 house in its place, the average sold price in the neighborhood is going to skyrocket, but it won't reflect the increase in value of the individual homes. So, since my buyer is looking in the 200K price range anyway, I searched the Highlands for sold properties under 300K, to eliminate the "scrape effect." And I still found that the average sold price was up 1.3%, while the median was up a whopping 14.3%.

So, what's a buyer to do? Well, if he needs a lot of house for the money, and plans to stay a while, and wants to take advantage of recent price drops, he might want to look at Thornton. However, if he's buying with resale in mind (and wants a very cute, charming area) he might want to stay in northwest Denver, knowing that it has held its value even in a declining market.

This kind of knowledge is important, not just for buyers, but for seller, and for everyone who owns a home or who follows the market. So often we hear news reports that say "Home values in Denver dropped x% over the past year" or even "Home values nationally dropped x%", and we automatically think "Well, what's x% of the value of my house? That must be how much value it has lost."

But it doesn't work that way. Not only are different cities appreciating and depreciating at different rates, but so are neighborhoods within those cities. Often values can shift fairly dramatically within a block or two. Even though a metro area (like Denver) may be depreciating, neighborhoods within that metro area can be appreciating -- sometimes significantly.

Location, location, location.

Is Now a Good Time to Sell?

In a word (or two), “it depends.” Obviously, conventional wisdom says that you don’t want to sell when prices are at their bottom. So, in general, if you don’t have to sell right now, you might want to think about staying put.

There are, however, a couple of caveats to that. First of all, what do you do if you’re selling in order to buy a new place here in town? You want to get in on the great deals inherent in a buyer’s market. But you have to sell to make that happen.

Obviously, the best case scenario would be if you didn’t have to sell to make that happen. Renting your current property might be an option. That way, you can wait until the market turns around to sell it. Plus, during the interim time, you’ll have someone else making payments and contributing to the equity on the property. There are disadvantages, however. First and foremost, you have to be (or hire) a landlord. Second, you wouldn’t have the proceeds from the sale of that home available as a down payment on your new home. You could borrow against the equity you already have to make your down payment, but that would increase the amount of rent you would need to cover the mortgage payment. And finally, you would need to be financially stable enough to cover that mortgage payment yourself on any months that the property remained vacant.

So let’s assume that renting isn’t an option. Well, then the question remains – is the loss you’d take on your current home made up for by the gain on the new house you’d be acquiring?

That all depends on where it is and what’s been happening in that neighborhood.

The trick is to look up the sales for houses like yours, in your area, for the past few years. (I know you can’t do that. But I can.) See if prices have dropped, remained stable or increased. Trust me – there are plenty of parts of town where values are still rising. Given those figures, can you sell the home for enough money to cover your mortgage and closing costs? Would you have enough left over for whatever down payment money you need?

And then look at where you want to move. What are housing prices doing in that part of town? Flat? Dropping or rising?

If you’re moving from a flat neighborhood to another flat neighborhood, it’s probably a wash – especially if the homes are in a similar price range. The same is true if both are depreciating or appreciating at roughly the same rate. This might not be a good time to move from a depressed neighborhood into an appreciating one, unless you’re afraid that your current home will continue to drop in value, and you want to cut your losses and jump onto the uphill train.

And finally there are the cases of sellers who have to sell. They’re being transferred, moving out of state, need to get out from under the mortgage – whatever. All is not necessarily lost in a case like that. But it’s a big enough topic that it deserves its own entry.

Which I’ll do tomorrow

Is Now a Good Time to Buy?

In a word, “yes.” Now is most definitely a good time to buy real estate in Denver. I remember Denver’s real estate bust in the 1980’s. I wasn’t living here at the time, but I’d come home to visit and see that I could buy a condo in Denver for less than I paid for my car. (Well, less than the average person paid for the average car. I don’t think my ride at the time was worth a whole lot.) I, of course, had no interest in buying any of these bargain-basement condos because a) I didn’t live here, b) I had no money, and c) I naively assumed that their value would always remain low.

If I’d only known then what I know now. If I had scraped together every dime I had, bought one of those condos and rented it out, I’d be thanking my young self for it today.

Unfortunately, my crystal ball is in the shop, so I don’t know at the moment when housing values in Denver will start to climb. The market indicators show that we’ve reached the bottom. So it should happen sooner rather than later. I don’t know if the wider economic crisis will delay it. I do know that Denver’s economy frequently runs counter to the national economy. Given that interest rates are likely to remain low, and that Denver’s employment situation looks good, I have every reason to be optimistic about the Denver market.

So yes, I believe that this is an incredible time to buy. Market conditions have driven prices down in many areas. Housing is “on sale.”

Get in on the sale while you can.

Did My House Drop 14%?

So I’m sure at least some of you were reading yesterday’s post about the Denver real estate rebound, and kinda got stuck at the part about the average home price dropping 14.8% in the past year. "Did my house drop 14.8%?"

Don’t panic. It probably didn’t. Heck, it may have even increased in value. It all depends on where you live.

All real estate is local. Not just “local” as in “city.” “Local” as in “neighborhood.” When you average the prices of all of the houses in all of the neighborhoods that sold this September, you get a figure 14.8 lower than the same data for last September.

Values are falling fast in certain neighborhoods. Neighborhoods that have seen a lot of foreclosures, for example. Foreclosures tend to sell for less. The banks want to be rid of them. But when all of those low-priced foreclosures show up in a neighborhood, their non-foreclosure neighbors can’t get as much for their houses any more, and prices drop.

Prices are also falling in the market segments that have seen the greatest decrease in the number of buyers, namely the higher end. The number of homes sold in the 500K to 1M range dropped nearly 22% in the past year. The number of million dollar plus homes sold dropped over 40%.

Of course, that fact in itself contributes to the decline in the average sales price. Sales in the under 200K category are brisk, because demand is high for well-priced, low-end foreclosures. So if a lot of lower priced houses are selling, and very few high-end houses are selling, the average price will be dragged downward.

Some neighborhoods are appreciating. That privilege goes to neighborhoods that in demand for some reason. Areas that are close to the center of town. Areas that have unique architecture. SmartMoney magazine says:

. . . established, close-in neighborhoods are often holding up better than suburbs, because they didn’t endure overbuilding and because higher-income owners were less likely to need subprime or adjustable-rate mortgages.

Of course, another reason many of those neighborhoods are appreciating is because of the “scraping” going on. When you buy a shack for 200K, and then tear it down and build a mansion on the lot that sells for 1.5 million, you’ve upwardly skewed the average sales price for that neighborhood.

There are other reasons. My house has appreciated in the three years since I bought it because it’s fairly close to downtown and it’s a patio home. There’s a higher demand for these types of homes among retiring baby boomers, and very few of them have been built in the close-in suburbs, so the value goes up.

What’s happened to your house’s value? I don’t know. But if you’d like me to find out for you, drop me an email at mb@mblovesdenver.com and let me know. I’d be happy to check it out!

Condos are Rebounding, Too

Just as a postscript to the last post – the figures above are for single family homes. The condo market’s rebound looks even more dramatic. Inventory is down nearly 26%, days on market is down 3%, and months’ supply is down over 33%. And the prices have “only” dropped 11% average price, 5.5% median price. (I know – it’s a lot of money when it’s your money!) Sales are up 11%, and units under contract is up 17%, which means the number of units sold is still rising. Good news!

Numbers Don't Lie: The Denver Market Bounces Back

Everywhere I turn, I hear that the Denver market has turned and is poised for a rebound. (See the SmartMoney entry below.) Great news. But I wanted to see exactly where all of this optimism was coming from. So I started digging into the numbers. The numbers look very, very good.

From September 2007 to September 2008, inventory (the number of homes on the market), dropped nearly 20%. The number of houses sold increased 15%. The average days a home is on the market before it sells dropped 5%. And – get this – the “months’ supply” of homes on the market dropped a whopping 30%.

Why does this signal a rebound? Because the problem in our market (and in any difficult real estate market) has been that we’ve had a lot more sellers than buyers. And -- thanks to the law of supply and demand – when you have less demand for a product, the price tends to drop. How do we know we have more sellers than buyers? Inventory. When a lot of houses build up on the market, we know we have more people trying to sell their houses than we have people willing to buy those houses. So, with all of the competition for fewer buyers, houses sit on the market longer, reflected in the average days on market statistic. All of this leads to the “months of inventory”, which is what you get when you take the number of houses on the market divided by how many are selling every month. That tells us how long it would take to sell all of those houses if no new houses were to come onto the market.

When more houses are selling and less houses are sitting in inventory, that tells us that the market is becoming more balanced. It tells us we have more buyers in the market, buying houses and reducing inventory.

Why has this happened? Well, the average sales price might give us a hint. It has dropped 14.8% in the past year. Median sales price dropped 11.8%. Apparently prices have dropped to a level where homes are attractive to buyers. It’s the law of supply and demand again. When the price drops, demand increases. As demand continues to increase, prices rise to meet the demand.

At any rate, it’s very good news for Denver real estate.

More Good News for the Denver Market

So the PMI Mortgage Insurance Company, released its Summer 2008 U.S. Market Risk Index yesterday. The list looks at the top 50 U.S. housing markets, and assesses the likelihood that home prices will be lower in that market it two years than they are today. At the top of the list, Riverside-San Bernardino-Ontario California, with a 95.5% chance of lower prices in the next two years. In other words, they're nearly 100% sure prices are going to drop. Hovering at the bottom of the list: Denver Colorado, with less than a 1% chance that prices are going to drop in the next two years.

Isn't that lovely news?

Red Trolley's GRAND Opening is This Saturday!!!

Come by Red Trolley Cake and Cone on Saturday July 5th for the OFFICIAL grand opening. There'll be fresh squeezed limeade for a quarter, organic hotdogs for a buck, a live band, a jumpy castle for the kids, lots of yummy ice cream and gelato (my favorite this week is chocolate hazelnut gelato) and a good time all around. It'll run from 11 a.m. til 11 p.m., and I'll be there the WHOLE time.

Address is 2637 W. 32nd Ave.

See ya there!

Great New Patio Homes at Lowry

I love Lowry. It's a great neighborhood, the town square is adorable, and it's all just a hop, skip and a jump from the center of town. If living on that side of town made sense for me, I'd move there in a heartbeat. Alas, my family is all on the west side, so I only look longingly eastward.

I spent this afternoon at Lowry with some clients of mine, looking at a new patio home community -- Arbors at Lowry -- going up in the East Park section. They were having a lovely grand opening celebration with sandwiches and cookies, which always makes me happy.

And I have to say the houses are really, really nice.

I'm a big fan of the patio home concept. So much so that I live in one myself. They encompass the best of both worlds -- a detached home on a lot with a yard, but with no lawn care and no shoveling. The HOA handles it all. That works very well for me. When I owned a "normal" home, I used to water my lawn once a month for a day. Not deliberately. I'd just forget to water until the lawn got all dry, then I'd water the heck out of it and eventually the water was running down the street and one of the neighbors would come over and turn it off.

The thing is, I'm not the only one who wants a real house and a real yard without the real work. That's what the Baby Boomers want as they retire. The kids are moving out, and they're tired of the mowing and pruning and shoveling. But they're used to having a real house with a yard. They don't want to go to a condo or a townhouse where they have to share walls.

The Baby Boomers create a seismic demographic shift every time they enter a new phase of life. And as they retire, they're creating an increasing demand for low maintenance detached homes. They don't want yard work. What they do want is ranch floor plans or at least main floor masters so they can get still get to their bedrooms on their creaky, arthritic, ACL-scoped knees. They want patio homes.

That's why I bought mine. It wasn't just the personal convenience. It was the investment. I knew the demand for patio homes -- especially those closer to the center of town -- would grow. And it has. In the three years since I built my home -- three years that have been relatively flat in the Denver real estate market -- my home has been appreciating. Homes rarely go on the market in my neighborhood. And when they do, they sell quickly.

That's why I'm a big fan of the patio homes I saw today. Homes in Lowry are already beating the appreciation odds in Denver, increasing in value in the midst of a flat market. I think that trend is only going to increase as gas prices soar. People like newer houses, but they want to live closer to the center of town. They don't want to waste a ton of money on gas driving to work (or to play!) There are only a few places to find new houses close to the center of Denver. There's Lowry, Stapleton and a few smaller infill areas (like my neighborhood in Lakewood). That's about it.

So take the appeal of patio homes, the past performance of Lowry and the rising gas prices, and the Arbors at Lowry starts looking like a danged good investment. Nice houses, too. Floor plans are well laid-out, and the finishes are high end. Slab granite, alder cabinets and extensive hardwood floors are all standard. Plus (this floored me) the back yards are fenced. That's a big deal in a patio home community. In my neighborhood we can't fence our yards, because the HOA needs to have access to them for mowing, etc. At the Arbors, the HOA actually comes into the fenced yard and mows it. Best of both worlds.

So check 'em out. Better yet, call me and I'll go along! (See June 23rd blog entry below "Do You Need a Realtor To Buy From a Builder?") If you go without me, at least tell Judi Phillips in the office that I sent you. She's very nice.

If you want to learn more about patio home communities throughout the metro area, let me know. I'd love to help!

Three Words: Honey Canteloupe Sorbetto

Yes, Honey Canteloupe Sorbetto. The latest flavor at Red Trolley Cake and Cone. I just tasted it. It's beyond amazing. Tastes like a summer Sunday brunch, only better.