Real Estate News from Jim

The Overall Market - There are a couple of positive signs for the real estate market related to overall inventory levels. In the overall market there was a decline of 15% in new homes coming on the market and a 5.7% decrease in active listings compared to May of 2007.  Currently there are 20,287 homes for sale in the greater metro area with an absorption rate of 5.4 months.  One concerning item is the decrease in average sold price of 13% compared to May ‘07 to $276,374 for a single family home.  The number of closed residential homes was off by 5.9% in May and down 7% year to date. 

Douglas County West (DCW) - 149 residential closings in May ‘08 a decrease of 19% compared to May ‘07.  Year to date DCW is off by 15% in number of closed residential transactions.  Average days on market increased to 126 days and absorption rate is currently at 10 months.  Average sale price decreased to $387,334 compared to $483,842 in May of 2008.  This figure can be misleading and in my opinion and does not equate to every house loosing 19% in value.  We are seeing more homes sell in the lower price range skewing the average sold price when compared to May of 2007.Douglas Elbert Parker (DEP) - 197 residential closing in May ‘08 a decrease of 16% compared to May ‘07. Year to date DEP is off by 21.9% for closed residential transactions.  Average days on market decreased to 104 days and absorption rate is currently at 6.5 months.  Average sale price increased to $376,259 or 1.3%.  Active listing inventory increased to 1,356 homes or 6.1% more homes on the market in May ‘08.Douglas Highlands Ranch Lone Tree (DHL) - 206 residential closings in May ‘08 a decrease of 11.2% compared to May ‘07.  Year to date DHL is off by 18.9% in number of closed residential transactions. The average days on market has increased by 21% to 69.  Listing inventory decreased by 4% to 678 homes on the market and new listings coming on the market in May ‘08 was down by 17%.  Absorption rate is at 3.4 months for this area.I hope this information helps your business. 

You can also find real estate statistics for the entire Denver Metro Area by clicking here.  (See below for direct links to mls area stats)

Tournament hosted by Barbara K. Wood & Perry Park Country Club Put your foursome together or sign up as a single. Monday July 7, 2008 “Golf the Park” Realtor Open

You are invited to join us at Perry Park Country Club Attention Brokers, Agents and Affiliates… Take advantage of this unique opportunity to golf one of Colorado’s Premier Private Golf Courses along the Front Range. Special pricing includes all of the following…. 18 Holes of Golf, Golf Cart, Range Balls, Games for Prizes on the Course, Continental Breakfast, Dinner Buffet, 2 drink tickets (Plus Cash Bar) Spectacular Door Prizes! Tournament Awards! And a whole lot of fun!! - 9:30 - 10:45 a.m. Check In, Tournament Instructions, Warm Up and Continental Breakfast - 11:00 a.m. Shot Gun Start (beverage cart and snack shop on course) - 3:30-4:30 p.m. Cocktail Hour (Cash Bar or tickets) - 4:30-? Dinner Buffet, Door Prizes and Tournament Awards All of this for $125.00 per player or $500.00 per foursome

Event Schedule Attention Affiliates!!!!

 Along with a great day of Golf on this Beautiful Course, for an additional $ 100.00 Hole Sponsorship Fee, your company can set up signage and/or an information table. (Sponsorship fees will go toward Door Prizes!) Sign your Team up today! Call Perry Park CC Pro Shop: 303.681.3186 Credit Cards payments will be accepted by phone or you may mail your checks to.. Perry Park Country Club Attn: John Merrihew 7047 Perry Park Blvd. Larkspur, CO 80118 Payment deadline is June 15, 2008 For sponsorship details and more information Call Barb Wood 720.260.7998 Barbara K. Wood www.PerryParkRidge.com

I’ve updated Denver Real Estate trends for April 2008. 

In the Douglas County luxury market 28% few homes sold homes sold over $1,000,000 when comparing Jan to Apr 2007 vs. 2008. In 2007 we saw a total of 65 homes sold in this category with 55 of them in the 1 to 2 million range, 7 in the 2 to 3 million range and 3 in the 3 to 4 million range.  For the first 4 months of 2008 47 homes have sold over 1,000,000 with 39 in the 1 to 2 million range, 6 in the 2 to 3 million range and 2 in the 3 to 4 million range.

Check out this amazing development in Sedalia Colorado.  The Bears Den is preserved as an exclusive, gated community with a limited number of expansive sites available for construction of custom residences.  These estate homes are required to adhere to HOA Architectural Control Covenants specifying quality, native materials, color palettes and landscaping installations in keeping with the unique legacy of Bears Den.

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Housing challenges including foreclosures,
home sales, and new housing starts continued
to impact Metro Denver’s economy in October,
according to data compiled by the Metro
Denver Economic Development Corporation
(Metro Denver EDC) in its Monthly Economic
Summary for November 2007.
Existing home sales in Metro Denver declined
25 percent between August and September,
from just over 5,000 homes sold in August to
just over 3,700 homes sold in September.
The total inventory of unsold homes decreased
almost two percent over the month, suggesting
that a slower market could be affecting some
homeowners’ decisions to sell.
On a year-to-date basis, Metro Denver home
sales were down 0.5 percent from the same
period last year, and inventory levels were down
almost four percent through the first nine
months of 2007.
Still,Denver ranked No. 1 among 20 metro areas
in the highly regarded S&P/Case-Shiller Home
Price Indexes national report, which showed
that Denver had the highest home appreciation
rate, with an index increase of 0.3 percent,
between July and August. Analysts say the
Denver market showed earlier symptoms of the
nationwide housing downturn and could be
one of the first to recover. They caution, though,
that additional positive readings are needed to
determine if Metro Denver has truly entered a
real estate recovery.
“We certainly feel that difficulties on the housing
front continue to challenge the region when
it comes to consumer confidence and the
health of the lending industry,” explained Tom
Clark, executive vice president of the Metro
Denver EDC.“We are optimistic that we’re
not as bad off as some of the regions that we
compete with for job growth.”
There is good news, however, on the commercial
real estate front.A recent report by the
Urban Land Institute and Price Waterhouse-
Coopers lists Denver as the only non-coastal city
among top-tier spots for commercial real estate.
Metro Denver’s commercial real estate market
ranked eighth among the 15 markets tracked in
the report, and analysts gave special recognition
to the city’s redeveloped urban core and the
transit system that links downtown with suburban
communities.
Employment in Metro Denver grew by 3,000
jobs between August and September, a gain
that is consistent with seasonal patterns in the
Denver-Aurora and Boulder-Longmont metropolitan
areas.
The Denver-Aurora MSA lost 1,000 jobs over the
month, and the Boulder-Longmont area gained
4,000, bringing Denver-Aurora job growth to 1.6
percent year-to-date, according to the Colorado
Department of Labor and Employment.The
Boulder-Longmont area reported year-to-date
growth of 2.9 percent.
Metro Denver job growth has flattened over the
past three months, with year-to-date growth of
1.8 percent recorded each month from June
through September. Colorado had a two percent
employment growth through the first nine
months of the year, outpacing the U.S. job
growth rate of 1.4 percent.
Recent economic data for Metro Denver reveal
that eight of 18 indicators moved in a positive
direction for the month, down from 12 positive
indicators last month.Twelve of 18 indicators
moved in a positive annual trend, down from
13 last month.
The Monthly Economic Summary provides a
snapshot of metro area economic activity, as
well as its relationship to national and regional
economic trends.Key real estate points from
this month’s report include:
Residential Real Estate
According to research by the National
Association of Realtors, September ended three
months of over-the-year stability for median
home prices. The U.S. median existing home
price was $211,700 in September, down 4.2
percent from the $220,900 median recorded in
September 2006.
Single-family home and condominium prices
in Metro Denver both declined over the month,
with single-family prices dropping most
significantly.The average sales price of a metro
area single-family home fell more than seven
percent in September, slipping to $305,459
from $329,783 in August. Condominium prices
were less volatile, declining roughly one percent
to $182,741 from $181,458 in the prior month.
On a year-to-date basis, the metro area’s average
single-family home cost is down one percent
through September, with condominium costs
down 3.4 percent.
Consistent with the national monthly trend,
Metro Denver’s foreclosure filings declined
between August and September. Public trustees
reported 1,894 filings in September, down from
the 2,276 filings recorded in August.Through
the first nine months of the year, metro area
foreclosure filings are up 40 percent over the
same period last year, and Denver, Douglas, and
Adams Counties had the sharpest increases.
The pace of new home construction in Metro
Denver flattened between July and August, with
declines in permits for single-family homes and
apartments offset by a considerable increase in
permits for condominiums, townhomes, and
duplexes. On a year-to-date basis, however,
metro area permitting trends vary. Total permits
issued through the first eight months of this
year are down almost 20 percent from the same
period last year, with permits for single-family
homes down almost 35 percent year-to-date.
Also, attached unit permits—or permits for
condominiums, townhomes, and duplexes—
were down about 9 percent. By contrast,
permits for multi-family units, or apartment
buildings, are up more than 100 percent
year-to-date.Developments in unincorporated
Arapahoe County account for almost one-third
of the apartment building permits issued in
Metro Denver so far this year.
The overall vacancy rate in Metro Denver’s
apartment rental market declined to its lowest
level since 2001, with rental rates declining
unexpectedly. The third quarter vacancy rate
of 5.3 percent was down from the prior
quarter’s 6.2 percent and noticeably below
the 6.7 percent vacancy rate recorded in third
quarter 2006.
Commercial Real Estate
In its third quarter 2007 report, Frederick Ross
Company observes a Metro Denver office
market that remains healthy despite signs of
credit-related weakness. Leasing velocity in the
office market slowed between second and thirdquarter, but year-to-date absorption remains
in line with the company’s forecast for the year.
Vacancy rates in third quarter were 15.6
percent, down from 18.2 percent in third
quarter 2006.
A third quarter report released by Grubb & Ellis
also acknowledges office market impacts from
the residential downturn.Third quarter vacancy
rates ticked up slightly in the Southeast
Suburban market, which has many mortgagerelated
businesses.The report puts metro-wide
office market absorption at 1.9 million square
feet year-to-date, a solid reading that is nonetheless
below previous records.
According to the latest data from CoStar Realty
Information, Inc., the vacancy rate in Metro
Denver’s office market flattened between
second and third quarter.At 11.8 percent, the
third quarter direct vacancy rate was essentially
the same as second quarter’s 11.7 percent rate.
Frederick Ross Company’s third quarter reports
that housing turmoil has only slightly affected
Metro Denver’s industrial market.Third quarter
industrial vacancy of 6.3 percent represented a
seven-year low and a noticeable decline from
the 7.6 percent rate posted in third quarter
2006. All sectors of Metro Denver’s warehouse
market had third quarter vacancy rates below
10 percent, and the flex market continued its
post-recession recovery with a three percentage
point improvement on vacancy rates from third
quarter 2006.
The Grubb & Ellis report also observes a trend
in renovations of existing properties.The report
notes, however, that increasing lease rates have
spurred new development, and nearly three
million square feet of industrial space is
currently under construction.
The Metro Denver industrial market remained
strong in the third quarter, according to the
latest data from CoStar Realty Information, Inc.
The direct vacancy rate ticked down to 5.8
percent from 6.1 percent in second quarter and
was the lowest vacancy rate posted since fourth
quarter 2001. Average lease rates have risen
steadily in a tightening market, and third
quarter’s rate stood at $5.02.
___________________
This article was shortened for length and reprinted
with permission of the Metro Denver Economic
Development Corporation. For a full version of this
report, including Labor, Employment, and Consumer
Sector data, visit the Metro Denver EDC at
www.metrodenver.org.

We are doing a blog class on Nov 9th at Castle Rock.

Let’s start by discussing the overall market conditions in the greater Denver Metro Area.  September closing where down 9.6% residential and 11% condo compared to last year at this time. Residential active listings are about the same at 23,202 active listings in September of 2007.  Condo listings are down 12.9% versus this time last year totaling 7,308.  Year to date residential closing are down only .3% and condo closing are down 1.2% year to date.  The bottom line is Denver is doing much better that the rest of the country and we will have a quicker recovery.

Douglas County West (DCW) posted 8 more closings in Sept 07 than in Sept 06.  Year to date DCW is down 3.8% in residential closings.  Keep your eye on avg days on market, inventory and new listings because they all showed an increase last month.

Douglas Elbert Parker (DEP) posted 11 more closing in Sept 07 than in Sept 06.  Year to date DEP is up 5% in residential closings. Keep your eye on avg days on market, inventory and new listings because all but active listings increase last month.

Douglas Highlands Ranch Lone Tree (DHL) posted 19 few closing in Sept 07 than in Setp 06.  Year to date DHL is down 1.2% in residential closings.  Active lisings and new lisings both decrease last month.

Are you ready for this?  I think we are showing small signs that the residential resale market in Douglas and Elbert County is improving and on track for a small recovery in 2008.  We have had plenty of negative news in that last month regarding liquidity in the mortgage market and increased foreclosures but I’m optimistic going forward.  Have we hit the bottom and are slowing starting to bounce back? 

Are you interested in more details on where exactly that what price range sales took place last month in Douglas and Elbert County?  Just email me back and I’ll send out the detail report first part of next week
Jim’s Commentary – August 2007
All three MLS areas posted an increase in sold single family homes with Douglas Elbert Parker (DEP) leading the way, an increase of 12.4% over Aug of 2006. Douglas Highlands Ranch Lone Tree (DHL) up 4.3% and Douglas County West (DCW) 2.9% comparing August closing in 2006 and 2007.
Douglas County West (DCW) is still down in overall closed homes year date by 4.8%.  Average days on market averaged 118 a decrease of 8.5% while active listing increased to 1,451 an increase of 9.6% over this time last year.  Active listings decreased in August when comparing last month’s totals, July 2007 1,505 listings.
Douglas Elbert Parker (DEP) has closed 4.8% more homes year to date compared with 2006.  Active, new listing and absorption rate all decrease in DEP compared to August 2006. Absorption rate for last month was 5.9 months indicating a neutral market between buyers and sellers.
Douglas Highlands Ranch Lone Tree (DHL) ended the month with 258 closings an increase of 4.3% over August 2006.  Year to date DHL is down only 2 transactions. Active, new listing and absorption rate also decrease in DHL compared to August 2006.

All mortgages can be divided into two main
categories: conventional and government loans.
Additionally, each of the various mortgage programs
can further be classified as fixed rate loans,
adjustable rate loans, or a combination of the two.
In last month’s technical bulletin, we discussed the
different types of conventional and government loans.
In this month’s technical bulletin, we’ll talk about
fixed rate vs. adjustable rate loans.
Fixed Rate Mortgages
With fixed rate mortgage (FRM) loans, the interest
rate and monthly payments remain fixed for the
period of the loan. Fixed-rate mortgages are available
for 40, 30, 25, 20, 15, and 10 years. Generally, the
shorter the term of a loan, the lower the interest rate.
The most popular mortgage terms are 30 and 15
years. With the traditional 30-year fixed rate mortgage,
monthly payments are lower than they would be
on a shorter term loan. But if a borrower can afford
higher monthly payments, a 15-year fixed-rate mortgage
allows repayment twice as fast and saves more
than half the total interest costs of a 30-year loan.
The payments on fixed rate fully amortizing loans are
calculated so that at the end of the term the mortgage
loan is paid in full. During the early amortization
period, a large percentage of the monthly payment is
used for paying the interest. As the loan is paid down,
more of the monthly payment is applied to principal.
With bi-weekly mortgage plans, a borrower pays half
of the monthly mortgage payment every two weeks.
Because of the extra principal paid each year, the
loan is repaid in less time. For example, a 30 year
loan can be paid off within 21–23 years.
Adjustable Rate Mortgages
A variable or adjustable rate loan is a loan whose
interest rate, and therefore monthly payments,
fluctuate over the period of the loan. With this type
of mortgage, periodic adjustments based on changes
in a defined index are made to the interest rate. The
index for a particular loan is established at the time
of application.
Well known indexes include the Constant Maturity
Treasury (CMT), Treasury Bill (T-Bill), 12-Month
Treasury Average (MTA), 11th District Cost of Funds
Index (COFI), Cost of Savings Index (COSI), London
Inter Bank Offering Rates (LIBOR), Certificates of
Deposit (CD) Indexes, and Prime Rate.
The new interest rate is determined by adding the
index and the margin. The margin is fixed percentage
points added to the index to compute the interest
rate. The result will then be rounded to the nearest
one-eighth of a percent. For example: If the index is
5.3% and the margin is 2.5%, then the new interest
rate = 5.3% + 2.5% = 7.8%. The nearest to 0.8% is
0.75% = 6/8%. The result will be 7.75%.
The margins remain fixed for the term of the loan
and are not impacted by the financial markets and
movement of interest rates. Lenders use a variety of
margins depending upon the loan program and
adjustment periods.
Most ARMs have interest rate caps to protect
borrowers from enormous increases in monthly payments.
A lifetime cap limits the interest rate increase
over the life of the loan. A periodic or adjustment cap
limits how much the interest rate can rise at one
time.
With most ARMs, the interest rate can adjust every six
months, once a year, or every 3, 5, 7, or 10 years. A
loan with an adjustment period of 6 months is called
a 6-month ARM; a loan with an adjustment period of
1 year is called a 1-year ARM, and so on.
Most ARMs offer an initial lower interest rate than the
fully indexed rate (index plus margin) during the
initial period of the loan, which could be one month
or a year or more. This is known as a teaser rate.
All ARMs are available with 30-year terms and some
with 15-year terms, and adjustable rate mortgages
generally have a lower initial interest rate than fixed
rate loans.
Negatively Amortizing Loans
Some types of ARMs offer payment caps rather
than interest rate caps, which limit the amount the
monthly payment can increase. If a loan has a payment
cap but has no periodic interest rate cap, then
the loan may become negatively amortized: if interest
rates rise to the point that the monthly mortgage payment
does not cover the interest due, any unpaid
interest will get added to the loan balance, so the
loan balance increases. However, the borrower
always has the option to pay the minimum monthly
payment, or the fully amortized amount due.
For example, if a loan has a payment cap of 7.5%
with a payment of $1,000 per month and interest
rates rise, the new payment could go up to, say,
$1,200 per month. But the capped payment is only
$1075. The other $125 would get added to the loan
balance to be paid off over time, unless the borrower
decides to pay that amount now.
The interest rate on negatively amortized loans can
adjust monthly.
The advantages of negatively amortized loans, also
known as deferred interest loans, are that they allow
borrowers to control cash flow (because the payment
is relatively stable), take advantage of low interest
rates relative to the market at any given time, and pay
back the money borrowed today at a depreciated
value years from now (because of natural inflation).
Combined (Hybrid) Loans
Hybrid loans, a combination of fixed and ARM loans,
come in different varieties:
Fixed-period ARMs
With fixed-period ARMs homeowners can enjoy from
three to ten years of fixed payments before the initial
interest rate changes. At the end of the fixed period,
the interest rate will adjust annually. Fixed-period
ARMs—30/3/1, 30/5/1, 30/7/1 and 30/10/1—are
generally tied to the one-year Treasury securities
index. ARMs with an initial fixed period, in addition
to lifetime and adjustment caps, usually also have a
first adjustment cap. It limits the interest rate paid the
first time the rate is adjusted. First adjustment caps
vary with the type of loan program.
The advantage of these loans is that the interest rate
is lower than for a 30-year fixed (the lender is not
locked in for as long, so their risk is lower and they
can charge less) but there is still the benefit of a fixed
rate for a period of time.
Two-Step Mortgage
Two-step mortgages have a fixed rate for a certain
time, most often 5 or 7 years, and then the interest
rate changes to a current market rate.
Two-step mortgages can be convertible or nonconvertible.
With a convertible two-step mortgage, also
known as a 5/25 or a 7/23, the interest rate for the
initial five or seven years is fixed. The loan then converts
to a fixed-rate mortgage (at a different interest
rate) for the remaining 25 or 23 years, respectively.
A non-convertible two-step mortgage means that the
5/25 or 7/23 has a fixed interest rate for the first five
or seven years, then converts into an ARM that adjusts
annually for the remaining 25 or 23 years of the loan.
Convertible ARMs
Some ARMs come with an option to convert them to
a fixed-rate mortgage at designated times (usually
during the first five years on the adjustment date), if
interest rates start to rise. The new rate is established
at the current market rate for fixed-rate mortgages.
The conversion is typically done for a nominal fee
and requires almost no paperwork. The disadvantage
is that the conversion interest rate is typically a little
higher than the market rate at that time.
The other kind of convertible mortgage is a fixed
rate loan with a rate reduction option. If rates have
dropped since the time of closing, this type of mortgage
allows the borrower, under some prescribed
conditions and for a small conversion fee, to adjust
the mortgage to the going market rate.
Graduated Payment Mortgages
(GPMs)
Graduated payment mortgages have payments that
start low and gradually increase at predetermined
times. A lower initial payment allows a borrower
to qualify for a larger loan amount. The monthly
payments will eventually be higher in order to catch
up from the lower payments. In fact, the loan will
be negatively amortizing during the early years of
the loan, then the principal will be paid off at an
accelerated pace through the later years.
Lenders offer different GPM payment plans, which
vary in the rate of payment increases and the number
of years over which the payments will increase.
The greater the rate of increase or the longer the
period of increase, the lower the mortgage payments
in the early years.
Buydown Mortgage
A temporary buydown is the type of loan with an initially
discounted interest rate which gradually
increases to an agreed-upon fixed rate usually within
one to three years. An initially discounted rate allows
you to qualify for more house with the same income
and gives you the advantage of lower initial monthly
payments for the first years of the loan when extra
money may be needed for furnishings or home
improvements. To reduce your monthly payments
during the first few years of a mortgage you make an
initial lump sum payment to the lender. If you do not
have the cash to pay for the buydown, the lender can
pay this fee if you agree on a little higher interest
rate.
A very popular buydown is the 2-1 buydown. 3-2-1
and 1-0 buydowns are also available, though less
common. The compressed buydown works the same
way, but with the interest rate changing every six
months instead of yearly.
The lower rate may apply for the full duration of the
loan or for just the first few years. A buydown results
in lower payments and may be used to qualify a
borrower who would otherwise not qualify .
With a variety of different loan programs available, it
is important to choose the type of loan that will best
suit your needs.