1st Quarter 2008 Residential Real Estate Stats for Colorado Springs

As predicted in the annual report, the first quarter of 2008 was as tumultuous as any time in the recent market slowdown. Characteristics of the First Quarter, 2008 include: low prices, low selling activity, high inventory, tightened credit and bad press coverage. What is not characteristic of the First Quarter, 2008: increases in local foreclosures, a continued increase in listing stimulus, and the end of civilization as we know it. The big bail out in the financial markets orchestrated by the Federal Reserve was not on Main Street but on Wall Street with the giant $20 billion bailout of Bear Sterns. The classic rule of real estate was proven true in the first quarter: location, location, location.

At the end of the first quarter, crocuses were popping through the frequent snow gales of the Colorado spring. The vast majority of the real estate practitioners have not seen a first quarter that they would have liked: total volume is off 25% year to date, and few turn cartwheels of the "good ol' days of 2007." However... as weird as the market has been, as strange and as sudden as the slowdown has been, it is beginning to make sense; and it is beginning to show signs of picking up.

The popular press likes to look at two pieces of data to tell the entire story of the Pikes Peak Market: Average price and total units sold. March 2008 was a lousy month according to the popular press: the average selling price of $236,000 was similar to the same value in March, 2005. Three years down the road and zero appreciation sells papers. Similarly, March '05 and '06 both saw more than 1000 units sell. March '08 saw 722 units sell, the lowest March total since 1999 and an 18% drop over 2007. But real estate is a market with many variables and supply and demand rules real estate just like it rules all markets. The numbers for demand were week, but the numbers for supply showed improvement. The market has only 150 more listings than the same time last year and is only up 4% in total inventory from March 2007. Even better, March '08 listing units were down 18% from March 2007. It now appears unlikely that the 2008 actively listed single family inventory will break the 7000 unit ceiling as it did in 2007. While $236,000 is not a sure sign of positive appreciation, it is $10,000 higher than the February average sales price.

The first quarter has closed with sub 6.00% interest rates on 30 year fixed loans, most buyers have at least a little cash and think ARMS are "what got everyone in trouble" and the listings that are selling are well-priced and in great condition. Stuff is starting to make sense again and the late arriving relocation buyers appear more eager to buy this year than the year before.

Advice for Sellers:

Supply is Slowing. Demand hasn't picked up yet. Don't take chances. Now more than ever is the time to strike if you are a seller. The market is not exactly heating up, but there are some favorable trends. Get your yard looking better than any other on the block. Address your paint. Prune your shrubs. Get the inside smelling fresh and clean (Glade Air Fresheners are not nice and clean smelling). Clean the furnace, don't wait for the inspector to kill the deal. As relo season begins, condition matters, and relo buyers increasingly are anxious to get in and get a good buy. With 72 hours to pick a house, they'll only buy good value homes that are tidy and ready for move-in.

Advice for BUYERS:

Use this information to your advantage. Supply is slowing down. Colorado Springs will not likely have 7000 single family choices this summer. That means the maximum inventory will occur in the next 90 days. Ask yourself this: "if supply is slowing down, is that a good thing for my future values? If demand is still low, is that a good thing forBuyers: DON'T BLINK. July and August may not be so favorable. my negotiating strategy? How many more times will I see a 6% 30-year fixed rate? How often will I see a seller so willing to pay my closing costs?"

INVESTORS:

If you've been waiting in the wings for the market to recover, start looking in your rearview mirror. What do you see?See any good deals from the last year you might have missed? Like Buyers, Investors need to ask questions that are not focused on the next 90 days, but the next 3 to 4 years. While the rest of the mortgage world has reset to 1999 underwriting rules, one place it hasn't changed is investor rates at or near primary occupant values. Some of the best deals in years are out there now, and relocation buyers who are starting to flood the market often can't waste their time with them. They want move-in condition. A long-on-market property needing a bit of work ($5000), is usually not a move-in property for a relocating buyer who needs every dollar to go towards their down-payment now that 100% finance is gone for anyone but a VA buyer. That means that the local investor buyer who has cash, 10% minimum, 20 to 25% better, has a ton of power. A classic rule of negotiating: those with needs have little power. Those with power have few needs.