Gretchen Faber ~ LifeStyleDenver

Last week, The Kentwood Companies sponsored a real estate and economic forum for our agents and clients. The speakers were nationally recognized experts in their respective fields, and had some extremely interesting comments to make about the U.S. economy, the Denver, Colorado economy and real estate trends. Over 1,000 people attended, and the local media was there as well.

I plan on presenting to you the highlights from each speaker, but am writing one at a time. Today, let’s hear from Erik Davidson, the SVP and Senior Director of Investments for Wells Fargo Private Bank.

He questioned, “Are we in a recession obsession?”

Davidson explained, “Recessions are neither good nor bad, In the past 50 years, there have been 80 recessions and economists have predicted 11 of them.” “The last recession ended on Nov 30, 2001. Economists declared that recession on Nov 26th, 2001. So you see, they are difficult to forecast.”

Erik joked, “A recession is when your neighbor loses his job. Depression is when you lose your job.”

If you review the chart for Consumer Confidence in Davidson’s power point presentation, you’ll see we are facing a challenging time. Erik continued, “The Misery index is back to where we were in the early 80’s. Are we in a triple bubble? A housing bubble, a credit bubble, and a commodities bubble? The magnitude is not just 3X a single bubble. With those 3 factors combined, it causes a higher magnitude of result.”

Chart of Consumer Confidence for 1986 through September, 2008

Erik concluded, “What does all of this mean? We will probably go into a recession. It’s probably going to be deeper and longer than what we have experienced in the past, more difficult than what some of you remember from the 70’s. There are still some reasons for optimism though. Denver’s employment growth is still much higher than the national average. The reason for this is Denver’s diverse portfolio of industries: Professional businesses, education, health, construction & mining, trade & transportation, leisure & tourism plus many more.”

One of Erik’s big concerns, he explains is that currently 56% of US treasuries are help by foreign investors. “We in the United States have been the recipients of a tremendous amount of foreign aid from China, Japan, etc.”

“What is causing all of the foreclosures? Is it a sub-prime crisis or an ARM crisis? 2/3 of our subprime loans are adjustable. ” People have seen their payments jump dramatically. This suggests that the crisis was founded with too many adjustable rate mortgages. Borrowers really didn’t consider they’d be repaying at the higher levels. People thought the housing prices would continue to rise, and when their mortgages adjusted they’d either refinance or sell.

Colorado has been better than the rest. Unemployment in Colorado is lower than the national average. Employment still showing positive growth in Colorado. The Denver economy is very diverse. Our economy is much better suited to withstand blows to single sectors. The rest of the country has been experiencing extreme highs and lows. We in Denver were only at 4.7% decline for housing prices, while the national average is at 15.9%.”

Erik coached the audience, “Denver is better than the rest! Be opportunistic! The best and most important thing for an investor to remember is to accommodate the markets. You want to be buying when others are selling and you want to sell when others are buying.”

“The 4 most dangerous words in investing are: “this time is different.”

For more information about Gretchen Faber’s real estate listings, or the Denver real estate market visit www.gretchensdenver.com. This comprehensive real estate web site includes all available idx listings in Denver as well as state-of-the-art mapping and search software. Also included is relocation information for those people looking to relocate to the Denver area.

View the original article at LifeStyleDenver.

This week, The Kentwood Companies sponsored a real estate and economic forum for our agents and clients. The speakers were nationally recognized experts in their respective fields, and had some extremely interesting comments to make about the U.S. economy, the Denver, Colorado economy and real estate trends. Over 1,000 people attended, and the local media was there as well.

I plan on presenting to you the highlights from each speaker, but will write one at a time. Today, let’s hear from Joe Blake, CEO of the Denver Metro Chamber of Commerce:

Blake opened with a quote from Shakespeare, “All the world’s a stage and all the men and women merely players. As we look forward to the remaining of 2008 and 2009, we are all now on an uncertain stage. Business hates uncertainty.”

“Before the event, I was chatting with Bill Moore. He asked me to give us all some good news. There is some good news and some bad news. One of the things that we tend to overlook is the powerhouse that we have at DIA (Denver International Airport). There is no greater engine for our economy than DIA. They did have plans for a $280 million dollar expansion on concourse C. They have postponed that due to the economy. Also delayed is The Cherokee Gates project has been delayed a year and now will begin 2011. Bond issues in Steamboat Springs and Colorado Springs have been postponed. In Colorado, it is projected that 1 in 25 homeowners are likely to go into some kind of foreclosure. The $4.7 million dollar expansion of Light Rail has now ballooned to $7.9 million.”

Joe explained the crisis with the transportation in the budget and the fact that much of our transportation infrastructure is in dire need of repair and that we must figure out a way to continue the Light Rail expansion.

Here are some of the positives mentioned by Blake. We have a tremendous military investment from Congress-$700 million allocated for Colorado. Buckley is the fastest growing air force base in the country. Denver is one of the top 10 real estate markets to watch in 2009. The ground breaking of the first phase of Denver Union Station is set with a budget of $125 million. That is going to be a major revenue maker for the state. Colorado leads the world in aerospace research. RTD is doing an extraordinary job now hitting the 100,000 million person mark with their passenger service, which is a major statement for a Western City that relies on its highways. Job growth in Colorado is predicted to be up 1.6% for 2009. We expect to see net in-migration of 23,000 to Colorado in 2009.

Joe continued, “Why, as the rest of the county is having problems, do we seem to be doing relatively well compared to other cities? One reason is that we have focused on growing 11 industry sectors. Space opportunities – Colorado is #2 for space employment. There is also bioscience, tourism, agriculture, energy to name a few.”

Blake touched on his concerns in his closing statement. “On Saturday, Governor Ritter will announce the 2009 budget. One of the areas that is going to be hardest hit is transportation. TREX (the I-25 widening with Light Rail component) came from bond issues, not from taxes. This year and for the future, the state is going to have to repay $169 million for this bond issue. We are facing a crisis in transportation. There is no money for Senate Bill 1. What are we going to do to take care of our transportation shortfall?”

With the lower unemployment rate and the firming up of the lower and mid end property sales, Colorado will fare better than many cities in 2009. We must, however, face transportation head on.

For more information about Gretchen Faber’s real estate listings, or the Denver real estate market visit www.gretchensdenver.com. This comprehensive real estate web site includes all available idx listings in Denver as well as state-of-the-art mapping and search software. Also included is relocation information for those people looking to relocate to the Denver area.

This post was originally seen at LifeStyleDenver.

Last night, The Kentwood Companies sponsored a real estate and economic forum for our agents and clients. The speakers were nationally recognized experts in their respective fields, and had some extremely interesting comments to make about the U.S. economy, the Denver, Colorado economy and real estate trends. Over 1,000 people attended, and the local media were there as well.

I plan on presenting to you the highlights from each speaker, but will write one at a time. Today, let’s hear from Steve Murray, CEO of Real Trends:

The causes of the housing downturn are many, but the affordability index fell drastically in 2005. As housing became less affordable, homeowners were less able to pay for housing.

Another factor, of course, was easy-money mortgages. There were even mortgages called “ninja” mortgages. No income, no job or assets.

Housing is a “trickle up” marketplace. In Denver, we’re seeing the trickle up beginning already. Affordability is better and the lower end properties are selling well. This will eventually “trickle up” to the high end properties. In Denver, the high end is really slow this year. It’s the lower end that’s recovering first. We’re seeing that in many markets, the leading indicator of a recovery is the increase in entry-level home sales.

The increased sales of starter homes and the slow-down in high end home sales is resulting in depressed average prices. It appears as if prices are falling drastically when you look at the decrease in average price, but it’s largely influenced by the increase in lower priced home sales.

Typically, 5% of households in any marketplace will buy homes in a given year. This average helps inform us about what the market might look like next year, and how many buyers we’ll have enter the market.

The real estate recovery will be slow and steady. The markets that are recovering - like Denver - are recovering at the lower price points first. As affordability increases, and as inventory decreases, we’ll be seeing a much more balanced market.

For more information about Gretchen Faber’s real estate listings, or the Denver real estate market visit www.gretchensdenver.com. This comprehensive real estate web site includes all available idx listings in Denver as well as state-of-the-art mapping and search software. Also included is relocation information for those people looking to relocate to the Denver area.

This was originally posted at LifeStyle Denver.

Many home sellers are finding themselves heading into the Fall and Winter months with their house still on the market. “Why?” They ask, “My home is wonderful and I love it, why doesn’t someone else? Why are we missing the bullseye?”

Denver real estate is very segmented right now with some segments selling much better than others.

Many home sellers are on their second or even third listing agent and have reduced their price along the way. They’re wondering where they go from here. Even wondering if they should remove their house from the market through the winter.

Market trends dictate that sellers need to be calculating in how they approach the sale of their house. Here are my top 5 suggestions for sellers to keep in mind:

1) Get a New Market Analysis - when real estate prices are trending down you’re in a very different position than when prices are flat. If you get a new market analysis every 5-8 weeks, you can discern what’s been happening with actual sales in your area. If you see prices continuing to deflate then you need to get in front of that rock that’s rolling downhill. Price reductions putting you just behind the rock won’t help you move into first place for buyers.

If the prices seem to be remaining flat, then you can adjust your price to that place and then leave it there. Pay attention to other factors that will move you into first place and keep getting a new market study every month or two. Remember, prices of homes currently available on the market don’t count when comparing prices.

Avoid “pricing entitlement” - a friend just coined that term and it fits. Sellers need to realize that their house is a commodity that goes up and down (more up than down for sure). If you’re willing to look at stocks as an investment and recognize that sometimes you sell up and sometimes you sell down, why is it so difficult to recognize that this can happen to a real estate investment too? You aren’t entitled to a price, the market will tell you what the house is worth. You can choose to sell or to hold on for a price upswing, but you can’t change market perception.

2) Consider Staging - if you’re living in your house while it’s on the market, you’d be amazed what a staging specialist can do with your own belongings to make the house pop. A fresh eye on furniture placement, some added decorative items and massive de-cluttering can completely transform a property.

If your house is vacant, you should investigate professional staging. The addition of classy furniture adds warmth and pizzaz to an empty house. Staging can add up if you’re paying a monthly fee, but there are ways to economize - like staging main rooms and leaving secondary rooms unstaged.

3) Re-Frame From the Curb - are you missing showings that were scheduled, but they skipped coming in? Then you may have to act like a movie director and look at your house from the street to see what’s going on. Be critical - act like you’re a buyer and this isn’t your house yet. What do you see? If there is chipped or peeling paint, if the front door is dirty, if the grass or shrubs are dead (or they block the front) you’ll need to give some attention to the maintenance of the exterior of your house.

Washing the windows will add sparkle that isn’t overt, but still makes a difference. Buyers like to look out through clean and clear windows. Dirty windows add a dingy feeling to an otherwise nice property. You can hire a window washer, or buy one of the spray products that screw onto a hose.

4) Paint the interior - I like colorful walls, and have several rooms in my house painted in color. That probably isn’t the best way to show a house. Neutral (with a little spark so it’s not boring) is much better. If you already have fairly neutral walls, but they haven’t been painted in over two years, then re-paint again. Fresh paint makes a world of difference in a buyer’s attitude about a house. If you have white walls, that’s just as bad as having too much color. White is harsh and cold - it doesn’t add a feeling of warmth to a house.

5) Have Your House Ready - too many sellers get preparedness fatigue after a few months on the market. They’re sick of living in a show home, tired of picking up and harassing the kids, and want to leave the bed unmade for just one day. Discipline yourself - don’t fall into this trap! I can’t tell you how many times I’ve walked into cluttered and unprepared homes with buyers lately. It amazes me that sellers would let their guard down when there is so much competition. Can some buyers look past this and see the house for what it is? Sure, a few can. Is that a risk you want to take?

Keep things in perspective, keep a positive attitude and remember that there’s an ass for every saddle! Your saddle just needs to be in first place on a buyer’s list.

Read the original at LifeStyleDenver.

Metrolist has released the sales data for September, and the trend continues to show that days on market are shortening. As we see inventory moving in the medium price ranges, with fewer new listings coming on the market, we’ll see that properties are selling more quickly.

The high end properties continue to languish, and as you can see in the attached chart, average sales price is falling. A friend of mine, Lon Welsh at Your Castle Real Estate, publishes his own statistical analysis of Denver’s Market, and he shared a graph with me today that shows we have 31 months of inventory for properties priced over $1,000,000.

The dearth of high-end sales is resulting in a reduction of our average sales price. This will eventually move back up when the higher-end homes begin selling again. The cost of jumbo loans and the fact that many people in luxury homes are deciding to stay put for the time being have contributed to the slow down in high-end sales. This vicious cycle is perpetuated when new listings come on the market, increasing inventory numbers.

Denver real estate sales are much more active for moderate priced homes. Homes and condos priced $200, 000 to $800,000 are still the price point that we’re selling. This has been the case for many months now. The reduction in overall inventory is a result of this healthier segment of the market selling more quickly.

Sales for September 2008 are up 14.13% from this time last year and average days on the market are down 4.56% from last year. We’re hoping this shows that Denver, ever counter-cyclical with the rest of the U.S., is actually showing signs of strengthening and pulling out of the slump earlier than other areas.

Of course, as I write this, the news about the credit crisis, the bailout, international markets crashing along with ours is permeating the press. This frightening and unprecedented unraveling may very well slow Denver’s recovery. It remains to be seen, but overall, our news here positive.

Read this original and other articles at LifeStyle Denver.