Michael Clarkson

See more here: Denver Market Statistics

Some interesting points:

Unemployment:

• National - 8.5% (up 0.4%) - the highest since 1983.
• Colorado - 7.2% (up 0.6%) - the highest since 1988.
• Denver - 7.9% (up 0.5%)

Months of Housing Inventory is DOWN SHARPLY (good thing for prices), meaning a trend toward a Seller Market.

• Seasonalized (taking into the seasaonality of the Denver's market sales 60% April - September; 40% October - March) - 5.35 Months of Inventory - Seller Market
• Unseasonalized (taking only the current month demand into account) - 6.43 Months of Inventory - Neutral Market
• A well balanced market is 6 Months of Inventory

Days on Market

• 106 Days - For all markets, Single Family Homes & Condos. It was the first time in recent memory where all markets converged for this metric.
• Days on Market were relatively stable for Single Family Homes, and Condo Days on Market is down from 118 Days this time last year.

Housing markets in Denver are increasingly stratified by price segment:

• $0 - $200k (median price in Denver) 2.6 Months of Inventory - STRONG SELLER MARKET
• $200k - $400k - (median price to roughly about the $100k qualifying buyer) 5.1 Months of Inventory - SELLER MARKET
• $400k - $1m - ($100k qualifying buyer to the sub-luxury market) 12.4 Months of Inventory - STRONG BUYER MARKET
• $1m and above - (the luxury market) 37.1 Months of Inventory - FUHGEDDABOUDIT (By the way, that's not an official real estate term.)
• In fact, you heard about that story on KMGH 7News this past week. (See story here: http://www.thedenverchannel.com/money/19134459/detail.html )

However, if you have been a reader of my blogs for the past year, you KNEW about this trend (and others) for over a year:

The diverging market addressed only this week by Channel 7. But here is what you heard about this market for the past year:

November 2, 2008 - http://milehighhomehunter.blogspot.com/2008/11/denver-market-statistics.html

• A lower end market housing shortage (meaning that lower priced homes were flying off the shelf):

July 28, 2008 - http://milehighhomehunter.blogspot.com/2008/07/news-from-mile-high-home-hunter.html

• Paying the "Procrastination Tax" - Talks about why you shouldn't try to time the market like a stock

May 14, 2008 - http://milehighhomehunter.blogspot.com/2008/05/daily-dirt-real-estate-news-update-from_9798.html

• This one also speaks to the errors in RealtyTrac showing Denver was NEVER a #1 state for foreclosures - and it cost you!!!

Listing inventory is at a 5 year low at 20.628 homes

• Down 25% from the recent peak in 2006
• Down 19% from 2008

Sold homes are at a 5 year low at 3,206 homes.

• Down 30.3% from the recent peak in 2005
• Down 13.5% from 2008

The percentage of homes under contract - waiting to close - which normally averages at 127.8%, stayed high at 150.5%. In short, for 100 homes sold, 150.5 were waiting to sell. This is consistent with prior years' activity for this time of the year.

• This percentage is a great leading indicator of the market. In short, it's the window into anticipated activity in the market one to two months out.

Prices are rebounding convincingly:

• Average sold price - $251,583, up from $236,920 in February - up 5.8%
• Median sold price - $203,950, up from $192,500 in February (Median is the point at which 50% of the market sells above that price and 50% sells below that price) - up 5.6%

If you have any questions, give me a call.

I recently had a dialogue with a fellow professional about short sales. In that discussion, there seemed to be a difference of perspective about just what the role of a broker is. I am interested in your thoughts of whether I am being too extreme or narrowly focused in my definitions of a broker's scope of work/practice.

Short question: Should a broker take on cleaning a home on behalf of a client (or cater/dog sit/help move/tend yard/paint/fix things, etc) or should a broker inform their party as to their obligations verbally and in writing and leave it to the parties to discharge their contract?

My position is the latter: A broker should inform their party as to their obligations verbally and in writing and then encourage them to discharge their contract. (But NOT take ownership of it.)

The other broker shared a story about how the sellers (again, a short sale) left a home unclean with two pick-up's worth of trash, which caused distress for the buyer (understandably). The story then spoke to the brow beating it took get the listing broker to clean the home for the sellers. NOT the sellers, the listing broker.

I was FLOORED. When is it the broker's responsibility to clean a house?!?!?

Permit me to share my response...your input would be appreciated. (Additions made for clarity due this being extracted from a larger context are bracketed thusly [ inclusion ] . )

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I disagree with you: It's [cleaning/removing debris from the home] not any moral obligation [of the listing broker]...at all!!! (Maybe of the seller's, but not the broker's.)

I would say that if you didn't inform your buyers about what happens during short sales - though I suspect you did - then you didn't do your job. That would be your moral obligation. I suspect the crying [of the buyer] was related to the stress of the event, not the "surprise" about the condition.

With regard to [a proposal to establish a practive of requiring] a Seller's "earnest money" [as liquidated damages], they do in Colorado. If the Seller defeats the contract with a ready, willing and able buyer, the sellers owe the commission. Also, they expose themselves to "specific performance" litigation from the buyer -- though highly unlikely, particularly on a short sale. ( As I tell all my clients, "I only play a lawyer on TV, consult a real lawyer to get specific legal advice as it relates to this transaction".)

Also, they risk a foreclosure vs a short sale on their credit report, or, alternatively, a lost time-value of money if a positive balance remains from the equity in the home.

In my short sales, I secure a non-recourse clause in the short sale agreement so there is some more seller skin in the game to "get er done". If you aren't, are you REALLY doing the seller any good vs a foreclosure?

Second, who's kidding who? Just in terms of Realtors, there are about 1.2 million of us, excluding the non-Realtor brokers. (In Denver and Northern Colorado, one not need be a Realtor to use the MLS. ) [This related to garnering a bad reputation in the local board for not making sure the home was clean.]

So, let's say there are 1.5 million practicioners nationally. Do you really think reputations - except for the top 2% or bottom 2% - really get around?

I mean we have brokers who were involved in crime syndicates of mortgage fraud here in Denver (and likely [other broker's town] too) and were INDICTED, CONVICTED AND ARE SERVING TIME. Ask 500 random brokers in Denver: Who would be able to name them? Probably 1 or 2 could of the 500 asked. So, please, an uncleaned house is not going to park on someone's radar! Who ya' kiddin?

Besides, if your buyer/seller says "take their contract" [when informed about how a prior home was not left clean], what position are you in except to share your prior experience, which the clients (appropriately) consider your problem anyhow -- which is likely related to the party to the contract and not the broker. For you to state differently is to do so from an uninformed perspective...you are just ASSUMING it was the broker's fault. The sellers could be the long, lost cousins of Charles Manson, for all you know. Seriously. [The story related, in my opinion, to the listing broker not 'enforcing' that the short sale home be cleaned by the sellers for the buyers.]

Thirdly, I agree that professionalism is a benefit to your client. It's also a key to remaining in business and growing. However, if you are a professional, you "Don't do what is needed". You do what you are contracted to do to the best of your ability.You do what is the "highest and best use" of your time.

We are not painters, therapists, caterers, cleaners, etc. Every minute you are not doing what your skills demand in the marketplace, you advantage your competition. I mean, while you're cleaning a home, your competition is marketing and getting a listing...unless a listing isn't important to you.

We are marketers. We are (in Colorado) folks are able to perform a very limited scope of law as it relates to the Colorado Real Estate Commission approved contracts. (That relates to a decision called Conway-Bogue.) We are resources for lender referrals, craftsmen/craftswomen, movers, etc. We are knowledgeable about our neighborhoods and endeavor to ensure that an open and transparent contract takes place comporting with our state laws and highest and best practices.

We should know what the months of inventory are locally. We should know what paired sales analysis is...and do one to determine value in residential sales. We should know what sells are in any given area. We should know and counsel folks about the incremental challenges of buying a short sale.

I accuse those who muddy those professional waters with all the non-broker activities [cleaning, repairing, vacuuming, etc] are more the problem than those who were like the broker on the listing side of the transaction above.

It's this "Dump all your problems on me" attitude that empowers the public to do JUST THAT. Do you not get the number of lawsuits that stem from a broker taking on liabilities beyond that which they are licensed to do? Activities which your E&O Insurance do not cover.

I mean, selling a home is not life and death. It is a BUSINESS transaction.

The only home related emergency I know of is if it's burning to the ground. In which case, call 9-1-1.

We, as a business, get an immeasurable amount of ego-petting from feeling like the center of the universe for a defined period of time. We call ourselves "experts, [additional comments redacted] and any myriad of self-congratulatory accolades. Hell, I call myself the "Mile High Home Hunter", though I would claim that is more descriptive than self-congratulatory.

Because of that, we act like we have big, red "S"'s on our chests. We are not supermen/women. We are professionals.

If you have unfulfilled inclusion needs or self-esteem issues -- talk to a therapist. However, if you are running this like a business, run it like a business.

Yes, it is sometimes a dollars and cents decision to step up. However, that's not been ANY of the responses I read. It's all been about feelings, love, tenderness, happiness, kumbaya... If you want love, get a dog. A dog will make you feel like the center of its world, much cheaper. I prefer to get my love from my family.

Hey, want to market and sell your home? Call a Realtor. [This is my example of an elevator speech that all should have to understand the value they bring to a client -- value exceeding cleaning, vacuuming or repairing a home.] I will bring my entire suite of professional background, which includes:

• An MBA
• 20 years in Global Sales Experience
• A strong reputation for knowing the market which has had me featured on 3 of Denver's highest rated radio stations, the Denver Post, the Denver Business Journal and Realtor magazine. (See my own self-congratulation there.)
• Three of the world's top rated websites: www.MileHighHomeHunter.com and www.MileHighForeclosure.com and www.TheHomeHunterBlog.com (which are in the top 1% of websites worldwide according to Alexa.com). They are ranked in the top 800k to 1m or so out of about 130m website worldwide. (More self-congratulation - I am not immune.)
  • This means folks permitted into my sphere get one of the top 3 or 4 websites for Colorado Real Estate, and get tons of view on my website.
• Strong contracting and negotiating skills
• A thorough knowledge of the laws, practices and markets in which I work.
• A database of referrals to work the niche that is best suited to my client's needs -- which means I refer deals, even if I really want the whole transaction. I won't transact something that isn't in my wheelhouse; my ego is not that invested in the deal.
• A deep resource bench of attorneys, tax people, lenders, craftsmen/craftswomen to support my clients.

That's what my clients get. Not Superman. A professional.

That's been the focus of my response and my source of incredulity in this thread. We are not of value because we are supermen/women; we are of value because we are a focal point for professional resources.

Don't dilute it by kidding yourself that cleaning a home makes one a better broker. It doesn't. It devalues oneself.

Sorry, this was so long. [Response ends]

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That is the response I wrote.

So, am I wrong? Or am I right?

If I am wrong, you believe that brokers are accountable to pick up the slack when sellers and buyers do not..

If I am right, then you believe it's the sellers and buyers contract and the specifics are for THOSE parties to complete.

I really would like your input.

Michael Clarkson

Every month, I put together the "Mile High Stats" from MetroList in Denver. You can see those charts here. http://images.agentcenter.com/client/4/3/9/23934/2009.01_Blog_Information_Word_2003.pdf

The first chart is something that is the MOST important for the entire group of readers. Though nobody knows the future, I am disgusted - yes, disgusted - with the fear of the unknown and the lack of economic insight offered by the media.

The first chart relates to the unemployment rate in the US since 1948 -- 60+ years. The chart shows how unemployment seems to peak around 8.0%. Given how dire prognostications have been, this time it might be higher. However, this IS NOT the GREAT DEPRESSION. Nor is it even close.

Now, I am an MBA with corporate background, but I don't do econometric modeling for a living. I sell residential real estate. However, no matter how dire the news in 1975, 1982, 1992, etc., America is still America.

We are the strongest, most diverse, most pull-up-the-bootstraps and get-it-done country on the planet. Despite how bad things are, our spirits always rise above the adversity. That is what is great about our country! It's why we lead the world in everything we set our minds and hearts to excelling in!

As you will see, that greatness drives America to overcome unemployment as it starts to exceed 8.0% -- pretty much always. The two times it was exceeded were right after Vietnam, as tens of thousands of veterans (for whom we are eternally indebted to them for their service) came back into the employment pool, concurrently with the Oil Embargo. The most recent was when hyperinflation was being choked off in the early 80's and aggressive FED policy was intended to cut off the inflationary, upward spiral.

Though there are some unique aspects to this downturn, there always are unique things about each and every downturn. So, there is nothing new there. So, it is realistic to expect this downturn to be like the majority of those in the past 60 years.

I hope this provides some perspective because it seems the media is lacking it nowadays...and that is a huge disservice to you.

"A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty." - Churchill

If your real estate broker said:

•· This home is $200,000, plus or minus $140,000

•· This home has 4 bedrooms, plus or minus 2.5 bedrooms

•· This home is 2000 square feet, plus or minus 1400 square feet

Chances are, you might think that your real estate broker "never left Woodstock", and, then make the decision to find your own way back to the real estate office.

Well, it's ironic. Why?

Because the same appropriate doubt one would have with regard to the above is totally dismissed when put on the evening news.

I hear you saying: "What does he mean?"

Well, in the Denver Business Journal, published the annual report from RealtyTrac yesterday (source: http://denver.bizjournals.com/denver/stories/2009/01/12/daily48.html), January 15, 2009. RealtyTrac Inc (www.realtytrac.com) is the leading online marketplace for foreclosure properties, and one of the fastest-growing real estate sites on the Internet.

In that story, the following was noted, "In the past, state officials have disputed Colorado's high position in RealtyTrac's rankings, saying that because the state's public trustees report foreclosures at multiple stages of the process, RealtyTrac may overcount Colorado foreclosures. RealtyTrac officials have denied this, saying they have taken steps to ensure accurate counts."

Well, that's great to hear, but by how much? How about 70% inaccurate? Yes, OVER 70% inaccurate.

Here are the citations for my statements:

Sources:

•· Colorado Public Trustee's Website - http://www.e-ccta.org/Forms/Public%20Trustee/Sale%20Sats/2008%20foreclosures.htm

•· RealtyTrac Press Release (dated 1/15/09) - http://www.realtytrac.com/ContentManagement/pressrelease.aspx?ChannelID=9&ItemID=5681&accnt=64847

•· http://denver.bizjournals.com/denver/stories/2009/01/12/daily48.html?t=printable

Public Trustees are the folks that begin a foreclosure and close out a foreclosure.

Getting foreclosed? You will hear from the Public Trustee. So, one would think their data is the REAL AND ONLY DATA. Right? It has to be. They implement the Foreclosure Laws in Colorado.

So, let's see how RealtyTrac deviates from the Colorado Public Trustee Association.

Foreclosures Actions Opened
	2007	2008	Change	% Change
Colorado Public Trustees Association (CPTA)	39,607	38,450	(1,157)	-2.92%
RealtyTrac	71,149	66,795	(4,354)	-6.12%
Overstatement/(Understatement) by RealtyTrac	31,542	28,345	(3,197)
% Difference - Overstated/(Understated)	79.64%	73.72%
Foreclosures Completed (in Colorado, known as a Public Trustee Sale)
	2007	2008	Change	% Change
Colorado Public Trustees Association (CPTA)	24,929	20,825	(4,104)	-16.46%
RealtyTrac	39,403	50,396	10,993	27.90%
Overstatement/(Understatement) by RealtyTrac	14,474	29,571	15,097
% Difference - Overstated/(Understated)	58.06%	142.00%
Citations (via hyperlink):
CPTA - 2007
CPTA -2008
RealtyTrac - 2007
RealtyTrac - 2008

So, let's get this straight:

•· Colorado Public Trustees (the folks doing the foreclosures) - show foreclosures are down 17%

•· RealtyTrac (the company that has a vested interest in hyping foreclosures) says they are up 27.9%

Who do you believe?

Compounding this is the following regarding completed foreclosures:

•· 2007 - Overstated by RealtyTrac by 58%

•· 2008 - Overstated by RealtyTrac by 142%

When putting the corrected numbers into a national context, the following revised ranking is found for Colorado.

Foreclosure Rank
	2007	2008	Ranking Change
Colorado Public Trustees Association (CPTA)	15	23	( 8 )
RealtyTrac	5	5	0

Please remember that this revised ranking is ASSUMING that RealtyTrac's numbers for the 49 other states and the District of Columbia is accurate. As noted, that is not a given.

Congratulations to the Denver Business Journal for noting that accuracy controversy in their article.

CONGRATULATIONS, COLORADO! You are not number 5 in 2008. You are #23.

So, why do I do this? I wonder aloud: How many homeowners have lost equity due to the inaccurate reporting?

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