Michael Clarkson

Dear Readers:

Wow! The data this month really signifies a sea change!

Why?

There are three factors in the data that indicate Denver has a very favorable outlook in residential real estate:

1. Continually strong sales activity, drawing down existing resale inventory - a 1,838 listing reduction in the month of January alone
• This should jump back up as previously frustrated Sellers become encouraged and re-list their homes
• However, sales activity continues above the 12 trailing month average rate. In January, one would have expected essentially one week's worth of activity to dry up due to the mid-week New Year's holiday - which people seemed to cause people to take off the whole week. However, instead of the expected 683 unit drop in sales, we saw only a 252 unit drop, or 1/3 of the normally anticipated drop. So, sales continued at a healthy pace.
2. Builders are heavily discounting their inventory homes in an effort to improve balance sheets and retain market share.
• We have already seen TOUSA - locally known under the brand Engle Homes - file for Chapter 11 reorganization.
• Moreover, builders are moving to a build-on-contract model, which will take lots of inventory out of the market. This should have a very favorable impact on home prices, particularly where new home incentives have created "hostage values" - these are values held hostage by the builder. In other words, the incentives a builder offers holds the net prices of resale homes down, largely by the amount of the incentives. Take those incentives away, upward pricing pressure is allowed to re-establish itself.
3. Interest rates are having downward pressure exerted on them.
• The dropping of the Fed Funds rate to 3.5% and 3.0% within a 3 week period indicate that there is a larger concern about the economy stalling. It also would appear to be a means to soften the ARM Adjustment/Foreclosure phenomenon

Factors aside, how did the Denver market fare?

In January, the market composite of the communities featured were:

• Seller's Market - 11 (down from 13)
• Netural Market - 5 (up from 3)
• Buyer's Market - 1 (though static, this market moved from Erie to Golden)

So, the market, though impacted by the holidays, stayed largely healthy.

Additionally, the in-month trends appear to be very favorably impacted from the TWO Fed Funds rate cuts. The trends changed in the following way in January:

• Trend toward a Seller's Market - 13 locales (up from 6)
• Trend toward a Buyer's Market - 4 locales (down from 11)

The change in trend is determined by taking the current month under contract homes and determining the percentage change from the 12 trailing months' average monthly home sales. So, if you sold an average of 100 homes per month the past twelve months, and had 110 go under conract in the present month, then you would see a 10% trend toward a Seller's Market {([110-100]/100) = +10%}. The data for each featured community is shown in the table.

Well, the numbers continue to be strong, even while we had most of the first week of the month wiped out by a mid-week holiday (New Year's), which caused a lot of buyers to self-eliminate from the market. However, over half a month of rate reductions from the Fed caused a significant upswing in lead activity. Indeed, the author of this article saw website traffic jump by nearly 10%, with average daily new leads doubling the seasonal average.

The National Association of Realtors® (NAR) recently published a report that stated, "Prices will still rise by 2% in 2008 if mortgage rates rise to 7.5% next year from the current 6.5%." They further added, almost as if they foresaw the Fed Funds rate cuts, there is a potential for a price improvement between 5.7% and 14.6% based on interest rate changes and corresponding debt service capacity. Please see the "Alternate Price Forecasts" table in the NAR report on my website:

http://www.milehighhomehunter.com/Price_20_Outlook.html

So, is it a good time to buy? That you can only answer for yourself. However, I can share that many brokers in the Metro Area are seeing what this broker is seeing: increased activity. Please read the article on my blog: http://www.milehighmls.com/2008/02/michael-clarkson-interviewed-for-denver.html

As always, whenever YOU are ready, I am here Bringing The World Home To You^TM

And, if you know of someone that is looking to buy or sell, I am NEVER too busy for any of your referrals.

Kind regards and happy "Home Hunting",

Michael Clarkson
RE/MAX Alliance
303.403.2641

MJ@MileHighHomeHunter.com

On the web:

www.MileHighHomeHunter.com

www.MileHighForeclosure.com

www.MileHighMLS.com

Dear Readers:

Wow! The data this month really signifies a sea change!

Why?

There are three factors in the data that indicate Denver has a very favorable outlook in residential real estate:

1. Continually strong sales activity, drawing down existing resale inventory - a 1,838 listing reduction in the month of January alone
• This should jump back up as previously frustrated Sellers become encouraged and re-list their homes
• However, sales activity continues above the 12 trailing month average rate. In January, one would have expected essentially one week's worth of activity to dry up due to the mid-week New Year's holiday - which people seemed to cause people to take off the whole week. However, instead of the expected 683 unit drop in sales, we saw only a 252 unit drop, or 1/3 of the normally anticipated drop. So, sales continued at a healthy pace.
2. Builders are heavily discounting their inventory homes in an effort to improve balance sheets and retain market share.
• We have already seen TOUSA - locally known under the brand Engle Homes - file for Chapter 11 reorganization.
• Moreover, builders are moving to a build-on-contract model, which will take lots of inventory out of the market. This should have a very favorable impact on home prices, particularly where new home incentives have created "hostage values" - these are values held hostage by the builder. In other words, the incentives a builder offers holds the net prices of resale homes down, largely by the amount of the incentives. Take those incentives away, upward pricing pressure is allowed to re-establish itself.
3. Interest rates are having downward pressure exerted on them.
• The dropping of the Fed Funds rate to 3.5% and 3.0% within a 3 week period indicate that there is a larger concern about the economy stalling. It also would appear to be a means to soften the ARM Adjustment/Foreclosure phenomenon

Factors aside, how did the Denver market fare?

In January, the market composite of the communities featured were:

• Seller's Market - 11 (down from 13)
• Netural Market - 5 (up from 3)
• Buyer's Market - 1 (though static, this market moved from Erie to Golden)

So, the market, though impacted by the holidays, stayed largely healthy.

Additionally, the in-month trends appear to be very favorably impacted from the TWO Fed Funds rate cuts. The trends changed in the following way in January:

• Trend toward a Seller's Market - 13 locales (up from 6)
• Trend toward a Buyer's Market - 4 locales (down from 11)

The change in trend is determined by taking the current month under contract homes and determining the percentage change from the 12 trailing months' average monthly home sales. So, if you sold an average of 100 homes per month the past twelve months, and had 110 go under conract in the present month, then you would see a 10% trend toward a Seller's Market {([110-100]/100) = +10%}. The data for each featured community is shown in the table.

Well, the numbers continue to be strong, even while we had most of the first week of the month wiped out by a mid-week holiday (New Year's), which caused a lot of buyers to self-eliminate from the market. However, over half a month of rate reductions from the Fed caused a significant upswing in lead activity. Indeed, the author of this article saw website traffic jump by nearly 10%, with average daily new leads doubling the seasonal average.

The National Association of Realtors® (NAR) recently published a report that stated, "Prices will still rise by 2% in 2008 if mortgage rates rise to 7.5% next year from the current 6.5%." They further added, almost as if they foresaw the Fed Funds rate cuts, there is a potential for a price improvement between 5.7% and 14.6% based on interest rate changes and corresponding debt service capacity. Please see the "Alternate Price Forecasts" table in the NAR report on my website:

http://www.milehighhomehunter.com/Price_20_Outlook.html

So, is it a good time to buy? That you can only answer for yourself. However, I can share that many brokers in the Metro Area are seeing what this broker is seeing: increased activity. Please read the article on my blog: http://www.milehighmls.com/2008/02/michael-clarkson-interviewed-for-denver.html

As always, whenever YOU are ready, I am here Bringing The World Home To You^TM

And, if you know of someone that is looking to buy or sell, I am NEVER too busy for any of your referrals.

Kind regards and happy "Home Hunting",

Michael Clarkson
RE/MAX Alliance
303.403.2641

MJ@MileHighHomeHunter.com

On the web:

http://rs6.net/tn.jsp?e=0013IQlKHz7LN3qOPujFn4Xd0bX92d8hA6rA6BYZmgjOLch2gZekxdwevWNxfek4f8L0YR6Qyu4JWiH5eRvJ-3Gplt69ggDAF5VwsR-8Wy7loJciUKlASOh0bMQP_T6Bf5z

http://rs6.net/tn.jsp?e=0013IQlKHz7LN1It5hQrsDObWBvnLgwuDj06dFy1aR9Q-KLp32BsXiHlBPaJiG9d0Iuk75a3umZG3ZHFPC1dwajLmXcR9dQlzLLgYXPYiZ-NSTZ5PQ-dBULfyGSYub6HhvZ

http://rs6.net/tn.jsp?e=0013IQlKHz7LN0GTYjxaAQJ-wiGp9-_VIxiuYEtFKm3rDryDkJS2eiBS5t1uicbOAwkS3V7OUJN1RdaVmD8L7EYlyTPBT4JP6-v_28bv1lfODxDwaG6dc9vfQ==

Folks:

I wanted to share that I was interviewed by the Denver Business Journal for an article that Paula Moore was doing called: Investors Find Opportunities in Homes Lost to Foreclosure.

In the article, there seems to be a general concensus that the local market is picking up significantly. I would agree that the data is telling me that as well. What is surprising is there appears to be a perfect storm getting ready to happen:

1. Low rates
2. Under supply of for sale homes
3. Over supply of buyers (due to the in-migration into Colorado)
4. Builders cutting back on inventory homes
5. Builders going out of business
6. Foreclosures being held more - though not entirely - in abatement through the lowered interest rates

You can access the article on my blog at: http://www.milehighmls.com/2008/02/michael-clarkson-interviewed-for-denver.html .

It's a great article!

Michael