What Does it Mean to be in a “Buyer’s Market”?

It is best to return to basic economics. A buyer’s market is when there is more supply than demand. Some say it is when the inventory rises above a six month supply and there are more homes for sale than there are buyers for these homes. All agree that a buyer’s market has more inventory than demand for this inventory and so buyers are in control. So what this means is that there are typically more homes for sale for buyers to choose from. What it doesn’t mean is that a buyer has total control and can make unrealistic demands on the seller.

If you are a buyer looking to buy in Boulder, you may have your pick of several homes that meet your criteria..and you may not. Revisiting the simple economics and understanding how Boulder’s sustainable growth or housing cap works is an important piece of this equation. Boulder has its own limited supply by historical and ongoing scrutiny with new building permits. This plan started in the 1960s when the City implemented a sales tax increase and purchased greenbelts to remain as such; surrounding the city instead of issuing developers building permits for this space. Currently the idea of quality over quantity is still evident in the “Comprehensive Rezoning Proposal” which addresses both commercial and residential development within the City of Boulder.

I found a very well written case study based on Eben Fodor’s Better Not Bigger if you would like to read more about Boulder’s sustainable growth plan. So even if the national news is telling you it’s a “buyer’s market,” it is best to examine real estate city by city or even better: block to block. Some areas within Boulder and price ranges are definitely taking a hit. The upper end of the market (above $1,000,000) has seen longer days on market and fewer sales in the past 12 months. At the same time, single family homes under $400,000 have continued to sell in less than 80 days on average, some even going under contract the same day they are listed. It just goes to show that homes will sell and not every market is the same.

How about foreclosures or short sales? Buying from a bank has its own set of rules and if you are someone that likes to control situations then this is not for you. It is a game of "hurry-up and wait". When I was first starting my real estate career, all I did was buy foreclosures and pre-foreclosures. I know from experience it can be a long process. It can take a month or more for a bank to decide whether or not to accept a short pay offer and 80% don't get accepted. There is no one to call and push along, the person that answers the phone at the bank doesn't care much if the property sells or not and the listing agent has no control over the speed at which the bank responds. What’s more is because the market is moving in Boulder, there are little to no foreclosures available, even right now.

What else does a “buyer’s market” mean? Currently it means that buyers still have choices and incentives to buy. One of the most popular loan products I have seen is an FHA loan where the buyer only needs to bring 3.5% to the table. You can bring more of a down payment, but 3.5% is pretty stellar. This loan has been a 30 yr fixed with a rate around 5%, depending on the borrower. Also, the federal government has implemented a non-repayable $8,000.00 tax credit to first time home buyers. The terms “first time” are pretty loose as the definition according to the federal housing tax credit website says first time also means that you haven’t owned in the past 3 years. Visit the site to find out if the tax buyer credit will work for you.

And what about if you are a seller? Well, the above incentives for buyers are great because it keeps buyers buying. But sellers are not off the hook yet. Price your home right, stage it

properly and market it effectively. Look for a follow-up post from me on how sellers can reach their goals in a buyer’s market.

This post contributed by:

Sheila Mudd-Roberts

boulderrealtor@gmail.com

720-628-8454

Good News and Bad News ... which do you want first?

Well the media is starting to turn around a little and seems to have discovered that if you print something remotely positive about the economy people might read it! But as always there is good news and bad news. Which do you want first? Let's save the good news for last.

First the bad news ... Boulder and the rest of our area is not feelin' the uptick yet. I just ran the numbers for our MLS for March 2009 compared to March 2008 and here is what I found:

• # of new listings is DOWN 16.4% for single family and 6.5% for attached dwellings - many sellers are still reluctant to test the waters or can't afford to take a loss. This also means that although there are some foreclosures in our area they have not flooded the market at this time.


• Median and average list prices are UP 7-10% for both single family and attached. Sellers still haven't internalized the message that homes are not going to move at 2005-2007 prices anymore!


• # of units sold is DOWN, and in a big way - 32% for both single family and attached. Yikes! Obviously despite the "bubble" we all think we live in here in the Boulder/Denver area we are definitely seeing the effects of depressed consumer confidence.


• Median and average sold prices are DOWN too, although not as bad as they could be - 5.7% and 13.5% for single family respectively, and less than 1% and 7.6% for attached dwellings.


• Total home sales $ volume is DOWN also in a big way - over 41% for single family, and over 37% for attached dwellings, which just validates that fewer units are selling, and for lower prices than last year at this time.

So what does that mean for you as a seller? If you live in Longmont, Loveland/Berthoud, Ft. Collins or Greeley/Weld County then your house might sell quicker than you think. These are the areas with the highest # of units sold in March 2009. It's no coincidence that these are also some of the more affordable communities in our MLS coverage area. Only 35 homes and 52 attached dwellings sold in Boulder last month. Broomfield, Louisville, Lafayette and Superior all report lower units sold as compared to last year.

Okay, these are the facts, and they are indisputable (isn't that a movie line?). I wish we had better numbers to report, but it's not our job to blow sunshine in anyone's face. As real estate professionals we have a responsibility to our clients to provide the facts, meaningful analysis, and make all of this relevant to our clients and their situations.

Now ... here is the GOOD news from a few different news feeds from today (I know you are saying "Finally!"):

Recovery Hopes Begin to Blossom - from CNN Money.com 4/7/09
http://money.cnn.com/2009/04/06/news/economy/recovery/index.htm?section=money_latest
Economists think there are some long- and short-term indicators giving more hope that the economy is closer to a turnaround than previously thought. Pent up demand for goods, slowing job losses, and home price declines will all help to turn around consumer confidence and fuel a recovery.

Signs of a Housing Bottom? - from CNBC.com 4/6/09
http://www.cnbc.com/id/30071303?__source=RSS*blog*&par=RSS
Existing and new home sales increased in February. Sales are headed in the up direction. Blogger/real estate reporter Diana Olick is slightly optimistic!

Signs of Hope and Fear In "Foreclosure Central" - from CNBC.com 4/7/09
http://www.cnbc.com/id/30086754
Signs of hope in the housing market because sales have jumped. The $8000 tax credit being one reason. Prices have stabilized and inventory is down in some markets. Markets that have seen huge foreclosure activity are starting to see more green lawns, meaning less vacant foreclosure properties and people are out in their yards. "That part of it is very encouraging."

So as I said earlier ... Boulder and the rest of our area is not feelin' the uptick ... yet. Key word = YET. It is coming - we see it in our office every day with agents setting showings like crazy on our listings. Consumer confidence is on the rise - maybe everyone just needed to go have a good spring break, and now they are back they are testing the waters.

Hope you had a good spring break! Now get off the fence, and into the yard!

Pam Metzger
Director of Relocation and Business Development
Colorado Landmark, Realtors
pam@coloradolandmark.com
303-302-8839

Home Sellers - Let's Take Action Together!

Historic evidence shows us that at any given time in a healthy real estate marketplace that 25% of its standing inventory should be under contract at all times. This is not the case in Boulder’s luxury real estate market and it concerns me. Are we really in a healthy place or are we fooling ourselves? I think the latter and the numbers and statistics are proving me right.

So … it is time for our friends and clients to take note and make real changes. Price Changes! In the past I have on occasion lost listings to other brokers. On my exit interview with the seller I have more often than not heard “ Why didn’t you tell me it was price, we are flexible”. Well now it is official, we need price reductions of some consequence to function correctly to get us back to normal.

If there are 115 homes listed over $2,000,000 and 5 of those homes are currently under contract, we actually need 25-30 homes under contract to mark the bottom of the market and put full recovery under way. I want our listings at Colorado Landmark, Realtors to lead the way to that recovery. So when people ask me about the local real estate market, market recovery and the “reality of realty”, I would love to say we lead the way from stagnation to normal and beyond.

Sellers … here is your mission for the next 90 days:

• Lower your listing price - your agent can help with strategic price positioning
  
• consider owner financing as a way to attract additional buyers


• stage your home and don't forget about the front yard


• anticipate and neutralize known cosmetic or maintenance issues that could pull buyers off the fence in the wrong direction


• look into solving buyer problems with creative ideas and methods, such as exchanges and leasing options
  

… and most of all, full out effort by the whole team – sellers, agents, and companies.

We can do this and do it together. Don’t come to me months from now and say “I wish I had lowered my price for the spring market” and be disappointed that you are headed into next fall or winter still sitting on the sidelines. Now is the time!

Joel Ripmaster

Owner / Managing Broker

Colorado Landmark, Realtors

joelripmaster@coloradolandmark.com

Reality Bytes - Boulder County Home Inventories

When I say I can sympathize with frustrated homeowners whose properties haven't sold yet, I really mean it, because my own home is for sale too. I have been considering a price reduction on my property, so I decided to do some research on inventory levels in my home's market area. It occurred to me that other folks in Boulder County might want this information too.

Here's what I did ... I found the number of homes sold in various price categories for the last six months, from September 2008 through March 2009. Then I compared that with the current inventory as of yesterday, April 1st 2009. With some simple math I determined the number of months worth of inventory in each price range. This gives a seller an idea of how long it may take to sell their home.

And let me tell you ... the news ain't good, at least in some price ranges. Not so great for sellers that is, but great for buyers because there is a lot to choose from. Overall the most dismal news is in the high end condo market in the City of Boulder. And not surprising is the glut of homes in county inventory over the $1.5M price point. The good news ... if you have a home between $200-500k you can expect to sell it within approximately 6 months or less. In the chart below, if you see "none sold" instead of a number of months of inventory it is because no properties sold in that price range from September 2008 through March 2009, which in itself is a significant statistic.

A couple of notes ..

• The numbers represent the number of months it would take for all of the existing inventory to sell, assuming that the rate at which buyers are purchasing remains the same and no new inventory is added.


• The existing inventory is just a snapshot in time. Inventory changes daily and usually increases in the spring and summer. But there are also more buyers during this time as well.


• Unfortunately not every home is saleable in its current condition - some properties are just too flawed to attract a buyer without deep, deep discounting.
  

If you would like a similar analysis of inventory in your neighborhood don't hesitate to contact me!

Pam Metzger

Director of Relocation

pam@coloradolandmark.com

303-302-8839 (direct)