John Skrabec

If you’re thinking of buying a home, there could be a big bonus for you in the economic stimulus bill that’s now before Congress.Among its many provisions is a $7,500 tax credit for first time home buyers. The House passed the $819 billion stimulus plan, including this tax credit, in a vote late Wednesday. The Senate may vote on its version of the bill some time next week. Read all the details here.

Rachel Gallegos

Great news today in the Wall Street Journal! Based on the S&P/Case-Shiller home price index, , they predict that house prices as measured by the Federal Housing Finance Agency will increases in Denver by 3% in the coming year. Read the entire article here…

Price Cuts Spur Home Sales

U.S. home sales registered their biggest monthly jump in nearly seven years in December, as cratering prices began to draw out more buyers and several major housing markets showed some signs of stabilizing.

The 6.5% rise in sales from November was attributed in part to strong sales of foreclosed homes. Economists say it is too early to suggest that broad improvement is at hand, though, and warned that the spring buying season is likely to be sluggish amid growing economic hardship. Indeed, the employment picture continued to darken Monday as U.S. employers announced at least another 65,000 layoffs.

Investors nonetheless seized on the whiff of good housing news, sending the Dow Jones Industrial Average up more than 100 points before it retreated to close up 38.47 points, or 0.5%, at 8116.03.

The National Association of Realtors said sales of previously occupied single-family homes, condominiums and cooperative homes reached a seasonally adjusted annual rate of 4.74 million units in December. Last month’s rise was the largest since the early phase of the housing boom in January 2002 and a sharp rebound from the prior month, when sales plunged 9.4%, according to revised data from the Realtors.

But home sales were still down 3.5% from a year earlier. The trade group said 45% of transactions completed in December were “distress sales” by banks unloading foreclosed properties or homeowners selling for less money than they owe to lenders.

The December figure “is by no means a sustainable type of improvement,” said Ivy Zelman, chief executive of research firm Zelman & Associates. She said the latest data represent a normal recovery from November’s extremely weak performance and show that banks became more aggressive in selling foreclosed homes late last year.

For 2008 as a whole, sales dropped 13% from a year earlier to 4.91 million, the lowest since 1997.

There are glimmers of hope. The Realtors said there were 3.68 million previously occupied homes listed for sale at the end of December, down 7.5% from a year earlier. Moratoriums on foreclosures by some lenders probably reduced the flow of such homes into the market late in the year, said Michelle Meyer, an economist at Barclays Capital. Separately, The Wall Street Journal’s quarterly survey of housing-market conditions in 28 major metropolitan areas shows that inventory levels dropped fastest in some places where foreclosures are attracting bargain hunters. These areas include Los Angeles, San Francisco, San Diego, Sacramento and Orange County, Calif., as well as Denver and Washington, D.C.

Some Still ‘Stuck’

Meanwhile, mortgage-interest rates for people who have good credit records and enough savings for a sizable down payment have fallen to around 5%, the lowest level in decades. Plunging prices have made housing much more affordable relative to incomes. On average, U.S. home prices are down about 19% since peaking in 2006, returning to levels recorded in 2004, the research firm First American CoreLogic reported Monday.

Many people who would like to take advantage of the lower prices find themselves unable to do so, however. Jae and Frank Shin of Phoenix bought a new three-bedroom home near a Wal-Mart store in mid-2006 for about $280,000, and played it safe by making a 20% down payment. Now, they are keen to sell that home and move to a neighborhood with better schools and playgrounds for their two sons.

But Ms. Shin screamed when her mortgage broker, Steve Walsh of Scout Mortgage, recently provided an estimate of the home’s current value: $180,000 to $190,000. That is less than the Shins owe on their mortgage and means they can’t refinance their loan or sell the home for enough to satisfy the lender. Until prices recover, Ms. Shin said, “we’re stuck.”

Rising unemployment and announcements of huge job cuts have sapped consumer confidence nationwide, discouraging some potential buyers from making a move. “People rightly feel less secure in their future income,” said Richard K. Green, director of the Lusk Center for Real Estate at the University of Southern California, who believes the housing market won’t recover until the unemployment rate stops rising.

Several U.S. employers announced layoffs totaling 65,000 jobs on Monday, including 20,000 at Caterpillar Inc. and 7,000 at Home Depot Inc.

So far this year, big U.S. employers have announced plans to shed more than 140,000 jobs, on top of the 2.5 million shed last year, the biggest drop since 1945.

That bodes ill for the home-shopping season that usually kicks off in February or March, the busiest time for housing sales in most of the U.S. Largely because of the weak job market, “we’re looking for a very tepid spring market,” said Jeffrey Otteau, president of Otteau Valuation Group, an East Brunswick, N.J., appraisal firm. Mr. Otteau doesn’t expect prices in New Jersey to bottom out before the second or third quarter of this year.

Banks Hold the Key

Even when prices do level off, he said, he doesn’t expect a rapid recovery. For one thing, any sign of an improving market will cause an increase in supply as people who had given up on selling their homes rush to put them back on the market.

One key to the eventual recovery is how fast banks can sell their enormous holdings of foreclosed homes. Barclays Capital estimates that banks and loan investors owned 844,700 foreclosed homes as of Dec. 1, up from 460,900 a year earlier. Barclays forecasts that this inventory will peak at around 1.3 million homes in mid-2010.

Not all regions are suffering to the same degree. The Wall Street Journal’s survey found that inventory in the Miami-Fort Lauderdale area at the end of 2008 was down 9% from a year earlier. But there are still enough homes on the market to last nearly 30 months at last year’s sales rate. That is about five times the level considered healthy. “Florida is still a train wreck,” said Dr. Green of the Lusk Center. “It will be a long time before that market comes back.”

In most big metropolitan areas, the supply of homes for sale is down from a year ago, an encouraging sign. But the inventory in New York’s borough of Manhattan, which until recently was one of the nation’s few strong housing markets, bloated 39% last year as Wall Street job losses crushed demand.

Areas with relatively lean supplies of homes in relation to recent sales include Boston, Washington, San Francisco, Sacramento and Orange County, Calif. That suggests these areas may recover more quickly than others once consumer confidence revives.

But almost no one expects a quick turnaround. Orders of homes from major builders this year are likely to be about one-quarter of the level in 2005, the final year of the boom, says Daniel Oppenheim, an analyst at Credit Suisse in New York.

Based on the S&P/Case-Shiller home price index, the mortgage payment on a median priced U.S. home has fallen to about 17% of average family income, in line with historical norms, from more than 25% two years ago, according to a recent report by economists at Goldman Sachs. Even so, such factors as a glut of supply and “self-fulfilling expectations of further house price declines … are likely to push down home prices considerably further over the next two years,” the Goldman Sachs economists say.

They predict that house prices as measured by the Federal Housing Finance Agency will plunge 36% in the Miami metro area in the two years ending in the third quarter of 2010. They also anticipate big declines in the metro areas of Las Vegas (-21%), Los Angeles (-26%), Phoenix (-20%) and Washington (-20%), but increases in Dallas (7%), Houston (8%) and Denver (3%).

Of course, house-price fluctuations vary hugely from neighborhood to neighborhood, and some may show little or no decline.

Though prices and interest rates have fallen, credit remains tight. Rob Weigand, a finance professor at Washburn University in Topeka, Kan., wants to buy a second home in Denver as an investment and place to stay when he visits relatives there. He is prepared to put 10% down in cash but found he would be required to pay more than $2,000 a year in mortgage insurance to get a $300,000 loan, despite his excellent credit record. So Mr. Weigand is holding off, saying lenders have now become too cautious.

“We’ve gone crazy in the other direction,” Mr. Weigand said.

Some people are finding it a good time to buy. John Haughom, an executive for PeaceHealth, an operator of hospitals, recently bought a penthouse in a development called Atwater Place in the South Waterfront district of Portland, Ore. The 2,792-square-foot condominium was listed at just under $2 million and had sat empty since it was completed in August. With most units still unsold, Dr. Haughom said he was able to negotiate a discount of about 30%, adding, “The sellers are very flexible.”

Dr. Haughom acknowledged that prices could fall more, but said, “We’re in it for the long run.” He believes today’s economic woes could lead to high inflation and, if so, property will be a good investment. “Portland is going to continue to be a very desirable place to live.”

John Skrabec

Activity around the LIVE Urban Real Estate office has been buzzing lately. Our urban Denver real estate market is moving boldly forward this new year. New listings are coming to market, and new buyers are contracting on the limited supply of homes on the market. It makes me wonder. Where is this market slowdown I keep hearing about in the media?

Today’s news brought me the answer. Denver has bucked the national trend, and has one of the best real estate markets in the country. According to the Case-Schiller Home Price Index, Denver-area homes lost only 1.1% in value last November, making it the best-performing city. Read the entire story here as featured in the Rocky Mountain News.

John Skrabec

My older daughter now attends North High part time. Is this the biggest mistake I have ever made? Or I am a savvy educational shopper who understands that within all averages extreme highs excel? After teaching at North for a year, I found the kids to be predominantly kind, funny, intelligent human beings. I met a cohort of students who were actively taking advantage of the services at North - the full-time college advising center, the AP classes, the mathmatics tutors, the full time writing lab and the proximity to downtown and the Auraria Campus. Several of the students I met scored well enough on their AP exams to prove to me that a child with his or her eyes on a rigorous academic life could become educated at North.
Are there pitfalls? Are there adults who should be in other professions? Could my kid be swayed to underachieve instead of seek out the group of overachievers? Sure. The same can be said for my other daughter’s school DSA. I am nervous as I have ever been in my life.

If you want to meet other parents who send their children to North and hear directly from primary witnesses about the pros and cons of educating their children locally, please come to the discussion on January 29. Come hear the strategies these parents have used to get their children into the best classes North offers.

NHS Parent-to-Parent Discussion - January 29 - North High School PTSA will be holding a Parent-to-Parent Discussion night for prospective North High School students and their families.  Information about academic programs, student led clubs and organizations will be highlighted by students and parents currently enrolled at North High School, as well as alumni, recent graduates and their families.  Please join us at 6:00 PM on Thursday, January 29, 2009 at North High School for valuable information you need to hear prior to making a decision for your student’s high school education.  For more information, please contact Cindy Daisley, North High School PTSA President at (303) 523-1574 or cindydaisley@hotmail.com.

John Skrabec

One of my favorite Denver events is coming up, Denver Restaurant Week, running Feb 21 through 27. Check out the menus for the 208 restaurants taking part in this year’s event; now available online at www.denverrestaurantweek.com. The online menu listing is searchable by restaurant name, location and cuisine. And this year, you have more choices, because restaurant participation this year increased from last year’s 174, according to Visit Denver, the event’s presenter. Participating restaurants will offer a multi-course dinner for the fixed price of $52.80 for two or $26.40 for one during the event. Its a great way to economically sample on those spots you’ve heard so much about. Last year, about 160,000 diners took part.

John Skrabec

I was one of several Realtors recently interviewed by HGTV’s FrontDoor.com about topics an urban real estate buyer should be aware of as they start the process of finding a condo or loft home in the city. Like most US cities, multi-family dwellings like condos and lofts are common in city-center Denver. And the advice holds true whether you’re buying a waterfront condo in Miami or a New York City brownstone.  Check out all the tips from downtown market pros before buying your urban home here.

John Skrabec

We all know it, and now the rest of the nation does too! Our own Park Hill, in historic northeast Denver, was named one of our countries best neighborhoods. No doubt its gorgeous tree-lined streets, architectural integrity, and proximity to Denver’s best cultural amenities pushed it to the top. The American Planning Association recently released their Top 10 list, which also included Downtown Salem, Massachusetts and LA’s Echo Park. Read the entire article here.

Of course, you could live there too! We currently have a beautiful bungalow for sale in Park Hill, located at 2336 Cherry Street. See for yourself, take a virtual tour.

Stacie Staub

You might have heard a nasty little rumor about the Real Estate market being down, but we are not really feeling it in Northwest Denver.  We have buyers looking for homes, investors looking for properties, demand that is overwhelming the supply. 

Interest rates are crazy low, and those first-time buyers and renters that have been sitting back and waiting for the perfect time to buy are realizing, this is it.  Tough thing is, we have nothing to show them!  So, if you are sitting in your cute little Sunnyside bungalow and wondering if you should put it on the market or refi, list it!  If you are finished with your fixer and waiting for prices to go back up, now is your time. 

We recently had an appraisal done on a cute little Highlands/Sloan’s Lake home because the owner needs to move on up the property ladder with his growing family.  He was hoping that the market would support a sales price of $240,000 - the appraiser came back with happy news - that little house he bought for $240K 2 years ago is now worth $280,000!  He’s hitting the market with very little competition, and we are expecting a quick sale.

So, if you think you are stuck in that Berkeley home that you have simply outgrown, or if you got sucked into a mortgage that is about to adjust to a rate that you just can’t swing, call us - it might just be the perfect time to sell - and we probably have a buyer that is looking for a house exactly like yours.

And if you want a sneak peek at that cute place that’s about to hit the market?  Give me a call!

John Skrabec

The Federal Reserve recently announced its plan to buy $600 billion in mortgage-related securities which drove bond prices higher and interest rates to an annual low. On a $200,000 loan the monthly savings on an interest rate decrease of 0.625% is $79.16. While the mortgage market is constantly evolving and many lending guidelines have become stricter now is still a great time to buy a home. For buyers who don’t have 10 – 20% to put down, here are government loans available:

FHA $100 HUD Repo Program: Buyers are only required to make a $100 down payment on purchases of foreclosed homes owned by the Department of Housing and Urban Development.  Another perk with this program is closing costs, pre-paid items, and up to $5,000 of repair escrows are allowed to be financed as long as the LTV does not exceed 110% of the purchase price.
FHA 203K: Borrowers can finance improvements/upgrades up to $35,000 into the mortgage before move-in.  This can be done on a purchase or a refinance and can also be used on a HUD owned property.

FHA: 3.5% down payment and currently offers a simpler loan process than Conventional loans.

VA: No down payment required! For veterans/active duty vets and reserves only.

Although seller paid down payment assistance has been eliminated at this time, gift money from relatives is allowed and there is State Funded DPA’s available for families with low to moderate incomes.

Dianne Cole

Coming to market in just a few short days:  Fabulous 5 bed / 4 bath move-in ready home in Wash Park.  Walk to the park and all the shops on South Gaylord.  Great home for families.  3 beds / 2 baths on upper floor.  Main floor offers guest room, large office with french doors, gourmet chef’s kitchen opening to great room, and formal dining and living rooms.  Don’t forget the media room and 2nd spare bedroom in the basement.  With over 4,000 square feet this house offers all the rooms you need and a more.  Energy efficient updates.

Check out www.1250southvine.com for more details and open house schedules.

For details contact Live Urban Real Estate Broker Dianne Cole at 303-931-6369, Dianne@liveurbandenver.com.