Vol 34, No 9 - September 2010

Real Estate Insider

A Publication Of The Group, Inc.

Vol. 34, No. 9

September 2010

If the price is right, sellers positioned for success Setting the correct initial list price is one of the most important decisions that home sellers make in today’s market. The initial list price will impact both the amount of time a property takes to sell and the final sales price. Research shows that when a house is overpriced upon the first day of its listing, and subsequently requires price reductions, it will take up to three times longer to sell that house in the Northern Colorado market compared to a house that’s priced right from the start.

PRICE IT RIGHT ON DAY ONE

Property “A” Priced Right on Day One Property “B” Overpriced on Day One

Price

The additional time required to sell an overpriced listing can cause the property to become ‘old news’ in the eyes of a buyer which can result in a sales price lower than market value. Buyers are hesitant to make an offer on a home that others do not seem to want, and multiple price reductions are a strong indicator of other buyers’ lack of interest for that property.

Property “A” Sold Property “B” Sold

The charts provided here can help you to assess the advantage of setting the right price in your community.

Time

HOW MANY DAYS DOES IT TAKE TO SELL?

Price Reductions Required

Strong new home market Solar chips power shingles Real estate by the numbers

81

55 Greeley

More online, visit www.thegroupinc.com

67 Loveland

208

179

169

163

Fort Collins

81 Windsor

At The Group we have developed specialized tools to help you properly price your property.

Call me to learn more about today’s real estate market conditions.

Source: IRES

Priced Right on Day One

New home market stronger than it appears: impact of “phantom listings” In the looks-can-be-deceiving department, it appears Northern Colorado’s new home market is stronger position than it may seem on the surface.

Traditionally, a valuable measure of any new home market is the months of inventory available for sale.

For example, if 10 homes have sold over the past year in a certain market segment, and there are 10 homes currently available for purchase, then it follows that there is a 12-month supply of homes on the market. Most experts agree that a six-month supply represents a healthy equilibrium in a local market.

Through extensive research conducted by The Group Inc., we’ve found a number of “phantom listings” in the Northern Colorado market that have exaggerated new home inventory and artificially increased the months of supply. These “phantom listings” consist of properties that appear on the Multiple Listing Service as being available for sale, when in fact the home is not yet under construction. Because construction is not under way, it could be many months before the home is actually ready for purchase.

For example, there are currently 37 new homes in the Fort Collins market listed for sale priced between $200,000 and $250,000. However, only seven of those are under construction and 30 are considered “phantom listings.”

It’s important for sellers, buyers and lenders to have a true picture of the new home market. Contact me for more details on “phantom listings” and the state of the new home market.

Believe it or not: Housing shortage could be on horizon With an abundance of housing inventory in most markets and foreclosures common across the country, it seems unfathomable to envision a housing shortage. However, some trends are taking shape that foretell just such a possibility in certain parts of the United States.

According to a recent article reported on MSN Money, economists are pointing at the convergence of two trends – a depressed level of home construction (new home starts in 2009 were one-third of the historical norm of 1.6 million), and the inevitable emergence of a generation that will soon be entering the work force and forming households – that could cause a shortage.

Overbuilt markets such as south Florida, Las Vegas and Phoenix may not be in danger of such a squeeze anytime soon. But the article identifies Western states such as Oregon, New Mexico and Utah, where housing supply and demand is considered to be in balance, as locations that could be undersupplied as early as mid-2012.

50 new homeowners in Windsor go on shopping spree—courtesy of town taxpayers The town of Windsor, in partnership with the Windsor Chamber of Commerce, is offering a $500 shopping credit to new homebuyers. The gift, which can be spent on services and products from Windsor merchants, is available to the first 100 homebuyers. The goal is to generate spending with local businesses, be it for window coverings or groceries. The project began June 1, and as of August 16, 50 “$500 Shopping Spree” certificates had been issued by the town. Most of the 50 home buyers are new to Windsor. Some of the most recent certificates were issued to buyers who moved from Hawaii ($635,000 home), Texas ($790,000 home) and Minnesota ($340,000 home).

Lower interest rates could save almost 50% in interest over ten years As interest rates continue to hover at historic lows – and before they make their inevitable climb – it’s important to emphasize both just how much power there is in those rates and how many dollars you can save today.

For instance, if a buyer today takes out a $250,000 mortgage at 4.5 percent interest, they would pay $102,229 in interest over 10 years of payments. By contrast, 6.5 percent interest – still a modest rate by historical standards – on the same $250,000 loan would cost $151,561 in interest over 10 years. It’s a difference of nearly $50,000 and 50 percent in increased interest payments.

If you’re on the fence about getting into the market, consider interest rate impacts from another perspective. A $200,000 at 5 percent interest requires a monthly payment mortgage of $1,073.

If rates were to go up to 6 percent, you could only borrow $180,000 to get the same monthly payment.

Put another way, each 1 percent increase in mortgage rates reduces purchasing power by 10 percent.

Interest rates matter. Call me to learn how you can get the most out of your buying power (and how much you can save) while rates are at these historic lows.

Solar chips power shingles Almost gone are the days when all the neighbors could tell which house on the block had solar power.

Dow Chemical will soon roll out shingles embedded with solar chips. The Dow Powerhouse Solar Shingle is shingle, in both its installation technique and in the roofing protection it provides.

In addition, it generates solar electricity by integrating solar cells into the design. Other companies—such as Lumeta, SRS Energy, OKsolar and SunPower—offer similar power-generating shingles and tiles, but Dow claims its shingles can be installed by any roofing contractor; an electrician is only needed for the final plug-in.

Time Magazine named the Dow solar shingle as one of the best inventions of 2009.

Wall for one and one for wall

“The prices of houses seem to have reached a plateau, and there is reasonable expectancy that prices will decline.”

TIME MAGAZ I N E , 1 9 4 7

“The median price of a home today is approaching $50,000…

Housing experts predict price rises in the future won’t be that great.”

NATION’S BUSINE S S , 1 9 7 7

“The golden age of risk-free run-ups in home prices is gone.”

MONEY MAGAZ I N E , 1 9 8 5

“Most economists agree…a home will become little more than a roof and a tax deduction, certainly not the lucrative investment it was through much of the 1980s.”

MONEY MAGAZ I N E , 1 9 8 6

Wall space: Architect creates 24 rooms in one flat By common standards of measurement, a 330 square-foot apartment doesn’t allow much wiggle room – let alone space to stretch your legs. But Hong Kong architect Gary Chang has turned those standards upside down with a design he calls the “Domestic Transformer.”

Employing a series of sliding walls, Chang has made it possible to create 24 different rooms in the 18-foot-by-18-foot space. And no matter which wall is used, the guest gets a built-in TV, couch, fold down bed and bath tub. Chang enhances the sense of space by placing mirrors on the ceiling, which also hide the wall tracks.

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Real estate by numbers • $1.2 million – The size of a five-year grant received by the University of Northern Colorado to fund a program for training math and science teachers for high-need school districts in the state.

• $1.73 million – The amount paid for the Clarion hotel at 701 8th St. in Greeley by Greeley Lodging LLC to Pueblo Bank & Trust Co. The amount was less than half of it’s last sales price.

• $4.2 million – The amount paid to the Robert Reynolds Family Trust by Markley Investment Co. for 3325 S. College Ave., which was Reynolds Cadillac, then Markley’s Saturn of Fort Collins and currently is Markley GMC Buick and Saturn/Pontiac Service Center.

• $8.3 billion – The amount of home equity Americans took out while refinancing homes from April to June, the least amount in 10 years, according to Freddie Mac. • 60 – Colorado State University’s ranking among public universities in the U.S. News & World Report 2011 list of “America’s Best Colleges.”

• 70 – The acreage on which Poudre Valley Health System and Longmont United Hospital will build a joint medical campus in southwest Weld County. The project is slated for the northeast corner of Interstate 25 and Colorado Highway 52 in Frederick.

• $800,000 – The purchase price of a 3,129-square-foot church building at 1450 Westwood Drive in Windsor. According to property records, Vineyard Church Fort Collins bought the property from the Rocky Mountain District of the Lutheran Church, Missouri Synod.

• $14.7 million – Price tag of the Sunlight Peak science building, which opened in August at Front Range Community College’s Fort Collins Campus.

• 16,450 – Number of square feet for the Boyd Lake Village Medical Office, located at Horstman Place and E. 15th St. in Loveland, which began construction in late August. The new two-story building will be shared by three medical practices.