Vol 34, No 2 - Jan 2010 WEB

Real Estate Insider

A Publication Of The Group, Inc.

Vol. 34, No. 2

February 2010

Think nationally, buy real estate locally The national media’s focus on sub-markets such as Las Vegas, Phoenix, Miami and Southern California, has created a perception that every real estate market in the country has been severely affected. The reality is that all markets are local and have local fundamentals that drive real estate activity. The research shows that the picture in Northern Colorado is much brighter compared to the nation as a whole.

One trait the aforementioned troubled markets have in common is that they all experienced unrealistic price appreciation during the latest boom. In Northern Colorado, meanwhile, values grew at a more modest rate. Subsequently, as prices are plunging dramatically in those once-overheated locales, prices here have been more resilient.

The main driver of real estate activity and property values in any market is jobs. Because of a diverse economy, our communities also outperform the nation in terms of employment.

Nationally, the jobless rate is likely to hover this year between 10 percent and 10.5 percent.

Locally, unemployment is expected to hold between 6.5 percent and 7.5 percent.

While national economic conditions bear watching, it pays to recognize that local factors go a long way in shaping what’s happening in each individual community. The fundamentals of our markets are strong and make Northern Colorado a sensible place to own real estate.

Forecast for 2010

-23.6 -23 -22.5

-15.9 -19.6 -19.5 -18

-12 -11

Fort Collins, CO

-8.4

Dallas, TX

Denver, CO

Windsor, CO

Boston, MA

Ault/Eaton, CO

New York, NY

Atlanta, GA

Seattle, WA

Greeley/Evans, CO

Chicago, IL

Washington, DC

Minneapolis, MN

San Fransisco, CA

Los Angeles, CA

Detroit, MI

Miami, FL

Phoenix, AZ

Las Vegas, NV

History of residential sales in N. Colorado Trends and advice for 2010

Loveland/Berthoud, CO

How Our Markets Compare

Three-Year Cumulative Price Change %

-5.4

-4

-29.3 -29.2

More online, visit www.thegroupinc.com

-46.9 -56.3

-52.2

-43.3

-39 -38.6

Case-Shiller Price Cumulative Declines through October 2009 IRES through December 2009

Fort Collins/Wellington Year # of Homes 2004 4,087 2005 4,008 2006 3,701 2007 3,613 2008 3,121 2009 2,923

% Change +7% -2% -8% -2% -14% -3%

Dollar Value $942,415,724 $983,941,789 $920,687,503 $916,175,623 $783,626,770 $699,252,210

% Change +8% +4% -6% -0.5% -14% -11%

Average Sales Price $230,589 $245,494 $248,767 $253,578 $251,081 $239,223

% Change +1% +6% +1% +2% -1% -5%

Loveland/Berthoud Year # of Homes 2004 2,162 2005 2,142 2006 1,820 2007 1,604 2008 1,467 2009 1,399

% Change +9% -1% -15% -12% -9% -5%

Dollar Value $514,310,240 $531,754,516 $464,160,780 $392,540,165 $350,466,694 $314,737,289

% Change +17% +3% -13% -15% -11% -10%

Average Sales Price $237,886 $248,251 $255,033 $244,725 $238,900 $224,973

% Change +7% +4% +3% -4% -2% -6%

Greeley/Evans Year # of Homes 2004 2,214 2005 2,225 2006 1,857 2007 1,704 2008 1,662 2009 1,671

% Change -6% +0.5% -16% -8% -3% +0.5%

Dollar Value $392,171,143 $407,305,044 $324,713,094 $281,539,881 $250,523,236 $232,955,393

% Change -3% +4% -20% -13% -11% -7%

Average Sales Price $177,132 $183,058 $174,859 $165,223 $150,735 $139,410

% Change +3% +3% -5% -6% -9% -8%

Windsor Year 2004 2005 2006 2007 2008 2009

% Change +8% +27% 0% -6% -28% +0.5%

Dollar Value $131,992,749 $219,181,664 $223,702,916 $219,222,307 $149,071,110 $141,649,327

% Change +15% +66% +2% -2% -33% -5%

Average Sales Price $236,971 $310,896 $319,120 $332,155 $311,864 $286,160

% Change +7% +31% +3% +4% -7% -8%

Ault/Eaton/Johnstown/Kersey/Milliken/Mead/LaSalle Year # of Homes % Change Dollar Value 2004 860 +7% $180,009,097 2005 795 -8% $172,302,909 2006 707 -11% $159,017,056 2007 662 -6% $143,527,537 2008 652 -2% $130,212,087 2009 532 -19% $100,097,095

% Change +7% -4% -8% -10% -10% -23%

Average Sales Price $209,312 $216,733 $224,918 $216,809 $199,711 $188,152

% Change 0% +3% +4% -4% -8% -6%

# of Homes 557 705 701 660 478 495

The number of “homes sold” is defined as “purchased dwelling units” and includes both new and resale single-family homes, town homes, condominiums, and patio homes. Change in average sales price is not the same as appreciation/depreciation.

Residential Building Permits

2007 Fort Collins 408 Greeley/Evans 179 Loveland 281 Windsor 224 Timnath 90

Single-Family 2008 264 65 145 119 62

Commercial Vacancy Rates

Fort Collins

1/09 1/10 Industrial 6.% 6.0% Retail 8.0% 8.0% Office 10.0% 14.0%

2009 140 45 68 96 41

Loveland 1/09 1/10 7.0% 20.0% 6.0% 5.0% 15.0% 13.0%

2007 211 215 0 0 0

Multi-Family 2008 524 3 97 0 0

Greeley 1/09 1/10 12.0% 10.0% 7.0% 10.0% 7.0%

8.0%

2009 4 0 6 0 0

Windsor 1/09 1/10 1.0% 3.0% 9.0% 24.0% 3.0% 6.0%

Trends for 2010

1. Tax Credit – The Federal Homebuyer Tax Credits offer an incredible opportunity for buyers.

Those that qualify can receive a credit of either $8000 or $6500 on their Federal Income Tax. This is an opportunity that many buyers find simply too good to pass up.

2. Interest Rates – Several economic factors lead experts to believe that the current low interest rates cannot be sustained. Some predict that rates could be 0.5% to 1.0% higher by the end of the year. The buying power of today’s interest rates will create urgency and cause buyers to act.

3. Design – Frugal is becoming fashionable with energy efficiency a priority. Smaller, greener homes will be popular. Built-in storage space and practical, more conservative features will be in demand.

4. Hot Properties – Properties with very unique locations continue to be in demand. Also properties that have been recently remodeled are attracting buyers.

Advice For: Sellers

Buyers

1. Understand what is happening in the general Northern Colorado market.

2. Understand the homes that will compete with yours as well as the supply and demand in your neighborhood.

3. Focus on the three factors that are in your control- price, condition and marketing.

4. Select a price that will immediately be perceived as a value in your market. This is much more effective than chasing the market with price reductions.

5. Have your property “Parade-Ready” before it goes on the market.

• Clean the home thoroughly.

• Consider new paint and new carpet.

• Consider hiring a professional stager.

• Remove excess amounts of clutter and personal items.

6. Have your property pre-inspected to eliminate surprises for a potential buyer.

7. Continually monitor activity in your neighborhood and in the general market.

1.

2.

3.

4.

Be prepared to act when the right property is available.

Understand the market so you know what is truly a great value.

Talk with a loan officer to get pre-qualified and educate yourself on financing options.

Research the Federal Homebuyer Tax Credits. You may qualify for an $8000 or $6500 credit if you purchase by April 30, 2010.

5. Understand your buying power at today’s interest rates and that many experts expect rates to increase by the end of the year.

6. Think long term. The fundamentals of our markets are strong and it is a smart place to own real estate.

Builders 1. Look at your marketing strategy with fresh eyes.

2. Ensure that everything in your control communicates success- signage, print advertising, etc.

3. Consider incentive packages that compete with the tax credit programs.

4. Consider new product lines that meet a lower price point.

Investors 1. Relatively stable residential rents combined with low interest rates make this an excellent time to buy investment property.

2. Develop clear long-term goals. Investors who fix and flip may find few opportunities in the short-term.

If you know someone who would like to receive this newsletter, please call me.

Harmony Office 970.229.0700 2803 E. Harmony Road, Fort Collins, CO 80528 Horsetooth Office 970.223.0700 Mulberry Office 970.221.0700

Greeley Office 970.392.0700 Loveland Office 970.663.0700

Centerra Office 970.613.0700

www.thegroupinc.com

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Forecast for 2010 We expect the Federal Homebuyer Tax Credit* to create quite a bit of activity from first-time buyers and long-time residents in the first half of 2010. The potential rise of interest rates will create urgency among buyers causing many of them to act in the near future. Properties that stand out in terms of price and condition will outperform the competition.

Northern Colorado will continue to perform better than the nation as a whole driven by a better job picture and property values that have held up fairly well the last three years.

2010 Residential Sales Forecast

Ault/Eaton/Johnstown/Mead Prediction Fort Collins Loveland Greeley/Evans Windsor Kersey/Milliken/LaSalle Number of home sales 3,000 1,425 1,700 500 550 Residential sales volume $724,500,000 $322,050,000 $237,150,000 $137,500,000 $104,500,000 Average sales price $241,500 $226,000 $139,500 $275,000 $190,000

We forecasted 7,450 sales in 2009, 7020 were sold – an accuracy rating of 94%.

*The Federal Homebuyer Tax Credit was expanded to include both first-time

HOMEBUYER

TAX CREDIT

buyers and long-time residents. The income limits were expanded to $125,000 for a single person and $225,000 for a couple. The tax credit was extended.

The tax credit is $8,000 for first-time buyers and $6,500 for long-time residents. This program expires April 30, 2010.

The Federal

APRIL 30, 2010 Tax Credits Expire Homebuyer ime Buyers ble to First-T $8,000 Availa ime Residents ble to Long-T $6,500 Availa

The Group has created a Homebuyer Tax Credit Kit that includes everything a prospective buyer or seller needs to know about this program. Call me for a complimentary copy.

The Group has just completed our detailed 2009 market research.

Contact me for the most current information.