Vol 34, No 3 - March 2010 WEB

Real Estate Insider

A Publication Of The Group, Inc.

Vol. 34, No. 3

March 2010

Opportunity of lifetime A set of market conditions has merged to create a unique opportunity that benefits both buyers and sellers in Northern Colorado.

• Historically low interest rates. In mid-February, 30-year fixed mortgage rates dipped below 5 percent. Since 1972, the average annual interest rate has been 9.03% with current rates the lowest we have seen during that time.

• Tax credits. The $8,000 first-time homebuyer tax credit and the $6,500 tax credit for long-time homeowners who purchase a new home are being offered for purchases prior to April 30 and a closing prior to June 30. Although the tax credit was extended and expanded once, we don’t expect this opportunity to occur again.

• Distribution of supply. Homes under $300,000 are in high demand and inventory is on the low side. Homes in this price range in good condition and priced to the market should generate offers quickly. Sellers of those properties who want to move up will find an ample supply of well-priced homes in the mid to upper-end ($400,000+). These circumstances have created a rare ‘dual market’.

“In my 37 years in real estate I’ve never seen a dual market like this,” said Larry Kendall, co-founder of The Group, Inc. “It only happens once in a lifetime.”

The combination of low interest rates, tax credits, and the ‘dual market’ provides a unique opportunity for those who are poised to take advantage of it.

NATIONAL AVERAGE MORTGAGE RATE

15% Good grades for Greeley Real Estate by the numbers Economic indicators

10%

5% More online, visit www.thegroupinc.com

1972

1980

1990

2000

2009

Pressure on interest rates could affect buying power Many experts believe that today’s low interest rates will not last much longer. Economists from the National Association of Realtors are projecting rates to reach at least 6 percent by the end of the year.

What could prompt a rate hike? Two primary reasons.

• Fed policy. The Federal Reserve has helped to hold rates down by its decision to buy mortgagebacked securities. But Fed Chairman Ben Bernanke plans to end that policy by March 31.

• Inflation. If inflation rises, yields on fixed-rate investments are squeezed. Mortgage rates would rise accordingly.

What do rising interest rates mean to home buyers? A 1% change in interest rate affects a buyer’s purchasing power by 10%. For example, a buyer who can afford a $300,000 property at today’s rates could afford a $270,000 home if rates increase to 6%.

Good grades for Greeley in recent housing report The Greeley-Evans market experienced a 15.1 percent increase in median home sales prices from November 2008 to November 2009, according data compiled by Information and Real Estate Services.

Prices climbed to $141,000, up from $122,500 the year before.

By comparison, the Fort Collins market experienced 2.3 percent gain in median home prices, while values in the Loveland-Berthoud market were flat over the previous year.

Greeley also fared well in two recent rental vacancy reports. Greeley’s vacancy rate for multi-family affordable housing was 4.9 percent in the third quarter of 2009, according to the Colorado Division of Housing. The CDH also reported Greeley’s overall rental vacancy rate at 7.4 percent during the fourth quarter of 2009, which was below the state average of 7.9 percent.

In good company: Fort Collins on list of “distinctive” places Fort Collins was named by the National Trust for Historic Preservation to the organization’s 2010 List of America’s Dozen Distinctive Destinations. The list, issued annually for the past 11 years, recognizes communities with “distinctive cultural and regional experiences.”

In the National Trust’s announcement, it praised Fort Collins as a place that “epitomizes the ideal of a bustling American main street.”

The 2010 List includes: Bastrop, Texas; Cedar Falls, Iowa; Chestnut Hill, Pa.; The Crooked Road: Virginia’s Heritage Music Trail; Huntsville, Ala.; Marquette, Mich.; Provincetown, Mass.: Rockland, Maine; Simsbury, Conn., and St. Louis, Mo.

British Holiday Inns offer the human touch with bed-warming service The hospitality industry is all about being warm and welcoming. So, three Holiday Inns in Britain are giving special focus to being warm this winter. If you choose, the hotels will send an employee, dressed in a one-piece fleece suit, to slip between the sheets before you do. Once the bed reaches at least 68 degrees Fahrenheit, you’re good to doze.

Real Estate by Numbers • 44,000 square feet – The size of the new OtterBox headquarters building that OtterBox at 209 S. Meldrum St. near downtown Fort Collins. OtterBox plans to invest $9 million to expand the existing 13,334-square-foot building at that address.

• $10.4 million – The amount spent by W.W. Reynolds Cos. for the Abound Solar building, a 126,384-square-foot industrial building located at 9586 E. I-25 Frontage Road in Longmont.

• 100% – The occupancy of the Rangeview Two office building at Centerra in Loveland.

MJB RVW LLC, a Colorado-based investment concern, recently paid $10.75 million for the 39,000-square-foot property.

• $583,000 – The bargain-basement price that a Toronto developer paid late last year for the Pontiac Silverdome, an arena that once housed the NFL’s Detroit Lions from 1975-2001. The Silverdome cost $55.7 million to build.

• 90 – The number of days that short-term investors previously had to hold a property before selling to an FHA-backed borrower. That 90-day “flip rule” was recently suspended by the FHA in order to stimulate housing supply.

• $5.3 million – The value of the sale of the 50-unit Creekside Garden Apartments in Loveland. The Housing Authority of the City of Loveland took ownership of the property.

• 9.03% – The average interest rate for the past 38-years.

Employment conditions give reason to believe in local market Local real estate markets are sustained by jobs. Statistically, employment conditions in Northern Colorado indicate a market that, while short of robust, is holding up well against the economic forces that have battered other regions of the country.

For example: • National unemployment is 10% • Colorado unemployment is 7.5% • Northern Colorado unemployment is 7% A better job market creates a better real estate market. And Northern Colorado’s diverse employment base will keep the local market outperforming the national market.

Swimming lessons for homeowners ‘under water’ For homeowners “under water,” short sales can be a beneficial option to foreclosure.

It takes professional advice to work through the process. The Group, Inc. has more real estate professionals designated as Certified Distressed Property Experts than any other brokerage in the region. Realtors who hold this designation have a thorough knowledge of the options available to homeowners in a distressed situation.

CERTIFIED DISTRESSED PROPERTY EXPERT

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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

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A monthly snapshot of Northern Colorado’s economic health Likely Direction in Next 6 Months Mortgage Rates Jan. ’10 5.03%

Jan. ’09 5.05%

Forecast

Fed policy and information will impact rates

Jan. ’08 5.76%

Existing Single-Family Home Sales Fort Collins Area YTD Jan. ’10 96 YTD Jan. ’09 104 YTD Jan. ’08 107

Greeley Area 101 107 112

Loveland Area 51 49 57

Windsor Area 10 14 19

Lower price ranges strong, upper end remains soft

Single-Family Home Inventory Fort Collins Area 4Q 2009 1,301 4Q 2008 1,178 4Q 2007 1,223

Greeley Area 994 1,089 1,411

Loveland Area 810 825 970

Windsor Area 372 422 443

Historically, inventory levels increase in spring and summer months

Housing Starts YTD Jan. ’10 YTD Jan. ’09 YTD Jan. ’08

Fort Collins 5 3 32

Greeley/Evans 12 1 10

Loveland 7 4 18

Average Existing Single-Family Sales Price Fort Collins Area Greeley Area YTD Jan. ’10 $229,143 $146,938 YTD Jan. ’09 $247,272 $130,782 YTD Jan. ’08 $271,066 $153,580 Apartment Vacancy Rates Fort Collins Area 4Q 2009

5.8% 4Q 2008

4.2%

Greeley Area 7.4% 8.1%

Windsor 9 8 27 Loveland Area $218,167 $231,714 $225,321

Timnath 3 Windsor Area $261,083 $238,738 $168,064

Loveland Area 6.6% 6.1%

Will remain low

Prices are holding steady

New projects coming on line will take time to absorb

Commercial Vacancy Rates

Industrial Retail Office

Jan. ’10 Jan. ’09 Fort Collins Greeley Loveland Windsor Fort Collins Greeley Loveland Windsor Area Area Area Area Area Area Area Area

7% 10% 20%

2%

6% 12%

7%

1%

8% 10%

6% 24%

8%

7%

6%

9% 14%

8% 13%

6% 10%

7% 15%

3%

Some stabilization occurring, rents lowering

Sources: Freddie Mac, cities of Fort Collins, Greeley, Loveland and Evans, towns of Windsor and Timnath, Sperry Van Ness/The Group Commercial, Gordon E. Von Stroh, state of Colorado, IRES.