June Market Insights by Clark Hutt

If you want to know whether this year is going to be good for buyers or sellers or both we need to look at several factors. First, looking at the housing market we see a recent uptick in mortgage rates. Second, we are seeing home prices move upwards and third, low inventory does not appear to be changing anytime soon. This has made buying a home slightly less a ordable than it was a couple of years ago, but that doesn’t seem to be stopping the ood of buyers in the marketplace. 

They may realize that mortgage rates, still at historically lows, means buying a home remains a very a ordable choice. This does appear true when taken together with recent economic data. 

According to the most recent outlook from Fannie Mae’s Economic & Strategic Research Group, how things play out will depend largely on young Americans who are just beginning to enter the real estate market in greater numbers. 

The National Association of REALTORS’ Pending Home Sales Index is a good indication of where home sales will be a month or two down the road. Lawrence Yun, NAR’s chief economist, says we may be seeing fewer contracts signed simply because of the lack of available listings. The number of buyers in the market is strong and hasn’t abated, in spite of the inventory struggles. 

What this means is the number of homes for sale isn’t keeping pace with the number of buyers interested in buying homes.

The even better news from the housing sector, as the Commerce Department reported, is that housing starts hit a four-month high. Housing starts are measured from the time excavation begins on a new home. 

The good news continues with starts on single-family homes rising to a near 10-year high, up 6.2 percent. These increases are a welcome sign for those in the market for a home, as it gives them expanding choices for purchases, again thanks to those ongoing inventory limitations. 

Home prices are expected to match their 2006 high at some point later this year, according to CoreLogic’s chief economist, Frank Nothaft. If this inspires more sellers to enter the market we could see a more balanced sales season than we’ve been witnessing so far. 

And what’s fueling the price increases? You can thank the combination of a stronger economy, population growth, low mortgage rates, and a lower-than- normal number of homes for sale in many markets. 

Of the 1627 available homes for sale in Metro Denver, 1344 sold and closed. Median sale prices rose from $360,000 to a robust $400,000 with Days on Market at a short 19. 

As more homeowners respond positively to the continuing price gains, easing market demand by putting their starter homes up for sale and purchasing from the move up inventory we should see that helping to balance the market.

Now on the verge of the summer home buying season, this environment of historically low mortgage rates will help o set the pace of house price growth and keep a home purchase an a ordable choice. 

 

April Market Insights by Clark Hutt

Can you believe we are moving into the Spring sales season already? Recent real estate data gives every indication that demand for homes to purchase remains high. How high? Sales of new single- family homes are at the highest levels they’ve been in the previous seven months! 

Continued low mortgage interest rates have motivated interested buyers who are seeking to take advantage of these conditions, particularly as hints of rate rises hover on the horizon. 

Meanwhile, tight inventory dictates that if you are a buyer searching for your perfect nesting place this season, odds will favor you increasingly based on how prepared you are to move very quickly once you spot the one that suits your fancy. 

Tight inventory is also the culprit behind the elevated home prices we’re seeing. That’s also why the new build home inventory has become such an important player in this marketplace. The
National Association of Home Builders, during its regular survey of local builders, says that optimism is high. As new home construction produces more choices for buyers and more competition among sellers it should also help balance the market. 

Those homes that are available are selling rather quickly. In Metro Denver, 1179 homes sold and closed within just 26 days on the market this past March. March also saw median home prices that rose from $356,750 in 2016 to $376,750. Available homes for sale sat at 1450, an increase from the 1422 available for sale this same time period last year. 

Prolonged constricted inventory levels are fueling frustration for some buyers and making a purchase harder than it ought to be in such a favorable marketplace. Hesitant homeowners, fearing they won’t find a suitable move up home, need a bit of prodding to take the leap into a sale. Once they do though, we should see brisk activity that’ll carry right through to the fall. 

Although this year’s real estate market may not look as buyer friendly as it has in recent years, this demand level is the highest it’s been since the Great Recession, according to the National Association of REALTORS’ chief economist, Lawrence Yun. Yun says Americans are feeling more confident about their financial status due to better job prospects and recent stock market gains. That, of course, is positive news. But the flip side of increasing buyer demand is more competition for available homes at a time when for- sale inventory is lower than normal in many markets. “Buyer traffic is easily outpacing seller traffic in several metro areas and is why homes are selling at a much faster rate than a year ago,” Yun says. “Most notably in the West, it’s not uncommon to see a home come off the market within a month.” 

Doug Duncan, Fannie Mae’s chief economist, agrees that housing should continue to grow. “We expect housing expansion to continue, albeit at a more moderate pace than last year given continued pressure on affordability,” Duncan said. 

Expect demand to grow and swell the buyer ranks thanks to first- time home buyers coming back into the housing market. With upticks in employment and the job market in general, to quote Steve Danyliw, Chairman of the DMAR Market Trends Committee: 

“The spring selling season in our housing market experienced some of its own March Madness. Homebuyers and sellers will be happy by the healthy increase in activity.” 

March Market Insights by Clark Hutt

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We may be looking at the sales and housing information from February, but those crocuses poking their heads up in many fields around Metro Denver indicate spring is not far away!

A recent survey conducted by Princeton Survey Research Associates says 59 million people are considering buying a home this year. That’s roughly one in four adults. Demand for housing remains high, evidenced by 829 of the 1281 homes available for sale sold and closed in February. 

This same survey shows that the strongest demand is being made by parents with young children. Understandable that they would want to move quickly on a purchase, leading to an average of just 31 Days On Market. Competition is a great motivator, and slim inventory is sparking tough competitions for what is available out there.

The second largest group of buyers are those between 27 – 52 years of age. Low interest rates appear to be what inspires this age group, as they choose to take advantage of home prices before further increases occur.

And prices are continuing to move upwards, indicated by the gap between February 2016’s median sale price of $325,000 and 2017’s $350,000. Holden Lewis, a mortgage analyst with Bankrate, insists there’s a lot of pent-up demand among younger buyers. “They have been stymied by stagnant wages, student loans and a lack
of available starter homes,” Lewis said. “If enough affordable homes are put on the market, we might see a surge of first-time home buyers in their early to mid-30s.”

Here is the big question among home buyers that potential home sellers really should be sitting up and taking interested note of: 

Will there be enough affordable homes on the market to support the increasing number of interested buyers?

Although all the recent signs among home builders indicate they are beginning to build smaller, more affordable homes, without a spike in the number of those putting existing homes up for sale, buyers are likely to continue facing a spring market that offers only minimal inventory to choose from.

No analysis of homes sold during the final quarter of 2016 is complete without noting that just under 60% of both new and existing homes were considered affordable to a family earning the median income of $65,700 annually. 

Even with the slight mortgage interest rate increase, the numbers – from the National Association of Home Builders Housing Opportunity Index – show that the majority of homes available for sale are still within reach for most who were hoping to buy a home this year.

A stronger job market and rising wages should help offset the effects of higher prices and rising mortgage rates. In addition, builders remain confident that the market will continue to improve this year.

As inventory of both existing and new homes loosens any price increases should begin to moderate, which would help improve affordability conditions even further. 

The housing market is always evolving. Whether you’re looking at new home construction or where mortgage rates are hovering, those numbers are always in flux.

The best time to sell? The best time to buy? When it’s the right time for you and your family should always be your deciding factor. 

 

January Market Insights by Clark Hutt

January 2017 saw 1287 homes available for sale in Metro Denver. Of those, 800 sold and closed at a median price of $342,500. Of the 1401 o ered for sale January 2016, 785 made it to the closing table at a median price of $319,185. The 2017 sales took on average 31 days to go from sale to sold, 5 days less than the previous year.

Wrapping up the real estate overview, according to results of the S&P CoreLogic Case-Shiller U.S. National Home Price Indices, year over year home prices were up just under 6%.

Denver was reported to be in the top three markets with the sharpest increases. David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices declared “...one can argue that housing has recovered from the boom-bust cycle that began a dozen years ago.” 

Based on the numbers, we’d agree with Mr. Blitzer, at least in our marketplace.

The major contributions that supported the full recovery include low mortgage interest rates, falling unemployment numbers and consistent gains in per- capita disposable personal income.

Not everything was an increase, evidenced by the nal quarter of 2016 which did see some slow down, with sales dipping almost 3% in November. Even with those dips, sales were still slightly under 1% higher than previous years in the last quarter. Only December saw a decline year over year, and Lawrence Yun, NAR’s chief economist, thinks that blame lies squarely with low inventory levels. 

The final analysis? People want to buy a home. Those buyer numbers will continue to increase as millennials wake up to the bene ts of ownership and multiply the already swelling marketplace. In 2016, sales of previously owned homes reached their highest level that they’ve been at in 10 years, according to new estimates from the National Association of REALTORS®.

Predictions are that lower-than-normal inventory levels mean prices could continue to see upward pressure unless more homeowners put their homes up for sale; or if new home construction ramps up enough this year to meet the increased demand. 

It is interesting to note, however, that, according to an article written by U.S. News and World Report, a surprising issue appears to have been uncovered, that may be one of the major contributing components to these stagnant inventory levels that are plaguing our real estate market.

The issue? Unrealistic expectations of first time home buyers.

On average at any given time about 32-38% of buyers in our markets are those venturing into the buying experience for the first time.

Where once it was accepted and expected that houses one might describe as a starter home would most likely require a little work done, the current wave of rst time buyers would seem to have a very different idea of what a starter home should be.

While what we might describe as a starter would absolutely be livable and functioning, we would probably also expect they would feature lower end appliances and fixtures.

Where it might have been taken for granted that a rst time buyer would naturallyassumeaneedtopaintand update to personal taste, the fact is that just isn’t the case anymore.

First time buyers in this marketplace, seeking that starter home, have an expectation of move in ready that includes fresh paint and updates that used to be reserved for that bigger, and maybe more upscale second home. 

The article went on to reveal that house condition and size expectations of rst time buyers is simply not in line with prices! Very low purchase o ers or no o ers at all on the types of homes that t the starter home description may be a big part of what is putting o sellers who own homes that t this category and suppressing our inventories.

Getting the news of equity gains out to sellers to stimulate inventory growth is important. Just as important is helping buyers recognize the reasonable price structure of homes available in this market. 

If you would like information for a different area than Denver metro, just comment below or email me.

Wasting my Time? by Clark Hutt

This is one of the things I hear most from my clients, that I almost never agree with.

Client Statement- "I don't want to waste your time."

And while I appreciate the sentiment I also want to show you that most of what I do for you is not a waste of time. I value my clients and what they need as well as how they're going to get there. 

You need to look at your Realtor as a resource for you, and also understand that they are getting paid to do what they do. Whether you are paying them as a seller, or whether you're a buyer and the other party is paying, most of the time your Realtor is getting paid to do what they do. So going on showings, writing contracts, and educating are the duties we as Realtors expect to uphold as part of our getting paid on your behalf.

My seasoned investor clients have no problem "wasting my time". They will send me to multiple listings, take photos for them and write handfuls on contracts. Because they know I work for them, and I'm getting paid a commission for my time. For my newer clients, pretend you're a seasoned investor and let me work FOR you. Ask your questions, let's go on showings, and take any expertise I have to offer. The client statement always leads to my statement below:

My Statement - "USE me, UTILIZE me, because I work FOR you!"

Don't be afraid to work with your realtor, and don't be afraid to let them work. I love to educate new buyers on the process and how we can succeed in buying them a home. I also love to go see properties and save my clients from work, or getting their hopes too high, or even missing a gem out there that would be perfect for them. 

Mindset of a Seller by Clark Hutt

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First time home buying is a tough business right now. I just pulled the data for different areas in Denver and found that if no new listings came on the market, the current homes for sale would be gone in UNDER A MONTH! That's a crazy statistic. That same data just a few years ago would tell you that there was anywhere from 4-8 months of listings that are ready to be sold. What that tells me is that it's tough to be a buyer, prices are still going up in Denver, and there aren't really any signs of stopping. 

So in order to be the best buyer that you can be, you need to be in the mindset of a seller. Think about everything they're going through; how many offers they are getting, where they are going next, how they feel about their home, and more. 

If you are looking at a home that is getting multiple offers, think about all the options that someone can do with a contract. What would you want to see if you were selling your place? Would you just take the offer with the most money? Would an offer that says they won't do an inspection objection make you excited? What if they were to waive the appraisal and agree to pay the contract price even if the bank doesn't agree with that number? These are some of the big things that sellers are looking for. All of those mean less fuss and stress for the seller. Granted it does not protect the buyer very much, it does get the seller interested in you and thus you have an opportunity to win the house. Competition is key here, and you have to shine above all the others, so you want to make your offer as strong as you are comfortable with. 

Personal letters aren't doing much for sellers these days, the sheer volume of offers on some places make it impossible to look beyond the data of the contracts. So focus on the data, ask your Realtor what would be the strongest position to take with the resources that you have. Ask for a couple of options that you can weigh on. Which one is stronger to you (in the mindset of a seller), and which seems feasible for you to pull off? 

Forget the photos of you or your kids, because when it's all said and done this is pretty much a business transaction. You probably aren't going to be best friends with the sellers, or really ever see them again after the closing table. It may not sound as fun this way, but on the bright side you'll have a new home!

Why Use a Realtor by Clark Hutt

Everything today screams DIY, be self sufficient and do it on your own. But when you are in one of the largest transactions of your life, your home, you want to make sure that you have every resource you can to protect you. There are so many things happening at once in a real estate transaction and so many risks involved, why wouldn't you want someone there designed to look after YOU?

Quick Tip - The difference between an agent and a Realtor is that a Realtor has promised before a group of people to act ethically in all situations. All Realtors are agents, not all agents are Realtors.

Things to know  - 

1) For most transactions as a buyer, the fee for the buyers agent is built into the price of the home. This means that it shouldn't cost you anything extra (besides the purchase of the home) to have somebody by your side. Most of the time if you walk straight into a home and talk to the selling agent they aren't going to cut you a deal by not having an agent. They are either going to get more money for their seller, which they are supposed to do. Or they will get more commission themselves for doubling their work load. So not having an agent doesn't save you money.

2) Do you know all the complications of Colorado Real Estate? - There are 16 pages in the Colorado purchase contract, let alone, agency contracts, Lead Based Paint riders, addendums, amendments, closing instructions, earnest money receipts, and much more. The purchase contract also has 37 dates tied to different portions of the contract that have serious repercussions if certain items don't meet those dates.

I point these out just to show you the complexities that surround each transaction. You wouldn't go to a court case without an attorney, neither should you jump into a real estate transaction with the protection of a Realtor.

I know the reputation of most Realtors is just above used car salesman. But that's also why you get to interview agents, and ask them about how they work, and how they protect you. They should be very up front with you about how costs work, what the market is like, and what you should expect from buying or selling a house with them. Don't be afraid and also don't take anything lightly, this is a HUGE transaction for you and everyone involved should know that and respect it as well.

Multiple Offers - What To do? by Clark Hutt

Often my team and I have buyers in a situation where they love a home and soon find out that many other people do as well. This often hits in the under $400,000 price range, where a vast majority of buyers are. There are many things to consider when you have to navigate a situation like this. You now need to move from just making an offer to crafting one that grabs the attention of the seller and helps them see weaknesses in all the other offers. This is where a wealth of knowledge in your Realtor should come in to play! Here are a few of my suggestions;

1) Use a Realtor, Don't just call the listing agent - While it might seem that you can save a few dollars, or the listing agent might like it if you don't come with your own agent, it's not the best idea for you as a consumer. Unless you are dealing with Real Estate transactions on a daily basis, you are giving up a lot of knowledge and safety to the benefit of the seller and their agent. It won't cost you anymore as a buyer (in almost all cases), to use a Realtor to help you craft offers, and use the protections that Colorado contracts have in place for the buyer.

2)Be in the Mindset of a Seller - Turn around and think about yourself as the seller. What would you like to see from multiple offers, what would be important to you as the seller in this situation. People often get stuck in "they should just like us" mode, and hope that sellers just like them and it doesn't matter what goes into our offer. In multiple offer situations, sellers are bombarded with information so they just stick to the top important pieces that ultimately matter to their pocket books.

3) Money is king - Financial strength is a big thing for sellers and sellers agents to look for. How much money can you put down? What kind of loan are you getting (if any)? You want to put your best foot forward. If you can are only putting 7-10% down but you actually have the cash to put 15-20% down, you want to put that in the contract. You aren't tied to doing exactly what is in the contract, you just need to be able to prove that you are able to do that(meaning you can show your accounts with that money there). 

4) Show them you mean business - In Colorado buyers have all the power in the contract; you as a buyer can walk away pretty much anytime before closing without any penalty. So show them that you are in this for the long haul by taking away some of your privileges. That might mean only pointing out LARGE safety concerns in your inspection, and not being nit-picky about small cosmetic problems. That also might mean that you pay for any difference between the contract price and the appraisal (just means more money down). What worries can you take off of the seller so they just think that you'll finish the contract and move in no problem?

 

These are some generic points to think about when going into negotiations with a seller and their agent. I'll delve into all of these in much more detail in later posts as these are all tricky things to maneuver, and all change depending on the buyers situation and comfort level, and how much competition there is for this specific home. Good Luck out there!