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Welcome to Jay Sandstrom's monthly newsletter, Jay's Real Report (on Real Estate)! Recent buyers and sellers, investors, real estate insiders, and those who are planning a real estate transaction are getting the upper hand with the help of Jay's insights and observations.
Numbers that matter: transactions & inventory |
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For the last six years, before and during Denver's tough real estate market, the pace of local transactions only showed only a small variance year to year. Now in 2009, we're seeing a significant drop in the number of transactions. (Metrolist: May YTD was down 18 percent compared to 2008.) That's a challenge because May through July are usually the most popular months to close a residential deal.
Two reasons (at least) are behind the current recessionary slide:
1) Unemployment affects people's ability to buy. Psychologically, the very fear of a layoff will cause some people to hunker down. Which leads to the second reason...
2) Inventory is down about 25% compared to a year ago. Everybody's sitting still - there are fewer buyers and fewer sellers. Again, many people are thinking "let's sit tight where we are for a while."
Bank-owned inventory continues to fall as well. That's a good sign, because the value of homes can begin to bounce back.
May I suggest that for those "brave" enough, now is the time to be a move-up buyer. Time is of the essence. Interest rates are beginning to creep up (recently up 3/4ths of a point from the 30-year year low of the past couple of months.)
Call me so we can talk about the timing and potential gains of your next transaction. |
| Another key indicator: condos & townhomes |
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 The condo-townhome market tends to lead the local real estate market in either direction. Recent articles say condo prices are starting to go back up. What does that mean? Because condo/townhome prices were way down a year or two ago, I predicted the single family home market to bottom about now. If the percentage of bank-owned properties on the market doesn't rise, prices (already among the most stable in the nation according to the Case-Shiller index of like properties) will begin their turn northward. Again, the local unemployment picture can change this situation. Thankfully, the latest numbers show that metro Denver unemployment (7.3% in May) continues to be healthier than the national average, 9.4%. Plus Colorado actually added 2,100 jobs in May, as reported in the Denver Business Journal, "Glimmer of hope." |
| Second homes and investment properties |
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Has anyone asked you if you "own" your home? Some smart alecks I know answer, "Well, yes, me and the bank own my home."
The National Association of Realtors report that 30% of "home owners" actually do own their primary residence outright. Yes, most are in the "builder" generation, retirees, and older baby boomers.
Due to stormy stock markets and the uncertain retirement picture, some people are choosing to cash out their second homes. Is that opportunity knocking?
Perhaps the fastest-moving properties today are investment properties. I've watched the transactions, and investors are buying like crazy right now. It is actually hard to get a quality investment property at a good price today. At the beginning of the year I saw two to three good deals in a week. Now, only investors with a sharp eye can catch one "good deal" in a month.
Many people who are afraid to take the investment plunge are parking their dollars in a savings account, but more aggressive investors are literally piling in. It's a very competitive time for investors, which moves properties and firms up the rest of the market.
I'm also noticing that banks are no longer dumping properties. The overall inventory in metro Denver is shrinking - a good indicator for a true supply-and-demand commodity like real estate.
Thirty percent of my clients hold some investment property. Is it too late to get into investment real estate? It's my business to watch this market carefully for you. Let's talk! 303-870-5763. |
Making your "green" upgrades pay off |
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 If you're living in home built before 1978, there may still be some "green" upgrades that will benefit your property. New windows not only enhance curb appeal (and neighbor envy), but can offer almost immediate energy savings. If you purchase the right window, you can get up to 30% of the cost of the window as a tax credit. Read the details from the IRS here.
Even with the credit, the full energy savings is long-term, recouping an average window purchase in six to nine years. If you're looking to sell, you should be able to recover most of your expense in the sale price.
Bigger "green" projects like solar photovoltaic cells on your roof get noticed by prospective buyers, but sellers should not expect to gain a quick return on that investment in any case. The average time to recoup such a major expense can be 50 years or longer.
Remember that the home improvements that add most quickly to the value and marketing of your property are kitchen improvements, bathrooms, windows and landscaping.
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 How do you make sense of all the conflicting news reports about the economy? Experience and wisdom. I look forward to helping you, your family and your friends manage your real estate portfolio during the best and worst of times. Call me anytime at 303-870-5763, or send your questions to jaysandstrom@aol.com.
Sincerely, Jay Sandstrom | |
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