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Tracy Shaffer's Blog

By Tracy Shaffer | Agent in Denver County, CO
  • Blowing Up the Housing Bubble

    Posted Under: Market Conditions in Denver, Home Buying in Denver, Home Selling in Denver  |  December 11, 2013 11:29 PM  |  56 views  |  No comments

    We've been very lucky in the Denver housing market. The downturn hit us early and with a short foreclosure process, we went through inventory faster than most cities. Of course I'm partial to the Mile High City,but that has no bearing on the current market stats. 2013 saw a rapid rise in home values, partially because inventory was incredibly low and because the pent up demand in the move-up buyer finally released itself. (Not quite like it sounds) Byers who'd been waiting for their first home to appreciate had been sitting tight, waiting out the market and this year was the time to sell. The flurry helped push prices up as these sellers went under contract and scrambled to find their replacement dream home. 
    With prices rising so rapidly, there has been talk of another housing bubble. With the help of Charles Roberts, Your Castle Real Estate co-owner, I'll give you 6 reasons why the echo bubble ain't happening.
  • Denver Ranks a Mile Hi on Home Affordability Index

    Posted Under: Market Conditions in Denver County, Home Buying in Denver County, Financing in Denver County  |  August 23, 2012 7:54 AM  |  106 views  |  No comments
    You may be surprised to know that in the Denver metro area, The Home Affordability Index (HAI) is at its highest recording ever. What does that mean? The HAI compares the median price of a home in the Metro Denver real estate market to the median income level, and brings the current interest rate for a 30-year fixed rate loan into the equation. As a home buyer this is good news as the median income earner can buy more house today than ever before. Why? Because home prices, while rising quickly, are still well below their peak prices of 5-6 years ago and interest rates are at never-before-seen historic lows. It is the interest rates that continue to make homes so wonderfully affordable, so let’s dig into those a bit. 
    The typical rate on a 30-year fixed mortgage tumbled below 3.5% for the first time last week, the latest record low in a trend that has fired up homes sales around the country. Freddie Mac’s weekly survey of what lenders are offering to qualified borrowers showed the 30-year rate at an average of 3.49%, down from 3.53% the week before. The 15-year fixed loan fell from 2.83% to an almost unbelievable 2.8%! Let’s put this in perspective. In late July 2010 and 2011 the typical 30-year rate in the Freddie Mac survey was just over 4.5%, more than a percentage point higher than now. The 30-year rate was above 6% in 2006 and most of 2007, over 8% back in 2000, and over 10% in 1990. Back in the bad old days of inflation, the rate topped 18% in 1981. Look at how the interest payments affect your monthly Principle and Interest payments:
    $200,000 property in 1981 at 18% interest: $3,014
    $200,000 property in 1990 at 10% interest: $1,755
    $200,000 property in 2000 at 8% interest: $1,467
    $200,000 property in 2007 at 6.5% interest: $1,264
    $200,000 property in 2011 at4.5% interest: $1,013
    $200,000 property in 2012 at 3.5% interest: $898
    But wait, there’s more! According to a recent CNN Money article the average cost of closing on a mortgage has fallen by 7.4% over the past year. At the end of June, a homebuyer looking to close on a $200,000 mortgage with 20% down paid an average of $300 less than 12 months earlier. Even if you don’t have 20% down payment saved, you can put 3.5% on an FHA mortgage. Very attractive, no?
    No one knows how long these historically low rates can last. But in the meantime my clients are taking advantage of them to buy the homes of their dreams and lock in once-in-a-lifetime interest rates.
  • News the News Doesn't Tell You

    Posted Under: Market Conditions in Denver, Home Buying in Denver, Home Selling in Denver  |  July 15, 2012 1:15 PM  |  129 views  |  1 comment
    Well, look who’s coming back around. With all due respect for the “Respected Media”, it looks as if they finally got the memo. Though real estate, like the weather, is hyper-local the mainstream types reporting on the national outlook finally figured out that the housing market is growing again.
    Both The Wall Street Journal and the New York Times said this week that “it would appear that housing is making a comeback”. Of course, REAL Trends has reported eight consecutive months of increased housing sales and three months of increasing housing prices, while NAR reports increased unit sales during the same time frame and that prices are firming.
    Until Case Shiller said that prices were turning around, neither of these news organizations would report such a thing; perhaps that’s just as well. It took them 12 months to report that housing was headed downward. In fact, they still report the downturn as occurring in the spring/summer of 2006 when in reality the beginning of the slide was in fall 2005. That is when unit sales began to slump on an annual basis. Yes, I’m being picky…
    The media may not always be fair or accurate in their reporting on the housing market. Recent years of staff cutbacks across the nation’s newspapers have left researchers and reporters without the time or (perhaps the inclination) to really research any sources that don’t fit their preconceptions.
    Overreliance on Case Shiller tend to mask a real turnaround in most housing markets. Thanks to consumers and investors alike, housing is starting the long road back to health. Those of us “on the ground” have witnessed six months of solid grown in the Denver housing market, with homes selling quickly at or above asking price.
    Though I’m not ready to start the parade (my calves are still sore from today’s Independence festivities) or predict a huge breakout of double digit appreciation, the evidence is overwhelming that housing is on the way back. Could it be time to strike up the band?
  • The Housing Bust Has Burst

    Posted Under: Market Conditions in Denver County, Home Buying in Denver County, Home Selling in Denver County  |  July 15, 2012 1:08 PM  |  59 views  |  1 comment

    As a follow-up to my previous article about the housing market and the mainstream media, I thought I’d post this. Just in from
    The Wall Street Journal it seems they’re finally confident to announce what we’ve been watching here in Denver for the past six months.

    From here on, housing is unlikely to drag the U.S. economy down further. It will instead reflect the strength or weakness of the overall economy: The more jobs, the more confident Americans are about keeping their jobs, the more they are willing to buy houses.

    Though one thing in the article is not likely to affect the Denver market.

    The biggest threat is a large shadow inventory of unsold homes, homes which owners won’t put on the market because they are underwater, homes that will be foreclosed eventually and homes owned by lenders. They have been trickling onto the market, slowed in part by government efforts to delay foreclosures; a flood could reverse the recent rise in prices.

    In Denver, the ‘Shadow’ is but a phantom. We currently have such low inventory, especially in homes priced under $250k, and our pre-foreclosure stats are well below the national average. Combine this with the Colorado’s swift foreclosure process and the fact that we hit the slump ahead of the curve, allowing us to recover sooner, we are not counting on a glut of “Shadow Inventory”.

    For further information about the Denver Housing Market please visit my website. 

  • This Time I Mean It!

    Posted Under: Market Conditions in Denver, Home Buying in Denver, Home Selling in Denver  |  March 7, 2012 5:37 PM  |  85 views  |  3 comments
    Real estate agents tend to be positive thinkers. Over the past five years, the Denver real estate bubble burst, the national housing market went bust, and we searched high and low for good news to share with our clients. Sometimes there wasn't any.  We worked longer and harder to save struggling homeowners, to make impossible deals possible, and we went from fulfilling dreams to ending nightmares. Now, like Dorothy in the Land of Oz, we find ourselves waking up to a totally different market! 
    At first I thought it was just me, or maybe me and a few lucky friends... or me, a few friends and the agents in my office, but throughout the industry, agents, title reps and lenders are saying the same thing... "All of a sudden, I'm slammed." 
    Contrary to the seasonal slowdown we expect to see in January/February, Denver's winter market has been hoppin' like springtime. Showings are up, under contract houses are up, closings are up-- the only thing that's down is inventory! Yup. We are begging sellers to list their houses, and not to feed ourselves. We're out there pounding the pavement to let people know that the we've got buyers and no houses to sell! 
    Sellers tend to believe that the best time to put their home on the market is in April or May, and for many years they've been right. Warmer weather and the end of school are traditionally better for the housing market but right now there is so much pent up demand, sellers would gain great advantage by listing early. There is more competition for fewer houses and that means HIGHER PRICES.  Of the contracts I've written this year (and I'm ahead of my goals), each one has resulted in a bidding war.
    Based on a number of economic indicators, nationally recognized real estate expert, Barbara Corcoran, recently picked Denver as the number one city for a housing market recovery . Well, I could have told her that. So maybe it's not just a case of rosey-eyed Realtors blogging about the good news for so long you think we're  making it up... because THIS TIME I MEAN IT! 

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