1. Consistent growth in number of homes sold.
2. Consistent increase in Average Sold Price.
3. Consistent low inventory.
One or two months of this type of activity is nice, but 4 or 5 months – to me that illustrates a true trend.
For the past few months I have been writing about the strength of the current market, reporting that the statistics were corroborating we real estate professionals hear day-to-day, and what businesses affected by real estate (contractors, vendors, other re pros) were reporting as well – busy, busy, busy.
John Rebchook’s recent blog post about activity in July neatly sums up what we are seeing on the streets:
What this means for you depends on who you are:
Thinking about selling? Well, get ready to move -and quick. In many neighborhoods, I am seeing homes sit on the market for 1 to 2 weeks. In this environment it is critical to price your home in a way that maximizes your proceeds, is attractive to buyers and can pass muster for appraisers and lenders. Balancing this equation is tricky and it helps to have a broker who has a window and understanding into each of these worlds – such as Cherry Point Properties! : )
The trick about selling is that you will need to find a replacement in a low inventory environment. I am suggesting that sellers begin their home search at the same time they begin the listing process – if your home sells quickly, you will have a leg up on getting a replacement under contract, eliminate a lot of stress and avoiding risk to your contract. I also suggest that buyers not limit their search to homes that are actively listed – I am employing unique search strategies to find homes for sellers, and if all else fails, if you see a house you like, as your broker, I will approach the homeowner on your behalf to find out if they are interested in selling.
Buyers – Smart real estate pros know that money is not made on the sell side, but on the buy. With prices still reasonable and with mortgage rates at never-before-seen lows, this is an unbelievable time to upgrade your home. You can lock in a super low rate (in some cases a 15 year mortgage, with rates in the high 2’s makes tremendous sense), and pick up a new home as the market is on the upswing then sit back and enjoy the ride.
Investors – Buy and Hold – although many of the foreclosure deals are gone, home prices are still reasonable and with mortgage rates low and the rental market tight, you can still cash flow a property and enjoy leveraged appreciation (the CoreLogice Home Price Idex for Denver-Aurora-Broomfield was up 7.2% from June ’11 to June ’12).
Investors – Fix and Flip – the fix and flip is back! With the tight inventory, if you can find the right opportunity, get in low and quickly bang it out – you will have a ready market. As the supply of entry level homes drys up, they fix-and-flip opportunities are moving up into the higher price ranges. Cherry Point
Staying Put? – If you have no plans to move in the near term, this might be a great time to re-finance you home. 30 year rates are hovering in mid-3% territory. One caveat I would throw out is that several people I have spoken with have indicated that they have not been getting the appraised value they expected – always review your banks appraisal – in some cases, it may not reflect actual changes in value and the current market (more on this later). If you don’t think the appraisal is right – tell your lender (but have some supporting evidence to explain why!)
As always, there are risks to the market – unforseen events, political change or grid-lock and global economic conditions can play a big role. Thanks to the looming “fiscal cliff” our lawmakers once again are in a position to destroy any recovery momentum – the effects of this fiscal cliff on uncertanty and employment are already starting to show. I tend to be an optimist and think that this will all get worked out and the Denver housing recovery will continue. However, if you are not optimistic – this might be a good time to adopta a get-out-while-the-gettins’-good approach and sell your home while the Denver market is hot.