Here is an article from the New York Times about Denver.  Americans, even in these tough times, still have a clear vision of “the good life”.  For many, that means moving; moving west to places like Denver, which is one of the top 5 most desired cities in which to live.

The numbers we read about the economy stagger our imagination:  2.6 million jobs lost last year, the highest unemployment level since the end of World War II, the worst stock market performance since the Great Depression. 

The real estate market, of course, is only part of the overall economy and Evergreen is a tiny part of the overall picture.  The table below shows how we measured up against the national and Denver resale home markets during 2008—these are preliminary figures and may be adjusted slightly in the next month or so.

As you can see, the number of homes that sold in Evergreen/Conifer was much lower in 2008 than in 2007, significantly lower than in Denver or the US.  But both our median and our average prices fared better than Denver or the US.  In a weak market, fewer expensive homes tend to sell, while foreclosures make lower-priced homes a bigger part of the mix, driving prices down. 

In Evergreen, the lion’s share of sold homes was in the $250,000 to $500,000 price range.  More homes sold in the Hwy 285/Conifer area because the average price is more modest there.  Interestingly, home sellers in the South Evergreen area had a higher success rate than in any other area.  To see a complete breakdown of 2008 sales activity in Evergreen by price range and geographic area, go to www.TuppersTeam.com, click on Evergreen Information, then click on Real Estate Stats.

The real estate market usually changes at a glacial pace and no one knows where the bottom is until we’ve passed it.  To get a sense of whether our local market is transitioning from a buyers’ market to a more balanced market, we need to read the tea leaves.  Here are some interesting factoids.

*Colorado was among the 5 fastest-growing states between July, 2007 and July, 2008 (latest stat available) according to the US Census Bureau.

*At a time when the country is mired in the worst foreclosure crisis since the Great Depression, Denver is bucking the trend by seeing a year-over-year decline in foreclosures.  Is it possible that Denver has already gone through the worst of its foreclosure cycle and that we might come out faster than the rest of the nation?

*According to a recent S&P/Case-Schiller home price index, Denver and Cleveland were the only two areas in their 20-city analysis that showed improved year-over-year returns; to be sure, both cities still posted declines, but smaller declines than the other cities.

*Relocation.com tracks which areas people move to and from.  Denver was second only to Las Vegas as the top spot where people were moving to.  As might be expected, the Great Lakes region suffered the worst outflow of transfers.

*Interest rates on 30-year fixed-rate mortgages have fallen to their lowest level since the 1970’s, which should grease the wheels of a market turnaround.

Buyers have an advantage in the current market because there are so many homes on the market, they are priced very competitively and interest rates are low.  This makes homes more affordable than ever and should lead to more home sales and, eventually, price stabilization.

In the meantime, if you are a homeowner and you haven’t lost your job, remember that there is a difference between ‘price’ and ‘value’.  Even though prices may have come down temporarily, the value of your home remains the same.  It still shelters you, it hasn’t lost any square footage, it accommodates your needs.  So unless you plan to sell the house or borrow a lot of money against it, the fluctuations in price don’t have much relevance in your daily life.

By Vicky Gits
Evergreen – Canyon Courier

With the economy on the rocks and the job picture uncertain, 2008 turned out to be one of the slowest years in recent history for the Evergreen-Conifer residential real estate market.

Homeowners can take some consolation in the fact that prices in general dropped only 3 percent on average for the year.  But the average selling price of $415,000 was slightly lower than the average selling price of $418,000 in 2005.

Although foreclosures are relatively few in absolute numbers, statistics show that foreclosures in the Evergreen-Conifer area were the highest in eight years – more thatn 200 in 2008, up from 50 in 2000.

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We will take whatever good news we can get!

Great article about Colorado’s economic outlook through the recession.

Colo. recession forecast: fair – By Aldo Svaldi
The Denver Post

Already more than a year old, the U.S. recession could run another six to 12 months but spare Colorado its full wrath, according to economic forecasts presented Wednesday morning. View Full Story

Anyone who has driven in an unfamiliar area without directions knows what it feels like to be lost. People are facing that same sense of panic today because they find themselves in unfamiliar economic territory. A handful of people vaguely remember being on this road before, but it was so long ago they’ve forgotten how to get through.

All real estate markets will follow the same road to recovery. However, not all markets will recover at the same speed because some markets spun out of control more than others. In Florida, for example, buyers-turned-speculators drove prices up to foolish levels and those irrational prices will now inevitably fall to irrationally low levels before that market corrects. Greed drove the prices up; fear will drive them down.

In Colorado, on the other hand, buying activity was never as out of control, so our prices may soften but not plummet like Florida’s. Same road, different speed.

Everyone wants to know when our market will recover. That’s like asking when a broken leg will heal. Technically, the healing begins right after the trauma happens. The break will heal faster if the bone is set correctly, but the setting process can temporarily add to an already painful event.

Likewise, our real estate market began healing as soon as the national bubble burst. Resisting the pain of setting prices correctly today only prolongs healing. Full recovery cannot happen until buyer confidence returns. However, that confidence hinges on prices falling to a point where fearful buyers feel comfortable about the value they receive for the price they pay. In the short term, many buyers will focus on price; they will sit on the sidelines if they can’t get a spectacularly good price.

A few submarkets, like bank-owned properties and (some, not all) short-sales are already priced well below rational value. But they usually require additional investment and/or elbow grease after sale to bring them up to comparable condition to ‘ordinary’ properties—proving the old adage that you get what you pay for. Until foreclosures and distress sales are wrung out of the market and buyers see beyond the frenzy of price-slashing and again consider value in what they buy, our market will remain in the healing process.

There is only one road to recovery and all market segments will fully recover. In the meantime, sellers who want to sell in this environment will need to “speed up” by driving their asking prices lower to appeal to price-conscious buyers. Ultimately, buyers will come to realize that there some very attractive values available without having to beat sellers down to foreclosure prices. At that point, confidence and order will be restored.
~With thanks to Denny Grimes, a Realtor friend in Ft. Myers, FL

Tupper Briggs is a Broker-Associate with Tupper’s Team at Re/Max Alliance Evergreen. He has practiced real estate brokerage full-time for 35 years and his team has ranked #1 or #2 among Re/Max brokers in Colorado every year since 1996. Look for his column next month. Send your comments about this article and ideas for future articles to Tupper@TuppersTeam.com or 303-670-6358.

With all the dire economic news on the national front, we’re happy to report that Denver’s residential real estate market is showing the first signs of a turnaround.  The number of homes on the market in September was down by 20% from September  2007, and the number of sold properties was up 14% from the same period last year. 
 
The median selling price was down, but the whittling away of the inventory is a key to price stabilization. 
 
Denver Post–Denver Housing Looks Up

Did you know that if your property is foreclosed on or sold for less than the amount of your loan (called a ’short sale’), you may be taxed by the IRS for any shortage on an incomplete loan payoff?   Unfortunately, many people who got 100% mortgages or people who live in areas where the value of their properties has fallen may find themselves in the situation where they can’t sell for enough to pay their loan off in full.  If they go through either a short sale (where their lender agrees to accept less than the full amount owed) or foreclosure (where their lender suffers a loss if the property is eventually sold for less than the amount of the loan), the difference between the loan balance and what the lender receives is considered taxable income to the owner.

 Now, the IRS may be changing course.  Under the US Taxpayer Relief Act of 1997, some or all of the ‘gain’ from the foreclosure sale of a personal residence qualifies for exclusion from income.   Debt discharged through bankruptcy are not taxable, and many homeowners facing a short sale are considering bankruptcy to avoid being taxed on the cancelled debt. 

It behooves anyone facing these complex issues to seek professional tax help to determine how these or new tax rules may apply.

Identity theft occurs when someone uses your personal information without your permission to commit fraud or other crimes.   While it’s not 100% preventable, there are things you can do to keep the odds in your favor.

Recognizing ID theft.
1. Bills arrive for a credit card that you never opened.
2. Your credit card bills include charges you didn’t make.
3. Your bank statement contains unfamiliar transfers or withdrawals.
4. You ordered new checks, but they haven’t arrived in the mail.
5. Lenders deny your requests for credit despite your good credit standing.

How you can avoid ID theft.
1. Closely review your credit card and bank statements each month for any unauthorized activities.
2. Call your bank or credit card company if a statement is late.
3. Never give out personal information over email, the internet or the telephone unless you initiate the contact.  Never respond to emails or telephone calls where your personal information is requested. 
4. Use intricate passwords for your email and internet accounts.  Avoid obvious passwords like your name spelled backwards or your birthday.  Use lower and upper case letters mixed with numbers and allowed symbols.
5. Shred documents that show your personal information.
6. Don’t leave outgoing mail in your own mailbox; instead, deposit mail directly at the post office.
7. Don’t carry your social security card in your wallet; store it in a safe place.
8. Only give out your social security number when it’s absolutely necessary.  Ask if you can use a different form of indentification instead.

Contacting consumer credit reporting companies.
The three nationwide consumer credit reporting companies are listed below.  Contact them in addition to your bank or credit card company if you’ve been the victim of fraud.
Equifax            1-800-525-6285         www.equifax.com
Experian         1-888-397-3742          www.experian.com
TransUnion    1-800-680-7289         www.transunion.com
 

It’s not the end of the world, but it’s worrisome.  The implosion of the mortgage market will be the way we in the real estate industry remember 2007.    The state of affairs is the product of many hands and the cause is age-old: greed.  In the great housing boom of the early 2000’s, no one wanted to be left out and everyone wanted to make as much money as they could.

 The mortgage industry invented instruments that allowed the purchase of more house than would otherwise be possible; interest-only mortgages, payment-option ARMs and other exotic instruments became commonplace.

 Buyers themselves were often complicit when they overstated income to qualify for ever larger loans.

 And Realtors bear responsibility because they sought out loans with the cheapest monthly payments and accepted whatever the buyers wished to represent as their financial condition.

We now have about $1 trillion worth of loans that will ‘reprice’ this year–the interest rates and therefore the monthly payments will rise.   While the overwhelming majority of homeowners have sufficient credit and equity in their homes to withstand the change, others will be unable to adjust and will be forced into foreclosure. 

For the real estate market, there will be two major consequences.  First will be the glare of adverse publicity.  The absolute numbers of foreclosures will be small–the foreclosure rate should increase from about 1.25% to 2.5%–but the headlines will read “Foreclosure rates double!!”  Second, regulators will come down hard on the lending industry, sharply increasing qualifying standards and eliminating exotic mortgages.  This will make it harder for buyers to qualify for financing.

The economy as a whole will feel the impact because even homeowners who can afford the mortgage rate adjustments will need to reduce comsumption of other goods–fewer dinners out, the car will have to last another year, more DVD rentals and fewer visits to the theater.  Since consumer spending is 2/3 of Gross Domestic Product, this translates to a lower growth rate in an economy that is already underperforming. 

Economists like to say there is no free lunch.  We thought we had it a few years ago: ever-appreciating houses paid for by mortgages that demanded low payments.  We feasted then and we’re paying now.  Hope it’s not at an exorbitant price.

This posting has been paraphrased from an article by John Tuccillo, former chief economist for the National Association of Realtors,  and one of Tupper’s heros.