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.

In 2008, some 897 homes were sold, a 24 percent drop compared to the year before, and only the second time since 1990 that total home sales have dipped below the 1,000 mark. The number of annual sales is typically closer to 1,500 or so.

The lack of activity is reflected in an average 3 percent reduction in the sales price of an existing single-family home in the combined Evergreen-Conifer market.

The good news is that in six months, the market will have finally bottomed out, meaning transactions and prices will begin to pick up again — according to the forecast of Patricia Silverstein, a prominent economist familiar with the Denver area economy.

But it has been mostly bad news for even the most established Realtors, who are seeing their incomes evaporate along with “sold” signs. It’s been good news for buyers who have both a steady job and a down payment. “You have more selection, depressed prices and incredibly low interest rates,” said Tupper Briggs, a real estate broker with Remax Alliance Evergreen.

The other plus is that, for the first time in recent history, plenty of homes are on the market for under $200,000.

“There used to be nothing,” said Briggs.

A search of the MLS database Jan. 26 produced 67 listings from $150,000 to $200,000 in Evergreen, Conifer, Pine, Indian Hills, Kittredge, Idledale, Morrison and Golden.

Of course, along with the decreasing number of houses being sold, the price of housing continues to deteriorate. The median selling price in 2008 in the Evergreen-Conifer area was $335,000, down 8 percent from $365,000 in 2007, based on Briggs’ annual report of real estate statistics, released last month at www.tuppersteam.org.

The average selling price of a house was down 3 percent to $415,000 in 2008. The average time on the market was 152 days, compared to 136 last year, a 12 percent increase. Sellers were discounting the original prices by about 10 percent to seal the deals.

Prices from a seller’s view compare favorably to prices in metro Denver as a whole, which declined 15 percent on the average in 2008 compared to 2007, according to the Colorado Association of Realtors.

To sum up, though, it’s not a pretty picture for many Realtors.

“During the fourth quarter, we looked up from our desks and noticed it was a lot slower,” said Briggs.

The long-range view

Like everywhere else, Evergreen is being affected by the national recession, declining employment rates, increasing foreclosures and the collapse of the subprime mortgage market. The recession was more than a year old in January and could take another six to 12 months to run its course, many economists believe.

Economist Silverstein, who is based in Littleton, expects metro-Denver median home values to increase 1.5 percent by the end of this year.

“We see great deals being driven by very attractive mortgage rates through the rest of the year,” Silverstein said. “On the price side, we are sticking our necks out and saying we could even see a 1 percent upside in prices and a little more sales activity.” Most of the action will take place in the last half of the year, she predicted.

One reason for that forecast is the lack of new construction.

“Our forecast is 8,000 new residential units, mostly multifamily. … In the year 2000 we built 28,300 new units,” Silverstein said.

And the impact of foreclosures is trending downward.

“The foreclosure situation is really being helped by outreach and also the fact that home sales activity really spiked in 2004 and 2005, when everybody was embracing the exotic mortgage products.”

Foreclosures stemming from doomed loans take about three years to materialize.

Waiting it out

The prevailing wait-it-out psychology appears to be slowing down sales.

“Most buyers are saying they want to wait for the bottom of the market. But if prices fall 10 more percent and rates go up 1 percent, it’s a wash,” Briggs said, noting today’s buyer can get a 30-year fixed loan for about 5 percent.

The direction of the market caught Briggs by surprise, he said.

“Last year I saw the housing market peaked and was trending downward in 2006. In 2007 we had the subprime mess and the financial market meltdown in ‘08. I didn’t see the magnitude of the problem. The thing I didn’t see was the financial markets falling apart.”

So, one wonders, have we reached the bottom yet?

“No one will see the bottom until you are past it. Then the buyers will come flooding back,” Briggs said.

Huge inventory of houses

Realtor Rita Hansen of Metro Brokers at Evergreen had the same story, and she has been in the business for 35 years.

“I think it’s worse than last year,” she said. “We are getting more phone calls, but people are really dragging their feet. We aren’t buying anything new. It’s just a feeling that we have to pull in our horns — that we have overdone it. There is a fear people won’t have enough to live on.”

In her best year, Hansen sold 20 homes. Last year she sold 10. Of the few houses that have been sold, sellers are reducing the price by as much as 25 percent, Hansen said.

She thinks the biggest problem is the media keep harping on all the bad economic news, which only makes things worse.

“I have a huge inventory of houses and land on the market,” Hansen said. “… I looked at a house in Spring Ranch, very private, beautifully decorated. But there are six houses in Spring Ranch on the market, and they had no sales last year. A lot of people are redoing kitchens and bathrooms. They are most important. And the front entry — it’s got to be attractive.”

Hansen’s best current deal is a 1976 $1.3 million one-story on 5 acres in Soda Creek. She said the owners want to downsize and can find something smaller for much less.

Hansen thinks things are going to pick up somewhat with Barack Obama as president.

“People seem to be enthused. We are getting more phone calls and setting some showings. I think it will pick up,” she said.

Likewise, Susan Williams, a broker associate with Coldwell Banker in Evergreen, hopes that Obama’s influence will bring forth change in 2009. In a market study of Soda Creek, Williams found only five homes sold last year, compared to 20 in 2007.

“Sellers in this rampant buyer’s market need to be serious and motivated,” Williams said. “Needless to say, the upper-end market is SLOW.”

Tangible improvements

Mark Footer with Intero Real Estate Services of Evergreen thinks the turnaround may already be in progress.

“We have seen from the beginning of the year a tangible pickup in people looking and getting qualified,” Footer said. He described 2008 as “another year of muddling through … but what’s going to be the trigger point?”

The volume of business in his office is about the same compared to a year ago, but the type of business is different, because there are fewer traditional sales and more short sales, in which the homeowner is unable to pay the mortgage and the bank is looking for a buyer at a slight discount.

Footer’s current best deal is not bank-owned but an “exceptionally good deal” at 425 Upper Elk Valley Drive in Saddleback behind Ski Country Antiques on 35 acres in ZIP code 80439.

Built in 2001, the stone-and-stucco home has sunlight, views, four bedrooms, five baths and a five-car garage. The listed price is $899,000, down from $1.2 million. It has been on the market for nearly two years.

“People are waiting for that one bit of news that makes them feel confident,” Footer said.

The question is, when will the angst-filled attitudes turn around?

“I think we are getting very close to that point,” Silverstein said. “I don’t think they are going to be able to play that game much longer. Within the next six months, we will see more solid performance.”

Evergreen-Conifer median selling price, number sold by year

(Source: Tupper Briggs, MLS, Remax Alliance Evergreen)

• 2008 — $335,000, 897 homes sold

• 2007— $365,000, 1,179 homes sold

• 2006 — $340,725, 1,324 homes sold

• 2005 — $375,000, 1,360 homes sold

• 2004 — $350,495, 1,167 homes sold

• 2003 — $326,975, 1,237 homes sold

• 2002 — $275,882, 1,195 homes sold

Homes sold by area 2008

median selling price, days on market. (The median is the price at which half of homes sold for more and half for less.)

• I-70 corridor, 123, $498,000; 171 days

• North Evergreen, 181, $425,000; 129 days

• South Evergreen, 165, $360,000; 141 days

• Conifer/U.S. 285, 242, $317,750; 161 days

• Pine/U.S. 285, 186, $211,750; 160 days

2008 TOTAL: 897, $335,000; 136 days

Foreclosures

The number of foreclosures in the Evergreen-Conifer area matches the trend in the Denver area as a whole. The peak for foreclosures came in 2008, about three years after the point where people who were poor credit risks were buying homes with low down payments and no-interest loans.

Data reflect the number of foreclosures applied for at the Jefferson County public trustee’s office in each year for selected Zip code areas.

Source: Jefferson County Public Trustee Office data base

Evergreen (ZIP code 80439)

2000 27

2001 21

2002 47

2003 57

2004 51

2005 49

2006 79

2007 89

2008 123

Conifer (ZIP code 80433)

2000 23

2001 12

2002 29

2003 29

2004 44

2005 29

2006 55

2007 63

2008 80

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

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.

 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.

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
 

 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.