Lane Hornung's recent statements on the Front Range housing market has led to a debate about where the local market is heading.

In the spring of 1991, a woman called me at the Rocky Mountain News, complaining that she was tired of Realtors saying now is the time to buy.

She had bought a home in Denver just before the collapse in the mid-to-late 1980s, which was then the worst housing market in the metro area since the Great Depression.

Colorado was one of the so-called COLT states that also included Oklahoma, Louisiana and Texas, whose economies and housing markets had been hammered by falling energy prices.

The Denver-area housing market was horribly overbuilt on speculation that oil prices were headed for $65 a barrel from around $30. Instead, they plummeted, briefly falling below $10.

HUD once Denver’s largest landlord

Thousands of people left Colorado for states where there were still jobs, such as California. While at the Rocky, I broke a story that the  U.S. Department of Housing and Urban Development was Denver’s largest landlord, because it owned many foreclosures. The Rocky used to run a weekly listing of HUD properties that was thicker than today’s Denver Post.

The irate caller had taken a check to the closing when she sold her home in Denver, because the sales price was less than her mortgage. She left Denver, moved East and bought a home in Washington, D.C. The real estate gods were not smiling on her. The nation was gripped in a recession when she sold her home in D.C., and once again she lost money when selling her house, before returning to Denver.

At the time, I was quoting people such as Dennis Hipp, president of a company called Perry & Butler, and Bill Moore, owner of Moore and Co., the largest locally owned realty firm in Denver at the time, who said that now is a good time to buy and people will be kicking themselves down the road if they passed on the unique opportunity to buy.

After all, mortgage rates were low at 9.5 percent — the first time in a decade they had been below 10 percent —and homes were selling below the cost of building them.

The average home in the Denver area in May 1991 sold for $97,925, the equivalent of $165,426 in today’s dollars.

The woman, however, was having none of it. She assured me that she was not even going to consider buying a home until prices fell at least another 20 percent.

I told Hipp about my conversation.

Timing is difficult

He said he hoped she landed the bargain she was hoping for, but she thought she was wrong. Hipp added that it is incredibly hard to time the market. Despite what so many people believe, Realtors do not set the price of houses, he said. The market is set by the market, Hipp said. That is,  home prices are determined by what a willing buyer pays a willing seller. While Realtors tend to be “half-full” glass people, no matter how bullish they are, they lack the power to drive up prices, he said.

Yet, at that time in history, Hipp and other were prescient.

Market on a tear

A year later, the average price of a home sold in the Denver area was $105,418, the equivalent of $172,880 in today’s dollars. Demand out-stripped price appraction. In the first five months of 1992, 12,051 homes closed, a 28 percent increase from the 9,408 in 1991.

“Homes are still reasonably priced,” I quoted Hipp as saying at the time. “We’re seeing more multiple offers, sometimes with people offering more than the asking price.”

Sounds like today’s market.

Hornung strikes a nerve

I thought of this recently after I published a question-and-answer article with Lane Hornung, CEO, President and Co-founder of 8z Real Estate.

Hornung provided consumer tips for prospective buyers in the current market, who increasingly are being out-bid for homes. He cautioned that the conditions of incredibly low supply and increased demand may not last, but they are the reality of today’s market. Many would-be buyers are disappointed after being out-bid multiple times.

A reader named Peter, who seems sophisticated and intelligent on financial matters,  responded in a missive that he found it “shameful” that brokers are such cheerleaders.

Peter, who is renting a million-dollar home for far less than what it would take to buy it, went on to write that he gives the market’s recent bounce another six to 12 months. After that, he sees a double-dip, which is when home prices retreated to new lows. He also thinks a recession and possibly even a depression, are waiting in the wings.

Shaky home sales foundation?

“Stop feeding the real estate greed and learn from recent history,” Peter wrote. “Your belief is that the recovery is here and the market has bottomed. That is the new buyers’ belief and that I believe is built off a very false premise.”

Recently, while attending Universal Lending’s 30th anniversary celebration, I sat next to man who had been a mortgage and real estate broker for more more than three decades.

I asked him if he thought the housing market had hit bottom, or the dreaded other shoe would kick the market’s butt.

“Anything is possible,” he told me. “Could home prices double-dip and fall another 10 percent or 20 percent? They could. But I don’t think they will.“

Modest appreciation predicted

He thought the odds were far greater than the Denver-area housing market in the next few years will enjoy modest appreciation, of perhaps 4 percent or 5 percent, if the annual inflation rate continues to hover around 2 percent.

That would have a big impact on the market, he predicted, because in two or three years, many homeowners who are itching to sell their homes, but can’t because they are still under water, will be able to sell them and move-up.

Back in the 1991-1992 era, I used to do get a call every Tuesday morning from a radio reporter, who would ask me about the real estate market. I told him exactly the same thing – my best guess was that home values would slightly out-pace inflation.

I was wrong. Home prices registered double-digit price increases, almost unabated for the next 15 years, although the market never got as crazy as once-high flying markets such as Phoenix and Las Vegas, before succumbing to the first national real estate downturn since the Great Depression.

I’m wondering what other people think.

Vote in the poll at the bottom of this blog and feel free to leave a comment.

Have a story idea or a real estate news tip? Contact John Rebchook at JRCHOOK@gmail.com. InsideRealEstateNews is sponsored by Universal Lending, Land Title Guarantee Co. and 8z Real Estate.

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Lane Hornung

It almost sounds like the name of a play: How to succeed in a low-inventory, high-demand home market which is very trying.

While it’s not the name of a Broadway show, the Front Range real estate market can lead to a lot of drama if you are in the search for a home in certain neighborhoods.

“This market has shifted more rapidly than anyone would have predicted,” said Lane Hornung, President, CEO and Co-founder of 8z Real Estate and COhomefinder.com.

With the year-over-year inventory of unsold homes down 42.5 percent and under contracts up almost 20 percent, bidding wars for homes are becoming increasingly common in along the Front Range.

“Whether it is sustainable is debatable,” Hornung said. “But certainly the reality is that in today’s market if you are trying to buy in the sub-$400,000 price range (sub-$600,000 in places like Boulder), there is a high likelihood you are going to run into multiple offers.”

The suddenly shifting market is the subject of this month’s question-and-answer session between Lane and John Rebchook, of InsideRealEstateNews.com

John: While the low inventory is welcome news for sellers, it is a real challenge for buyers. How does a buyer prepare for a shortage of homes and increased competitors?

Lane: First, if you are trying to buy in one of those markets where there is a shortage of homes and a lot of interest, you have to get rid of the mindset that it is still a buyer’s market. Just leave that at the door.

John: Can you elaborate on that a bit?

Lane: If you are in an area that is a seller’s market, you have to dispense with the notion that you are going to be able to buy a home for 85 or 90 percent of the list price. Ultimately, that mindset will hurt no one but you.

John: It’s a sea-change from not that long ago when a buyer could take their time and look at 30 or 40 homes and feel no sense of urgency, isn’t it?

Lane: It is a tough time to be a buyer. This is a market that has changed so quickly that it has even taken professionals by surprise. If we get some more supply, we could end up with a market a bit more in balance. But you have to be prepared with the realities of today’s market.

John: How fast does a serious buyer need to move on a home?

Lane: Very fast. You need to be prepared to come in quickly. In many cases that means the very same day. Realtors are watching the inventory to see what is new and when you get that phone call from your agent, you have got to be ready to act.

John: If you need to pull out your checkbook on the spot, it sounds like buyers needs to be prepared even before they walk into the home.

Lane: Absolutely. You need to be pre-qualified for a loan before you start looking. That means you must have provided a lender with your work history, pay stubs and other documentation that is required to get a loan.

John: Let’s say you offer the full asking price and that is not enough. How do you decide if you want to get in a bidding war?

Lane: It may not be a pure financial calculation. It depends on how badly you want the home. You obviously don’t want to over-pay and have your basis way too high. But for some people, if the house really meets their needs and their finances, for very rational reasons they could be willing to pay a little more.

John: Is there a danger of getting carried away and bidding too much?

Lane: Yes. Talk to your Realtor to find out what he or she thinks is the fair-market value. Part of the Realtor’s job is to be objective and keep you from being carried away by emotion.

John: Any favorite tip for a buyer in a bidding war?

Lane: I always liked to have a buyer write down two numbers. The first: What do you want to pay? The second is what you are willing to pay. It’s not that you can’t scratch the number out and replace it with a higher one, but it always seems to help to have the numbers on a piece of paper before you get into the frenzy of negotiating.

John: What if you find yourself on the losing end of a bidding war?

Lane: At the end of the day, there is always more than one house that will typically work for most buyers. For most buyers, there are many houses that will meet their needs. It might just be a matter of time. You might need to wait another three months before you find the right home.

John: It must be hard if you have lost out on multiple offers for homes.

Lane: It is very taxing on buyers. Some buyers have bid on five homes and have lost five times. That is very stressful. Some people might need to take a bit of a breather before wading back into the market.

John: Lane, while most the stress in today’s market is on the buyer’s side, can you touch briefly on what it means for a seller pricing her home today?

Lane: First, you can’t count on a bidding war. The Denver/Boulder market, for example, is not anywhere near the frenzied market in the San Francisco Bay area during the peak, when you knew your price was going to get bid up.nThat said, a good Realtor can help you price your home correctly.

John: What will the Realtor bring to the table?

Lane: A Realtor will be able to tell you if you have very much competition in your area. You want to price it for today’s market and maybe in some sizzling markets maybe even a little ahead of the market. If well over 50 percent of the homes in your area are under contract, you might want to price it a little more aggressively.

John: But even in today’s improving market, you don’t want to ask for a ridiculously high price do you?

Lane: There is still a real risk of over-pricing. If you over-price your home and it becomes a stale listing, you can miss your shot at the spotlight.

John: Thanks Lane.

A monthly conversation between Lane Hornung and John Rebchook is a feature of InsideRealEstateNews.com. Hornung is President, CEO and C0-founder of 8z Real Estate, a sponsor of InsideRealEstateNews.com. For more about Lane Hornung and 8z Real Estate, please visit this link.

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In April alone, foreclosure filings were up 7.3 percent from April 2011 to April 2012 while foreclosure auction sales fell 36.2 percent over the same period.

From March to April, foreclosure filings fell 10.8 percent while foreclosure auction sales rose 6.1 percent. Since 2008, March and April have tended to be two of the most active months for new foreclosure filings in Colorado, with totals in both filings and auction sales tending to drop off in May.

“March and April tend to be the high points for the year when it comes to foreclosure filings, but this year, those numbers were quite low compared to recent years,” said Ryan McMaken, a spokesman with the Colorado Division of Housing. “On top of that, every metro area in the state showed a declining trend in foreclosure auction sales, and this suggests that foreclosure prevention efforts in general are continuing to have an effect statewide.”

During the first four months of this year, the counties with the largest changes in foreclosure auction sales, year over year, were Douglas, Denver and Boulder counties where auction sales declined 40.7 percent, 38.1 percent and 38.1 percent, respectively. Auction sales dropped by only 5.4 percent in Pueblo county, and they grew by 29.6 percent in Broomfield County where 35 auction sales were reported. All other counties surveyed reported drops of 18 percent or more, compared to the first four months of this year with the same period last year.

New foreclosure filings, on the other hand, grew in several counties. New filings increased 22.6 percent percent in Mesa County from the first four months of last year to the same period this year, and they grew 5.7 percent in Pueblo county. Over the same period, filings activity also grew in Adams, Arapahoe, Jefferson and Larimer counties. Filings fell in all other counties.

“The overall trend is clearly down for now, but we’re still going to see some ups and downs,” McMaken said. “Some of the most notable and badly needed declines in foreclosure activity were seen in Weld County, although Mesa county out west is still dealing with some challenges.”

Contact John Rebchook at JRCHOOK@gmail.com

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Rey Armendariz

Since 1998, Rey Armendariz has sold homes throughout the Denver metropolitan area – from Castle Rock to Erie and everything in between.

“But I haven’t found a community quite like the Bradburn Village and the Weatherstone area,” said Armendariz, a broker owner with 8z Real Estate.

The Bradburn/Weatherstone area, near West 120th Avenue and Sheridan Boulevard in Westminster, is the subject of this months’s Insider’s Guide to a neighborhood, a look at a neighborhood through the eyes of an 8z broker.

Something for everyone

“There is such a broad-range of housing types, styles and price ranges in the area,” Armendariz said. “The areas are walking distance to Sprouts Farmers Market, 24 Hour Fitness, Chipotle, Starbucks, banks, shopping and more. Other good amenities like Home Depot, King Soopers, Petco and Walmart are across 120 th Avenue.”

Bradburn Village Streetscape

“The Community College designated open space and Westfield Village soccer and baseball park, within the area, are a great touch, and breaks up other adjacent sub divisions. You see a lot of people running, walking their dogs, biking and enjoying the outdoors. The (nearby) mountains offer great hiking trails, major sporting events and more. The public schools, Cotton Creek Elementary, Westlake Middle and Legacy High are good. And the Academy Charter School, Front Range Community College and College Hill Library are walking distance or a short bike ride away.”

And that’s not all.

“You have two major shopping areas, the Orchards and Flatiron Malls, five to 10 minutes away. We’re loaded with amenities and the walking score is great! The whole Westminster and Broomfield community is perfectly positioned to benefit from the economy recovery. The Interlocken Business Park (off the Boulder Turnpike) and many other business centers including downtown Denver, Boulder and the northern areas, are all within 30 minutes of Bradburn and Weatherstone area. We have great business accessibility. Long term, a diverse set of jobs will continue to grow, and businesses will have convenient recruiting accessibility to a large pool of students from the University of Colorado and Colorado State University.”

In addition, the Bradburn area, as well as the City of Westminster and nearby cities, will benefit from the redevelopment of Westminster Mall, he said.

The City of Westminster has bought the mall and plans a high-density, mixed-use development on the 105-acre site.

“Personally, I am very excited about it and I think it’s great for the community,” he said. “Certainly, it is going to have a positive impact on the area.”

Calls area home

Armendariz, who joined 8z Real Estate over two years ago, has lived in Westminster for nine years and owns a home in Weatherstone.

He started his real estate career with REMAX in 1998. Although he has sold houses all over the Denver metropolitan area and has specialized and loves many older Denver neighborhoods, he believes the Bradburn/Weatherstone area is the best of both worlds.

“It’s just provides great balance, especially if you’re raising kids like myself. I have a 13-year-old daughter and it’s a great area for her. Plus, it’s an easy commute to Boulder, Denver, DIA and everything in between… it just can’t be beat.”

At 8z, he increasingly is focusing on Westminster, Broomfield and Arvada areas, but because of his broad client base and market experience, he still enjoys working with clients throughout the Denver metro area. Currently he’s been spending time in Denver, Greenwood Village, Englewood and Parker.

“I have some great past and current clients and it’s fun and rewarding helping sellers and buyers properly prepare for the market and execute a plan; looking at houses, negotiating deals, guiding clients through a transactions, successfully overcoming obstacles and closing the deal,” he said. “I joined 8z because of the whole team concept. You aren’t working independently like most traditional real estate systems. The technology and the team is the best, and we’re a progressive real estate company sincerely trying to fix real estate with great service, market knowledge, great training, a team approach and technology.

At 8z, he said, “the push is to be more area-specific i.e. hyper-local,” which provides him with an opportunity to work the Bradburn area where he lives and knows like the back of his hand.

This 5,264-square-foot home, built by New Town Builders in Bradburn, recently sold for $630,000. It has five bedroom and five bathroom.

Denver-based Continuum Partners opened Bradburn as a 125-acre “New Urbanism” community a decade ago. The community includes a private pool and a village. Available housing includes single family houses, townhomes, live/work lofts, rental apartments. There also is retail and restaurants, including a Main Street in its Village Core.

“There are still some infill lots available in Bradburn but are selling fast,”  Armendariz said. When completed, Bradburn will have 865 homes. Architectural styles include classics such as Craftsman, Denver Prairie and Farmhouse. Yet, unlike the original version of these homes in neighborhoods that are 100 or more years old, homes in Bradburn have modern floor plans and are energy-efficient.

Continuum, best known, perhaps for developing Belmar in Lakewood and a number of downtown Denver projects, was a green developer before it was trendy.

Sustainability and green-building is a philosophy shared by homebuilders in Bradburn, such as New Town Builders.

“I think that has been one of the draws of Bradburn,” said Armendariz. “A number of the homes have solar panels and other energy saving features. I think people who don’t even think of themselves as being particularly “green” like the

idea of saving money on their utility bills.”

In Weatherstone, he said patio homes start around $200,000s and bigger single family homes rise to about $450,000.

In Bradburn, townhomes are priced from about $170,000, and bigger single family homes rise to about $900,000

“There’s a broad-range of prices. I would say the ‘sweet spot’ for a single-family home in Weatherstone is about $350,000, while it is closer to $450,000 in Bradburn.”

His research on sales activity during the past 12 months found:

• Bradburn – 642 homes sold at an average price of $477,000. The lowest sales price was $340,000 and the highest was $675,000.
• Weatherstone - 335 homes sold at an average price of $285,000. the lowest sales price was $175,000 and the highest $390,000. As with Bradburn, the community includes a private pool. It is adjacent to the Westfield Village Park, which includes baseball and soccer fields.
•   Green Acres -  198 homes sold at an average price of $278,000. The low sales price was $224,000 and the highest was $340,000. It was first developed in the 90s and includes only single-family homes. It also is adjacent to Westfield Village Park.
• College Hills/Stratford Lakes - 554 homes sold, at an average price of $238,000. The lowest sales price was $162,000 and the highest was $318,000. It was first developed in the 1980s.

With everything going for it, from its green-built homes to its central location and its many amenities, houses in the Bradburn/Weatherstone area held their own during the recent housing recession, Armendariz said.

Shortage of homes; sellers needed

Like the rest of the market, the Bradburn/Weatherstone area is suffering from an acute lack of inventory, he said.

“According to Metrolist, our primary multiple listing service (MLS) for the area, greater Denver metro area March inventory is down 40 percent and solds/sales are up almost 10 percent from a year ago. The market is clearly trending up, and it’s just not under the $250,000 price range; I recently had a showing cancelled at the last minute because the seller had two offers, within 48 hours of her house being on the market at $825,000 in Denver, and the seller didn’t want to show it anymore….it’s everywhere. A well presented and priced house in this market will fly off the shelves and get absorbed. Our biggest market challenge is a lack of good inventory.”

It’s also a fantastic time to be selling a home, he said.

“If you have been holding off selling your home because the recent turbulent real estate market, now is a great time to reconsider.”

Insider’s Guide, a look at a neighborhood through the eyes of an 8z Real Estate broker,  is a regular feature of InsideRealEstate. 8z is a sponsor of InsideRealEstateNews.

To learn more and contact Rey Armendariz, please visit this link. 

For more on the Bradburn area, please visit this link.

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A condo in this building sold for close to the asking price of $599,000 before it was officially on the market.

Forget about March Madness. The real action last month did not take place on college basketball courts, but came from home buyers snapping up houses in the Denver area.

The number of previously owned homes placed under contract in March jumped by 49.2 percent compared with March 2011, while they rose 28.4 percent from February. Closings were up 39.3 percent from March and 8.3 percent from a year earlier, according to reports released on Thursday.  Single-family home prices rose by 5 percent from February, with an average price of $284,035 in March, were up 5 percent and 4 percent on a month-to-month and year-over-year basis, respectively.

While the inventory of unsold homes is still extremely low with only 10,325 unsold homes on the market – 47.7 percent fewer than the 17,707 in March 2011 – levels have risen by 2.4 percent from February, according to the report by independent broker Gary Bauer. The report is based on Metrolist data.

“It’s a very good market,” Bauer said. “There is pent-up demand in the market and brokers are increasingly seeing multiple offers on homes.”

By the numbers:

• Buyers placed 5,328 homes under contract in March, compared with 4,150 in February and 3,571 in March 2011.
• Year-to-date, 12,964 homes have been placed under contract, compared with 10,411 in the first quarter of last year.
• There were 3,475 home closings last month, compared with 2,495 in February and 3,209 in March 2011.
• In the first quarter, there were 8,440 closings, compared with 7,954 during the same period last year.

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Christy Owen

Christy Owen, consistently one of the top real estate agents in the Denver area,  has joined the Kentwood Co. in the Denver Tech Center as a broker associate.  Owen has almost 30 years of experience in real estate, 19 of them spent at what is now Coldwell Banker Devonshire.

“We are pleased to welcome Christy to Kentwood Real Estate,” said Peter Niederman, Chief Executive Officer of Kentwood Real Estate.  “Her remarkable achievements can be attributed to a sincere dedication to surpassing her clients’ expectations while providing customer service that far transcends the mainstream. Christy is among the top-producing Realtors in the country and we are proud to have her affiliated with Kentwood Real Estate.”

At Coldwell Banker Devonshire, Owen was a top three producer for five consecutive years among more than 1,000 broker associates, including No. 1 in total sales in 2007 and 2009.  She has a background in architecture, design, home renovations and new construction .

Owen said she left Coldwell Banker Devonshire after almost two decades because she wanted less of a corporate environment. She said there are now only three people left at the original Devonshire since she began there 19 years ago.

It’s also somewhat of a homecoming for her. She said that she had an opportunity to be an owner at Kentwood a number of years ago, but the time wasn’t right for her, so she stayed at Devonshire.

Days after she had breakfast with long-time friend, Luisa Staerkel, managing broker at Kentwood DTC, she made the leap. “You know Luisa had been one of the owners of Devonshire and she left when Coldwell bought them,” Owen said. “It was a great 19 years there and I will miss my co-workers, but it was time to leave. For the last few years I had been working with blinders on and just focused on my own business. In the back of my mind I had this idea that I would be leaving at some point.”

Owen said that she did not speak to any other brokerage firm besides Kentwood, but she said that a number of brokers at Fuller Sotheby’s International Real Estate wanted her to join their organization. She said that Kentwood’s recent affiliation with Christie’s International Real Estate also was a selling point.

“Six days after I met with Luisa, I was here,” Owen said. “No only is Luisa great, but I can’t say enough about Peter Niederman. Peter has just done a great job with Kentwood. I love that it is locally owned.”

She said clients share her enthusiasm. “I practically told my clients about my move before I told my family. They have much just wonderful. One long-time client said, “Christy, I love you and I would follow you wherever you went. But that you went to Kentwood is just the bomb.”

Owen has marketed residential developments in Denver including One Polo Creek, the Ice House, No. 25 Downing Street, and the Stadium Lofts.

Contact John Rebchook at JRCHOOK@gmail.com

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Home builders in the metro area – from Boulder to Castle Rock, Erie to Englewood – pulled 2,959 permits in the first 10 months of the year for single-family detached houses, 2 percent more than the 2,896 during the same period in 2010, according to the report by the HBA of Metro Denver.

On a month-over-month basis, permit activity rose by 9.7 percent to 261 in October from 238 in October 2010.

Single-family attached homes, such as condos and townhomes, saw even greater  improvements. In the first 10 months of the year, permit activity – a signal of future construction, or starts – rose by 11 percent to 724 in the first 10 months from 652 in the same period last year. On a month-over-month basis, permit activity soared by 111 percent, but the numbers were small, rising to 95 in October from 45 in October 2010.

Apartment permit activity rose by 25.7 percent on a year-to-date basis, and were up 100 percent when October is compared with October 2010.

Moving in the right direction

“The numbers are encouraging,” said Jeff Whiton, President and CEO of the HBA of Metro Denver. “We have seen month-over-month improvements every month since April. The numbers aren’t big. We are still at the bottom of the cycle and it is too early to call an upswing. The buzz going around the industry is that builders are having a brighter outlook, are seeing more traffic and are finally being able to hit their projected sales numbers. That has not been the case for the past few years. Builders are much more optimistic than they were a year ago.”

That is certainly true about Gene Myers, the President and CEO of New Town Builders.

“I think customers are calling the bottom,” Myers said. “We sold around 30 homes in Stapleton until the beginning of October. Since then, we have sold 15. The numbers in the last 30 days have been amazing. It’s not just us. I was at a Vectra Bank dinner last night and I was talking to the guys at Wonderland, and they were seeing the same thing. And we are carrying more backlog of unsold homes into 2012 than we have in years.”

The HBA report includes the counties of Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, Elbert and Jefferson, as well as all of the individual communities in those counties.

Myers said he didn’t know if the pick-up in activity is only occurring at places such as Stapleton, or is market-wise.

“I think a lot of time the recovery starts in the most attractive communities, like Stapleton, and moves outward from there,” Myers said. The HBA report showed that permit activity in Denver rose by 11.7 percent to 525 in the first 10 months of 2011 when compared with the same period in 2010.

In any case, he said there are several reasons driving the increased demand:

1. “There’s a penting-up of demand. Families continue to grow and households are forming even in these tough economic times. Grown kids are tired of living in their parent’s basements.”
2. “The affordability factor. People are starting to realize that home prices are not going to get any lower. And it’s crazy to think that interest rates are getting any lower.”
3. “The resale market is very tight. There isn’t much inventory of resale homes, creating more demand for new homes.”
4. “Rising apartment rates. In many parts of the country, it is cheaper to buy than to rent. I think that is true in Denver, especially if you are renting in downtown or near downtown Denver.”

The report shows that 1,259 permits were pulled for apartment units in the first 10 months of the year, compared with 1,002 during the same period in 2010. Developers in October pulled permits for 176 apartment units, compared with 88 in October 2010.

All of that apartment construction is good for the economy, and ultimately will be good for housing, said Peter Niederman, CEO of Kentwood Real Estate.

“Nationally, there is an incredible amount of construction moving forward for apartments,” Niederman said. “It may not be for new homes, but at least it is construction activity. Think of all the concrete being purchased, all of the steel, lumber, fixtures, roofing material, copper pipes and glass for windows. That creates jobs. Ultimately, some of those people working in the trades, building apartments, will buy homes. And some of those renters, especially as rents continue to rise, will eventually buy, when they are secure enough in their jobs.”

“Cautiously optimistic”

Denver housing consultant S. Robert August said that he, and most builders, are “cautiously optimistic.”

August, who has weathered many economic downturns during the past four decades or so, said that in the past, when the inventory falls and the population increases, “we see a tremendous direction with pent-up demand taking place.”

The pent-up demand hasn’t yet manifested itself as strongly as it has in the past, because consumers are reluctant to make the big economic commitment of buying a home, the unemployment rate is still high, and consumer confidence remains low.

“Denver, unfortunately, has been in this economic malaise for such a long-time, people are afraid to call the bottom,” August said. “But I really believe the worst is over.”

Contact John Rebchook at JRCHOOK@gmail.com

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This HUD home in Denver is listed at $73,800. Homes like this can now be purchased for only $100 down.

Take a poll at the bottom of this blog.

It only takes a $100 downpayment for an owner-occupant to buy a HUD foreclosure in the Denver area.

Previously, it required a 3.5 percent downpayment. The $100 downpayment policy kicked off last Friday.

The new rule should boost the sale of homes owned by the U.S. Department of Housing and Urban Development, local experts said.

“I think it is going to have a huge impact,” said Jason Peck, of Coldwell Banker. He said the $100 downpayment had been previously offered, but HUD took it away about a year ago in the Denver area. The new program is in effect for the next 12 months, according to Denver’s HUD Homeownership Center.

Peck said he suspects one reason the $100 down payment is back is because nationally, HUD is bracing for another 40,000 homes to come on the market. A portion of those homes are distressed properties that were taken over by Bank of America when it purchased Countrywide Mortgage, he said. While he didn’t know how many more HUD homes will be available in the Denver area, one rule of thumb is that the Denver area has about 2 percent of the overall housing market. In that case, it could mean another 800 HUD homes could hit the market locally.

Not only will the new program be good for buyers who are cash-strapped, or don’t want to spend the money, but it also will help HUD liquidate its portfolio quicker, he said.

The program is available to owner-occupants only, not investors. Buyers using this program must get FHA-insured loans and must pay the full asking price for the home.

Peck said he also suspects that HUD felt it was selling too many of its foreclosures to investors, and this will help it return to its core mission of selling to owner-occupants.

“I think this is going to be a win-win for HUD and for buyers,” said Steve Scheer of Denver Realty Partners. “It’s going to help people who are short on cash and it is going to be good for HUD.This is really going to help first-time home buyers. I’ve been in a lot of HUD homes, while they often need some work, a lot of them are pretty nice.”

Katherine Jolliffe, a broker with 8z Real Estate, said most of the HUD foreclosures she sell are priced from about $60,000 to about $240,000.

“I’ve been doing HUD homes forever,” Jolliffe said. “I love selling HUD homes. I do a lot of them. It’s funny, we’ve been hearing for the past couple of years that we are going to see this huge increase in inventory. But our biggest problem right now is the lack of inventory.”

Lender Jocelyn Predovich believes $100 downpayments for HUD homes will open the door for a lot of buyers.

Janet Frederick, of Aspen Real Estate, also sells a lot of HUD homes. She typically is working on 15 to 20 HUD deals each months.  The $100 downpayment already is sparking more interest from buyers, she said.

“I’ve had about 10 phone calls today,” Frederick said. “I suspect this is going to help quite a bit.”

Jocelyn Predovich, president and CEO of Limetree Lending Group, also said that she is seeing interest in the program, and it will only grow as more people become aware of it.

“Already today, I’ve had a number of Realtors call me and send me emails about the program,” she said. “I’ve also had another five or six consumers contact me today. I think people are going to start to look at their data bases and contact people who might have had problems coming up with a 3.5 percent downpayment. I do think it is going to stimulate activity with buyers. Who can’t come up with $100, right?”

Contact John Rebchook at JRCHOOK@gmail.com

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Home closings in September were up almost 13 percent from September 2010, but showed a 16 percent drop from August.

Home prices were flat to down slightly on both a year-over-year and month-over-month basis.

Denver-area home sales in September fell to an 11-year-low

In the first nine months of the year, closings were only 1 percent below where they were in the first three quarters of 2010.

In short, September was a mixed-bag for the Denver resale housing market, and depending on your perspective, some of the metrics could be viewed as either positive or negative.

Not “stellar”

“September was not a stellar month,” said David Simonson, a broker with RE/MAX Professionals. “But I do not want to define 2011 by one month. The market this year has been primarily stable or slightly up, and September was really the first month that trended the other way.”

Simonson was less than bullish on September’s housing activity because there were 3,847 homes placed under contract last month, down 15.2 percent from the 4,537 in August.  And there were 3,337 closing in September, down 16 percent from the 3,973 in August, shows a report based on Metrolist data released today by independent broker Gary Bauer.

Bauer said that much of the month-over-month declines were for seasonal reasons.

“It was a little higher than normal, but when you consider seasonality and the state of the economy, it wasn’t that much of a concern for me,” Bauer said.

And on a year-over-year basis, contracts were 5.5 percent and closings were up 12.8 percent, respectively. In September 2010, there were 2,958 closings.

Almost a 13 percent year-over-year increase in closings is especially significant, said Mike Rinner of the Genesis Group, which tracks new and resale housing across the Front Range.

“I think that is promising because now we are comparing months to 2010 that were not helped by the federal tax credits in place during the first few months of last year,” Rinner said. The tax credits of $8,000 for first-time home buyers required that a home be placed under contract by April 2010 and close by the end of September last year.

In the first nine months of the year, there have been 29,980 closings,  only 1 percent below the  30,286 during the same period of 2010. Some 37,332 homes were placed under contract from January through January, down 6.2 percent from the 39,814 during the same period last year.

But it was the number of unsold homes on the market – or perhaps the dearth of homes on the market in September – which showed the biggest year-over-year decline.

Inventory shows huge decline

There were only 17,139 unsold homes on the market last month, a whopping 26.5 percent drop from the 23,332 in September 2010. The inventory was also down 5.6 percent from August, when there were 18,164 homes on the market. The last September there were fewer homes on the market was in 2000, when the inventory stood at 10,998.

“The inventory – or the lack of inventory – is a real concern,” Bauer said. “It’s a continuation of what we have been seeing for a number of months. More and more people are delaying putting their homes on the market. Part of it is they don’t want to compete with distressed properties. The other part is they don’t have a really good feeling of taking home ownership to the next level whether than it up-sizing, right-sizing,  or down-sizing. That means there are fewer and fewer options out their for buyers.”

He said if buyers can’t find the appropriate home for their income and aspirations, they, like many sellers, may throw in the towel.

“Nobody wants to sell at these prices,” Rinner said.

However, he said that a lack of resale opportunity may open an opportunity for new homes to fill the void.

The good news is that the market has moved from a big over-supply to one that is more in equilibrium, when supply and demand are balanced, said Rinner, of the Genesis Group.

“We still have an excess of supply,” Rinner said. “But when homes were appreciating much faster than incomes, we basically had a 30-day supply of unsold homes and that was too low.”

David Binkowski, owner of Prudential Real Estate of the Rockies, said the problem is that many people have mortgages that are worth more than their home, precluding them from selling for a profit.

“A lot of homes are under water,” Binkowski said. “They would sell their homes if they could and take advantage of these incredible interest rates below 4 percent. But they can’t sell their homes, unless they want to bring money to the closing table and very few do.”

Peter Niederman, CEO of the Kentwood Co., said that the low inventory in itself is neither a positive nor a negative.

“To me, it is a rational response to market conditions,” Niederman said. “Prices have softened a bit, and what it tells me that people who don’t have to sell are waiting.”

But today’s situation is far better than what was being predicted by many a year or two ago, he said.

“The biggest fear was that we were going to be flooded by a “shadow” market of REO and foreclosed homes,” Niederman said. “It was going to greatly increase the number of homes on the market and was going to drive down the value of all homes. It didn’t happen. Instead, home prices have been stable or are up slightly. We’re trending in the right direction.”

Prices not showing a lot of movement

The average price of a single-family homes sold last month was $280,289 down 1.3 percent from $284,065 in August, and down 3.4 percent from $29,025 in September 2010.

Year-to-date the average price of a single-family home was virtually unchanged at $281,782, compared with $282,416 at the end of September 2010.

The median price of a single-family home closed in September was $229,804, down 2.2 percent from $235,000 in August, but virtually unchanged from $230,000 in September 2010.

Niederman noted that the Denver-area economy and its housing market are not only buffeted by local events, such as the employment picture and national forces, such as interest rates, but world-wide forces.

“There are global concerns such as what will happen to the economies of Portugal, Spain, Italy and Greece, all of which can impact the market,” he noted.

Dramatic events across the pond could reverberate all the way to the Denver housing market.

“Still, I think we can still end the year with my earlier prediction of being up about 3 percent from 2010,” Niederman said. “I really think everyone would like to see my prediction come true. I’m cautiously optimistic.”

Contact John Rebchook at JRCHOOK@gmail.com

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This home sold for $13.8 million.

The Texan, who developed a number of properties on Red Mountain in Aspen, approached broker Steven Shane in mid-December with a deal on a tight timeframe.

The Texan, whom Shane declined to identify by name, told Shane that he was willing to sell a 10,398-square-foot home at 1375 Red Mountain Road with six-bedrooms, six full bathrooms, an infinity pool and even a solar-powered snow-heater on the driveway, for far less than the  $19.995 million asking price.

However, the home, owned by a Fort Worth-based LLC, according to public records, had to close by the end of the year for tax purposes.

Willing to take a hit

“His primary business is not real estate development,” said Shane, owner of SDS Real Estate in Aspen. “He is actually in the oil and gas business. He told me he was willing to sell it even below the current market value, because he had enjoyed such a great level of success in his other business he could afford to take a loss.”

The catch, of course, is that Shane had about two weeks to close the deal during the Christmas holiday season. Because the home is a spec, investment property, and not a primary residence, the seller would be eligible for a tax loss.

So what did Shane do?

Doing the hustle

“I hustled,” he said.

He called a broker, Dale Hower of Frias Properties, whom he knew had a client that had expressed an interest in buying 1375 Red Mountain Road. “I asked for permission to speak to her buyer and connect to the buyer,” Shane said. She granted the permission.

He laid out the deal, but stressed it needed to close by the end of the year.

The buyer agreed and closed on the home for $14 million on Dec. 30. “The buyer was an out-of-state guy who is in the world of finance,” Shane said. He paid almost 30 percent below the asking price.

While that would be a great way to close out a year for any broker, Shane wasn’t done yet.

$49 million in closings in one day

There were two more homes in the mix. And like 1375 Red Mountain, they all closed on Dec. 30. Together, they sold for about $35 million, but because Shane handled both sides of one deal, his total transaction “sides” equated to about $49 million in closings on the same day.

Earlier in the year, Shane represented a buyer who paid $31.5 million for an estate in Aspen, the biggest residential deal of 2010.

“That brings my total sales volume in 2010 to approximately  $100 million,” Shane said, marking his best single year, despite the tough market.

Here is a snapshot of the other two deals that closed on Dec. 30.

Shane also was listing a home at 310 West Francis St, in the  West End of Aspen. The home has 6,385-square-feet of space, six bedrooms, seven full bathrooms and a caretakers unit.

This Aspen home sold for $7.1 million.

The home was listed for $9.95 million.

“I had an offer, but it was too low for my seller,” Shane said. “So I called the broker and asked her if the buyer would come up in price.”

The buyer did and paid $7.1 million, 29 percent below the listing price. Amy Doherty of Amy Doherty Properties represented the buyer.

Meanwhile, the Texas oil-and-gas guy owned a home at 355 Ridge Road on Red Mountain that was not officially on the market.

But Shane approached him and asked if he would be willing to sell.

The seller of 310 W. Francis used the proceeds of that deal and came out of pocket an additional $7 million to buy the home at 355 Ridge Road for $13.8 million. Shane handled both side of the transaction, giving him almost $28 million in “sides,” in Realtor-speak. The 8,463-square-foot home is valued for tax purposes at $20 million by the Pitkin County Assessor.

Team work pays off

Closing three big deals on one day was no easy task.

“It is very important to understand how unbelievably hard everybody worked,” Shane said. “There are many moving parts in transactions like these. Sacrifices were made by title companies, surveyors, attorneys, building inspectors, the entire SDS support staff and many other individuals who took time away from their families during the holidays.”

That three deals of that magnitude could come together in such a short period of time, also speaks volumes regarding how the super-rich are looking at Aspen real estate, Shane said.

Tired of the sidelines

“People are tired of being on the sidelines,” Shane said. “People have adjusted their business and personal lives. They understand the economic realities of their situations, and feel comfortable making a move. It took a while to get there. But the adjustments have been made. At some point people want to enjoy life and the fruits of their success. They don’t want to wait forever.”

What that means, he said, is that 2011 is likely to see much more buying activity in Aspen than in 2010.

“I think we are going to see a heck of a lot more high-end properties sell,” Shane said. “I really do.”

Contact John Rebchook at JRCHOOOK@gmail.com

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