Benny Moo

2009 Real Estate at Mid Year

These are the disparate data-points I try and draw patterns from to predict the real estate future:

1.) Colorado Springs' real estate market is off approximately 11% in value from the peak in 2007. Compare that to markets like LA and Las Vegas which just saw asking prices drop 10 to 20% in the last quarter (Thank you @Trulia).
2.) There are presently 1400 fewer single family and patio home listings for sale than the same time in 2008. That's a 21% decrease in inventory. And it looks like June 2009 sales volume will be identical to June 2008 volume (when I ran the numbers this morning, the net difference was 3 fewer sales in 2009). So demand is now officially stable and supply has shrunk dramatically.
3.) The first time buyer tax credit benefits marketplaces with a young demographic (Colorado Springs) and an abundance of neighborhoods with properties under $200,000 (Colorado Springs). Generation Y is also a larger generation than the Baby Boomers, meaning that growth in this age demographic is extremely sustainable.
4.) The nationalization of Fannie and Freddie has created a nightmare appraisal scenario when the low rate of demand is factored in. Yes, a consumer deserves a more accurate appraisal as that was the primary tipping point of the over-leveraged real estate bubble, but two of three comps within 90 days is almost impossible in half of our neighborhoods. If a real estate market was terribly homogeneous and Zillow worked perfectly due to lack of variables, this would not be the problem that it is. But a market like Colorado Springs has so many micro-markets within 1 and 2 miles that a comp really isn't a comp in this appraisal format. With the additional new requirement for a 90 day, 180 day, 270 day and 360 day market report supplementing the appraisal, markets like ours should be allowed to use 6 to 9 month history since the rate of value decline has been negligble since December, 2008 and supply-side stimulus has abated for two years.
5.) The volatility of interest rates meshes menacingly with the new Truth in Lending standards. Having seen buyers on three occassions go from qualified to unqualified to qualified within a 6 hour window to the fragility of inter-connected markets, I have no clue how on earth RESPA will enforce the three-day window that the new TLI requires. This will either be patently ignored, or another major restrictor plate on the marketplace.
6.) Throughout 2009 Denver has exhibited market behaviors that are the envy of the rest of the nation in the Case-Shiller index. In two of the last three months, Denver showed the smallest rate of market depreciation and year-to-date is one of the only markets in "the positive" in terms of appreciation. The rate of value decline is slowing nationwide, but Denver, our nearest major market and one we usually track within 3 to 12 months of, is already past the flat line and showing signs of honest-to-goodness gains. This value trend is the product of forces similarly exhibited in Colorado Springs: stable demand, 20% reduction in supply. Private Mortgage Insurance and OFHEO.gov made predictions that this would be the case in 4th quarter 2008, and that third quarter 2009 would see the glimmers of recovery along much of the Front Range. Moody's who nailed the expected price decrease in Colorado Springs, now ranks the state of Colorado 3rd out of 50 states to most quickly rebound from "The Great Recession".
7.) The majority of my buyers have sprouted shark fins and rightly so. The majority of my sellers are ticked that they're selling below market capitalized rates and want to consider all options including renting for a year or two to await some recovery. That means the disconnect is growing, not shrinking between buyer and seller expectations. Buyers see this as the biggest financial opportunity of their lives in many cases... a chance to get in on values as low as 2002 prices (I've sold one property for 70% of it's 1998 price tag this year, and three really nice homes within 1% of their 2002 and 2003 purchase prices) with never before seen interest rates. So they're looking for the deal of deals. Sellers see this as another squirt of lemon juice in their lacerated financial portfolio. The disconnect means that market-value ultimately falls between two really subjective parties, and not on anything objective. Buyers are always "the market" because a seller can't sell to themself, they must sell to a buyer. Buyers are no longer looking at the over-priced inventory of 2007, they are looking at a discounted inventory of 2009. And a lot of these sellers are ticked that they're selling 3% (Manitou, Old Colorado City) to 20% (High-End Luxury over $800K anywhere) below peak. It creates connundrums like I had last week, writing low offers while on vacation and the buyer and seller were 20% apart. The buyer can't be blamed for trying to get a steal of steal. The seller can't be blamed for thinking the worst is over. So a new level of disconnect has arrived: where sellers previously had unrealistic aspirations about what their house could command, buyers now have increasingly unrealistic expectations on what they can negotiate. Buyers are not willing to except this unless some other buyer comes in and buys out a house from underneath them. In the high-end, this doesn't happen very often. But under $250,000 it happens DAILY. 
8.) Seasonally we are in the peak of activity. What the fall brings is really anyone's guess. If the first-time buyer tax credit is not renewed, properties under $225,000 will continue to find ready, willing and able buyers and this price range will literally be a seller's market with bidding wars to beat the deadline of November 30th. There could even be an artifical spike in units sold this fall. If the tax credit is renewed, I actually think the market will pick up more gradually, but steadily through 2010. That is, if interest rates stay below 5.5%. Americans are actually saving money (the credit crisis began with a negative 0.5% savings rate!) and lenders have rethought who is a good candidate for their cash. If the tax credit is expanded to any residential buyer, there will be benefit to the higher reaches of the market (before inflation goes ape-you-know-what within 6 months). That could create a false recovery before a bigger tank job shows up. The big "but's" are:
    A. UNEMPLOYMENT: Can a market continue any recovery when 10% of Americans are jobless?
    B. JUMBO FINANCE: Colorado and most of the US that is non-coastal has a conventional cap at $417,000. Even with B of A, Wells Fargo and Chase now offering sub 6% Jumbo Loans, they still usually require 25% down. That's why there is almost a four-year backlog of inventory over $500,000 around here.
    C. APPRAISALS: How on earth will any property appraise in February when November, December and January will probably have only 400 to 500 sold units each month in the entire MLS? How many homes sold in Mountain Shadows over $400,000 last year in that time period? ZERO. Peregrine and Hunter's Point had 8, but Mountain Shadows in D11 had nada, none, zippo. An appraiser can't use a Blodgett Comp for a home on Brogan's Bluff. Sorry. But Happy Selling! The same problem is keeping qualified individuals trapped in their dumb loans of 2005, 2006 and 2007 because the three-month window won't produce sufficient value for their re-finance appraisal.

So what do I conclude?

Our market is getting marginally better, not marginally or significantly worse.

The market is going to take two to four years to recover, and for high-end sellers, three to six years.

Dirt Matters. Condition matters and price matters, but ulitmately, dirt carries the day. Where a home is physically located is 50% of the equation as to whether or not it is a good buy or a bad buy. The market in D20 right now is dead, dead, dead for properties over $550,000. There still is too much inventory in Flying Horse, Cordera and among the ranch plans in Pine Creek. Peregrine has one closed sale this year of any note and a good 15 properties competing with each other in a knife-fight. Six homes dropped $25,000 in price OR MORE in the last two weeks up there. But where a buyer can see with their own eyes "remarkble"... that's the area they need to pay attention to. Because even with inventory thinning and demand stabilizing, there are fewer and fewer remarkable homes. They're often at the top of a buyer's price spectrum, but there's a reason: That Remarkable Home started out WAY above where they were looking and has fallen precipitously ahead of it's peers to a point where it suddenly looks like a great value. Case in point: 7975 Ruststone. This was on the market way too high at $899,000 initially. It made a couple of adjustments and went to coporate buyout. That didn't come in so nice and the corporation priced it to get rid of it: at $700,000. Total time it took for a $200K price reduction? Four months. Verbally agreed to contract as of today. Time it took to get to contract since last price reduction: 4 days. Why? Great house at a remarkable price in a superb area. This one sale, while low, could be the catalyst that starts to spin the Peregrine market forward, proof that not everything will sit. Where's the lesson? THE REMARKABLE ONE'S SELL FIRST, NOT LAST. We are now past the inventory growth stage of the market. The only inventory that a buyer can rightly expect to see through the summer are drop-downs from one price range higher onto their radar screen.

Finally: YOU CAN BUY A HOME for $0.90 on the dollar. Sometimes $0.80 on the dollar. Maybe $0.70 on the dollar. The question is: today's dollar? Or 2005's dollar? With inventory levels now below where they were in 2006, it is easier and more likely that a buyer will make a smart buy rather than a dumb buy. But you have to really sort through all of the above to know if it is a GREAT BUY as opposed to a pedestrian "everyone's getting a deal."

TLI equals TBD: Big Truth in Lending Changes that WILL Delay Closings

The following is courtesy Jim Harmelink, ERA Mortgage

Critical read -- MDIA/ Mortgage Disclosure Information Act

This message is to alert you to changes in the federal Truth in Lending Act regulations which will have an impact on our mortgage processes. It will require a fundamental change to how we finalize loan terms for the borrower prior to closing. Changes at the closing table could require the borrower to reschedule the closing date if a revised Truth In Lending (TIL) is needed. *This is a rule all lenders will need to follow, not just ERA Mortgage.*

We are actively working on implementation, scheduled to be complete at the end of July, 2009.

Summary

The rules for the Mortgage Disclosure Improvement Act were finalized Friday, May 8th and it is applicable to all mortgage lenders (federally chartered or state licensed). For applications taken as of July 30, 2009, new requirements about the delivery and the accuracy of disclosures will apply. One of the new requirements is that the borrower must be provided with an accurate APR disclosure at least three business days prior to closing. It must be in their hands three business days prior to closing and they are permitted to close on the 3rd business day after receiving it, or later.

An easy way to remember new rule is “3/7/3.” This means:

3 days after application – An initial Truth In Lending statement must be provided no later than 3 business days after receipt of the loan application. Our current process which generates an auto-compliance package complies with this requirement so no changes are needed.

7 business days after initial application – Waiting period - the borrower is not permitted to close until at least seven business days have passed since the TIL was placed in the mail or provided to the borrower.

3 business days prior to closing – Waiting period - The borrower must receive an accurate APR on their TIL at least 3 business days prior to closing. If it was provided before that period of time, because the loan terms were locked in earlier in the process, no new TIL is required if there is no change to the APR or the change is less than 1/8th of a percent (¼ percent for construction loans).

If the final loan terms cause the TIL / APR to be understated by more than 1/8th of a percent, a revised TIL with an accurate APR must be provided to the borrower, so that they receive it at least three business days prior to closing. It must be in their hands at that time, and they may close on the 3rd business day after that day.

Some issues to consider and address:
All Realtors need to be advised of these new timing requirements which will limit rush closings, and could delay closings.
For loans where the final loan terms change the APR by more than 1/8th, a revised TIL is required to be received by the borrower at least 3 business days prior to closing. This means closing table changes may result in having to reschedule the closing date.


Jim Harmelink
ERA Mortgage
office : (719)535-7405
toll free: (866)820-5526
mobile : (719)651-0291
fax : (719)535-7393
http://jimharmelink.eramortgage.com/

Free Friday: I'm headed to Trader Joe's and taking orders!

I'm a huge fan of grocery stores.

It's this dominant gene in my family that likes free samples, fresh fish on ice, a wide variety of cereal boxes, cheese, etc.

My kids love going to Whole Foods. There isn't some bait or treat or inducement that's the special prize (although the monster cookie is a $0.99 family favorite)... they just like to look around and point at stuff.

Our place of staple is Vitamin Cottage Natural Grocers. My buffalo fix is satisfied here and they always have good prices and friendly staff.

The opening of Sunflower Farmer's Market at Dublin and Academy has created a bit of a stir. First, the place is twice the size of VC. Second, they have fresh fish. Third, they are packed. There prices are good on a lot of things and their fresh produce is quite a bit better than VC (let alone the deli which is non-existent at VC). But their prices on other things, the stuff you always need at the store, are usually more than our old friends at Vitamin Cottage.

The one name not mentioned here of course is Trader Joe's. Californians love them Trader Joe's. They don't have any in Colorado. If this is this is a consideration in your reloction to Colorado, stay in California or Oregon or Washington DC. We don't have them.

But Santa Fe does.

I'm headed south Sunday for a week.

I'm taking orders. I'm already committed to a case of $2 Chuck ($2.99 in Santa Fe) for Rob. I'm trying to keep the mini van packed light.

Until Trader Joe's relents and either figures out their warehousing needs in Colorado (which doesn't figure since the one in Santa Fe is 500+ miles from the nearest outlet and the only one in the Rockies) or Colorado repeals their grocery store bluelaws (I've heard that's a problem, but apparently they do have Trader Joe's in other locales with similar Blue Laws), this little tradition of buying one-of-a-kind Trader Joe products perpetuates itself.

If you have needs, comment or email. I accept cash upon delivery.

2655 Silent Rain Drive UPDATE: Under Contract in 8 Days

Stage it.
Inspect it.
Price it right.
See every competing listing before putting on MLS.

Tactical Real Estate is Reactionary. Reacting sometimes can get you 2nd place.

Strategic Real Estate is Proactive. Proactive gets you out the door on time with the proceeds you want/need.

2655 Silent Rain Drive, Colorado Springs, CO 80919: $248,000

Darrell and Carrie Cox are officially my first Facebook Referral. Thank you to Mark Winstead for the introduction!

Darrell and Carrie have a corporate sale move out of town and correspondingly, were able to do some things with their home that the average seller could not do:

1. Have it professionally inspected
2. Have it appraised for market conditions by TWO appraisers
3. Have Susie and Mari stage it (via yours truly)
4. Price it for less than the neighbor down the street with the identical floorplan who went under contract at $250,000 in 11 days.

2655 Silent Rain Drive, C/S/C This 1993 built home is over 2300 total square feet. While the lots in Oak Valley Ranch, and especially Silent Rain are on the small side, what this lot lacks in size it more than makes up for in privacy. The neighboring houses make a ring around this property allowing the lot to extend into a deep semi-circle. Mature aspens tower up above the height of the house adding shade and privacy. The front yard landscaping in face is  impeccable.

In the backyard is a nice wood deck with built-in bench seating. The sellers have extended this with a brick-paver patio offering a great outdoor area for al fresco dining or a nice dinner party.

Inside, the condition is nearly perfect. In 2008, every window was replaced with vinyl replacement windows. In the process, the sellers removed a useless upper level deck that stole a lot of the backyard space and added two windows instead to the 11 x 16 secondary bedroom. With glass on either side of the bedroom, the room is filled with natural light, and Spring through Autumn, it enjoys the canopy of aspens outside.
Architecturally, the house benefits from some great benefits:

• Two-Story Vaulted Ceiling in the Living Room
• Living Room Fireplace
• Big Dining Room with Bay Window
• Spacious 14x14 Master Bedroom with walk-in closet easily big enough for a king bed.
• Oversized secondary bedrooms of 11x16 and 10x16 on the upper level and a 14x12 with walk-in in the basement.
• Spacious kitchen with eat-in area.
• Main Level Laundry
• Open Stairwell to the lower level providing an open, airy feeling from one level to the next
• Skylight in the upper level secondary bathroom.

Throughout the home, the cleanliness and care are evident. Consistency is a hallmark of a remarkable property, and here you will find:

• Up/Down Blinds in all the bedrooms
• Vinyl Windows even in the basement window wells
• Super Carpet throughout
• Neutral Paint Throughout
• Upgraded Lighting and Faucet Fixtures

With the market beginning to turn around, the Northwest MLS is increasingly popular. This home sits a mere two blocks from Oak Valley Ranch Park, has trails to both the north and southeast, a neighborhood Starbucks and one of the cities only outdoor pools less than a half mile away.

With almost $20,000 in improvements in the last two years, this is a ready-to-move-in home that you will not want to miss.

Free Friday a Day Early: How to Make Spicy Tuna Rolls

Morgan called last week to tell me the revelation that is Hawaiian Ceviche: Five ingredients, all available at King Soopers, basic knife-skills and refrigeration were all that separated him from a sublime evening pupu (appetizer). It had hit him like a revelation, so much of what he loved about the Big Island, the simple "howzit?" attitude to the question that sinks in on day 6... "what day is it? Do I care?".For $10 at the local grocery store, he was that much closer to island time.

I follow @DenverFoodGuy on Twitter and he posts tons of easy to follow YouTube videos on creating your own delicacies. Sushi rightly has a reputation as being exotic and the difficulty of the Japanese culinary aesthetic too much for the basic chef to attempt. Well, Denver Food Guy has a Morgan-esque appreciation for easy yummies...
How many ingredients? Six. White rice, some water, a little rice vinegar for the rice, sashimi-grade ahi tuna, Nori wraps and Sriracha Hot Sauce. Sure, you can go and spend $7 a roll at a sushi place for these. Or you can make them at home for half the price and live to tell about it!

Inspirational News from the Stat Pack

Author's Note: It will be interesting to see how many more of these educator memos I write to other ERA Shields agents. I have run the numbers now for over three years for ERA Shields and periodically send out "All-Company Memos" to the crew of agents. Some are fans of what I write, some are not, and about half gush about what I write but never actually read it. It's unfortunately obvious.

Today, I wrote such a memo, and as a believer in transparency, I think what is said on the inside, should be said to the outside as well. So another installment in the release of secret insider documents...

Clearly, the tide has turned.

Sales in May 2009 were down from May 2008 by less than 1%, 840 units in May ’08 to 832 units in May ’09.

Average sales price has recovered to just shy of $221,000. I am anticipating that June will be around $230,000.

It still is not clear if we hit peak inventory in March, as the marketplace added units in May, but take a look at the inventory levels at the start of the last four months and compare that to last year and 2007…

                                2009                       2008                       2007

February              5060                       5571                       5202

March                   5075                       5849                       5659

April                       5009                       6175                       6052

May                       5043                       6396                       6567      

In 2008, the market swelled 15% from February through May. In 2007, it grew 26%. This year it has remained essentially flat for 120 days (a 1.3% max variance is as flat as any four month period in the last 16 years.) Consider also that this coincides with the maximum ramp up of supply, and you can see how surprising this trend (or non-trend) actually is.

Other big indicators:

The jump in buying activity from March to May this year was 47%. Last year it was 16%.

The market has 6.06 months of inventory right now.

Last year it was 7.6 months.

We are in a new marketplace that can no longer be compared to 2007. In 2007, the median price was $30,000 more and the average selling price was $37,000 higher. The artificiality of that can be attributed to the last months of exotic, soon-to-foreclose financing. I contend that those numbers are padded by buyers who should not have been buying and we should have been in full-tilt correction at this point (like we were last year), but the marketplace was sustained by jumbo loans within a half percent of conforming rates, 80/20’s, interest-only ARMS… and these were the conforming products!

Here is a graphic example of that: in 2007, there were 292 sales over $300,000 in May of that year. In 2009: 159. There were 1032 sales in May, 2007. There were 832 sales in May, 2009. Wanna take a guess where the activity has remained the same? Wanna take a guess where the activity is almost non-existent? In 2007, over $300,000 was beginning to scale back, but it was still 28% of the market. Now it is only 19% of the market.

Lastly: there are 2348 single family and patio home properties for sale under $250,000. From March 1 to May 31, 1548 sold. That means there is 4.55 months of supply for almost half of the market. NAR uses 6 months of inventory as the dividing line between a buyer’s market and a seller’s market. Present Advantage: Sellers? I have a hard time broadcasting that, again, the market has changed and I wonder if 6 months really is an appropriate baseline. But the relationship to sales and supply is increasingly swinging around to a pre-correction level.

Author's note: Again, realize the following information is from an email to fellow real estate agents.

Don’t go and paint your faces and proclaim the correction over. Don’t buy a bunch of bus benches and try and evangelize the non-believers. I still think prices will FALL between September and February (have you seen the foreclosure numbers? These will hit starting mid-July right as sales activity starts to recede and the first-time buyers will be very active September and October trying to beat the November 30^th deadline… while one is supply and the other is demand, they will work together to drag prices down probably 3%). Additionally, if the market is picking up… this means your competition is also starting to do well. Your competitors are getting healthy. I have also, somewhat controversially, proclaimed that a big problem in our market was too many REALTORS. As a state, we have lost about 10% of our licensed population since the peak in August, 2007. But the national rate of attrition is 22%. As the market begins to stabilize/turn/return… I don’t think many more will be leaving the profession.

The way you grow your marketshare is through listing control. Without listings, you don’t have any market control. Game on.

Stat Pack should be cooked by Wednesday.

531 Cedar: One of a Kind in Downtown Colorado Springs

There are very few large homes outside the Old North End in Downtown Colorado Springs.

Additionally, the desirable and highly walkable neighborhood offers precious few environmentally-friendly homes.

The combination of spaciousness and small ecological footprint have merged at 531 Cedar Street.

531 Cedar Street, C/S/C

This 1946 home offers traditional, downtown curb appeal with gingerbread Victorian accents, white picket fence, and a brand-new hardwood deck facing west.

On the inside is a remarkably open and spacious great room environment, with a two-story living room, lofted family room with built-in bookshelves, and casually functional kitchen that opens to an informal eating area as well as a bar-entry to the separate dining room. The dining room is decorated with in-wall stained glass, a prismatic benefit of what is on the other side -  a two-story solarium that provides an effective passive heat source without disrupting either the interior floor-plan or the exterior charm.

Bedroom and office accommodations are abundant throughout the home. The master is on the main level and is a rare, true master suite with a full bath attached. At 16x16 it is larger than most downtown bedrooms and has two closets for storage. There is also a small secondary bedroom alongside the main level master. Upstairs is  a 20x10 bedroom with gabled ceiling on the sides. A 25 x 9 loft functions either as a home office, library or family room with built-in bookshelves. The basement is finished with a fourth bedroom and a possible fifth, both of which have code-compliant ingress/egress window wells.

The lot is 5001 square feet and recently professionally xeriscaped. The exterior has just been painted, the hardwood front deck added, and new Kenmore appliances installed (black on black microwave, drop-in range and dishwasher). A rare blend of past-time charm and forward-thinking innovation, this is a one-of-a-kind home awaiting new owners in downtown Colorado Springs. 

425 McShane: Monument, CO 80132 at $270,000

No one buying in this marketplace is looking for ho-hum.
No one buying is pleading just to get in and buy average condition.
No one buying is "hoping" that they can into a decent area.

This is not a marketplace of minimum standards. It's a marketplace of maximum expectations.

EVERYONE in this marketplace is looking for a good deal.
EVERYONE in this marketplace is hoping for either a screaming value or fantastic move-in ready.
EVERYONE in this marketplace is expecting to get into a decent area.

How about...

425 McShane Place, Monument, CO
A 12,000 square foot, end of cul-de-sac lot backing to open space?
How about the west side of Monument WITHOUT train noise since the hillside to the east is a natural buffer?
And for that matter, how about under $300,000 in Monument WITH views and NO I-25 sight-lines or noise?

How about: 425 McShane Place?

For $270,000 you can get:
4 bedrooms, including three bedrooms up
Four baths, including a 5-piece master and two additional full baths
Hardwood Floors in the living room with vaulted ceilings and skylights.
Island Kitchen with big eat-in area that flows to the family room.
Hot tub and no rear neighbors
Finished rec room with 2nd fireplace, fourth bedroom and full bath in the basement
Shop area for any extra storage, hobbies or future needs you can imagine?

There are features, and then there are benefits.

Benefits like a 10 minute drive to USAFA.
Benefits like bike or trail access to Santa Fe Trails
Benefits like being around the corner from Monument Lake
Benefits like a wide-open, spacious, airy and bright floorplan that flows from room to room but offers space to get away for privacy
Benefits like an asking price that is ONE HALF the usual asking price in Monument.

See it. Soon.

April Real Estate Market Report for Colorado Springs

April data revealed a few surprises:

1.) UCCS Senior Economist Fred Crowley has seen a pattern develop in the local economy that leads him to believe that the worst is over and the conditions for improvement are developing.  was based largely on the end of marketplace conditions continued erosion, and a "nominal improvement" in the Business Condition Index, a weighted metric analyzing ten primary components of the local economic health. Click Here to view the April, 2009 QUE.

2.) April sales units were off 8% from April 2008, and average sales price was off 11% from the same time last year. HOWEVER... April 2009 sales were up 25% from March 2009 sales (the 2008 month-over-month increase was 7%) and inventory went DOWN almost 70 units (a bit more than 1%). The last number is very encouraging for a couple of reasons: supply and demand needs to balance before any market recovery can take root. Right now there are 1200 fewer homes for sale than the same time last year and market activity is increasing to a point very similar with last year.

3.) With 5009 listings for sale today, there are over 1500 properties that are under contract or pending. At the same time last year, that number was around 1300. 

4.) Flying in the face of all of this were 539 demand for sale foreclosure filings in El Paso County, the highest monthly figure ever recorded in our county.

To See the Market Data by Price, Months of Inventory, Pricing Trends, Supply and Demand Trends, MLS Areas and complete Analysis, CLICK HERE.

What's a Buyer to do?

What's a Seller? A seller needs to consider what buyers are doing. You're not going to sell to yourself or another seller. So paying attention to "the market", which happens to be Buyers... is critical.

Buyers have to be cognizant of their price range and their goals. I want to look at the four-segments: FIRST-TIME BUYERS: Under $225,000 there is less than a 5 month supply of housing. This is shrinking daily. There is now talk of monetization of the first-time buyer tax credit. This would make the $8000 first time credit available as downpayment money at a real estate closing. The FHA actually announced this program on May 12th, but had to retract it due to pressure from the Office of Management and Budget who pulled a sort of comically bureaucratic "how you gonna implement and pay for this?" on the hair-trigger gang at HUD. Nonetheless, first-time buyers are out in strong numbers and now have a clock audibly ticking on November 30th when the eligibility for the credit expires (that's if it doesn't get renewed).
THE FIRST-MOVE-UP BUYER: From $225,000 to $350,000 inventory is beginning to retract. It's increasingly obvious that buyers in the midst of personal change (more kids, long commute, quality of life desires) are electing to sell in the lower ranges and move-up. There are multiple areas in town with only two to three months of inventory in this price range, but for the entire MLS it is around 10 months. In most parts of town, this is where a really good long-term buy can be found, and occassionally the obscenely priced bank-owned property (yours truly had a buyer on the losing end of an REO in Broadmoor that fielded 11 offers last week).
THE SECOND MOVE-UP BUYER: Here is where opportunity begins to exist in spades. Some areas like Pine Creek are moving pretty well. Other areas like Monument have over 20 months of inventory in most neighborhoods. Many properties that are selling in this price range have to reduce $20 to $30,000 in order to sell and appraisals are very subjective: it may be a $425,000 nieghborhood, but if there isn't a single sale in the last 7 months, an appraiser has to use any comp they can find, REO or otherwise.
THE HIGH-END: I personally hesitate to call this the land of opportunity. A 47 month supply of housing over $500,000 indicates that pricing still has a long way to go before it stabilizes. Notably, Black Forest, parts of Northgate and Monument areas like Kings Deer, Walden and Longview are bloated and won't stabilize in values until 2011 unless high-end buyers get some sort of goofy $25,000 tax credit as part of a Federal McMansion Rescue Package. Jumbo financing could be reformed later this year (the real estate rumor mill is at full tile drunk with bailout fever), which would help, but when there are steets with nine homes total and six are for sale asking more than $625,000 and one has sold in the last 10 months like there are in Longview... the value of new construction is muddled by the sheer magnitude of nicely appointed luxury homes.

I often rush to the word "remarkable" to quickly explain things, and it is easy to see why first-time buyers  and move-up buyers are attracted to this market: the opportunity to grab a great home for a growing family and set up a long-term investment now at depressed prices and interest rates really is remarkable. But as this stretches into the upper reaches of price, and one looks at an area like Longview where small builders built homes with an apparently infinite supply of buyers from 2005 to early 2007, and it becomes more apparent why a buyer might hesitate to act. If "remarkable" is the stimulus to get into this marketplace and buy, what's remarkable about a lot with no trees and long distance views? The house? Well what's more remarkable? Butterscotch-glazed hickory cabinets or cherry-suede dove-tailed maple? Verde Merratacca, or veined marble? What's so strange about this market is that in this apparently "customized" set of the price range, the homes take on the flavor of competing commodites. When the buyer has to choose between one commodity or another in almost any marketplace, what usually prevails is the cheapest price.