Living Littleton

    Home loan rates for buyers in Littleton or Denver continue to drop.  FHA rates are about 4.25%, depending on the day you ask.  This is quite a surprise from what the experts were all predicting back at the first of the year.  If you remember, they were saying rates would start to rise in the second quarter because the Fed was going to quit buying home loans.  Most were saying rates could rise 3/4 to 1 % by the end of the year.  That would have us in the high 5’s, but we’re no where near that at the present time.  The Fed did quit buying home loans, however, there has been so much money pouring into Treasuries instead of stocks, that the price of Treasuries has been bid up.  They run counter to interest rates, so when the price of the bond goes up, the interest rate goes down.

    Today’s low rates, coupled with the supply of homes at bargain prices has made this a perfect time to buy a home in Littleton.  If you weren’t able to purchase by the end of April, to take advantage of the Federal Tax Credit, you aren’t left out in the cold.  The low rates will give you a return over what someone had to pay 5 months ago for their home loan, that will make up for the tax credit, over time.  

     Even with this perfect combination of rates and supply, home sales aren’t going through the roof.  I suspect that many wanna be buyers just don’t have the money.  If that’s your case, or you know of someone who’s faced with that issue, you may want to look at the attached loan comparison chart for a $200,000 home purchase, at the end of this post.  It’s the only Zero Down home loan available, outside of VA.  It’s a 30 year fixed rate loan that is always below market and doesn’t require any money down.  In addition to that, there are no closing cost, just pre-paids.  I’ve made reference to this loan in the past, however, I’ve never broke it out so people could see the benefits, when compared to FHA. . The first column is for an FHA loan, where the seller paid 3% towards paying buyer’s closing cost.  The second column is where the seller pays 3% to buy the rate down an additional .75%, to 3.25%.  Since there aren’t any closing cost, the buyer doesn’t need to have that money apply to his cost.  The third column is were the buyer elects to discount the price of the home by 3% and just go with the market rate on the Zero Down loan, which is 4%.

   If this is something you’re interested in, give me a call ASAP.  It takes a little longer to process these loans, as you have to attend a workshop, first, and they’re only held once a month.  I only make this loan available to my clients, so please don’t contact me if you have a relationship with another Realtor.

                                                                                    Loan Comparison

                                                                          Purchase Price $200,000

   Vacancy rates in the Littleton and Denver Metro area continue their downward trend.   In fact, they’re the lowest since 2001, according to the Denver Post.  This low rate is contributed to the fact more people are moving here, coupled with the fact fewer apartments are being built.  To give you an idea of how quickly rates have fallen, they were at 9% in the second quarter of 2009.  We’re also seeing a very healthy rental rate in single family homes from what Realtors were saying at a quarterly real estate trends class, I attended.  With very little apartment construction in the planning stages, along with the continued growth, experts are predicting rates to fall even lower in the coming quarters.  This will ultimately lead to higher rates and pickier land lords.

Jerry Becker
www.jerrybeckerandassoc.com

   High end homes in the Denver/Littleton area are starting to rebound from their record lows.  It’s no secret that the high end home market has been close to dormant over the last couple of years, with the uncertainty in the market coupled with the difficulty in obtaining jumbo loan financing.  The good news is that we are starting to see in increase in this market for homes priced over a million dollars.  In fact, sales in this price range have risen to a level not seen in two years.  Several factors have contributed to this, the most important being the steep discounting some sellers have been forced to do, in order to get their homes sold.  Coupled with a slowly building demand, record low rates, and the beginning of some sanity in the mortgage industry,  buyers are starting to become more active in this price range.

    This increase in the high end market may pull up the average sales prices in the Denver/Littleton market.  If this happens, hopefully buyers won’t be lead to believe all home prices have increased by the announce price increase, if there is one.  As I always stress, these figures are the average prices of all the homes sold, not the percentage increase in prices.

A local real estate company recently finished an analysis of which homes are most likely to sell.  As it takes a while for a home to go through the selling process, they limited their study to homes that went on the market from January through September of 2009.  What they found out was the odds of a home selling were dependant on several factors. 
1.  Homes owned by banks (REO) had the best chances.  90% of these listings sold, with the remaining 10% being withdrawn from the market or had the listing expire.
2.  Short sales (SS) were the least likely to sell with only 32% of these listings ever selling.
3.  Regular, non-distressed home listings had only slightly better odds than short sales, with 37% of these selling.

In the various categories, they discovered that the price of a home determined it’s odds of selling.  In the Denver and Littleton market, the least expensive, 10% of all homes sell for $85,000 or less. Non-distressed sellers in this price range had a success rate of 78%.  This is compared to a success rate of just 44% for SS sellers in the same price range.  At the opposite end of the range, the most expensive 10% of  the home sales sold for over $460,000.  This market segment requires a jumbo loan, and they weren’t easy to obtain, or cheap, during this time period.  In this high end, only 16% of the regular listings sold and only 14% of the SS.

For a middle of the pack comparison, let me tell you that in the price range of $210,000 to $315,000 for regular, non-distressed home listings, only 41% of these homes sold.  Now true, this information came from 2009’s market and we’re doing much better in 2010, however, as a seller, one really needs to pay attention to the prices of previous sales.  Over reaching in this market can end up costing you lots of time plus a potential sale.

Jerry Becker
jbeckerhomes@comcast.net

    Vacancy rates in Littleton and Metro Denver continue to show improvement, based on the latest report released by the Colorado Division of Housing.  When considering the rates of single family homes, for-rent condos, and other small properties, the vacancy rate for the first quarter had dropped to a two year low of 3.1 percent.  This is compared to a vacancy rate of 3.9 percent in the first quarter of 2009.  Our highest recent vacancy rate occurred in 2005, when it stood at 9.5 percent.  This was a result of people buying homes like crazy so they wouldn’t be priced out of the market.  Many accomplished this by using some of the creative loan products that were available, at that time, and of course we all know how that worked out.
    For those of you that are regular readers of this blog, you may note that last month I commented on how the vacancy rate stood at 6.5%.  Be sure to note, that it was for apartments, only, while the above data excludes apartments.
Jerry Becker
Jerry Becker and Associates – Metro Brokers
jbeckerhomes@comcast.net

For the fifth month in a row Denver Metro home prices, which includes Littleton, have shown an increase in year over year pricing.  There was also a slight increase from February of this year to March of this year.  These statistics came from the latest S&P/Case-Shiller Home Price Index.

The report showed the the average price increase from a year ago was 4.1%.  Once again, I want to stress that these are the averages of all the homes sold in the respective months, and not the increase of 4.1% for each home. 

Since much of the market was driven by the push of first time buyers to take advantage of the expiring tax credit, I suspect the market was weighted to more of the entry home price range.  We may see another increase in April as that was the last month to take advantage of the tax credit.  After that, the experts predict the number of sales will slow, however, we may see more of a mix of higher priced homes because of the fall off from first time buyers.  This may give us a continued increase in year over year prices, however, the total number of home sales may decline.  These experts also expected interest rates to be higher by now, but in fact, they’ve declined.  It’ll be interesting to see how all of this shakes out.            

Another index is a comparison of a market’s present average home values when compared to the year 2000.  Based on that index, Denver and Littleton came in at 125.31.  That means prices were 25.31% higher than they were in 2000.  The average for the top 20 cities was 143.35 in March.

Jerry Becker
Jerry Becker and Associates – Metro Brokers
jbeckerhomes@comcast.net

Back around the first of the year, Littleton mortgage experts predicted a rise in home loan rates after the end of the first quarter.  This was all predicated on the fact that the Federal Reserve was going to quit buying mortgage securities.  The Fed had been buying billions in mortgages to inject liquidity into the loan market to help stimulate the housing market with the hope of getting many of the sliding markets to stabilize.

Well, the Fed did quit buying and rates did start to move up about a quarter point or so, but the good news is that rates have softened.  In fact, they’ve softened so much that they are as low as they have been this year, so you could say rates have gone in the wrong direction.  This all came about because of the weakness in the Euro due to the debt crisis and bail out for Greece.  Investors have started to worry about the value of the Euro so they have switched to buying dollars.  This influx of money, has caused our rates to stay low for the time being.  More money chasing our bonds which cause the price to get bid up.  With bonds, when prices go up, interest rates go down.

If you felt squeezed out of the home buying market because rates went beyond where you felt comfortable, this present situation may give you another chance.  No one knows how long this will last, but it change and go the opposite direction in a short period of time, so take advantage of it now, if you can.

Jerry Becker
jbeckerhomes@comcast.net

   A recent Denver Post article mentioned that Littleton and metro Denver apartment vacancy rates are continuing to fall.  According to the article the first quarter rate stood at 6.5%, which was an improvement over the fourth quarter of 2009 vacancy rate of 7.7%.  Year over year, the rate improved from 8.4% vacancy in the first quarter of 2009.

  As bad as the recent recession has been, these rates never came close to the rates we saw in the recession of 2002-2003, when they topped out at 13.1%.  Two main reasons were given for the rates being lower in this recession, builders pulled in their horns and built fewer apartments this time around, and less people could afford to purchase a home because of the tighter mortgage restrictions. 

   The good news, if your a renter, is the lower vacancy rates haven’t yet translated into higher rents.  One would expect this to come eventually as the economy improves. There may also be a large pent up demand of current renters, that will want to purchase as they feel better about their economic situation.  Depending upon the size of this pent up demand, it may be enough to help keep a lid on  the price of rents.

Jerry Becker
Jerry Becker and Associates Metro Brokers
jbeckerhomes@comcast.net

    A new survey was conducted with first time  home buyers and was featured by RISC Media.  According to BBVA Compas many first time buyers weren’t totally prepared for the after purchase experience.  Going with the law of averages, some first time Littleton home buyers may find they agree with some of the findings.

    According to the survey, prior to purchase, the vast majority of buyers (88%) felt they had accounted for the expenses of owning a home.  This figure contrast significantly from those buyers that had purchased a home for the first time in the last twelve months.  Just over half (51%) found that expenses were more than they expected, resulting in a change in lifestyle.                                   

     The good news was that 70% of them felt the unexpected expenses leveled out after awhile, however, 87% did end up changing their lifestyle.  Although the study didn’t go into great detail, this changing of lifestyle may not be all bad.  I’m guessing the change resulted in less money for discretionary items, which means more money was spent on maintaining an appreciating asset as compared to spending on items that give no return except for temporary gratification.

     If there is anything to take away from this survey, I would say it’s to not stretch yourself too thin when buying a home for the first time.  It may make sense if your career is providing steady wage increases, but for most people either be prepared to tighten the budget a little or save up a little more before signing on the dotted line.  It’s still the best investment most people will ever make, just don’t be surprised with some of the initial unexpected bills.   

Jerry Becker
jbeckerhomes@comcast.net

     March sales statistics have been released, comparing March 2010 to March 2009.  The numbers aren’t consistent for the two Littletons.  By two Littletons, I’m refering to the City of Littleton (SSC) and unincorporated South Jefferson County (JFS), which is also known as Littleton.  Keep in mind that Trailmark, which is in Southern Jefferson County is part of the City of Littleton.

     When comparing the average days on the market, both areas experienced a decline, which was steeper in SSC than in JFS.  SSC went from about 93 days in March 2009 to about 68 days in March of this year.  JFS dropped from about 98 to 79 days.

     When it comes to average price for homes sold, this is where the areas reversed themselves.  SSC saw the average price of homes sold go from $310K in March of 2009 to about $210K in March of this year.  JFS, on the other hand, saw an increase from $275K to $345k in year over year numbers.  The  numbers are for all types of property, both single and multiple family.  I’ll break them out further in a future post.

     I want to stress, as I have in previous posts , the numbers don’t reflect the increase or decrease in home values but the average prices of all the homes sold in a particular period.  In JFS more expensive homes were sold in March 2010 than in March 2009, while just the opposite happened in SSC. 

Jerry Becker
jbeckerhomes@comcast.net