The good news is that despite our freezing weather, in January, active listings got more showings  than they had on average in the dismal months after the expiration of the tax credit.  Lots more!  The number of showings is typically a pre-cursor to the number of sales, so if showings increase, sales won’t be far behind.  There’s comparatively fewer homes on the market too, than at this point a year ago, so this should contribute to an overall upward pressure on prices.  This doesn’t mean we’re going to experience a huge jump in values. 
After all, home prices are down an average of 16% from the peak in 2006.  (This is an AVERAGE – some  neighborhoods experienced huge drops of 70-80%, while others stayed relatively stable.)

Each neighborhood has its own special characteristics, and therefore, its own price trends.  Here at Your Castle, we  generate a price change map for most Denver Metro area neighborhoods.  Let me know if you’d like one for your area – you can tell exactly what’s gone on. The maps include price changes, short sales & foreclosure stats.

There’s one more factor that will shape the future of the housing market.  Interest rates have begun to creep north.  In April, mortgage insurance monthly payments will take a big jump also.  This means homebuyers will need to figure more interest and a higher mortgage insurance premium into their housing budgets and will have to search for a lower priced home than they might have been able to buy last year. 

All signals point to a GREAT time to buy!  Prices are still comparatively low.  Interest rates are still fairly low, and the new mortgage insurance requirements haven’t kicked in yet.  This is an unbeatable combination for buyers!

• Available inventory was at 13,941 units, up 14% compared with month ago figures. BUT the number of homes on the market was down 11% compared with the same month, year ago.  Fewer people are selling now than at this time a year ago.

• Closed Sales were up 13% from month ago to 2,422 units sold. Units sold are up 4% from December of 2009.
• Over all though YTD sales volume fpr 2010 was at 30,777 units, down 7% compared with YTD 2009 sales of 33,114 units. 

• The average sales price was $274,625.  This is DOWN compared to November 2010′s average of $218,466, and DOWN compared to the same time last year. The average sales price for December of 2009 was $281,756. 
• Median sales price was $225,000, down 4% compared with prior month, and up 2% from Dec 09.
• Average Days on Market (DOM) was at 111 days, up 26% compared with a year ago.  Homes are taking an average of 26% LONGER to sell. This is probably a result of the “feeding frenzy” we had in late 2009 due to the new homebuyer tax credit. 

In a  nutshell, INVENTORY is UP and homes are taking longer to sell.  This means its a BUYERS Market and a great time to buy a new home!

Here’s the stats on the condo/townhouse market:

• Available inventory was at 4,316 units, up 3% compared to last month, but DOWN compared to December 2009. 

• 602 units sold in Dec 10, up 15% compared to November 2010 and down 5% from December 2009
• YTD sales volume was at 8,041 units – DOWN 10% compared with 8,956 units sold YTD 2009
• Average sales price was $166,841, UP 1% versus November 2010,  and UP 4% compared to Dec 2009
• Median price was $139,900, UP 12% compared to November,  and up 7% versus December one year ago
• Average Days on Market (DOM) was at 132 days, UP 42%  from one year ag

1. Choose a foreclosure sale expert. Lenders rarely sell their own foreclosures directly to consumers. They list them with real estate brokers. You can work with a real estate agent who sells foreclosed homes for lenders, or have a buyer’s agent find foreclosure properties for you.If the agent represents the lender, don’t reveal anything to her that you don’t want the lender to know, like whether you’re willing to spend more than you offer for a house.
2. Be ready for complications. In some states, the former owner of a foreclosed home can challenge the foreclosure in court, even after you’ve closed the sale. Ask your agent to recommend a real estate attorney who has negotiated with lenders selling foreclosed homes and has defended legal challenges to foreclosures.
Have your attorney explain your state’s foreclosure process and your risks in purchasing a foreclosed home. Set aside as much as $5,000 to cover potential legal fees.
3. Work with your agent to set a price. Ask your real estate agent to show you closed sales of comparable homes, which you can use to set your price. Start with an amount well under market value because the lender may be in a hurry to get rid of the home.
4. Get your financing in order. Many mortgage market players, such as Fannie Mae, require buyers to submit financing preapproval letters with a purchase offer. They’ll also reject all contingencies. Since most foreclosed homes are vacant, closings can be quick. Make sure you have the cash you’ll need to close your purchase.
5. Expect an as-is sale. Most homeowners stopped maintaining their home long before they could no longer make mortgage payments. Be sure to have enough money left after the sale to make at least minor, and sometimes substantive, repairs.
Although lenders may do minor cosmetic repairs to make foreclosed homes more marketable, they won’t give you credits for repair costs (or make additional repairs) because they’ve already factored the property’s condition into their asking price.

Lenders will also require that you purchase the home “as is,” which means in its current condition. Protect yourself by ordering a home inspection to uncover the true condition of the property, getting a pest inspection, and purchasing a home warranty.

Be sure you also do all the environmental testing that’s common to your region to find hazards such as radon, mold, lead-based paint, or underground storage tanks.

Well, actually there are a number of things you can do to make your credit look a little more appealing to a prospective loan officer:

Pay off old balances – especially past dues and chargeoffs that have happened during the last 2 years. Items more than two years old have little effect on your current credit score. In fact, if you pay off delinquent items over two years old, it can actually bring your credit score down - something you don’t want to do. Bringing that score up means you’ll get a better interest rate on your loan.

Don’t close existing unused credit card accounts.  Counter-intuitive tho it might seem, this can actually lower your score. Part of your credit score is based upon credit history. If you have old credit cards that you don’t use very much, you still have the benefit of the credit history they represent.

Rather than trying to pay off all your credit cards, it does make sense to move part of the debt from one card to another to even out the distribution of debt. Try to keep balances as close to zero as possible, and definitely below 30% of the available credit limit when trying to purchase a home. Also, if your credit provider will increase your line of credit, the ratio of debt to available credit is automatically reduced, without you having to pay down the balance.

When married couples have separate credit card accounts, the debt can be transferred from one spouse to another to clear up credit issues for the other spouse. That spouse with clean credit can be designated as the sole borrower on the loan, but ownership of the home can still go in both names.

Find and correct errors on your credit report.  These might be balances that have already been paid, or even entries that don’t belong to you! Request that these items be removed by the credit bureau. They are obligated to rectify this within 30 days.  If you’re paying off items that are less than 2 years old, send in your payment if possible and mark the back of the check with the following notation: “Accepting this check is evidence that the transaction is complete and this charge will be deleted from my credit record.” If necessary, the cancelled check will be proof that this should be promptly removed from your credit report if it interferes with the closing of your loan.

The common wisdom is that the current real estate market is “bad”. But bad for who? The fact is that the market is actually GREAT for quite a few people!

Here’s the “bad” part:

According to a report in the Denver Business Journal http://denver.bizjournals.com/denver/stories/2009/11/23/daily25.html?surround=lfn , about 19% of Colorado homeowners actually owe more than their homes are worth in the current market. Its even worse in the Denver metro area , where the percentage jumps to 22% – almost one quarter! How can this happen?!

Two ways. The worst because we as individuals, can’t really control it, is the decline of home values over the last 2-3 years. High foreclosure rates literally sucked the value out of many neighborhoods. Aurora, was one of the hardest hit, especially in the 80011, 80012, 80013, 80017 and 80018 zip codes.

The other way homeowners become “upside down” is through high “loan to value” mortgages – the ones that were very common in the latter half of the decade. Some lenders were loaning MORE than 100% of the value of a borrowers home! So those people STARTED OUT underwater, and the only way they could ever hope to come out ahead is if property values soared. THAT didn’t happen. Some people also have mortgages that add to, instead of subtract from the amount originally borrowed as the years go on. This is called “negative amortization” and it happened to many homeowners who had “choice” loans, where they had four payment choices each month. If they made the choice to make the lowest available payment, their loan principal actually increased for that month. And, of course, we all know about the effects of ARMs (adjustable rate mortgages). Some people’s loan payments have doubled when their mortgages adjusted!

All of this makes for tough times for current homeowners. Those that can wait out the cycle will see their values return, and even grow. History has shown that real estate in the Denver metro area follows cycle that lasts about 20 years. In some segments of the market (e.g., homes under $250,000, north Aurora, SW Denver) we are actually seeing prices begin to climb again. Investors and first time homebuyers pushed values upward as they bought up low priced homes and took advantage of the $8000 tax credit. Still, homes in many areas of Aurora, are selling well below what they were three years ago. Higher valued homes in SE Denver, Parker, Centennial and Highlands Ranch are seeing values stay flat, or fall slightly. Homes in the $600,000 and up range are sitting on the market for 2 years or more! Many people, who want to sell, but don’t really need to, are (wisely) waiting for prices to come back up again. Yes, for some people, the market is “bad”.

But if you’re looking for a home or investment property to buy, you really couldn’t ask for a BETTER time! Interest rates will likely never be lower and home prices are still down. The upward portion of the real estate cycle is still ahead of us. The first time homebuyer tax credit ($8,000) and repeat homebuyer tax credit ($6,500) add even more incentive. If we get the inflation that many experts are predicting, you’ll be paying back money you borrow today with cheaper dollars in the future.

Your Castle Real Estate (www.yourcastle.org) offers free real estate trends classes around the metro area from time to time. We give you a real world look at what’s really going on at the neighborhood level all around the metro area. Visit my website at www.myrealestateladyonline.com and drop me an e-mail to be included on the e-mail notification list for upcoming classes.