Denver Real Estate Market Update Fall 2018

You may have heard by now, the Denver real estate market has slowed its breakneck pace. Properties are taking longer to sell and we’re seeing more price reductions before properties go under contract. Another interesting sign — so far we haven’t seen the second price uptick that usually occurs in Denver in recent fall markets.

So we have definite signs that the market is softening a bit – though overall, the number of days on market and steady price trends indicate a market still favorable to sellers.

Inventory, after reaching a low in early 2018, is actually up higher now, year over year. This is another good sign for buyers, and a sign that sellers may need to step up to more competition when it comes time to sell a home in Denver.

And, good news on the lender front! Fannie Mae and Freddie Mac have increased loan limits, so buyers can borrow more at a better rate. Click here to see the new, higher loan limits, courtesy of my mortgage lender buddy David Thomas of Caliber Home Loans

All in all, still healthy and happy market for sellers, and easing up for buyers just a bit. Please get in touch if you have questions or would like to talk real estate in any way.

Signs of Buyer Fatigue, Supply Creeps Up

There’s been talk of a market slowdown and I’ve been waiting to see if the last quarter of 2018 would confirm it. Our stats show that the market has cooled off – but just a tiny bit. 

The chart below shows that supply is a bit higher in 2018’s last quarter over 2017. In December we had 1.4 months of supply, up from only three weeks in December 2017. Note that less than 2 months of supply is still very low, and favorable to sellers.

Another slight but visible indicator can be seen here – the number of active listings is higher than last year.

And here we see that the number of days on market has crept up to 20 days in December – higher than it’s been in many years! (But still pretty low).

These numbers show that Buyers have gotten pickier. And with 2018’s higher interest rates, they’re probably feeling tapped out on prices. Or they don’t have the capacity to buy a home that needs a little work. We’re still seeing multiple offer scenarios in the Denver real estate market, but they’re fewer and farther between.

Here we see Seller’s “sold” prices compared to original “list” prices. Near the end of 2018, sellers were forced to come down on their pricing a bit more than in previous years, closing at an average of just over 98% “sold price” to original listing price.

Since lending standards are so much stricter than they were leading up to the 2008 crisis, I’d say we shouldn’t be worried about a bubble or any extreme “correction” like we saw back then. 

The Denver real estate market is stable and secure. People are still moving here and demand is expected to remain high for the long term. Denver real estate prices are expected to continue appreciating, up 5-6.8% in 2019, depending on who you ask.

Sellers will have to price a bit more aggressively this year to find a buyer, and they’ll want their property to be “show ready” right off the bat to avoid sitting.

It may only be January but the spring market is here! Thinking about selling? Get in touch now to find out how to make the most money on your house.

Want to buy real estate in Denver? Greater supply means there are more houses to look at! Get in touch now and we can get started.

Easy DIY Home Renovation in Denver

Home renovations are usually expensive, and good contractors in Denver can be hard to track down or hire — especially for the smaller jobs. In some cases, it may make sense to do the work yourself, if you are so inclined and if you are handy. Here’s how to go about a DIY renovation job in Denver the right way.

Which Jobs Should I DIY? Obviously your skills (or lack thereof) will help you decide what kind of job you can take on. If it requires a permit, you should probably get one. The city will require you take a test to demonstrate your proficiency based on your proposed scope of work before they give you the permit. This goes for electrical work, HVAC, water heater installs, and similar jobs. Here’s a list of common household projects you might conceive of when planning your Denver home renovation. Not all of them require permits.

Do Your Research. If you need guidance, there are tons of resources online. I like Bob Vila’s site. It offers How-To videos for nearly every kind of job and it’s really well done. Home Depot and your local hardware store often host DIY classes too, so you can gain some knowledge there.

Talk with a Contractor and Get an Estimate. It’s valuable to get an estimate or two from a legitimate contractor before you start, especially if the job is a tad more complicated. They may point out things you hadn’t considered, and at the very least you’ll be able to formulate a better plan by talking it through with an expert. And when they give you a price, you’ll truly have an idea of the cost-savings you’re going to get by doing it yourself. (Tell that to your significant other!). If you might want to hire a contractor, read this post for a few tips on how to go about it.

Be Prepared for Surprises/Mistakes. Houses, especially older ones, can be “quirky” and surprises may come up. Maybe there’s a pipe behind that wall in the bathroom, so you can’t install a storage medicine cabinet. And now that you know, you have to put drywall back up and patch and paint. Believe it or not, mistakes can happen on a DIY job, so make sure to budget more time than you think you need, for that extra trip (or three) to the store.

What About Permits? Permitting allows to the city some oversight to ensure that work gets done properly and safely. If you want to sell your Denver house in the future, potential future buyers may check with the city for the permits to find out more on the house. They’ll get a “warm and fuzzy” if they see everything done right. More particular buyers may balk if they don’t see permits on recent work done. (But in my experience, I’ve never seen anyone cancel a contract over missing permits).

The more “cosmetic” work – like flooring and cabinetry – tends to be exempt from permitting. Here’s a list of some more common jobs.

Denver Home Improvement Jobs Exempt from Permitting

Counters and cabinets

Paint, wallpaper

Carpet, flooring

Plumbing fixtures

General plumbing repairs

Uncovered Decks

Swings, playground equipment

Single-story detached accessory buildings, not to exceed 200 square feet

Most fences

Please check Denver’s Residential Permitting Guide for the most up-to-date information as this list is subject to change.

Watch Out for Lead and Asbestos. Before disrupting possible lead-based paint, or an odd popcorn ceiling that may have asbestos, it’s a good idea to get it tested for hazardous materials so you can take the proper precautions. Find out more about common household environmental hazards here.

Will I Make it Back When I Sell? If you want some perspective on the return on investment for your project, I’ve sold many homes and am happy to share ideas on what’ll be most attractive for resale. Get in touch now.

Are You Ready Now? If you have a solid plan, budget, and time allotted to complete the work, a DIY job can work out beautifully and save you hundreds or even thousands of dollars.

Denver Real Estate Market Update

Median home prices in Denver are up 8.5% in January year over year, a pretty aggressive increase, in my opinion, for all the talk of a market slowdown.

Prices are down just a hair in January from December, which is not unusual for this time of year.

It’s very interesting to note that housing inventory has been climbing steadily since July of 2018, and in January the number of active listings in Denver was up 14% over January of last year.

Rising inventory is a new trend and it’s good news for buyers. However, the number of days on market is still under 10 days and sellers are getting 100% of their asking price.

The takeaway for now is: Buyers still don’t own this market, but it’s getting easier and less frantic for them.

We’ll be watching spring market closely to see if the pent-up demand keeps up with supply increases, and of course we’ll keep you posted.

House Hacking Guide

House hacking is a trendy term for a home purchasing model which is sort of a hybrid between investing and regular home buying. With the high cost of housing these days, it’s become a popular way for some folks who otherwise might not be able to afford it to get involved in real estate investment.

House hacking occurs when a homebuyer purchases a property and moves in as an owner occupant, and then rents out part of it. Typically most people start with a smaller multi-unit, such as a duplex, triplex or a quad — though it can be done with a single family home or condo depending on the configuration of the property.

Taking on tenants and collecting rent allows for some or all of the mortgage and expenses to be covered while you live there, so you build up equity and create cash flow. And then, when you are ready, you can do it again! This is a great and low-cost way to build a portfolio of investment properties.

Advantages to House Hacking

Owner-occupant purchasers qualify for the best loan terms, with better mortgage interest rates and lower down payments.

Learn how to screen tenants, lease, and manage your property.

Get to know your property inside and out.Learn through firsthand experience. Mistakes and issues always come up, and it’s easier to deal with them when you are onsite.

Start building your wealth through real estate, which has historically been one of the most reliable ways to make money grow.

Is House Hacking Right for You?

This is a very hands-on approach, and it may not appeal to everyone. You’ll need flexibility in order to buy a place with a plan to move out after a year or two. To be most cost effective, you’ll be directly involved with managing improvements, tenants and repairs and possibly do much of the work yourself.

And of course you have to be willing to live in close proximity to your tenants. Fortunately at least you have some say on who’s moving in!

Would you like to explore this option? Please schedule a call now and let’s talk about what kind of property might work for you.

House Hacking Real-Life Example

Suly Bolano, a cost segregation specialists living here in Denver, has been house hacking for three years now. She and her boyfriend are on their second property and they’ve made impressive progress.

They started with a six-unit building, which is now fully leased to solid, long term tenants. They made improvements to the tune of $60K, and it’s earning them a positive monthly cash flow of $800 — which will improve once an inherited tenant moves out.

Their next move was to a single-family house, where they currently live in the basement, which has a separate entrance, while renting out the upstairs. They’ve just finished improvements and are about to rent the mother-in-law suite. They’re projecting $9000 positive cash flow for this property in 2019, on top of living there for free.

Suly likes having control as an owner occupant landlord, and she hopes the tenants will stay for the long term. I was surprised when she told me the best place to find tenants is on Facebook Marketplace.

One interesting point she raised was how this whole endeavor has changed her mindset about money. She says she and her partner have become much more careful and conscientious about their spending habits. They putting so much work into their investment and this plan for the future that they appreciate every dollar — and spend more carefully now. Her boyfriend traded in his expensive car for a more modest model, and Suly doesn’t have a car. They’ll go out and enjoy life, but it’s easier for them to be frugal with long term goals in mind. So they’re not only building up wealth through real estate, they’ve also got more money to work with thanks to more careful spending habits.

Many thanks to Suly Bolano for the interview. She’s a lovely person and works as a cost segregation specialist at Titan Engineering. Cost segregation is a tax planning strategy which reduces upfront tax liability for commercial and residential investors. If you’re an investor, she’s a good person to know. Here’s her Linkedin profile if you’d like to find out more about it.

Ready to get started?

Interested in real estate investment or want to start a “house hack”? Let’s discuss your situation, budget, and the types of property that might work for you. Please get in touch here now. Look forward to talking with you soon.

Denver Real Estate Market Update Q1 2019

Median home prices in Denver are up to $428,000, an increase of about 3% over last March. That’s down a good bit from the 10+% appreciation we’ve been seeing over the past few years.

In the first quarter of 2019 we also saw a pretty dramatic rise in inventory, with the number of active listings up 54% over last year.

The number of new contracts has stayed about the same for the same period.

Rising inventory and steady contracts would indicate that the market may be tilting to favor buyers. In addition, interest rates have taken a recent dip, so it’s a great time for buyers to take advantage of the market now before they go up again.

Questions about the market? Want to make a real estate move? Get in touch now to talk to an experienced agent who’s been through the ups and downs.

These Denver Neighborhoods Shifting to Favor Buyers

The Denver real estate market has favored sellers for many years now, but it’s been showing signs of cooling in some areas since last fall. 

The number of active listings is up overall, we’ve seen price drops on more listings, and the median number of “days on market” is up —  meaning it takes longer to get to a contract.

Higher days on market is occurring in particular for listings that are priced too high. Buyers are savvy and have gotten more selective, and many of them won’t offer if they feel it’s overvalued. 

Buyer Markets in Denver and Across the West

This nifty map published by the housing economists at Trulia shows that many zip codes in Denver are expecting a shift to favor buyers this coming year. They used “days on market” and price cuts as primary indicators to determine which way the market is going.

We still have a few areas favoring sellers, mostly on the west side of the metro area, including Evergreen, Sedalia and 80403, which includes Golden and Arvada. 

Of course, conditions can vary from neighborhood to neighborhood within a ZIP code, but these are the big picture trends happening in the Denver Metro area — and also across the west side of the country.

Seattle has seen the strongest shift to buyers, probably because people realized they were paying too much to live in such a dreary climate.

Is Denver Real Estate Still a Good Investment?

This is healthy. Denver has gotten popular, but it also got expensive quickly, and affordability has become an issue for many. Right now, it’s good to see that demand is keeping up with the higher inventory, which is up 54% in Denver over last year’s first quarter. Buyer’s still have to move quickly, but things area little less hectic than they were a year ago.  

In another good sign for Denver housing and the health of the real estate market, this study reports that the rate of new homes construction is up, though builders are being careful not to overbuild, which cost them dearly in past markets. They’re also building more for first-time home buyers and lower price points, where supply is most needed.

So builders have confidence but are not overbuilding, and median prices are still increasing, but less dramatically. Denver has good fundamentals, with a healthy, diversified economy and a strong job market. While the market may be shifting to favor buyers, I expect we’ll see a stabilization rather than decline. We should continue to see appreciation, but perhaps not in the double-digits that we’d gotten used to since 2013. 

And as the market adjusts, Denver’s many advantages will continue to draw young professionals and families, while many older folks choose to stay for the long haul and age in place in Denver. 

Takeaways

Buyers have a little more leverage. Interest rates are low and supply is picking up. I’ve seen some really nice listings out there and they’re taking just a little longer to go under contract, so while buyers must still have urgency, they have a little more room to negotiate. Ready to jump in the Denver real estate market? Get in touch and let’s chat. 

Sellers want to be careful with pricing. If a property is overpriced, it’ll sit, and if it languishes for too long, it can be hard to recover. Simply put, the place should look right and be priced correctly from the start in order to attract the right buyers the first time around. Have a question about your home’s value or are you considering selling? Get in touch or call 720.514.9540.

Need help with your next real estate move?

Agents at A Better Way Realty help you look at the big picture, to help you achieve the best financial results from your real estate moves. Email or call 720.514.9540 and let’s talk soon!

Green Living in Montclair!

Search current inventory of Homes for Sale in Denver

Listing Details

Lovely Detached Home in Montclair!

775 Pontiac Street, Denver, CO 80220
Price: $829,000
MLS number: 3874164
Bedrooms: 5
Bathrooms: 4
Total Square Footage: 3243

Call Jon Wells at 720-271-2778 to see if this property is still available and arrange a showing.

Green Living in Gorgeous Historical Neighborhood!

Wonderful opportunity to own a stunningly renovated single family home in Montclair. Redesigned and completely remodeled, this two story home with finished basement offers 3100 square feet, including four bedrooms plus den and three and a half baths.

Open Concept Kitchen Perfect for Gathering

This home offers lots of natural light with modern floor plan, designer color scheme, and stylish new floors, carpet and tiles. The open concept kitchen is the perfect spot for gathering and checks all the boxes, with gas range, hood vent, and all new granite counters, cabinets and appliances.

Good sized bedrooms with beautiful, built-out closets, modern bathrooms, and a spacious finished basement with wet bar. Don’t miss the gas log fireplace on the main level for those cozy nights at home. 

This property has been reconfigured, re-wired and re-plumbed with main floor radiant heat and an efficient boiler in the basement. Utility bills are only $50/month in the winter! Solar panels and hot water heat make this home super efficient.

The 7000+ square foot lot offers a spacious yard for relaxing, gardening and playing, and an extra long driveway which can fit six (6!) cars.

Montclair, Denver

The lovely Montclair neighborhood, nestled between Hilltop, Lowry and Park Hill, has a lot to offer. It’s quiet but centrally located, with easy access to City Park, downtown and Denver International airport, with good transportation options and convenient thoroughfares to get around. 

This walkable neighborhood has a good number of independent businesses and establishments as well as your favorite grocery stores close by. Architecturally diverse, with Bungalows, Victorian homes, Queen Annes, Tudors, Cottages and ranch style homes keep it interesting. Monaco Boulevard and 6th Avenue are both impressive, wide streets lined with mature trees and impressive homes.

For questions for more information please contact us asap! 

Denver Real Estate Market Update Spring 2019

Real estate prices have been pretty flat since January in the Denver metro area.

And, as remarked upon in my last post, supply is up year over year. The number of contracts is up slightly.

The market seems to be absorbing the heightened supply easily, with days on market still very low (under 10). Let’s see how the peak season of June and July play out.

Lender Spotlight: Meet Ericka Herrera with Partners United Financial

Ericka Herrera is a Senior Loan Officer at Partners United. She’s a great lender to know, and not only for her winning personality. Ericka works loans for buyers  that many other lenders can’t do. She can help first-time homebuyers, Veterans and has some wonderful programs for self-employed and investor clients.

Since her bank does its own underwriting and funding sources, they are not limited to the normal Fannie and Freddie guidelines, which can be cumbersome when borrowers don’t fit in the box. Here are a few unique loan scenarios she can help with.   

Investor Loan Uses Property, Not Borrower Income, to Qualify Loan

Instead of using your income to qualify you for a loan on an investment property, Ericka can use the projected cash flow of the property to qualify the loan instead. As long as it comes out $1/month positive, they can work a loan up to $2 million. This loan is for folks who already own at least one investment property, and a borrower can buy up to 15 properties this way! Her underwriters don’t look at debt-to-income ratios, and they don’t need to see your tax returns. Of course, rates are a little higher than conventional financing, they’ll require a 20% down payment, and they need to see two months cash reserves.  This loan product is not intended for “fix and flip” buyers, rather buy-and-hold investors.  The program is available for both purchases and cash-out refinances. 

Borrower Earns Cash Tips

Ericka had a borrower with hard to document tip income from tips from working at a casino. Most lenders won’t count income that they don’t see on your tax returns. But the underwriters qualified this borrower for nearly double the loan amount on what she would have qualified for using tax returns, because she was able to provide bank statement history documenting consistent and regular deposits from tips income.

Borrower with Extenuating Circumstances

The “Smart Series” loan allows for challenged borrowers to qualify for a loan, with a good explanation. Even if they are one year out of bankruptcy or short sale, and two years from foreclosure — if extenuating circumstances were at play and the underwriters are ok with it, then they can work a loan. They’ll require a 15% down payment, but up to 10% of that can be a gift. Credit scores begin at 620, and 12-months of on-time housing payment history.

First-Time Homebuyer Down Payment Loan 

As an alternative to Colorado’s CHAFA loans, they offer a new program that pairs a 97% conventional first mortgage with a 4% community second.  This program does not have mortgage insurance and for borrowers with good credit histories, can be a less expensive way to purchase a home than state bond financing.  Income limits do apply, contact Ericka for more details. 

About Partners United Financial 

This regional mortgage banking firm expanded to the Denver Metro area two years ago, and Ericka opened the Denver office. Other Colorado branches exist in Fort Collins, Loveland and Johnstown. Based in Ohio, and licensed in 10 states, Partners United Financial is a purchase-focused arm of the NewRez family of companies.  With the power of a large national company behind them, and the local service that Ericka provides, Partners United Financial is uniquely positioned to help a wide range of clients find great financing solutions.

Questions on these amazing loan products? Get in touch with Ericka now.