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Archive for the ‘Statistics’ Category

I continue to be frustrated when I read news reports about the housing market. It drives me crazy that people who know nothing about real estate, aren’t in the business, continually write reports that are misleading (in my opinion).

A recent LA Times article talks about both year over year and month over month data. It is almost always misleading to evaluate the real estate market based on month over month data, especially a broad measure like median sales price.

The key to the market’s health is ALWAYS, let me say it again, ALWAYS about volume and transactions. As long as their are willing and able buyers, the market is good and healthy.

The challenges over the last 18 months has been not only the lack of buyers, particularly in the higher price ranges, but also the lack of ABLE buyers. In other words, there are many cases where there are WILLING buyers, but because of the huge lending pull back, these buyers are not able to obtain financing.

As you can see from the graphic below, the Denver market as a whole is showing broad strength in looking at year over year numbers. For some of the southern area markets, such as Centennial, Highlands Ranch, Castle Rock, Parker – the year over year numbers are much more pronounced; meaning that Q1 of 2009 was exceptionally weak, and Q1 2010 was substantially stronger.

source: LTGC, Metrolist

In any case, I continue to see progress in the market as a whole. Sure, there are still several problems: financing for condos remains difficult and the upper end of the market is still out of balance in terms of sellers and buyers (more sellers than buyers). However, I am seeing higher end properties begin to sell when the buyer(s) begin to see the value (i.e. “deal”).

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Many of you may have seen the article in Fortune last month saying how Denver had gone from one of the best real estate markets to one of the worst – all in a matter of 10 months.

I received several calls from clients, all in a panic. I said the article was totally false and misleading, and walked them through why. However, I was much too lazy (and busy) to spend the time to articulate, in written form, why it was incorrect.

Fortunately, John Renchook wrote a great article outlining these facts. Check it out http://insiderealestatenews.com/2010/04/denver-no-5-on-case-shiller/

One of the key errors in the Fortune article was using faulty data. Any time you use data that does NOT come directly from the MLS or Tax Assessor, you are bound to have errors – at least in my opinion. The MLS IS THE MARKET!!! Reporters often don’t understand that. It would be like reporting financial and stock news without checking the NYSE/NASDAQ, etc for the accurate data. Dumb – and misleading.

That is why I never read the news for real estate – it is often wrong! I am out IN THE MARKET EVERY DAY, plus I get updates and statistic summaries through the MLS. Rarely does what I see and experience get reported in the news.

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Surprising, but the average sales price has bounced up in the Castle Rock zip codes.
As of 7/22/2009 - zip codes 80104,80108,80109

As of 7/22/2009 - zip codes 80104,80108,80109

I don’t have a specific explanation, but my overall sense is that the higher priced properties have softened on price, there have been distresses properties in the higher priced ranges that buyers have begun to take advantage of, and possibly a slowing of lower priced distressed properties.

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Typically, sales volume increases from January through the first half of the year.  And, although the real estate market is far from posting transaction and price numbers from just a year or two ago, it is still thankfully following this historic trend.

Sales volume increased in February over January numbers, as expected.  The bulk of the sales continue to be on the lower end of the market.

  DCW DHL
Active Listings                    1,342                        619
# Homes Active: $0-$399,999  515 / 38%   322 / 52% 
# Active U/C: $400,000+  827 / 62%   297 / 48% 
     
Homes Under Contract  192 / 12.5%   176 / 22.1% 
# Homes U/C: $0-$399,999  115 / 60%   128 / 73% 
# Homes U/C: $400,000+  77 / 40%   48 / 27% 
     
Homes Sold YTD 61 64

 

You can see that the lower half of the market is staying strong, while the upper end of the market is quite literally dying.  Almost 7 out of 10 homes selling in Highlands Ranch/Lone Tree is under $400k, even though  there is an equal # of homes for sale above and below this range 1 home for sale under $400k for every one over $400k).

With interest rates staying strong, and prices down, people are buying houses.  To me, it looks like there is going to be tremendous opportunity in the upper end of the market, since there are a shortage of buyers but a plethora of sellers.  At some point, people who MUST sell will need to price their homes so that they DO sell – which means someone is going to get a great deal!

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