Friday, September 10, 2010

Denver Real Estate Market Update September 2010

So, How’s the Market, September, 2010
All real estate data taken from Metrolist Inc., on September 8, 2010 Denver, Colorado.

“Building Wealth in the Denver Real Estate Market?”

There are 3 considerations buyers and sellers should ask their Real Estate Professionals before buying or selling a home in today’s real estate marketplace to increase wealth positions.

Consideration #1 Have Home Prices Hit the Bottom?

Depending upon the price range and location some prices have risen in 2010.

• There were more sold single family and condo properties in August 2010 then July of 2010 a 2.1% increase.
• Inventory for single family and condo homes is currently at 24,545 units, the second lowest inventory level in 5 years.
• In the price range of zero to $250,000 for single family homes there is a 5.827 month supply of homes.
• Conversely in the price range of $750,000 to $1,000,000 single family homes have a monthly supply of 23.92 months.
• Condos in the zero to $250,000 price range have a 7.599 month supply.

Prices are most affected by supply and demand. If you are in a price range or location that has less than an 8 month supply of homes, the prices are going to appreciate over the next 12 months.

Consideration # 2 Why should I sell my home in a market that has had little appreciation over the last couple of years?

The goal of selling any asset enables the seller to better position their wealth, especially for move up sellers.

• Selling in today’s market makes a seller feels like they are taking a set back in their financial position. However, moving to a higher priced home to improve their position of wealth is happening today when selling and buying real estate.
• Homes over a ten year period have appreciated 50% to 100% in any given decade since the 1950’s. This phenomenon is how a seller can gain wealth in today’s real estate world.
• If you sell your $450,000 home that would have appreciated at 3% your gain would be $13,500 per year.
• Assuming you held onto it and hoped to regain the loss in appreciation during the down market of the last 3 years you would have lost time in the world of appreciation because you bought this property at a higher value sometime in the past.
• In holding this $450,000 home for 10 years the value would be $585,000 or a gain of $135,000 in net worth.
• If you were to sell your home and move to a property that could be bought at a discounted price of 15% at $700,000 then get the same 3% appreciate over at 10 year period you would have gained $105,000 on the discount and $210,000 on the appreciation, representing a gain of wealth of $315,000 over the same period.
• The reason for selling today is to better position your future wealth, especially if you are moving up.

Selling your home right now may be one step backward to be able to take advantage of the five steps forward in buying your dream home and to obtain a very favorable appreciable position. Over the next 24 months a major shift in wealth will occur in real estate and putting yourself in this position will be a smart move.

Consideration #3 Do the low interest rates create opportunities for me as a buyer or seller?

Money is less expensive than at any time in the last 50 years. People build wealth by using money wisely.

• Both Fixed Rates and Jumbo Rates are at Historical Lows
• A $400,000 loan at 4% has a payment of $1903. The same loan amount at 7% has a payment of $2646. What would you do with $743 extra dollars per month, every month you live in the home?
• 15 year amortized loans are the vehicle to build wealth.
• Prepaying principal on loans is a way to build wealth.
• Refinancing your riskier loan types into more conventional loan types is the right step today, even if it requires putting money into the new loan.

What should sellers do in today’s market?

• Consider the Three Components of the Pricing Model, PRICE, TERMS and TIME, when placing your home on the market. Seek the advice of a professional to describe your options.
• Be the Best Positioned Home in Your Neighborhood.
• Utilize the Services of offered by RE/MAX Professionals to get more dollar for your home.

What should buyers do in today’s market?

• Get preapproved today to be a “Cash Buyer” when making an offer.
• Build wealth by getting a good price and low interest rate that can be prepaid.
• Know what the neighborhood supply and demand is to make an informed buying decision.