As an overview, the La Plata County residential real estate market has continued to recover from the bottom of the market, which was September 2009. The residential real estate sales for the nine months thru 2011 totaled 528 transactions with a median price of $308,000 compared to the same period in 2009, which was 386 transactions and a median price of $292,500. As compared to the same period last year, the La Plata County residential transactions were up 10.46%, with the median price up .67%, the Durango In Town residential transactions were up 9.88%, with a 4.13% increase in the median price, and total Bayfield residential transactions were up 27.9%, but the median price fell 5.46%. The number of land sales improved 45.2% over last year, with a 21.7% increase in median price, and the commercial transactions increased 45.4%, with a median price increase of 20.4%.

Although this is encouraging news on the market, the number of transactions is still approximately 1/2 of the number of sales in the top of the market, which was 2005, and still lower than the numbers for 2008 (same nine months). Prices continue to be challenged in the market place due to the excessive inventory of properties for sale, and by distressed properties that are offered below market value.  In October I calculated 10% of all La Plata County sales were bank owned.  This is WAY better than what appears in the National Association of Realtors November confidence survey which the advance report released this morning-across the US Realtor sales were 19% foreclosed.

I like to flip past the quarter statistics to p 19-YTD comparisons and then the graphs past that-they show a truer picture of our market.  Most categories have increases in number of sales.  That is about what I expected to see.  We are on our way out of the housing slowdown, but it will be a very slow recovery.  I still expect each year, save a major new disastrous policy change in Congress, to be about 10% increase in # sales.  This recovery is not being seen in the condo market yet.  There is still difficulty with financing loans on condos, there are many distressed properties in this category, and the matter could potentially be made worse depending on the next year’s actions by Congress.

Two pending national issues are the Mortgage Interest Deduction, which has been a cornerstone of US code for almost 100 years and which there is a strong fight to take away, plus a push for upping the down payment from 3.5% to 20% for FHA loans.  The down payment issue would be devastating in our county and both issues are being fought hard on both sides-my trade association NAR is in the thick of it fighting to protect home buyers and sellers across the US .  I’d be happy to explain further to you if you want to call.

As always, I look forward to hearing from you and feel free to comment here.    If you would like any further explanation of the statistics or the market I can always be reached at (970) 946-0740.

Click HERE for the statistics.

Now let’s add more green jobs to the mix for long term diversity!

Germany itself is pretty anti-nuclear.  To the already aware public Fukushima was the last straw.  Even the conservative German Christian party realized it was unrealistic politically to continue a pro-nuclear stance because of the amount of votes that would be lost.  Germany made a decision to stop with nuclear altogether-they’ve already shut down eight plants, and the rest will be shut off by 2022.  It’s a very ambitious goal.

Germany does strongly support renewable power.  There is a feed-in tariff (FIT) there which rewards homeowners and companies for becoming their own power makers in renewable energy-whether wind, water, solar, biomass, or biogas.  Because it covers all renewables, the base load created comes from a variety of sources.  Germany makes the incentive high enough to actually incentivize getting to the goals in renewable they want to achieve. The incentives provide a predictable stream of income to the project – this future income can be used to get investment money for the project-from banks, farmers, or whoever makes up the money and product source. The German Development Bank also offer low-interest loans. The larger the system you install with the feed-in-tariff the less you get from the government because you make it up in the size of your system.

To give some background, after WWII Germany rebuilt their industries and the utilities grew to be extremely centralized into the four major utilities that exist.  The reason and goal for the FIT  was to decentralize electricity production.  All four of the big utility companies own some nuclear and other energy to sell, so mandating a closure on nuclear will not close any of the companies down.

Getting back to how Germany’s FIT works, the actual electric grids are owned by separate companies than the utilities.  If a homeowner puts up PV (photovoltaic) on their roof or a company builds a wind farm, the grid operators are required to hook you to the grid.

Renewable energy also receives dispatch priority. Some people argue that in a FIT the little guy pays for inefficient plants because the cost to consumers goes up, but if the power source isn’t delivering what it is supposed to it’s not rewarded. The funds for the FIT payments are distributed among all electricity consumers. With a FIT you are getting money for every watt you produce-not just the excess so in a small system you’d use it for your home and you get money for that too.  There are isolated FITS in America like in Gainsville, FL, as well as movements across the country to see if the idea can take hold here.

What are the goals Germany has set for renewables? There was a Renewable Energy Law passed in the EU which requires at least 20% of electric to come from renewable sources by 2020.  Germany’s version is called the EEG, and its renewable electricity goal for 2020 is 35%.  Germany already gets over 17% of its electricity from renewables; their 2050 goal is 80% renewables.  Non-renewables will not be replaced by wind and solar alone-it wouldn’t be practical to think it would in Germany; biomass and biogas and geothermal need to be part of the mix to reach the targets.

The ambitious targets were set before Fukushima and Germany’s ending nuclear all together.  So far they haven’t replaced the targets.  Unless they are changed to lower numbers, replacing all the nuclear power quickly will be hard while still trying for the 35%/80% renewable goals.  There are a lot of unknowns and a lot of moving parts.  Is nuclear to be replaced by non-renewables?

To give you an idea of costs, in the EU solar per kw hour is the same price as wind off-shore-the biggest of the facilities-and some of these will definitely help replace nuclear.  8.5% electric power in Bavaria is biomass and 10% in Germany overall.

One thing is for sure, as I rode around Bavaria and saw rooftop solar on almost every other home-renewable energy is here to stay in Germany.

While eight transactions may sound insignificant, last year the first six months was affected by a First Time Homebuyer Credit that was nationally available.  This stimulus credit pushed sales higher than they would have naturally been.  Another effect of the credit was that first-time homebuyers taking advantage of the credit were generally in a lower price range than our median sales price, which would have driven down the median prices in our sales-which means all else being equal our medians should show a slight increase this year.  Even without the government stimulus this year we are improving in number-the market is rebounding slowly but steadily.

It should be noted that the bottom of the market was in September 09 with an annualized number of homes sold of 532 in La Plata County.  If you look at our last twelve months through June 2011, 638 homes sold-over 100 transactions more.

Looking at median prices it appears that the median is still falling and will continue to fall until the inventory we have on the market starts reducing in number as it has in-town Durango.  When there is over a two-year inventory the balance between buyers and sellers is too extreme not to show a downwards pressure on Sellers.  Also between 10-15% of all sales are foreclosed properties which adds another pressure to prices.  It took some time before Sellers realized their need to price their homes lower in price than where comparable homes are on the market in order to capture the few buyers ready to purchase.  Six months inventory is where housing economists estimate is about a normal balance-we have over twenty four-which is very significant.  First you need to get the number of sales up, then with less inventory the prices will start rebounding.  We are very slowly increasing in number but it will take much more time to see a positive affect on prices.

Per our statistics, the number of in-town Durango homes improved 32% over last year, with a trade-off in a -25% sales in Durango condos and townhomes-this strongly affected by the home buyer credit.  In the total Bayfield market, there were ten additional sales.  The number of homes for sale in La Plata County is 1,291, continuing to provide opportunities for buyers, and it is definitely still a buyer’s market.  Although overall the market is slowly improving as many people selling their homes will tell you it is not an easy market to sell in.

As always I welcome your comments and don’t hesitate to contact me with questions.

Nearly three-quarters of 3.3 million or 67% of Colorado residents are homeowners.

Real estate contributes 10% of the total U.S. economy’s output.  If real estate sales decline construction jobs decline, unemployment increases, real estate prices decrease, the value of homes decreases whether they are being sold or not, and consumer spending decreases.

The two largest service industries are real estate (10%) and health care(12%).  Real estate contributed 32$ billion in economic development in 2008-nearly 13% of the total economic output of Colorado.

47% of recent home buyers were first-time buyers.  The typical first-time home buyer was 30 years old, while the typical repeat buyer was 49 years old.

21% of recent home buyers were single females, and 12% were single males.

When considering the purchase of a home, commuting costs were considered very or somewhat important by 76% of buyers.

Colorado was ranked 10th in the nation for its foreclosure rate according to the Division of Housing.  In January one out of every 438 homes had a foreclosure action against it.  The national average is one out of every 497 homes.

From December, Colorado saw a 3.5% decrease while the nation was up 1.39%.

Sources: Bureau of Economic Analysis, N.A.R., Macroeconomic Advisors, Harvard Joint Center for Housing Studies, C.O. M.L.S., Realty Trac, U.S. Census Bureau, State Div. of Housing; Everitt Real Estate Center, Leeds School of Business, Denver Business Journal, Wall St. Journal.

COLDWELL BANKER REAL ESTATE SURVEY
FIRST-TIME BUYERS DEMAND NEW KIND OF “STARTER HOME”
87 Percent of Beginner Buyers Want Move-In Ready

The term “starter home” seemingly refers to an entry-level property – one that is affordable yet needs “tender love and care.”  But amidst the many homes available in today’s market, current first-time buyers want places with a little less “room for improvement.”  In a survey of 300 consumers who purchased their first home in the last year, 87 percent said finding a move-in ready home is important to them.

This survey from Coldwell Banker Real Estate explored what was most important to new buyers to provide insight for those looking to buy or sell in 2011. According to the National Association of Realtors (NAR), first-time home buyers accounted for half of the market in 2010.

What Surprised First-Time Home Buyers
Several consumers experienced unexpected benefits after buying their first home:

• 67 percent said the market afforded them the opportunity to buy a home sooner than expected
• Half said they found a home in a more desirable neighborhood than expected
• 61 percent were able to get the home at a better price than expected
• 40 percent got more space than expected
• 43 percent locked in a lower interest rate than expected

“There’s a real ‘a-ha’ moment for sellers revealed by this survey that the condition and quality of their home matters a great deal to first-time homebuyers,” said Diann Patton, consumer real estate specialist, Coldwell Banker Real Estate LLC. “On top of that, our agents have reported that on average, first-time home buyers now look at more than 11 homes before making decisions which is higher than in the past. They can be choosy about what appeals to them and are recognizing the benefits of the low prices and wide selection of homes in many areas.”

What They Want
In addition to move-in conditions, first-time buyer results revealed the old adage “location, location, location” still holds true:

• 78 percent of respondents said the home had to be in an area convenient to shops and services
• Three-quarters of buyers said it was important to be close to their place of work
• Nearly two-thirds said it was important to be near “highly-rated” schools

The La Plata County residential real estate market showed improvement for 2010. Residential real estate transactions increased 13.9%, while total dollar volume was up 13.3%. The median price for all residential sales combined was up 3.4% to $310,000.

The market has been showing slight improvement since September 2009. The number of units sold increased 12% in the under $500,000 category, up 23.4% in $500,000 to $1,000,000, and they were down one unit in the over $1,000,000 category.

The number of homes sold in Durango (In-Town) increased 14.58%, but the median price fell 10.2%; while homes sold in the Durango area outside of the City increased 10.3% and the median price dropped 1.2%.

La Plata County condominiums & townhomes seemed to fare the best in the market looking at the increases with 207 sales in 2010 versus 140 sold in 2009, a 47.8% increase, and the median price was up about 1% to $267,500. The inventory level currently for townhomes and condos for sale is high-the increases shown for 2010 are over an almost dismal 2009 when loans on condos/townhomes were very hard to obtain.  The condos/townhomes sold in 09’ were also in the lowest end of the market, creating an increase in the 2010 median.  This increase is good but not yet a sign of stability in that market.

Numbers of homes selling in rural Bayfield were still on a decline in 2009.  With high inventories it will take more time for the market to improve in a significant manner.

The number of vacant land transactions (0-10 acres) decreased 2.4%

As the president of the local Realtor association (DAAR) I spend time analyzing the numbers, talking to Realtors across the county, and checking on pending sales (under contracts) to see what the next 30-60 days will bring.  This way I have a broad understanding of what’s happening region wide.

Rates are still the lowest we’ll see in our lifetimes, and lending overall has become significantly easier/looser than in 2009.  Inventory levels of homes for sale remain high, creating a strong buyer’s market. A good selection of homes and very low-interest rates create an ideal purchasing opportunity for the savvy buyer.  What we’re noticing right now is a steady but slow amount of activity, assisted by the good not-so winter weather. 

As always, I look forward to hearing from you!  And remember if you know someone interested in buying or selling be sure to tell them about me and I’ll take excellent care of them for you.  If you would like any further explanation of the statistics or the market I can always be reached at (970) 946-0740.

Press Release

2010 Annual Trends

Scott Anderson is a senior economist with Wells Fargo, and he spoke about the national outlook.  All three of the presenters were in their words “cautiously optimistic” about how the next year was going to play out.

I think that sometimes people forget when they are listening to unemployment numbers how bad unemployment really is in the country.  Although the rate is at 9.8%, the augmented number is 17%.  Augmented takes into consideration all the under-employed and discouraged people out there that aren’t considered in that 9.8% number.  How astounding.  17 out of every 100 people-that’s 26.6 million people!  And that number has really not changed in the last year. 

Now here’s another national number for you.  I have heard on the news that consumer spending is up-it’s coming back.  Well 35-40% of consumer spending right now is coming from the top 5% income makers in the US.  That is a horrible fact.  The top 5% of Americans have seen a rebounding of their personal wealth from the stocks coming back and they are driving an enormous portion of spending.  The rest of Americans are buying groceries, gas, and clothing.  That’s why, Scott pointed out, the sales at places like BMW, Neiman Marcus, and Saks are doing so well.

Consumer debt is not going down.  14% of homeowners across the US are delinquent.  And the banks are still holding on to their reserves.

Now here’s what’s happened in Colorado.  Richard Wobbekind is the Director of Business Research at the University of Colorado-Boulder and he gave out state numbers.  In the last decade Colorado has added 800,000 new residents, and we have averaged at zero new jobs.  Our state is more heavily dependent on construction than in many states and that’s where we lost 1/3 of our jobs in 2009.  And in the jobs total we’ve lost in the state they are in the above average wage sectors-so when the construction, mining, and manufacturing jobs are lost it brings down the wage average because we’re loosing more “well-paying” jobs.

Luke Miller, Assistant Professor with Fort Lewis, explained a few local numbers.  Our unemployment is at 6%.  I’d agree with him that we are probably still in the “correcting” process of the real estate market.  We still have a lot of inventory.  Although the Durango Association of Realtor’s numbers won’t be out till Jan 11th, I know 2010 had higher sales than 2009 by far. We still have a long way to go before there is a balance of supply and demand.  What happens next year is going to be dependent on a number of factors. 

How much shadow inventory does La Plata County have ?  These are homes that are foreclosed or will go in to foreclosure but are not yet on the market.  There’s no way to track them so it’s called a shadow.  2011 will be a year around the country where many adjustable rate mortgages are resetting-meaning a lot of folks will see their mortgage rates skyrocket, they won’t be able to re-finance, and they will lose their homes.

What will the interest rates do? From the various predictions I hear that I trust, they should edge up through the year but not go up too quickly.  If this is not the case we will be on more shaky ground.

What loans will be available and what loan problems will we encounter in 2011?  Well meaning policy changes can affect whether loans close on time or at all.  Also, if banks continue to hold onto a lot of reserves we’ll see it take more time for the pendulum to swing back to a normal rate of lending-right now even in residential purchases lending is a little tight.

Buyer confidence-will people keep purchasing and will this rate continue to pick up? 

Will the “feeder markets” Durango depends on for some of our home sales continue to stabilize?

All of these questions give a little background to why predictions on the markets are complicated and cautious at best about being optimistic.

Here are the presentations from the Forum.

If you follow green building either locally or in the US you’ll see there are more markets with third-party certified green built homes are becoming more a more a larger percentage of new homes built-up towards 60% of new homes built-in some markets.  This is great.  In La Plata County last I checked there were over 200 green built homes.  But there are two things missing.

First, consumers want green.  In every poll taken, people say they want “green”- whatever that means to them-in a new home.  But oftentimes these homes, with all the added cost and expertise it takes to build them, don’t command a higher price on the market.  Not enough over long-term to justify the cost.  They sell much faster than traditionally built homes, but not always for more.

Second thing missing, appraisers can’t take these special features included into their appraisals, and underwriters often don’t have a good loan product that makes sense to help finance any extra cost.

This Bill will work on both aspects.  It allows for both appraisers and underwriters to use the projected cost of heating and cooling your home considered while calculating cost and risk.

It seems sensible.  I’ve sold homes that are new and energy-efficient, and those cute century-old farmhouses with a nice lot for about the same price.  Now let’s say a buyer is right on the edge of being able to qualify to buy one of these options.  One home is going to average 30/month in bills, and the other over 200-this isn’t hard to imagine as the average American spends over $2300 in energy costs per year.  Wouldn’t it make sense to consider that?  And let’s say you just like that farmhouse so much you are willing to forget for a moment how much it’ll cost to keep it running.  The first step in consumer awareness is disclosure.  When the numbers are disclosed it gets harder to ignore.

Does the bill have a chance?  From what I read it looks like it.  More and more cities and states have or are looking at legislation about disclosure-think the E.U., San Francisco, and Burlington, VT.  among others.  And with an enormous push across the globe for real-time valuations in lending it just makes sense the lending institutions would want to push towards evaluating real risk by having energy use disclosed.

I do expect a fight on the Hill from lobbying interests including the housing industry, but I will keep you posted.

I pulled the information below from this link, where you can find more information. The SAVE Act



The SAVE (Sensible Accounting to Value Energy) Act, a new proposal supported by energy efficiency advocates and leading U.S. homebuilders, seeks to correct this “blind spot” in mortgage underwriting and home appraisal. Championed by Sen. Michael Bennet (D-Colo.), the SAVE Act would require federal loan agencies to assess the expected energy costs for mortgage loan applicants. This can be accomplished through modest adjustments to underwriting guidelines and appraisal practices and could be implemented over a manageable period without disruption. The SAVE Act would achieve the following:

§ Enable federal mortgage programs to improve the quality of mortgage underwriting and provide an accurate picture of repayment risk and the expected costs of homeownership

§ Greatly accelerate the supply of and demand for energy-efficient new homes

§ Quickly return any incremental cost for homebuyers due to home efficiency improvements

Encourage the purchase of energy-efficient homes that reduce utility bills for American homeowners and reduce the vast amount of energy consumed in homes

§ Consistently and accurately account for energy efficiency in appraisals, enabling builders and homeowners to invest in energy-saving features

§ Put people in the construction and manufacturing sectors back to work renovating and building energy-efficient homes and products

 What we compared in the chart linked below is the third quarter to the same period over the last three years.  Now, La Plata County has a small amount of sales to draw conclusions from and the statistics are complicated-they change depending on new subdivisions being offered, loans being available, etc.  Medians and averages jump around from quarter to quarter depending on the homes that happened to sell.  Most of our focus concentrates on the trends we see from year to year.

If you follow the real estate news you probably heard about the First Time Home Buyer Credit that was in effect the first two quarters around the country.  The Federal government spurred home growth by offering money to people to buy homes.  What you saw across the country was a huge rise in Q1 and Q2, then as the tax credit expired, a large fall in sales because what the credit did was “borrow” buyers who would be buying now and instead they bought early in the year to get the credit.  In Durango we had the huge pickup which brought us up 25% in sales this year so far from last year.  But when the sales slowed in July, it went back to last year’s levels and not below, which is encouraging.  In this market flat-the same number of sales as last year- is encouraging. 

The prices of homes and land have dropped in the last twelve months locally.  How much depends on the area and subdivision.  Since statistics are looking backwards we won’t know exactly how much until we’re a few quarters ahead of the fall.  

Everything is set for a local recovery.  We have the lowest rates we’ve had in years, lending has eased up, we have a great variety of inventory, and the prices have fallen making us more affordable than in a long time.  What we are waiting for is consumer confidence.  There are lots of buyers waiting because they want to make sure we are coming out of the recession before making a huge decision; a lot of these people are just making sure their jobs and hours are not at risk. 

It’s a buyer’s market and that will not change for some time.  When there is more than say six or so month’s supply of homes (or less than about three) in any given area, it is out of balance.  It’s slowly returning and some areas mostly in town Durango are seeing this balance return.  I do see us coming slowly back to that balance but it’ll be a while.  Call me anytime to show you how it looks in the areas you are concerned with.

If you would like any further explanation of the statistics or the market I can always be reached at (970) 946-0740.  Feel free to comment about your own experiences.