July 2009 Denver real estate market statistics – Prices are still coming down. A curiosity to me because I’m sitting here preparing an offer for clients and they are in a competitive bidding situation. We decided to offer slightly over list price, and we’re not sure they’ll get the house even with that. They need to ask for down payment assistance from the seller, which puts them at a disadvantage.
Their lender told them that it’s usual and customary for sellers to make a concession for closing costs in an FHA loan. I told them, “not necessarily.” Anyway, that’s what they think he told them. So now I explain that usual and customary are very different when a seller is desperate, can’t sell his house and wants to keep this buyer on the hook; and when a seller is receiving multiple offers and every cent he shaves off concession is less deficit to worry about in his short sale negotiations.
I’ve also received a counter proposal tonight for a very different transaction. A multi-million dollar home that has been on the market for over 18 months. My clients offered 50% off the original list price, and not that far off where we assessed the actual value to be. The seller wouldn’t even counter. We decided to humor them and rewrote another offer slightly higher. We’ve just received a counter barely below the list price. We’ll see where this goes, but perhaps this is why prices are declining.
We’ve only added 37 new listings above the total inventory we had in June 2009. That means people, banks, sellers are waiting to put their homes on the market. They’re happy where they are, decided not to move, want to see what 2010 brings. Here’s a warning to buyers – make a decision soon, especially if you’re in the low-mid range price point. You won’t have much to choose from in a few months. There will probably be even less inventory in October, November, December – and you won’t have the First Time Home Buyer Tax Credit available either (unless Congress extends it – like they did tonight for the Cash For Clunkers program.) Just me here – but doesn’t it seem more important to help out consumers with the purchase of a potentially long-term investment and a roof over their heads than with the disposable automobile we American’s favor?
And while we’re musing about Congress and their ability to influence markets. It’s clear they can – first time home buyers are in bidding wars and my friend is out trading in her 2000 “clunker” right this moment. Why don’t they consider helping out those high end buyers and sellers as well? It’s a sad day when you show $3mm REO properties – and I have. Just as sad as any bank owned home – no one should lose their house.
But jumbo loans are still for the most part unaffordable and that’s seriously stymied the high end market. With sales drying up and only a few cash buyers out there, appraisals are tougher and buyers warier of overpaying. Not only are jumbo loans priced high, but the hoops applicants need to jump through in the application and approval process is a total pain.
So to the extent that prices are still down in July while we have extremely low inventory is probably mainly driven by high end homes. It’s not the low or middle range houses because those are selling quickly and at full price or close to it. Look at the condos category in the chart. Condo prices have actually risen in the past month and are only slightly off last year’s prices. Since most condos are in the middle or low range price-point – there’s your answer.