The single question everyone seems to ask when talking about real estate in Denver. Rightfully so, as for most of us, real estate represents a sizable investment and its performance is extremely important.

Most of the major players that index real estate values such as Case-Shiller, RealtyTrac, NAR (National Association of Realtors) are predicting moderate declines to flat growth for 2012. Foreclosures are expected to continue to decline and it is expected that there will be moderate growth in new home starts.

Now all of this analysis is based on historical data with little or no forecast. Additionally, most of the projections are based on national averages that can be out of touch with our local markest. That being the case what is the best way to gauge the health or direction of the Denver Market?

ActiveRain recently surveyed 1,835 realtors across the nation to get a grass roots feel for what the people in the trenches think about the market in their respective areas. This analysis provides another data point to consider as the market continues to recover.

Data provided by ActiveRain.com. Join 215,590 Real Estate Agents on the world’s largest Real Estate Social Network.

Survey results that are promising for Denver include:

• Brokers are calling 2012 the bottom of the current correction
• 2 of the top 3 “Biggest Challenges”, short sales and foreclosures, have significantly less impact on Denver as we have statistically less of them than the rest of the nation.
• Voted as the #6 top real estate market. More positive news for Denver’s real estate outlook.
• Denver was rated as excellent for cost of living, technology and energy industries and rates excellent for investment property.

As the housing market in Denver begins to stabilize it is important to keep a close eye on the priorities of Denver home buyers to ensure your listing sells and sells quickly. Buyers have become more analytical and more realistic about their home buying decision.

A recent study revealed that 85% of home buyers prefer a home that is move in ready. This has shifted drastically from the mentality of the bargain shopper looking for a home that needs some “sweat equity” or “fix up”. If you analyze this trend it makes sense. Lending requirements have become more stringent and require a greater amount of down payment. This has reduced the available cash buyers have after the purchase is complete. Thus buyers are looking for homes that need no immediate maintenance.

The good news – as a seller, you can take immediate advantage of this trend. Make sure you take care of the all the deferred maintenance that is needed on your home. Does the exterior need a new coat of paint? Does the fence need attention? How about the baseboards and banisters? The home is your baby and you will know all the little things that potential buyers are going to register as an expense if they move forward with an offer. Remove those deterrents and you’ll get and offer quicker.

Another item that Denver home buyers are after is value! What are they going to get relative to what they spend? Most of the time this is determined through comparison of what else is available for the money. Make sure you shop your competition to see how you compare. Your goal is to be the very best home available in your neighborhood for the price. Price being a very important factor as an overpriced house will cost you in the long run. Most buyers associate a home that has been on the market longer than 90 day to “have something wrong with it”. Don’t make the mistake of trying a price the home over market to “see if you can get it”. This will inevitably lead to a longer time on market, less negotiation leverage and a lower sales price compared to a correctly priced home in the beginning.

Who priced this house? – Denver home valuation analysis.

Home valuation is an important duty when listing, buying or making an offer on a home. In Denver the listing inventory is dropping sharply as the amount of homes being purchased is on the rise. This is shifting the market toward stabilization. We are also seeing some areas and neighborhoods where prices are beginning to rise.

Denver home valuation is subjective and there are typically 4 parties that contribute an opinion toward the perceived value. As a rule a property is only worth what others have paid for comparable improvements/property.

Let’s take a look at all the parties involved in a real estate transaction.

1. Sellers: The single most important factor to help sell your home is the price. It is very important to hire a full service, local listing agent that specializes in your neighborhood. A neighborhood specialist will be able to complete your home valuation accurately and determine a price at or near market value. An overpriced listing will place you home in one of the only market segments not selling.
2. Buyers: Competition is now a reality in the market. As the number of new listings fall and home sales increase the days of a “low offer” are over. It’s a difficult lesson when you  lose your favorite house due to an unreasonable offer. Select a buyer’s agent that can accurately determine the market value of the home and knows the market trends for that particular Denver neighborhood.
3. Listing Agents: It’s important to determine an accurate home valuation and present that to your client(s). It is a disservice to your client and yourself to overestimate the true market value to “win a listing”.  An accurate list price will sell the home quickly and at higher net amount for the owner. Starting higher than the true market value will allow all the other comparable properties priced accurately to sell, leaving buyers wondering what is wrong with the listing as the day on market climb.
4. Buyers Agents: The job is to educate and inform the buyer as to the conditions of the market and neighborhood and let buyer decide which home is best. When the best home is decided upon, it’s important to discuss the process of determining an accurate home valuation and sticking close to that value with an offer. Setting expectations of the result of a low ball offer (losing the house) ensures the buyer gets the home of their dreams.

Conclusion: An accurate Denver home valuation is the key to securing a successful real estate transaction. Interest rates remain at historically low levels and there has never been a better time to purchase a new home. Staying focused and realistic on the important aspects of the deal ensures all parties get what they want.

As we close out of 2011 and head into 2012 the troubled housing sector of the economy is showing signs of improvement. Year over year housing starts and home sales are trending upward. This is welcome news as these indicators begin to show signs that we are ending the current real estate correction period.

So as the housing market begins to rebound nationally how is our local market going to fare? According to real estate guru Greg Rand, Denver is at the top of the list when considering real estate investment. He bases his opinion on fundamentals such as:

• Migration – Are people moving to the area and from where? People are moving to Denver f
• rom all over the United States. It is not a situation where there is a specific climate that people are moving from. People are coming from all over.
• Denver has a stable, young, active population that is employed.
• The unemployment rate and foreclosure rate for Denver are half the national average.
• The most attractive attribute about Denver – a high quality of life combined with a relatively low cost of living. The people that live in Denver absolutely love it and attract others based on the positivit
  y they have about the area.

Another key factor leading to a bullish outlook on Denver is the fact that the median home price has steadily climbed since 1996 without a major price collapse over the last 4 year. As you can see from the graph, a minor correction is observed with prices rebounding almost immediately. This is a strong indicator of health real estate growth without influences that cause hyper-appreciation.

It’s a wonderful time to own real estate in this great city If you are interested in investment opportunities please don’t hesitate to give us a ring. Or search real estate in your favorite areas to see how prices are doing.

So you have decided to sell your home, Congratulations!

You have hired a realtor and come up with a compelling price based on the comparable properties that have sold in the area. You have painstakingly gone through the house to remove as much furniture as possible while still making the home feel warm and relaxing. You have spent countless hours cleaning and organizing so that everything in the house is meticulous and purposefully placed. The yard is immaculate and the entrance is inviting.

Now comes the listing day when the property goes active in Metrolist. You are overwhelmed with excitement as your home in top shape and you feel that buyers are going to like it. The house gets numerous showings and you are anxious to hear the feedback on what the other brokers and buyers think. Your listing agent calls to report that some buyers have provided feedback, “the house is not the one for them”. Others seem to be uncooperative and have not provided feedback. You think to yourself, how hard is it for them to answer a few questions and provide a little feedback, its common courtesy!

The truth is – they have provided you with valuable feedback. Since they did not set up a second showing or present an offer, the house was not right for them. You already know the shortcomings of the house. Perhaps it only has 2 bedrooms or is on a busy street or has a funky floor plan or has limited outdoor space, etc. Feedback of this nature represents attributes of the hose that are already known. Rarely is feedback profound in uncovering hidden items that once addressed successfully sell the home.

The real focus and the very best feedback is an OFFER.

How do you get an offer? Simple, price the home based on the comparables for the area!

How much will Stapleton property value increase when light rail completes

This is a question I have been curious about for some time. It seems logical that in a neighborhood as active as Stapleton, the benefit of light rail will be profound. Not only will it allow of easy car-free access to the airport it will afford stress-free travel to and from downtown.

Imagine walking over to the Central Park Station for quick train ride downtown for a play, concert, show, sporting event, dinner or stroll. Imagine boarding the train for a relaxing ride to the airport and leaving your car parked safely in your garage. Imagine the convenience of meeting visiting friends and family at Central Park Station rather than driving all the way out to the airport. This list goes on and on. With many quality-of-life improvements associated with commuter rail access, how does this translate into property value appreciation?

We need a way to determine if this new transportation hub, opening in our back yard, will have an impact on property value.   The term “Transit Premium” has been established for just this purpose and is defined as the value added to property by proximity to high capacity transit.

A report prepared by Reconnecting America for the Federal Transit Administration studied high-capacity transit in Washington D.C., Dallas, San Diego and Portland. They concluded that not only does viable high-capacity transit spur robust development but also has a significant impact on Transit Premium. The following was pulled from the report.

This particular report focused on property within a very close proximity to transit stations.

Additional research has also been conducted by RTD FastTracks with regard to transit and property values.  The following information has been pulled from the RTD FastTracks, Impact of rail transit on property values.

Analysis of property values surrounding the Metrorail in Miami-Dade County between 1971 (13 years before the line opened in 1984) and 1990 revealed a 5% higher rate of appreciation compared to the rest of the City of Miami.

Two separate commuter rail systems were analyzed in Philadelphia and Pennsylvania confirming proven premiums for proximity to commuter rail. In suburban New Jersey the median price for homes served by the PATCO rail line were 10% higher than homes not served by the line. In Pennsylvania the homes served by the SEPTA commuter rail enjoy a 3.8% premium over homes not directly served.

The reports continues to say.

A study of the Eastside Metropolitan Area Express (MAX) light rail line in suburban Portland uncovered, on average, 10.6% greater value for homes within 500 meters (1,640 feet) of transit. The study attributed the gains to homes within walking distance of the station. The study also noted that nuisances such as noise and traffic reduced property value impacts on properties closest to the station.

Analysis of 5 rail systems in California including San Mateo County, San Francisco, San Jose, Sacramento and San Diego concluded that systems with the highest ridership rates and locations access experienced the most significant association between station distance and value.

The primary positive impact of rail on property value is accessibility. It’s been determined that properties within a limited distance of transit stations achieve the most positive effects. Distance is generally defined as a walk of one quarter to one half miles. Beyond this zone the effect on property value is less significant.

Given the research presented here it’s not unreasonable to expect the same thing to happen in Stapleton. I argue that the positive impacts of Central Park Station will be significant and extend beyond 1/4 to 1/2 miles. Again, given the active nature of the community I believe the accessibility ring will stretch beyond 1 mile. Additionally the I-225 FastTracks line will link  Stapleton the Anschutz Medical Campus. Stapleton has a great deal to gain through the completion of the FastTracks East Corridor.

The following is a flyover of the East Corridor light rail route

This is a rendering of the Union Staion Redevelopment (click to visit their website)

This a another view of the Union Staion Redevelopment (click to visit their website)

Resources

Cambridge Systematics, Economic Impact Analysis of Transit Investments: Guidebook for Practitioners, TRB Report 35, Transit Cooperative Research Program, Transportation Research Board (www.trb.org), 1998 http://onlinepubs.trb.org/Onlinepubs/tcrp/tcrp_rpt_35.pdfDiaz, Roderick B., Impacts of Rail Transit on Property Values, American Public Transit Association Rapid Transit Conference Proceedings Paper, May 1999.http://www.rtd-fastracks.com/media/uploads/nm/impacts_of_rail_transif_on_property_values.pdfParsons Brinckerhoff, The Effect of Rail Transit on Property Values: A Summary of Studies, Project 21439S, Task 7,NEORail II, 2001. http://www.reconnectingamerica.org/public/show/bestpractice162Smith, Jeffery and Thomas Gihring, Financing Transit Systems Through Value Capture, Victoria Transport Policy Institute, 2006. http://www.vtpi.org/smith.pdf

How to make an offer on a home?

This is a question we get asked a lot and is a great question. When considering making an offer on a home there are three considerations that need to be taken into account.

1. Market Comparables
2. Days on Market
3. Amount Owed

These three variables will help establish an offer that is likely to be accepted. Additionally, knowing this data helps reinforce your offer and aids the negotiation process.

Market Comparables
Market comparables or Comps are similar homes in the area that have sold with the same characteristics as the home you are making offer on. This analysis is first because the rule in real estate is; A house is only worth what others have paid for equivalent property.  Knowing the comps for the area will tell you if the seller has priced the property over market value or not.

Days on Market
The days on market represent to total amount of time the home has been for sale. This is valuable indicator for making an offer in that it gives you some guidance on how negotiable the seller is likely to be. If the listing in new to the market the seller will be more firm on their price as they have the luxury of time. The logic is that if the offer is less than their expectations they can always wait for the next buyer to come along. For homes that have been on the market for a long time (average days on market) the seller will likely to be more willing to negotiate on price.

Amount Owed
The last piece to consider is the amount the seller owes on the home. It is valuable to know if the seller owes the amount the home is listed for or close to. For homes in this situation the seller is typically very reluctant to negotiate.

When making an offer on a home it is always best to have as much information as possible to support your offer price. Always negotiate the facts.