Job Bounce

“How could the real estate market be so strong in the middle of a pandemic?”

That is a fair question and one we hear frequently from our clients.

There are several reasons for this but two stand out.

  • Interest rates
  • Jobs

Employment has bounced back much quicker than most people expected.  When COVID first showed up, the expectation was that many industries would be hit hard for a prolonged period of time.

The reality is that only a few industries were severely impacted by COVID and the rest were able to get back to a near-normal level of business relatively fast.

Additionally, what we find along the Front Range is that our ‘job bounce’ is even better than the national average.

 

Here are the numbers…

The COVID-peak unemployment rate for the Front Range looked like this:

  • Larimer County = 11.1%
  • Weld County = 10.1%
  • Metro Denver = 12.3%

Today it looks like this:

  • Larimer County = 5.2%
  • Weld County = 5.2%
  • Metro Denver = 6.4%

 

Nationally, unemployment peaked at 14.8% and now stands at 6.7%.

So, a main reason why demand is high now is because jobs have bounced back, and the bounce is even higher than the average across the country.

Bounce

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Rate Heading

Interest Rates

 

Rate Heading

Where are interest rates headed?

This question was one of many which were addressed during our annual Market Forecast yesterday.

Our Chief Economist, Matthew Gardner, provided insight on rates, prices, inventory and many other fascinating topics.

Matthew’s prediction is for rates to creep up to 3.07% by the end of 2021.  They are currently at 2.79%.

The image below shows how his prediction compares with predictions of his economist colleagues.

If you would like a recording of the presentation, simply reach out to your Windermere Broker or reply to this email.

Graph

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Re Bubble

Bubble

 

The activity in the Front Range market is causing us to hear the bubble question again.

People are curious to know, based on recent growth in price appreciation, if we are in a housing bubble.

This question seems to crop up when prices go up.

While we do not believe that the current double-digit price appreciation is sustainable, we firmly believe we will not see prices crash or see any kind of a bubble bursting.

Here’s why we think that…

This past Tuesday we hosted a private online event for our clients which featured our Chief Economist Matthew Gardner.

Matthew is well-known and well-respected in the industry.  He is often quoted in leading real estate publications.

He sees four reasons why there is no real estate bubble that is about to pop in Colorado.

  1. Inventory is (incredibly) low.  The number of homes for sale is down over 40% compared to last year.  The market is drastically under-supplied.  Based on simple economic principles of supply and demand, inventory would need to grow significantly for prices to drop.
  2. Buyers’ credit scores are very high.  The average credit score for buyers last month, for example was 759.  So, by definition, average buyers today have excellent credit which means there is low risk of them walking away from their mortgage and causing a foreclosure crisis.
  3. Buyers have high down payments.  On average, buyers are putting 18% down on their purchases.  This means that prices would need to fall by a considerable amount in order for the average buyer to be ‘upside down’ on their mortgage.
  4. Owners are equity rich.  Well over a third of property owners along the Front Range have more than 50% equity in their homes.  This means that a severe economic downturn causing a slew of distressed properties to hit the market is highly unlikely.

Bottom line, as Matthew Gardner reminded us, what we are experiencing in the economy today is a health crisis not a housing crisis.

If you would like a recording of the private webinar we would be happy to send it to you.  Just reach out and let us know.

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Re Bubble

Bubble

 

The activity in the Front Range market is causing us to hear the bubble question again.

People are curious to know, based on recent growth in price appreciation, if we are in a housing bubble.

This question seems to crop up when prices go up.

While we do not believe that the current double-digit price appreciation is sustainable, we firmly believe we will not see prices crash or see any kind of a bubble bursting.

Here’s why we think that…

This past Tuesday we hosted a private online event for our clients which featured our Chief Economist Matthew Gardner.

Matthew is well-known and well-respected in the industry.  He is often quoted in leading real estate publications.

He sees four reasons why there is no real estate bubble that is about to pop in Colorado.

  1. Inventory is (incredibly) low.  The number of homes for sale is down over 40% compared to last year.  The market is drastically under-supplied.  Based on simple economic principles of supply and demand, inventory would need to grow significantly for prices to drop.
  2. Buyers’ credit scores are very high.  The average credit score for buyers last month, for example was 759.  So, by definition, average buyers today have excellent credit which means there is low risk of them walking away from their mortgage and causing a foreclosure crisis.
  3. Buyers have high down payments.  On average, buyers are putting 18% down on their purchases.  This means that prices would need to fall by a considerable amount in order for the average buyer to be ‘upside down’ on their mortgage.
  4. Owners are equity rich.  Well over a third of property owners along the Front Range have more than 50% equity in their homes.  This means that a severe economic downturn causing a slew of distressed properties to hit the market is highly unlikely.

Bottom line, as Matthew Gardner reminded us, what we are experiencing in the economy today is a health crisis not a housing crisis.

If you would like a recording of the private webinar we would be happy to send it to you.  Just reach out and let us know.

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Empty Nesters: Remodel or Sell?

Empty Nesters

Your kids have moved out and now you’re living in a big house with way more space than you need. You have two choices – remodel your existing home or move. Here are some things to consider about each option.

Choice No. 1: Remodel your existing home to better fit your current needs.

  • Remodeling gives you lots of options, but some choices can reduce the value of your home. You can combine two bedrooms into a master suite or change another bedroom into a spa area. But reducing the number of bedrooms can dramatically decrease the value of your house when you go to sell, making it much less desirable to a typical buyer with a family.
  • The ROI on remodeling is generally poor. You should remodel because it’s something that makes your home more appealing for you, not because you want to increase the value of your home. According to a recent study, on average you’ll recoup just 64 percent of a remodeling project’s investment when you go to sell.
  • Remodeling is stressful. Living in a construction zone is no fun, and an extensive remodel may mean that you have to move out of your home for a while. Staying on budget is also challenging. Remodels often end up taking much more time and much more money than homeowners expect.

Choice No. 2: Sell your existing home and buy your empty nest dream home.

  • You can downsize to a single-level residence and upsize your lifestyle. Many people planning for their later years prefer a home that is all on one level and has less square footage. But downsizing doesn’t mean scrimping. You may be able to funnel the proceeds of the sale of your existing home into a great view or high-end amenities.
  • A “lock-and-leave” home offers more freedom. As your time becomes more flexible, you may want to travel more. Or maybe you’d like to spend winters in a sunnier climate. You may want to trade your existing home for the security and low maintenance of condominium living.
  • There has never been a better time to sell. Our area is one of the top in the country for sellers to get the greatest return on investment. Real estate is cyclical, so the current boom is bound to moderate at some point. If you’re thinking about selling, take advantage of this strong seller’s market and do it now.

Bottom Line

If your current home no longer works for you, consider looking at homes that would meet your lifestyle needs before taking on the cost and hassle of remodeling. Get in touch with a Windermere Real Estate broker to discuss the best option for you.

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What Makes A Home “Modern”?

Sleek, sustainable design, open concept floor plans, minimalism, and eco-conscious thinking are defining characteristics of modern architecture. Recently, modern design concepts in home building have become more popular, and the resurgence of interest in modern real estate has followed suit.  

 

These characteristics are what define Contemporary Architecture: 

 

Clean geometric linesAt the heart of modernist values lies the simplification of form. Modernist homes have a very ‘linear’ feel with straight lines and exposed building materials. Furnishings and adornment reflect this value, incorporating vibrant, geometric and abstract designs. 

 

Smaller, multifunctional spaces: With the Tiny House subculture consistently on the rise, and the new generation of homeowners expressing a desire to move away from the sprawling dwellings of the past, multifunctional living spaces are a must for modern homes. Built-in storage is commonly used to reflect this multi-purpose; space-saving feel. 

 

Eco-conscious: Modern homes are wellsuited for technological and green upgrades, as well as eco-friendly building materials and energy-efficient practices, and flat roofs to accommodate solar power. A new trend is to bring nature into each room for a calming, soothing effect. Large windows are abundant in modern architecture, allowing light to fill and expand the interior space, bringing the natural world indoors. 

 

Post-and-beam structure: Exposed wood posts and ceiling beams are classic elements in modern architecture. This style of building has been around for thousands of years; however, modern homes significantly emphasize the structure, rather than hiding the bones behind drywall. In new modern homes, the post-and-beam structure can be made of concrete, iron or other materials. The visible horizontal and vertical beams reinforce the clean geometric lines of the space. 

 

Open concept:  Modern design strives to “open” the space by eliminating enclosed rooms. A common tactic is to open the kitchen and dining room into an open living space, allowing the spaces to flow into one another. 

 

Minimalism: With open and connected modernist spaces, careful curation of furniture, adornments, and household objects is paramount to incorporating the modernist aesthetic. Generally, modernist homes have art and furniture that reflects the clean geometric lines and the natural materials of the architecture, leaving less space for clutter. Minimalist philosophies encourage few household items that serve both form and function, which work well within this design and architectural style. 

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What ‘s My Home Worth? The Downside to Home Valuation Tools

What’s your home worth?

 

It is a seemingly simple question. However, discovering the worth of your home is more complicated than it might seem. Sites like Zillow, Redfin, Eppraisal, and others have built-in home valuation tools that make it seem easy, but how accurate are they? And if you get three different answers, which one do you believe? Online valuation tools have become a pivotal part of the home buying and selling process, but they’ve proven to be highly unreliable in certain instances. What these valuation tools have made clear is that real estate agents are as vital to the process of pricing a home as they ever were—and maybe even more so now.

 

Every online valuation tool has its limitations. Most are readily acknowledged by their providers, such as “Zestimate” from Zillow, which clearly states that it offers a median error rate of 4.5%. That may not sound like a lot, but keep in mind that 4.5% amounts to a difference of about $31,500 for a $700,000 home. For Redfin and Trulia, there are similar variances. When you dig deeper into these valuation tools, it’s no wonder that there are discrepancies. They rely on a range of different sources for information, some more reliable than others.

 

Redfin’s tool pulls information directly from multiple listing services (MLSs) across the country. Others negotiate limited data-sharing deals with those same services, relying on public and homeowners’ records alike. This can lead to gaps in coverage. These tools can serve as helpful pieces of the puzzle when buying or selling a home, but the acknowledged error rate is a reminder of how dangerous a heavy reliance on them can be.

 

Nothing compares to the level of detail and knowledge a professional real estate agent offers when pricing a home. An algorithm can’t possibly know about the unique characteristics of neither a home nor its neighborhood. Curious about what improvements you can make to get top dollar or how buyer behaviors are shaping the market? They cannot provide an answer there, either. That can only be delivered by a trusted professional whose number one priority is getting you the best price in a time frame that meets your needs.

 

If you’re curious about your home’s value, Windermere offers a tool that provides a series of evaluations on your property and the surrounding market. And once you’re ready, we’re happy to connect you with a Windermere agent who can clarify this information and perform a Comparative Market Analysis to get an even more accurate estimate of what your home could fetch in today’s market.

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Kick-Starting a Kitchen Remodel

Ask a homeowner which room they would most like to improve, and most will point to the kitchen – the starting point for every meal and the heart of the home.

Ask those same people why they don’t move forward with a kitchen remodel, and many will say the project seems so overwhelming they don’t know where to start. If your kitchen needs an upgrade, here are some step-by-step suggestions to get you started.

 

Gather your thoughts

The steps that follow will all progress much easier if you take time beforehand to form a strong opinion about the desired look and layout of your new kitchen.

 

Start by reviewing kitchen magazines and photo-heavy kitchen remodeling guides and/or websites. Compiling clippings and printouts in a notebook helps you refine your vision. Clip or print the photos that capture your imagination, add notes, and draw circles and arrows around the things you like most.

 

Once you have a clearer vision of what you want, search online for better examples and new solutions, if necessary. If you live with a significant other, share your ideas with them and don’t allow yourself to become too committed before getting buy-in from them. Contractors and sales associates will expect a unified front.

 

Focus on the flow

Another major factor you’ll want to consider is how your new kitchen will be used, and by whom:

 

  • Do you want to cook with others?
  • Do you want family and guests to gather in the space while you cook?
  • Do you want to serve meals in the kitchen?
  • Do you want to display your dishware?
  • Where would you like things stored for maximum efficiency?

 

Imagine yourself happily cooking and entertaining in your new kitchen, then note the key elements necessary to make those dreams a reality. Having a list of your desired kitchen features and storage needs will help ensure your plan meets your vision.

 

Determine your budget

According to the annual Remodeling Magazine survey of costs, a “midrange,” “minor” kitchen remodel will cost homeowners living on the West Coast about $23,000. Those same folks can expect to pay about $70,000 for a midrange “major” kitchen remodel. Determine what you can afford before you start work to ensure that your vision is within reach, or to help prioritize what’s most critical.

 

What to do with the cabinets

Replacing the cabinets is one of the most expensive improvements you can make in a kitchen remodel (typically consuming 20 to 40 percent of the overall budget, according to Architectural Digest).

 

Consider refacing instead. This can include one of the following: 1) Installing completely new cabinet doors and drawer fronts or 2) installing new wood or laminate veneer over the existing cabinet and drawer fronts or 3) simply refinishing the existing cabinet and drawer fronts.
Shopping for contractors

The contractor you choose will determine much of the cost, the pace of your project, the amount of disruption, the final results, and your level of satisfaction. So be thorough in your search:

 

  • Ask friends and family for referrals and advice.
  • Interview at least three of the leading prospects in-person.
  • Ask to see samples of past work.
  • Look for someone who complements your operating style (similar personality and communication style).
  • Once you’ve narrowed your choice to one or two, ask to speak with a few past clients.

 

You’ll be tempted to latch onto the first contractor who gets rave reviews from a friend or family member. But remember: You and your project are unique, and it’s worth the time and effort to be rigorous in your search.

 

Selecting appliances

If you’re planning to replace appliances, here are three factors you’ll want to consider:

 

Finish – Stainless steel is still the most popular option, but beware: smudges, fingerprints, water spots, and streaks will be obvious. Black stainless steel has a warmer feel and is better at hiding spots.

 

Extended warranty – According to Consumer Reports, extended warranties are hardly ever worth it because today’s appliances are so reliable. And if something does fail, it’s often less expensive to just pay for the repair.

 

Unbiased testing and reviews – Before making an appliance purchase, use the information resources available through Consumer Reports.

 

A final note

Moving walls and extending your home’s foundation are both very expensive options. If your kitchen plans call for these architectural renovations, perhaps you’ve outgrown your home and need something larger (with an already-improved kitchen).

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Buyer Beware: Is That House For Sale Haunted?

A trope as old as horror movies: a family moves into a beautiful house that they bought for well under market value. They’ve put all their savings into the move, and they’re looking for a fresh start. When they meet the neighbors and other townsfolk, they quickly learn that there’s a history to the home that they weren’t aware of.  

              When they start to experience the abnormal, it’s easy to brush off as new home jitters. The children who hear noises in the closet, and a husband who starts sleepwalking, are chalked up to stress and anxiety from the move. It’s only when the experiences escalate beyond control that the family finally realizes the extent of the haunting.

              While sharing a home with the supernatural can be a selling point for some buyers, it’s quite the opposite for others. In fact, a 2017 survey by Realtor.com found that 33% of people were open to living in a haunted house, 25% would consider it, but 42% said it was a deal-breaker. So how do you make sure you’re fully informed about a home’s history? Knowing the right questions to ask is the first step:

 

 

Ask to see the seller disclosure form

              In the famous 1991 case Stambovsky v. Ackley, the new homeowner, Jeffrey Stambovsky, won a lawsuit against the previous owner for not disclosing the history of hauntings.

              In this case, the previous owner had published stories about the family’s experiences in Reader’s Digest and their local newspaper. In her writings, she explained several interactions with ghostly beings in the home, including finding that her children had been given rings, which would later disappear, bed shaking, and conversations with the floating specters.

              The court took this evidence and ruled the “defendant is estopped to deny [the ghost’s] existence and, as a matter of law, the house is haunted.” Setting a new standard, this case created a basis for future seller disclosers. In this instance, they found that the history of the home, and the seller’s experiences in the home, would have influenced the marketability, and therefore, omitting these facts was unfair to the buyer.

              Fast forward to 2019, there is not a specific section on seller disclosure forms for hauntings or ghostly sightings, but thanks to Stambovsky v. Ackley, sellers in many states are obligated by law to disclose things that affect a house’s marketability.

 

 

Ask Google about the history of the home

              In 1991 when Mr. Stambovsky bought his haunted house, search engines didn’t exist. Today,  we’re lucky enough to have things like Google which would have found the previous home owner’s stories in mere seconds. Search keywords like the address or town name, and words like “haunted” or “ghosts”, as well as “murder” or “news report” should help you start your dive into the history of the home.

 

 

Ask the neighbors and your agent  

              This is where nosey neighbors come in handy. When you find a place you’re serious about, contact the neighbors to see what they know about the home’s history. The same goes for your real estate agent; he or she can reach out to the listing agent to see if there is anything haunting you should know about prior to buying. While many states don’t require sellers to disclose paranormal activity or deaths in the home, if asked, all real estate agents must, by law, answer truthfully.

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The Impact of Staging Your Home

For more than 20 years, the benefits of staging a home have been well documented. Numerous studies show that staging helps sell a home faster and for a higher price. According to the National Association of REALTORS®, 88 percent of home buyers start their search online, forming impressions within three seconds of viewing a listing. When a home is well staged, it photographs well and makes the kind of the first impression that encourages buyers to take the next step.

Studies also indicate that buyers decide if they’re interested within the first 30 seconds of entering a home. Not only does home staging help to remove potential red flags that can turn buyers off, but it also helps them begin to imagine living there. Homes that are professionally staged look more “move-in ready” and that makes them far more appealing to potential buyers.

According to the Village Voice, staged homes sell in one-third less time than non-staged homes. Staged homes can also command higher prices than non-staged homes. Data compiled by the U.S. Department of Housing and Urban Development indicate that staged homes sell for approximately 17 percent more than non-staged homes.

A measurable difference in time and money

In a study conducted by the Real Estate Staging Association in 2007, a group of vacant homes that had remained unsold for an average of 131 days were taken off the market, staged, and relisted. The newly staged properties sold, on average, in just 42 days, – which is approximately 68 percent less time on the market.

The study was repeated in 2011, in a more challenging market, and the numbers were even more dramatic. Vacant homes that were previously on the market for an average of 156 days as unstaged properties, when listed again as staged properties, sold after an average of 42 days—an average of 73 percent less time on the market.

Small investments, big potential returns

Staging is a powerful advantage when selling your home, but that’s not the only reason to do it. Staging uncovers problems that need to be addressed, repairs that need to be made, and upgrades that should be undertaken. For a relatively small investment of time and money, you can reap big returns. Staged properties are more inviting, and that inspires the kind of peace-of-mind that gets buyers to sign on the dotted line. In the age of social media, a well-staged home is a home that stands out, gets shared, and sticks in people’s minds.

What’s more, the investment in staging can bring a higher price. According to the National Association of REALTORS, the average staging investment is between one percent and three percent of the home’s asking price, and typically generates a return of eight to ten percent.

In short, less time on the market and higher selling prices make the small cost of staging your home a wise investment.

Interested in learning more? Contact your real estate agent for information about the value of staging and referrals for professional home stagers.

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