Seasonal Adjustment or Starting of a Trend

January is a peculiar month for real estate. As residential brokers we generally experience a slow down concerning transactions during the 4th Quarter of the year due to the holidays i.e. Thanksgiving and the December holidays. With few exceptions usually due to tax strategies closings during the last week of December are rare.

When January comes along we assume New Year’s Resolutions may include a new home. Historically January is a slow month as the days are short, the weather is cold and not the most conducive month of the year to go touring houses. Yet I have advised buyer clients January is a great time to look. Even though inventory is generally limited the slower pace and lack of competition can be an advantage.

Yet even I was surprised with the January 2019 market report. According to the latest marketing statistics from REcolorado, the Denver Metro market continued to experience increased inventory levels in January, due in part to 4,817 new listings coming on the market, more than double what we saw last month (December 2018).

This means buyers have even more options than they’ve had in quite some time, which may help relieve some of the stress home buyers have been feeling over the past few years. There is currently 8 weeks of inventory, 1 week more than last month and 2 weeks more than last year.

In January, home sales decreased 8% from last year and are down 24% from last month. The number of homes that moved to Under Contract in December was 8% higher than last year, indicating it was an active month. The rate at which home prices are increasing has continued to moderate in January, with the average price of a single-family home rising to $460,525, up 3% year over year.

From experience while a two month supply of housing may be positive for buyers based on historical averages the market for buyers and sellers is closer to equilibrium when inventory is in the 4-7 months range depending on the specific regional market.

The 3% year over year increase in average price mirrors inflation thus while may be disappointing to many homeowners who purchased within the last 12-24 months in reality a 3% growth is healthy and sustainable.

I believe February and March 2019 will be interesting to watch i.e. how much inventory increases and to see if buyers are active. Interest rates are 1% point higher year over year yet are still historically low. The factors that we should watch for beyond inventory and closing activity are:

  • Migration Into and Out of Metro Denver.
  • Activity in the luxury market; usually an early indicator of market trends.
  • Price Adjustments from Original List Price.
  • Days on Market, higher number weaker market.

Anecdotally I am seeing softness in the market. At present I am listing a residence in Congress Park. Due to its existing cosmetic condition the home is priced 20% below 6 month sales market comps for the neighborhood. While viewing activity has been strong; an offer has not been presented. If the home was on the market 18-24 months ago at the same asking price there would have been multiple offers; many above asking sans contingencies. Will keep you all posted.

Of note concerning last week’s blog about the unit in Writer Square there has been a price adjustment from $725,000 to $710,000.

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A Gem in Downtown Denver’s Writer Square is In Search of a Buyer

Over the weekend I was with clients who had a most specific request: a condo unit with its own separate and private entry. The clients did not want an attended lobby or similar.  Yet the vast majority of condos in Downtown Denver have a communal lobby, shared hallways to the unit and many of those lobby’s are attended.

Yet there are a handful of legal condos which are designed in the vernacular of a townhome. While you may not know the name of the complex, if you have been in downtown Denver you probably have experienced/walked-through Writer Square.

Dating back to the days of Urban Renewal, Writer Square was in vogue during a time of mixed-use developments inclusive of residential, retail and office. The Writer Square development which is bounded by Larimer St, Lawrence St, 15th Street and 16th Street Mall is literally the poster child of such developments.

At present one of the townhomes is for sale. 1512 Larimer St #27 aka Writer Square is a gem. Located towards the southwest of the square block complex the unit is set-back from 15th Street and Larimer Street thus not impacted by the vehicular traffic on those streets. Yet due to its location within Writer Square offers a view of the historically preserved 1400 block of Larimer Street.

Unit #27 is a two level unit that has undergone a gut renovation. While the exterior is late 1970’s contemporary the interior of this unit offers a warmth in design with a nod to French provincial. The main level includes a formal entry, an office (easily a 3rd bedroom), dining area, living room w/ gas fireplace, access to a private outdoor deck, double-height peaked ceilings, full bathroom and a beautifully designed and functional kitchen including a built-in espresso maker (trust me, my Mr. Coffee was quite disappointing this morning).

The upper level has two additional bedrooms including a master with an expansive en-suite and a secondary bedroom with another full bathroom. Extensive use of built-ins add voluminous storage space truly bespoke to the design of the unit.

The icing on the cake, two deeded parking spaces and storage.

If one is looking for a high-floor, city or mountain views with on-site amenities i.e. door staff, health club and so forth best to bypass. However if one desires a truly central location, a townhome design inclusive of privacy and security, private outdoor space and truly a turn-key opportunity i.e. no renovations.updates needed, this is a unit not to be missed.

 

A 1894 Congress Park Victorian in the Rough Comes to Market in Denver

Every once in a while a home enter the market that is truly unique concerning design and opportunities. I have run across a few of these in my career including an intact Burnham Hoyt in the Country Club neighborhood and a Lang Mansion in the 1400 block of Race Street.  I am soon to bring such a gem to the market.

1353 Clayton St. is an intact Victorian home located in the desirable Congress Park neighborhood. When constructed in 1894, the home matches others on the block and must have benefitted from the Gold Coast moving south and east from Colfax Avenue and Capitol Hill.

Recently painted the exterior color palette embraces its Victorian heritage sans being gaudy or trendy. A more subdued color palette verses the Painted Ladies found in San Francisco; still a bold palette more oriented to the Denver market.

The front porch has been enclosed yet can easily be opened up if desired. Once inside the home; a Victorian that has been preserved in-situ. The original wood staircase is a visitor’s first introduction to this jewel. The formal living room with its wood-burning fireplace and wood floors represent the formality of Victorian homes of the era.

Adjacent is the Parlor Room, which provides the living room with a true double room orientation. Through a set of pocket doors the formal dining room and ½ guest bath reminds us of an era when formal dining was the norm not the exception.

Beyond the dining room is the kitchen, which has been though multiple updates, the most recent being during the 1990’s including granite, dual wall ovens, a breakfast bar and other design features that beyond the materials used are timeless.

On the upper level are three bedrooms. The master is a two-room suite with a wood burning fireplace and access to a deck built above the enclosed porch. The perfect perch for morning coffee coupled with the warmth of the eastern orientation no matter the season.

There are two additional bedrooms, a full bathroom and a conventional staircase providing easy access to the attic with a peaked ceiling providing potential for the addition of dormers and thus additional functional rooms.

Being trained in design I envision an additional en suite bathroom for the master as plumbing is adjacent. Dormers in the attic could provide as mentioned above additional living space. There is also a rear service staircase from the rear bedroom to the 1stlevel most likely used by service staff well into the 20thcentury.

The basement is unfinished; at present just a washer/dryer (included with the home) and mechanicals. One can excavate to add additional square footage if desired.  The furnace is newer as is the on-demand hot water connected to updated plumbing. There are remnants of a solar power system and CAC can easily be added. Of note the basement as both in-residence and an exterior entry.

The rear yard is private and provides access to a one-car garage and additional off-street parking adjacent. Personally as a trained design professional and as the zoning allows for an accessory dwelling unit I would suggest rebuilding the garage into a 3-bay unit with a studio or one bedroom, ¾ bathroom and kitchenette above the garage. Of course any prospective buyer should review options and opportunities with a licensed design professional and insure entitlements per zoning including an ACU, tandem and duplex is allowed by checking with the Denver Zoning office.

This is truly a diamond in the rough. While the diamond’s value is intact, some additional cutting and polishing will only enhance an already strong value. The residence is priced at $694,900, which is 15-20% below comparable sales taking into account the present condition.  For the purchaser with a vision of what could be coupled with the preservation of the Victorian details inside and out a truly rare opportunity.

Please note the residence is listed by Joseph Sobin, Engel & Volkers Vail.

MLS Link: 1353 Clayton St. Denver, CO. 80206

There will be an Open House on Saturday February 23, 2019 from 12P-3P

Update the home sold and closed on May 24th, 2019

 

The Denver Housing Market – Price Appreciation Slowing Inventory Rising So Why is Purchasing Still a Challenge

The news of a slowing housing market is not new. In most markets including Denver inventory is rising, price appreciation is slowing or depreciating and mortgage interest rates remain static and at close to historic lows.

Thus why is it still challenging to purchase a residence in Denver and other popular cities? The folks at LendingTree has provided some guidance based on crunching numbers. “Of the top 10 most competitive cities, only two, St. Louis and Boston, were not in a western U.S. state. High-paying tech jobs, common in places like Oregon, San Francisco and Seattle, likely help fuel market competitiveness in some western cities,” the site reports.

In the most competitive areas, potential homeowners are vying against other buyers who:

  • Are often pre-approved for mortgages.
    • I advised buyers to get pre-approved before even starting to look at properties.
  • Have excellent credit scores.
    • Before we start looking we revise credit reports and if needed work with a vendor I know who can assist with report clean up and offer strategies to increase scores.
  • Are able to offer hefty down payments.
    • This can be a challenge as funds should be seasoned regardless of source. Parents and relatives providing down-payment assistance is quite common.

The following is a list of the 15 most challenging markets to purchase in and spoiler alert, Denver is #1 or the most challenging market at present:

#15 New York, NY: Percent of buyers with good or excellent credit: 58
Average down payment: 17 percent
Median home price: $829,000

#14 San Antonio, TX: Percent of buyers with good or excellent credit: 55
Average down payment: 14 percent
Median home price: $239,990

#13 Milwaukee, WI: Percent of buyers with good or excellent credit: 52
Average down payment: 14 percent
Median home price: $124,900

#12 Phoenix, AZ: Percent of buyers with good or excellent credit: 48
Average down payment: 15 percent
Median home price: $275,000

#11 Minneapolis, MN: Percent of buyers with good or excellent credit: 58
Average down payment: 14 percent
Median home price: $300,000

#10 Boston, MA: Percent of buyers with good or excellent credit: 57
Average down payment: 16 percent
Median home price: $699,900

#9 Sacramento, CA: Percent of buyers with good or excellent credit: 50
Average down payment: 15 percent
Median home price: $312,650

#8 Seattle, WA: Percent of buyers with good or excellent credit: 65
Average down payment: 19 percent
Median home price: $689,950

#7 Las Vegas, NV: Percent of buyers with good or excellent credit: 52
Average down payment: 14 percent
Median home price: $299,900

#6 St. Louis, MO: Percent of buyers with good or excellent credit: 54
Average down payment: 15 percent
Median home price: $145,000

#5 San Jose, CA: Percent of buyers with good or excellent credit: 65
Average down payment: 19 percent
Median home price: $939,000

#4 San Francisco, CA: Percent of buyers with good or excellent credit: 59
Average down payment: 17 percent
Median home price: $1.3 million

#3 Portland, OR:  Percent of buyers with good or excellent credit: 57
Average down payment: 15 percent
Median home price: $449,900

#2 Los Angeles, CA: Percent of buyers with good or excellent credit: 55
Average down payment: 17 percent
Median home price: $799,250

#1 Denver, CO: Percent of buyers with good or excellent credit: 56
Average down payment: 16 percent
Median home price: $459,900