If At First You Do Not Succeed; Relist and Hope for the Best

While I do not necessarily believe the following quote is attributable to Einstein in the context of this blog I find it most appropriate:

 Insanity: doing the same thing over and over again and expecting different results.

I use the above quote to characterize some aspects of the real estate market in Metro Denver that I am witnessing as both a broker and observer. To distill the niche of the market for which this quote is appropriate are the select listings which enter the market, do not sell, are withdrawn or expired and come back on the market at the same or higher price.

Here are just a few select examples:

100 Lafayette Street: A sprawling 2-story post-war suburban style home in the desirable Country Club neighborhood on an expansive lot.

  • 4/2/16          Listed at $1,350,000 – subsequently withdrawn or expired
  • 3/9/17          Listed at $1,300,000 – subsequently withdrawn or expired
  • 5/18/17        Listed at $1,300,000
  • 6/6/17          Price Adjustment to $1,280,000
  • 7/18/17        Price Adjustment to $1,250,000 – subsequently withdrawn or expired
  • 3/18/18        Listed at $1,250,000
  • 4/18/18        Expired
  • 4/19/18        Listed at $1,199,000

This residence will have been on and off the market for 2 calendar years. During that time, while there has been at the most recent resisting a $150,000 price reduction or approx. 9% the residence continues to search for a buyer. Yet the pricing over the past year had remained static. Yes, one may argue inventory for the neighborhood continues to be challenged and just waiting for the correct buyer. I will continue to watch as while the residence has many positives i.e. finished square feet and larger lot; much of the interior could use a cosmetic update and the residence is adjacent to 1stAvenue at a partial motion intersection; while designed correctly i.e. south garage will continue to be a challenge.

600 High Street: A large sprawling large brick potential duplex configuration sitting on a coveted 100’ x 125’ lot. Personally I have had my eye on this one for potential redevelopment HOWEVER I too cannot make the numbers work yet its pricing history continues to baffle me:

  • 8/26/14:      Listed at $1,495,000
  • 8/26/15:      Price Adjustment to $1,445,000
  • 11/20/15:    Price Adjustment to $1,395,000
  • 1/9/16:        Price Adjustment to $1,345,000 – under contract and active again
  • 4/8/16:        Relisted at $1,150,000
  • 10/8/17:      Price Adjustment to $1,250,000 (yes adjusted upward)
  • 10/27/17:    Price Adjustment to $1,150,000  (1.5 years to get back to that price)
    •                         -Goes under contract multiple times and falls through
  • 12/11/17:    Price Adjustment to $999,000 (under contract and falls through)
  • 3/23/18:      Relisted at $999,000
  • 4/15/18:      Goes Under Contract
  • 4/26/18:      Back on market at $999,000

At of April 2018 this residence has been on and off market for 3.5 years. While there had been a substantial price reduction from the original $1,495,000 to a more realistic $999,000 the home has still not sold.  I will not get into the details of Time Value of Money and Inflation. Yet I will suggest the history of this house seems to repeat itself, look at the sales history:

  • 7/13/1995:   Sold for $670,000
  • 2/20/1997:   Sold for $670,000
  • 6/15/2002:   Sold for $625,000

Thus between 1995 and 2002 the home actually lost $45,000 (more if factoring in inflation) and now with 3.5 years on the market continues to look for a buyer. While there may be a buyer willing to pay $999,000, when factoring in inflation and rising interest rates is it worth the wait not even considering maintenance and carrying costs.

140 S Claremont Street: This is a home I have watched as I walk by weekly when looking at options in Hilltop. With its coveted location within 2 blocks of Graland as well as Cranmer Park coupled with great curb appeal I have literally watched this home bounce around concerning pricing as follows:

  • 6/15/16:       Listed at $2,375,000
  • 8/30/17:       Price Adjustment to $2,275,000 – Subsequently withdrawn
  • 1/12/17:       Listed at $2,275,000
  • 4/10/17:       Price Adjustment to $2,175,000
  • 6/14/17:       Price Adjustment to $2,075,000 – Subsequently withdrawn
  • 8/7/17:         Price Adjustment to $1,999,000
  • 10/4/17:       Price Adjustment to $1,900,000 – Subsequently withdrawn
  • 4/1/18:         Relisted at $1,950,000
  • 4/27/18:       Goes Under Contract

During its almost 2 years on the market there were multiple price adjustments coming down to $1,900,000 in October 2017 only to be placed back on the market in April 2018 at $50,000 more. Again, I understand spring selling season yet I guarantee you any good broker representing a buyer will review the history of the listing and share with their client. As of last week, went under contract; I assume the broker representing the buyer has shared the pricing history.

Back to the definition of insanity. While I am not suggesting the above examples are insane. I believe it is more a function of the market or the perception of the market i.e. unabated demand, low supply and continued low interest rates. Yet the markets are a changing i.e. interest rates are ticking up, inflation is on the horizon and the equity markets are buoyant yet the charts are showing a slow downward trend from their peak on 1/28/18 of 26,616 (while composing this blog the DJI is trading at 24,288 or 9% off the high of 3 months ago.

I do not fault the brokers or their clients i.e. the sellers…..this has happened to me as a broker! This was back in 2012 when the market has just endured the Great Recession and was just beginning to show signs of a activity. I will not disclose the address as the home has since been sold and closed however the neighborhood was Cory-Merrill.

The house a pop-top first sold after renovation in October 2005 for $810,000. 2005 we were 1.5 years before the peak of the market; the buyers in retrospect over-paid for the residence. In addition to being in the house for $810,000, they added an additional $40K in cosmetic upgrades to the interior, thus their in the house for $850,000.

I am contacted in early 2012 concerning listing the residence. The sellers are retiring and moving and desire to leave Denver. I go over to the residence with a peer broker armed with comparable’s and camera. My co-broker and I confer and suggest an asking of $715,000. And now the saga begins as follows:

Per the seller the house is listed in April 2012 for $819,000! Yes, $819K

  • 4/25/12:       Listed at $819,000
    •   -3 weeks, one showing off an open-house.
  • 5/15/12:       Price Adjustment to $739,000
    • -Seller still believes this is the selling price regardless of our $715,000 suggestion a month earlier.
  • 10/4/12:       Relisted with another broker for $739,000
  • 11/2/12:       Price Adjustment to $725,000
  • 12/14/12:     Sold for $710,000

In addition to the loss between the $810,000 paid in 10/2005 to the $710,000 paid in 12/12 or $100,000 over the 7 years during my 10 months as broker the seller’s paid in excess of $40,000 in mortgage and carrying costs only to sell the residence for what my peer and I suggested 10 months earlier.

While I did not share the following with the seller; based on inflation the $810,000 paid in 2005 equaled $952,250 in 2012; thus their loss was even more severe.

 

The lessons are simple:

For sellers, even in a hot “sellers market” be realistic.

For brokers, while a listing may look attractive, if it does not sell, it is a challenge both financially and psychologically for all parties.

Finally from Wall Street we say “Do not fight the tape”…..the DJI is off 9% from its high, interest rates are going up, inflation is an actual concern and wages while ticking up are still considered stagnant for now.  My humble suggestion, price correctly and sell immediately, the Goldilocks market conditions can change to a Papa Bear in a moment’s notice. Sell like its 2016 not 2005.

 

 

 

 

 

 

 

 

 

 

 

 

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Does the New York City Luxury Market Foretell the Denver Luxury Market and Beyond

Yes I am well aware Denver is not New York City even if we do have Rosenberg’s Bagels and The New York Deli News; literally a slice of the Big Apple on Hampden Avenue. However the old adage goes when New York sneezes the rest of the country catches a cold. The reference is to the stock market; I am more concerned about the real estate market.

As some of my readers know I hold real estate licenses in both Colorado and New York and I work in both markets. Most recently the statistics concerning New York City real estate is concerning:

  • Real estate sales in the first quarter of 2018 posted their largest drop in nearly a decade and reached their lowest level in more than six years.
  • The high end of the market is getting hit the hardest, partly because of asking prices.
  • Many sellers have yet to lower their prices in keeping with tax law changes and a general slowdown since 2014.

The big headline in Manhattan was the 25% reduction is sales in the first quarter of 2018 when compared with the prior year. While the number in itself raised a few eyebrows more shocking was the drop, the largest in a decade meaning since the day when Lehman Brothers and Bear Sterns basically imploded and some argue the catalyst of The Great Recession.

The high end of the market is getting hit the hardest, since it’s the most discretionary segment. Prices for luxury apartments in Manhattan fell 15 percent and sales were down 24 percent in the quarter from 2017.

In Denver the luxury market seems to be on fire with sales including the highest number of over $1M homes selling in 2017 and a few blockbuster listings already in 2018. New York City went through the same cycle a few years back including the record setting $100M condo sale at 157 W 57thStreet.

For now Denver seems immune as the luxury sales have been associated with truly unique and rare properties in Denver’s toniest neighborhoods including Country Club, Cherry Creek North, Polo Club and in the suburbs including Cherry Hills Village. My question is anyone concerned about the number of condos coming online and developed in Cherry Creek North, many asking over $1M. Or the potential glut of luxury rentals on the market and those in the pipeline in Cherry Creek and along the Speer Corridor.

The luxury housing market I have suggested is similar to the stock market; it in general looks forward and sets the trends for the overall market. Well let’s look at the overall Manhattan market…..

The average sales price in Manhattan dropped 8 percent when compared to one-year prior. 8% may not sound like much however let’s assume you purchased a home in Metro Denver in 2017 for the average price of $480,140. How would you feel if suddenly $38,000 of your value suddenly disappeared and your home was now worth $442,140?

The money you invested in the conventional down-payment has basically disappeared yet your mortgage is the same, your PITI will probably increase due to property taxes and thinking about refinancing, interest rates are trending up not down.

While many believe the Federal Tax Law changes concerning deductibility of real estate taxes being capped at $10,000 mostly affects the Northeast and California, guess again….many of the luxury homes selling in the Denver metro area have tax bills in excess of $10,000 annually. The next assessment coupled with the gains over the past few years will increase valuations even further.

Let’s assume tax law changes are inconsequential; let’s consider other factors, which are challenging the Manhattan market:

Glut of Luxury Properties: In Manhattan due to land and construction costs luxury is what has to be constructed to justify investment costs. The same is being said in Cherry Creek North and in areas of gentrification i.e. LoHi and RiNo. Yet the luxury market is not infinite i.e. the higher the price point the less demand, as the potential pool of buyers is smaller and honestly more fickle.

Out-migration: While I continually hear about the continued in-migration leading to challenges concerning livability the reality is according to the state demographer, we are experiencing increased out-migration.

Cost Of Living: Denver is and has been for a few years the most expensive city not located on a coastline. While we believe we can rest on our laurels concerning the Colorado Lifestyle and the hipness of Denver, Salt Lake City is nipping at our spurs. We also forget such cities as Minneapolis, Dallas and others are actively courting tech businesses and capturing new residents due to their reasonable cost of living.

Do I see the market changing radically in the next few months? Not necessarily however the headwinds are there i.e. interest rate hikes, a bull market that seems to be losing steam, housing costs that are increasing faster than average wages and over-priced listings sitting on the market the light of rationality.

While we may wish to emulate Seattle, Portland and San Francisco we should be careful what we wish for.

 

 

If at First You do not Succeed Re-list

While I do not necessarily believe the following quote is attributable to Einstein in the context of this blog I find it most appropriate:

Insanity: doing the same thing over and over again and expecting different results.

I use the above quote concerning the some aspects of the real estate market in Metro Denver that I am witnessing. To distill the niche of the market for which this quote is appropriate are the select listings which come on the market, do not sell, are withdrawn or expired and come back on the market at the same or higher price.

Here are just a few select examples:

100 Lafayette Street: A sprawling 2-story post-war suburban style home in the desirable Country Club neighborhood on an expansive lot.

  • 4/2/16           Listed at $1,350,000 – subsequently withdrawn or expired
  • 3/9/17           Listed at $1,300,000 – subsequently withdrawn or expired
  • 5/18/17        Listed at $1,300,000
  • 6/6/17           Price Adjustment to $1,280,000
  • 7/18/17        Price Adjustment to $1,250,000 – subsequently withdrawn or expired
  • 3/18./18        Listed at $1,250,000

As of today this residence will have been on and off the market for two calendar years. During that time, while there has been a $100,000 price reduction or approx. 8% the residence continues to search for a buyer. Yet the pricing over the past year has remained static. Yes, one may argue inventory for the neighborhood continues to be challenged and just waiting for the correct purchaser i.e. one who desires a larger home at a below comparable PSF pricing. I will continue to watch as while the residence has many positives i.e. finished square feet and larger lot. However being adjacent to 1st Avenue, even with a sound/privacy wall will be a challenge for many prospective buyers (I know the challenges;  I have transacted residences along the 200 Block of Colorado Boulevard).

600 High Street: A sprawling large brick potential duplex configuration situated on a coveted 100’ x 125’ lot. Personally I have had my eye on this one for potential redevelopment HOWEVER I too cannot make the numbers work (due to pricing, location adjacent to 6th Avenue and Historic District inclusion) yet its pricing history continues to baffle me:

  • 8/26/14:       Listed at $1,495,000
  • 8/26/15:       Price Adjustment to $1,445,000
  • 11/20/15:     Price Adjustment to $1,395,000
  • 1/9/16:          Price Adjustment to $1,345,000 – under contract and active again
  • 4/8/16:          Relisted at $1,150,000
  • 10/8/17:       Price Adjustment to $1,250,000 (yes adjusted upward)
  • 10/27/17:     Price Adjustment to $1,150,000 (1.5 years to get back to that price)
  •                       -Status to under contract multiple times and falls through
  • 12/11/17:     Price Adjustment to $999,000 (under contract and falls through)
  • 3/23/18:       Relisted at $999,000

At present this residence has been on and off market for 3.5 years. While there had been a substantial price reduction from the original $1,495,000 to a more realistic $999,000 the home has still not sold. I will not get into the details of Time Value of Money and Inflation. Yet I will suggest the history of this house seems to repeat itself, look at the sales history:

  • 7/13/1995:   Sold for $670,000
  • 2/20/1997:   Sold for $670,000
  • 6/15/2002:   Sold for $625,000

Thus between 1995 and 2002 the home actually lost $45,000 (more if factoring in inflation) and now with 3.5 years on the market continues to look for a buyer. While there may be a buyer willing to pay $999,000, when considering in inflation and rising interest rates is it worth the wait coupled with maintenance and carrying costs including real estate taxes.

140 S Claremont Street: This is a home I have watched as I walk by weekly when looking at opportunities in Hilltop. With its coveted location within 2 blocks of Graland as well as Cranmer Park coupled with great curb appeal I have literally watched this home bounce around concerning pricing as follows:

  • 6/15/16:       Listed at $2,375,000
  • 8/30/17:       Price Adjustment to $2,275,000 – Subsequently withdrawn
  • 1/12/17:       Listed at $2,275,000
  • 4/10/17:       Price Adjustment to $2,175,000
  • 6/14/17:       Price Adjustment to $2,075,000 – Subsequently withdrawn
  • 8/7/17:          Price Adjustment to $1,999,000
  • 10/4/17:       Price Adjustment to $1,900,000 – Subsequently withdrawn
  • 4/1/18:          Relisted at $1,950,000

During its almost two years on the market there were multiple price adjustments coming down to $1,900,000 in October 2017 only to be placed back on the market in April 2018 at $50,000 more. Again, I understand spring selling season yet I guarantee you any good broker representing a buyer will review the history of the listing and share with their client before making an offer.

Back to the definition of insanity. While I am not suggesting the above examples are insane. I believe it is more a function of the market or the PERCEPTION of the market i.e. unabated demand, low supply and continued low interest rates. Yet the markets are a changing i.e. interest rates are ticking up, inflation is on the horizon and the equity markets are buoyant yet the charts are showing a downward trend from their peak i.e. 10% off the high of 3 months ago.

I do not fault the brokers or their clients i.e. the sellers…..this has happened to yours truly!

My awakening began in 2012; the market has just experienced the Great Recession and was beginning to show signs of activity. I will not disclose the address of the residence as it has since been sold and closed, however the neighborhood is the NW quadrant of Cory-Merrill.

The house a pop-top (first and to this day the largest on the block) sold after renovation in October 2005 for $810,000. While 1-2 years before the peak of the market the buyers in retrospect over-paid for the residence based on the opinion of myself and other brokers. In addition to purchasing the house for $810,000 the buyers added an additional $40K in interior cosmetic upgrades while neglecting the rear-yard (usually a strong selling feature for most buyers), thus in their house for $850,000 in 2005 Dollars.

I was contacted in early 2012 about listing the residence. The sellers planned on retiring and relocating beyond Denver. I visit the residence with a peer broker armed with comparable sales data. My co-broker and I confer and suggested based on empirical data i.e. sales comps an asking of $715,000. Now the saga begins; per the seller’s request the house is listed in April 2012 for $819,000! Yes, $819K or $100K+ over what we suggested.

  • 4/25/12:       Listed at $819,000
  •                      -3 weeks, one showing off an open-house.
  • 5/15/12:       Price Adjustment to $739,000
    • -Seller still believes this is the eventual selling price dismissing our $715 suggestion based on verifiable comparable’s one month earlier.
  • 9/30/12:      A mutual termination concerning the listing and I am thankful as endured  50+ showings and not one single offer.
  • 10/4/12:       Relisted with another broker for $739,000
  • 11/2/12:       Price Adjustment to $725,000
  • 12/14/12:     Sold for $710,000

In addition to the $100K loss i.e. $810,000 paid in 10/2005 to the $710 paid in December 2012 over the 7 years, during my 10 months as broker the seller’s paid in excess of $40,000 in mortgage and carrying costs only to sell the residence for what my peer and I suggested 10 months earlier.

On a more technical basis, here are the inflation adjusted #’s: The $710,000 in 2005 was actually $834,673 in 2012 Dollars, thus their real dollar loss was closer to $225,000.

The lessons are simple:

  • For sellers, even in a hot sellers market be realistic.
  • For brokers, while a listing may look attractive, if it does not sell, it is a challenge both financially and psychologically for all parties.
  • For buyers, trees do not grow in the sky, they need soil and moisture.

Finally from Wall Street: “Do not fight the tape”…..the DJI is off 10% from its high of 26,616, trading at 24,037 as of this posting, interest rates are going up per the Federal Reserve Minutes, inflation is an actual concern on the horizon and wages while ticking up are still considered stagnant.

My humble suggestion, price correctly and sell immediately, the market conditions known as Goldilocks can change to Papa Bear in a moment’s notice.

Sell like its 2016 not 2005.

Is Your For Sale Residence Instagram Influencer and Hashtag Ready

I just finished an article in The New York Times titled Hashtag Open House concerning brokers hiring influencers to promote their listings. While the trend seems to at present be relegated to Los Angeles and New York City is this a marketing program a seller of a residence or their broker consider?

With a marketing and public relations background; honestly I rolled my eyes while reading the article. While I understand the concept and the desire to secure eyeballs onto a listing; will such a program and the costs associated truly sell one’s residence?

Thus I decided for fun to distill my thoughts and I welcome comments:

  • Influencers: My first question is the influencer presenting and/or penetrating the audience for the listing? Honestly when I see a multi-million dollar listing being splashed across Instagram and other channels, promoted by an Influencer I question the Return on Investment (ROI). Granted if someone can present me with an influencer that is truly targeting the prospective buyers of one of my listings I would entertain the idea. However when marketing a larger, top 2% of the market price point I have to question if the influencer is capturing the demographic I wish to target including high-net-worth, liquidity, professional educational attainment and employment and so on. My personal view is if I am not attracting qualified prospective buyers all I am attracting is voyeurs.

 

  • Voyeurs: Hey I have nothing against voyeurs. Actually I like them as A) I hope I have captured their interest, B) at some time in the future they may be a client either on the buy or sell side and C) more eyeballs mean potential sharing and potentially attracting a buyer. Now for my concern: more eyeballs may also invite nefarious activity. Granted this is nothing new; as brokers we post pictures distributed among various channels i.e. Multilist, the Internet, Social Media and  open houses have been used by those up to no-good to preview a potential opportunity for future theft, squatting, vandalism and so forth.

 

  • Is One Selling a Residence or Selling their Broker: Yes I may be old-school (it happens with 25+ years in the business) yet do such activities sell a residence or sell the broker? In general from discussions with experienced peers it seems very few open houses actually sell the home to a visitor to the open house. Please do not misunderstand; I believe open houses can be a valuable tool for both sellers and brokers including assessment of comments/responses concerning presentation, pricing, interest and so forth. Of course for brokers hosting an open house an opportunity to meet prospective clients, both sellers and buyers.

The whole concept of being Instagram ready is not new. I always suggest a prospective seller consider professionally photographed images as a picture is truly worth 1000 words. In addition for certain listings, staging and related activity may enhance the marketing program. Personally I view staging, as a 3-D advertisement coupled with presenting a fantasy that can becomes one’s reality.

And while the article mentions events and immersive marketing this is nothing new in California! A Builder Hires Model Family to Sell Homes. However even California builders were late to the party as live mannequins have been used in retail (Selfridges c. 1920’s) as well as entertainment i.e. Area in NYC in the 1990’s.

BTW if you wish to see truly challenged listings: http://terriblerealestateagentphotos.com

I will be curious how the Instagram and Influencer marketed listings work out. I comprehend the opportunity concerning new developments, a multi-unit building, rentals, a market with competition within the price-point and so forth. However for exclusive listings, the one’s that are truly unique, bespoke, rarified well……sometimes discretion can be most attractive.

Why I believe the Housing Market is Overheated An Example with Statistics

This morning a listing alert came on my MLS advising 549 Lafayette St is on the market asking $800K. This is the exact type of home my wife and I have been looking for. Well actually a renovated version; let me explain.

In the 400 block there are three similar homes 434, 440 and 446 Lafayette all Victorian design on smaller lots i.e. 37.5’ frontage. All have been renovated with similar design criteria including enlarging the rear on the ground and upper levels including master suites with en sure bathroom and an additional 2nd bathroom. 440 Lafayette Street sold in 2015 for $825,000 and was truly turnkey condition. 446 Lafayette Street was last asking $1,150,000 (adjusted downward from $1,200,000) and is now under contract, also truly turnkey.

Thus I was intrigued with the 549 Lafayette Street listing. In my professional broker opinion; not as strong a block as the 400 Block of Lafayette Street as it is denser and is impacted by 6th Avenue traffic noise. Also the house has been a rental thus has not been updated or expanded recently. From the pictures a total renovation is needed and assuming an expansion would run $250,000 to $300,000 to replicate the design of the homes in the 400 block mentioned above.

Now let me compare sizes and condition:

549 Lafayette: 1,587 SF Above Grade / 846 SF Basement – Condition – Good (Asking $504.10 PSF Above Grade)

440 Lafayette: 2,084 SF Above Grade/ 329 SF Basement – Condition – Excellent (Sold for $395.87 PSF Above Grade)

446 Lafayette: 2,306 SF Above Grade/ 380 SF Basement – Condition Excellent (Asking $498.70 PSF Above Grade)

Thus as per my usual research I decided to look at the sales history of 549 Lafayette Street as follows:

In January 2011 the home seems to have been inherited, as the conveyance was a Personal Representative Deed, usually associated with an estate.

In February 2015 the home sells I believe through an arms length transaction for $225,000

Two months later in April 2015 the home sells again to an LLC for $456,000. Almost double in two months, which usually suggests either, not an arms length transaction OR someone just hit the market just at the right time.

Now 3 years later almost to the date, the home is asking $800,000 or a gain of $344,000 or basically a $10,000/month increase in valuation since the last sale.

Now back to 440 and 446 Lafayette St. Both of these homes are on a stronger block, have been gut renovated, expanded, offer 25% – 40% additional above grade square footage when compared to 549 Lafayette and are in excellent condition.

The following is their sales history:

440 Lafayette, which I believe mirrors market conditions:

  • 11/98:           Sold for $425,000
  • 5/04:              Sold for $665,000 (close to the pinnacle of the market cycle)
  • 12/11:            Sold for $675,000 (just coming out of the Great Recession)
  • 9/15:              Sold for $825,000 (Just as the market started to its ascent)
  • -Of note, between 2004 and 2011 the house gained just $10,000 in value or based on inflation the house actually lost $130,000 in value.

446 Lafayette:

  • 9/98:              Sold for $287,500
  • 10/05:            Sold for $530,000 (a few months shy of the pinnacle of the cycle)
  • 7/13:              Sold for $875,000 (market starting to begin to overheat)
  • 2/18:              Asking $1,150,000 under contract

Now granted someone may purchase 549 Lafayette for the asking at $800K. And in this market such a price may look attractive (yet on the 400 Block of Lafayette St a superior home and renovation asking $5 PSF less) .

However while I am not suggestion history repeats itself I would be remiss if they were my client not to mention one block south, larger homes in excellent renovated/upgraded condition sold for similar pricing just a few years back yet offering more above grade square feet and overall condition. Even in the present when comparing 446 Lafayette Street and 549 Lafayette Street within $5 PSF above grade, serious differences.

Personally I would take a pass. At $600K I am a cautious buyer, maybe even $625K knowing I am in it for another $200K and 6 months of construction to convert from its existing condition to my primary home. However at $800K I will pass and I hope the purchaser at that price does not see this blog posting.

Happy House Hunting.

Another Luxury Listing Shows Stress on the Upper End of Market

OK, I am the first to admit on occasion I drive down 7th Avenue from Cherry Creek to Corona Street so I can access the Safeway at 6th Avenue and Corona Street easily (yes I am still mourning the loss of my neighborhood Safeway). I drive at a leisurely pace taking in the majesty and prestige of one of Denver’s finest parkways. West of Williams Street when the Avenue becomes a standard width roadway the houses still continue to impress.

That is why I have been intrigued with 1433 East 7th Avenue. A home, which exudes gravitas. A nice corner lot, raised from the sidewalk coupled with mature landscaping can easily be at home in a many pre-war cities in the Northeast of for those who have relocated from the Bay Area, think Pacific Heights lite or if from Los Angeles, Beverly Grove.

With just shy of 6,000 SF finished including the basement and a manageable 7,250 SF lot (honestly I have mixed opinions concerning corners) larger than what I was and continue to search for but as mentioned from the exterior, gravitas. The stately yet manageable interior is perfect for many prospective buyers in this broker’s opinion from the center-hall plan to the upscale kitchen to the preservation of design details including wood beams and so forth. Updated yet respectful of its history.

I have kept my eye on this house since I first watched it come on the market in April 2011 as the Denver market was finally awakening from the reckoning of the Great Recession. At the time up-market listings continued to struggle to find a buyer however if priced correctly, they sold and some very astute buyers have probably done quite well on paper to date.

  • In April 2011 the home sold for $1,655,450 off an asking of $1,750,000.
  • In 2018 Dollars: $1,824,189

 

  • In August 2015 the home sold for $2,195,000, its asking price after being on the market for approximately two weeks and no seller concession! Many would argue that summer was the beginning of the major ascent of the market from realistic pricing to exuberant listing prices.
  • In 2018 Dollars: $2,295,481

Thus in a span of 4 years the sellers pre-commission made $539,550 not accounting for inflation. Even considering broker commissions (assume $130,000 at 6%), the sellers most likely netted approximately $400,000 of $100,000/yr concerning their residence.

I do not know if the sellers renovated or did other improvements, as I have not toured the home in years. However based on images and broker comments I am assuming any updates made were minimal.

Let’s fast forward to May 2017, just shy of 2 years later the home reappears on the market asking $2,500,000. Of note the home was purchased for $2,195,000 two years prior or asking for a $300,000 gain in 2 years of $150,000/year. In August the home is re-priced at $2,395,000 and the listing eventually expired.

As of January 2018 the house is back on the market with a revised asking price of $2,299,000, $96,000 less than the previous ask.

Let’s assume the seller does indeed get $2,299,000 for the sale price. When factoring a 6% commission ($137,940), their net is approximately $2,161,060.

 In my analysis a few issues arise as follows:

Seller paid $2,195,000 in August 2015. Assuming it sells for asking (doubtful as already 52 days on market), after commission their net is below their purchase price 2.5 years prior; a recap:

  • August 2015: Paid $2,195,000
  • January 2018: Asking $2,299,000
  • Commission 6% ($137,940)
  • Net at Asking: $2,161,060
  • Thus seller would walk away with a $34,000 Gain!

 Yet the gain of $34,000 assumes an at asking closing price. Again after almost two months on the market, doubtful but it could happen.

Now two additional issues:

Inflation: When purchased on 2015 for $2,195,000 based on 2018 Dollars that would translate to $2,295,481, thus based on inflation, already a real-dollar value loss even if sold at asking.

Real Estate Taxes: When the home first came on the market in 2011 the taxes on the house were listed at $8,127 or $677/month. At present the taxes in the house are listed at $13,779 or $1,148.25/month, a difference of $471.25/month. Granted at this price-point should not be an issue for the buyer (except the issue concerning tax deductibility of real estate taxes but will not go there in this blog post).

One of my friends from the East Coast is a stock trader and refuses to purchase a home in his suburban New York City community. His rationale; he can earn more money in the market versus his primary residence which he views as a money-losing proposition or at best matching inflation over the long-term and coupled with exorbant real estates taxes,he prefers to rent. So I asked him the following:

If one bought $2,195,000 of the Dow Jones ETF (basically a vehicle that tracks the DOW which I understand is not the best gauge of the stock market but is one of the most recognized) in August 2015 what would it be worth today?

  • In August 2015 the DJ ETF was trading at $166.35 / 13,195 Shares
  • On February 27th, 2018 the DJ ETF was trading at $255.33
  • The 13,195 Shares today would be worth $3,369,097
  • Total Gain: $1,174,097 or close to $42,000/average per month increase. Yes we are all aware of the gains over the past 12 months skewing the valuations.

My analysis tells me the follows:

  • The upper-end of the market is showing weakness and fatigue and thus slowing.
  • The belief that housing values can only increase is a fallacy as the upper-end is usually the first market segment to show signs of impending weakness.
  • The pinnacle of housing market values is behind us.

Now for my peer brokers who will advise but one needs a residence to live in; I cannot agree more both as a broker and one who is actively looking for a residence to purchase HOWEVER, let’s do the math:

The gain of $42,000 month is commendable yet most likely an anomaly as many argue the market is overheated and a respected wealth manager I know advises: “Trees do not grow in the sky” thus such oversized gains should be viewed within context.

However, that $42,000/monthly gain if generating 4.5% would equate to approximately $1,900 month. While one could not rent 1433 East 7th Avenue for $1,900/month. Yet when generating $42,000/month in gains, I assume one could dip into the monthly for a similar home in the $5,000-$7,500/month range and still have a nice return on investment.

Please know I am NOT a pessimist. However I have personally been through three (3) business cycles during my time in Denver and have watched real estate values rise and fall. While I do not except an across the board dramatic downtown of valuations; with the potential for rising interest rates for both mortgages and bonds, realignment of equity valuations to more traditional patterns, potential inflation and out-migration of population from Colorado, a 10%-20% downward valuation concerning housing valuations may not be out of the norm, it has happened before and history can repeat itself. Again, just one humble brokers opinion.

 

 

 

 

Is it Just Me or are the Optimistic Headlines Pointing to Concerns

Ok, I am a pessimist! Well not really but I have been accused of being too conservative concerning finance and investment. Granted most recently some of my portfolio was stopped out during the flash crash only to come roaring back within two weeks. And yes housing in Denver is still in-demand with limited supply and it seems overly eager buyers. However today’s headlines concerned me as follows:

US housing starts total 1.326 million in Jan, vs 1.234 million starts expected

  • New home construction increased to more than a one-year high in January.
  • The market was boosted by a rebound in the construction of single-family housing units.
  • Building permits soared to their highest level since 2007.

On the surface I should be thrilled as housing starts are beginning to mirror our economy which continues to defy conventional cycles and this expansion looks never-ending HOWEVER review last line of the bullet points:

Building permits soared to their highest levels since 2007” Yet just around the corner in 2009 we were in the depths of The Great Recession teetering on the edge of a Depression.

Concerning housing, most would agree our low-interest rate environment has been somewhat responsible for consumer demand i.e. many purchasing based on the amount of their monthly payment versus equity basis. If planning for the long-term hold this is not necessarily an issue as housing usually exceeds inflation. Granted the buyers from 2004-2006 who sold between 2009 and 2011 may have a different opinion. Yet, what happens if interest rates rise another 65 basis point to 5% which is still a low mortgage rate when looking at a historical chart.

According to Redfin: A 5 percent rate would cause more than a quarter of today’s homebuyers to slow their plans and housing affordability is starting to take a hit. The report goes on to advise buyers will still be house hunting however if one’s PITI increases will wages match? At present we have the signs of inflation yet wages remain stagnant.

Concerning employment and wages the good news is we are at a 17-year low concerning unemployment. The bad news the unemployment rate before the great recession was only 0.5% higher than it is today.

January 2018:          Unemployment Rate at 4.1%

January 2007:           Unemployment Rate at 4.6%

Of note the Recession officially started in December 2007 with unemployment rising to 5% that month and at its worst during The Great Recession, unemployment was at 9.5%

On to consumer sentiment i.e. how the average consumer feels about the economy:

January 2018:           Consumer Sentiment 95.7

January 2007:           Consumer Sentiment 96.9

For the remainder of 2007 the Consumer Sentiment stayed relatively strong hovering in the 80’s and 90’s yet by November and December of that year the Sentiment Index dropped into the mid 70’s as the recession began.

And finally an interesting article quoting an apartment developer:

Major apartment developer: ‘There is an acute crisis headed our way’

  • The luxury market is largely overbuilt, while there is a shortage of affordable rental housing.
  • Lower and middle-income households are spending proportionally more on their rent, says apartment developer Toby Bozzuto.
  • Nearly half of all renter households pay more than 30 percent of their income for housing.

As you have probably noticed in downtown and Cherry Creek the crane has again become the “official bird” of the Front Range. Yet many experts are cautioning the cranes are associated with the building of luxury apartments. Of note, multifamily construction is now at a 40-year high; the trouble is, developers are putting up the wrong kinds of buildings. The luxury market is largely overbuilt, while there is a shortage of affordable rental housing, and developers are hamstrung by the now record-high cost of construction.

The statistics are suggesting a potential for an overbuilt/supply coming soon as apartment completions in the 150 largest U.S. cities jumped to 395,775 units in 2017, beating 2016 production by a staggering 46 percent and more than doubling the long-term average, according to RealPage, an apartment management software and data company. Luxury, upscale buildings accounted for between 75 and 80 percent of the new supply in the current cycle.

I am not necessarily sounding the alarm but as a real estate broker with a few decades under my belt AND one who has a good memory of business cycles I remain concerned. My gut feeling is we will begin to encounter inflation which while necessary I believe will exceed the Federal Reserves 2%. Couple this with rising interest rates yet wage increases being stagnant we can run into serious complications leading to a recession. If it is a soft landing or a violent correction, that remains to be seen.

Again based on a traffic signal my light is Yellow and the countdown to Red is fast approaching, thus speed up and if conservative brake now and wait for the light to change and maybe avoid a potential collison.

 

 

Gyrations can Happen in the Housing Market as Well

The whipsawing of the equities market over the past few days has been challenging for many with the assumption the market will continue to rise. When the equity markets settle the forensics will probably blame a combination of leverage and obscure volatility index trades as the culprit.

Yet what about our Denver housing market?

Earlier this week I posted an article from CNBC concerning a home in Denver listed at $500K, which generated 100+ showings over the weekend. The issue haunted me as 1) at $500K still above the average cost of a home in the metro area, 2) with such interest are prospective buyers chasing a commodity versus a home i.e. low inventory, high-demand and 3) hindsight can be most appreciated.

Concerning hindsight; I take evening walks. Lately I have been keeping an eye on a home close to my residence. In the interest of privacy I will not disclose the address however I will share the following:

Neighborhood: Strong, desirable for families within the City and Country of Denver, well-respected public elementary and middle schools as well as a popular private school.

Street: Literally on the border of the neighborhood, on a minor arterial i.e. two-way, but one-lane in each direction. The street dead-ends about a mile north so not a major arterial mostly neighborhood oriented traffic. Within two blocks of a neighborhood oriented commercial low-scale retail development and within 4 blocks of a neighborhood park, all amenities.

The Residence (From Public Remarks): Amazing home in _________ under $600K!! Don’t miss out on this incredible opportunity to live in desirable ________. This beautiful brick bungalow has an updated kitchen with breakfast bar, seating area, and stainless steel appliances. Bright living room with wood burning fireplace and coved ceilings on the main floor and another large family room in the basement. Home has fabulous refinished hardwoods and a large master bedroom. Large backyard with deck and covered front porch. Ample amounts of storage in the laundry area as well as the garage and attached shed. Walking distance to great restaurants, amazing parks, and one of the top-rated elementary schools in Denver. 4th Bedroom in basement is non-conforming.

Style: Bungalow, pre-WWII Construction

Size: Approx 1,100+ SF Main Level, 1,100+ SF Fully Finished Basement

Configuration: 4 Bedrooms/2 Bathrooms

Garage: 2-Car

Lot: 6,750 SF

Now the Pricing History: Please note I am just using month and year to retain some privacy. Of note during its history dating to July 2012 from the images associated with the listing there was no major exterior or interior renovation that I could ascertain.

  • Jul. 2012:       Placed on market for $450,000 / 30-Yr Interest Rate: 3.55%
  • Sep. 2012:      Price reduction $450,000 – $425,000 / 30-Yr Interest Rate: 3.5%
  • Dec. 2012:      Expired, taken off market NO SALE

——————————————————–

  • Jun. 2015:      Placed on market for $492,000 / 30-Yr Interest Rate: 4.05%
  • Jun. 2015:      Taken off market NO SALE

———————————————————-

  • Jul. 2015:       Placed on market $519,000 / 30-Yr Interest Rate: 4.05%
  • Aug. 2015:     Price reduction $519,000 – $498,000 / 30-Yr Interest Rate: 3.91%
  • Sep. 2015:      Price reduction $498,000 – $475,000 / 30-Yr Interest Rate: 3.89%
  • Jan. 2016:      Sold and Closed: $445,000 / 30-Yr Interest Rate: 3.88%

__________________________________________

  • Jan. 2018:      Placed on market for $600,000
  • Jan. 2018:      Price reduction $600,000 – $585,000
  • Jan. 2018:      Price reduction $585,000 – $575,000
  • Feb. 2018:      Price reduction $575,000 – $565,000 / 30-Yr Interest Rate: 4.38%
  • Feb. 2018:      Goes Under Contract

In the above example between 2012 and 2016 one could argue the value did not change. While our collective memories can be subjective; in 2012 we were finally seeing viable sprouts post Great Recession yet it was not until 3.5 years later that the original asking price of $450,000 ($483.182 in 2018) from July 2012 was realized i.e. sold and closed Jan 2016 for $445,000 ($457,000 in 2018).

Now the home is back on the market. From Jan 2016 when the house sold for $445,000 and was placed back on the market last month for $600,000 or basically a 35% gain in two (2) years.

Now granted at the last asking i.e. $565,000 the potential gain is 22%. Yet from July 2012 to January 2016 one could argue there was no gain or most likely the market gained yet the listing was overpriced to when listed in 2012.

Now for some history. Going back to the days before the great recession:

  • 6/1993:         Closed for $120,000 ($204,725 in 2018) / 30-Yr Interest Rate: 7.21%
  • 10/1995:       Closed for $156,000 ($252,347 in 2018) /30-Yr Interest Rate: 7.64%

In the two year period noted above the house appreciated by 30%

The sellers of the house I believe desire to repeat history i.e. within a 2 year period asking for a 22% gain.

The following is added on Feb 7, 2018: In reviewing MLS this morning a classic Mid-Century Modern listing expired. Asking is $1.5M. A beautiful renovation/update as I remember viewing the residence when it was for sale in 2009 sold for $610,000 ($700,949 in 2018). Even more to my surprised I pulled the Chain of Title, the same home sold in 2004 for $629,000 ($820,876 in 2018). Thus in 9 years the home lost $19,000  (during which time  the local economy went from exuberance to recession). That same house was most recently listed at $1.5M. Considering the renovation and factoring for inflation $1.5M while high is not necessarily irrational yet the market has spoken i.e. 85 days on market and no sale. The prior sale in 2009 the home was on the market for 562 days or over 1.5 years! As a wise professor once said off the cuff “History does repeat itself

The question is are such gains sustainable or are we on the verge of irrational exuberance concerning housing prices?

The average price of a single-family home sold in 2017 reached $480,140, an increase of 8.7 percent from 2016. The median sold price, the point where half the homes sell for more and half for less, was $410,000, an increase of 7.9 percent.

Condo prices rose even more on a year-to-date basis, hitting an average sales price of $318,904 in 2017, up 10 percent from 2016, with a median sales price of $270,000, up 12.15 percent from 2016. This is not to be unexpected i.e. affordability both in sales price and overall upkeep.

Yet concerning incomes, the average salary in Denver, Colorado is $60,370. As of Q4 2017, the trend in wages is down 0.3 percent. The cost of living in Denver is 12.1% higher than the national average.

And why am I concerned?

  • Average salaries are not keeping up with housing costs.
  • Building permit activity has been most active in rental housing a market many believe had peaked in 2017 and with new construction continuing a potential glut coupled with lessening demand.
  • Lower interest rates may be permitting more leveraging. Yes borrowing standards have tightened YET there are still loans with just 3% to 5% down. Thus if the housing market cools there is the possibility of residences with negative equity.
  • Real Estate Taxes may increase. As assessor data is complied every two years the increase in underlying valuations will translate to higher tax bills.
  • The Goldilocks Economy: We came out of a deep recession with some caution, which seems to have dissipated as the economy continues to expand. Yet with expansion comes higher interest rates (as the Federal Reserve hopes to keep inflation in check) and partially what spooked the equity markets.

Equities are liquid and thus volatility with such liquidity can be expected. 5% moves in the Dow Average were not uncommon over the past 20 years. While housing values in general do not fluctuate I would argue the uptrend is flattening and to proceed with caution.

As the example above illustrates timing can be important. If one is purchasing today for the long term i.e. 5-7 plus years or longer I would not necessarily be concerned especially if able to lock in an attractive interest rate.

However if one assumes the market will only continue to go up, continue to exceed inflation and generate oversized returns year after year…..just remember negative equity, short sales and foreclosures are in the rear-view mirror and could be accelerating.

Remember Goldilocks needed a nap as well.

Your Budget is $1M to $2M. Here is What You Can Purchase in Denver and Beyond

It is no secret among my peer brokers the upper-level of our local Denver metro market is starting to show signs of stress. I am the first to admit inventory continues to be historically low and in the most desirable neighborhoods; a residence if priced correctly  will indeed go under contract in a matter of days.

However there have been some luxury properties that have sold at a loss including within the hot Denver Country Club neighborhood. 575 Circle Drive which sold in February 2013 for $6.8M ($7.15M in 2017 inflation adjusted dollars) was recently resold in December 2017 for $6.5M excluding broker commissions. In tony Cherry Hills 5500 E. Quincy just hit the market asking $4.97M. The seller purchased the property in 2002 for $4.5M or $6.16M in 2018 inflation adjusted dollars thus based on asking factoring in inflation, a loss.

Now luxury and price-point can vary widely. Around the world, a single square foot in a luxury home varies dramatically — from $200 in Monterrey, Mexico, to $4,500 in Monaco. The highest price paid for a home in 2015 was $194 million for the Barker Road Estate in Hong Kong purchased by Jack Ma founder of Alibaba and it needed work!

Recently I have been researching what one can purchase for $1M to $2M in various cities keeping in mind similar neighborhoods based on location to downtown, prestige, history and so forth. Not surprisingly even at the high-end Denver in both a square-foot basis and quality of life show a better value. Yet when average income for the neighborhood is factored in the value proposition erodes. In laymen terms the upper-end of Denver’s housing market is more costly when factoring in average incomes for the neighborhood. In addition percentage gain may be somewhat irrational even accounting for the Great Recession and continued low inflation and historically low-interest rates.

Please note I did not use average metro area household incomes instead opting for neighborhood specific as metropolitan demographics vary wildly. In addition both New York City and San Francisco have “rent-control” laws, which many economists argue inflates the value of free-market residences i.e. sans rental rate constraints.

Below at the findings:

Denver: 446 Lafayette St/ Denver Country Club Neighborhood

  • Size: Single-Family 3BD/2.5BA / 2,646 SF including a small basement
  • Asking: $1,200,000 (last sold in June 2013 for $875,000)
  • Median Income: West Country Club $54,417

A charming turn of the 20th Century Victorian including an expansion designed by locally well-respected architect David Tryba. A pretty block north of the Country Club Gates the block is mostly single-family homes of moderate size. A strong stable neighborhood demand is strong even during times of recession. Easy access to downtown to the northwest and Cherry Creek North to the east.

New York: 2 Beekman Place/ Beekman Neighborhood

  • Size: Cooperative Apartment 2BD/2BA / approx. 1,200 SF
  • Asking; $1.395,000 (last sold in January 2013 for $1,165,000)
  • Parking: available off-site at an additional charge
  • Median Income: Beekman/Sutton $136,300

Designed by one of the foremost pre-WWII architects in New York Rosario Candela buildings are in-demand as the apartments feature gracious proportions not usually found in more contemporary structures. Located in prestigious Beekman Place this enclave of a neighborhood is literally 3 square blocks dominated by pre-WWII apartments buildings and townhouses including a well-known Paul Rudolph creation all adjacent to the East River. Just north of the United Nations and an easy 4 crosstown block walk to Midtown Manhattan.

San Francisco: 2055 Bush Street/ Lower Pacific Heights

  • Size: Condominium Apartment 3BD/3BA / 2,532 SF
  • Asking: $1,198,000 (last sold in June 2001 for $747,000)
  • Parking: available off-site at an additional charge
  • Median Income: Pacific Heights $130,900

Considered one of San Francisco’s premier neighborhoods Lower Pacific Heights has easy access to the Central Business District as well as Fillmore Street, Japantown and neighborhood parks. A two-level condo this expansive unit, one of 4 in a 1904 building brings together classic design and spaciousness within a condominium yet feeling like a single-family home.

Los Angeles: 6747 Gill Way/ Hollywood Hills

  • Size: Townhouse 3BD/3.5 BA /1,718 SF
  • Asking: $1,225,000 (last sold in Nov 2016 for $1,125,000)
  • Parking: 2-Car Attached Garage Median Income:
  • Median Income: West Hollywood $67,500

Located in the Hollywood Hills this townhouse constructed in 2015 would feel right at home in Denver’s Cherry Creek North neighborhood. Similar in design to the townhouses on 4th Avenue between University and Josephine the layout includes a guest/office on the lower level and two master suites above. While close to a freeway highway impact is minimal. Newer construction, energy-efficient and close to Hollywood and easy access (by Los Angeles standards) to downtown as well as to the Valley.

Concerning the home pictured above, asking was $200M, sold for $100M. Curious about the location and provenance, send me a note.

 

 

If your Broker advises Earth Tones maybe it is time for a new Broker

In all seriousness, there is absolutely nothing wrong with earth tones and neutral colors when preparing a residence for sale. Yes I do believe one’s personal tastes and color choices may be challenged by prospective buyers. While I always advise “it’s just paint”, color and the perceived work involved to change can cloud a prospective buyer’s judgment.

However I am seeing more and more houses staged (which I have always been an advocate of as one is truly presenting a lifestyle advertisement and not just four walls). In addition I am always amused with headlines such as “Subway Tile is Out” just begging for one to open the article to find out what’s truly in. And by the way in my humble opinion Subway Tile in white is truly timeless as has been in existence for 100+ years and the gloss sheen always presents a clean and simple presentation, just remember the tight grout line.

Again I am not against earth tones and neutral colors including one color us brokers reference often; “Realtor White” which has been known to cover over many issues.

So what are the Color Trends for 2018 and how can you the home seller use them?

  • Darker is Dominating: It could be houses are larger or we are feeling more secure, darker colors seem to be the trend. Paint experts are encouraging bolder choices with darker hues. Setting the tone, PPG Paints was one of the first to release their new “it” shade for the year with Black Flame, a color described as a rebirth of classic black with deep tones of indigo. On a personal note I am in the process of updating a kitchen and we are actually painting one wall with Chalk Board Paint which allows us to use the wall as a true chalk board! Yes we will finally rid ourselves of the note pad on the refrigerator which really looks ridiculous on a Subzero with the glass doors.
  • Metallics are the new neutrals: Also predicted to be popular in 2018 is Pantone’s Intricacy Palette, which features neutral metallics with accents of dramatic red and yellow. This particular look is especially suited for accessorizing otherwise traditional spaces. I have witnessed such use in entry foyer’s and secondary rooms with coordinating accent pieces i.e. pillows, frames and so forth. Guess what? It works and makes a memorable impression without being shocking. As inventory begins to climb, making your residence stand-out against the competition may be beneficial especially if you are within a planned community/subdivision.
  • Intense color lovers: Embodying a contemporary spirit, Sherwin-Williams has released three bright color palettes for the year: Unity, Connectivity and Sincerity. From social media to technology, each is inspired by the qualities of modern culture. Yes you too will now have an Instagram worthy residence (or at least eye-candy for prospective buyers).

The question is how to put this all together. I am a firm believer some have an eye for design, either born with or trained, I am not one of them. Granted I understand good design when I see it and can opine on what sells and what may be challenging yet I know someone will comment how do I make the components mentioned above work in my own home.

  • Use the 60-30-10 rule.The idea behind this timeless decorating tip is to incorporate your primary color into 60 percent of the room. Your secondary color will take up 30 percent, and your accent color 10.
  • Vary one color throughout.To create a relaxing vibe, go monochromatic and let your main, secondary and accent colors be varying shades of the same hue.
  • Find what feels right.If a formula of 30-30-20-20 works better for you, go ahead and break the rules. Just remember to take note of the color balance in your room.

Finally I cannot stress enough the following:

1) Test a small area before purchasing gallons and gallons of paint.

2) Let it dry before you decide if it works or not.

3) View during different hours of the day and evening and consider different light bulbs as cool and warm, incandescent, CFL, LED can drastically influence color perception.

4) Prepare properly before painting; Kilz is a homeowners best friend for primer as is blue painters tape.

5) It’s only paint, its not structural, can easily be changed.

As a broker I can usually opine as I take into account the architectural design (I still remember a postmodern house’ interior painted in colors of a Southwestern Discotheque circa 1985, new owners repainted before moving in and secured a $15,000 concession), regional tastes and so forth. Concerning top-tier listings I will usually bring along an experienced interior designer or color specialist and let them offer opinions as I have many peers from graduate school in my Rolodex. Again, it’s only paint.