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REAL ESTATE INSIDER Vol. 46, No. 10 | NOVEMBER 2022

GETTING YOUR HOME SOLD TODAY

Perhaps you’ve heard of the phenomenon known as “recency bias” – the human impulse to shape opinions or make decisions based on the latest trends and lose sight of (or even forget) what happened in the past.

An everyday example of recency bias? People who pull their money out of the stock market, discouraged by a few bad months of returns, despite the long-term trend of increasing values.

If you’re looking to sell your home, don’t let recency bias trick you into thinking that there may not be sufficient demand in the marketplace. It’s true that home sales have declined compared to the last couple of years, but it pays to look at the bigger picture. Housing demand today is still as strong or stronger than it was in the years just before the pandemic boom.

Case in point: Real estate data service ShowingTime, which tracks home showings across the country, says the pace of showing traffic dropped about 16.5 percent between July 2021 and July 2022. That’s based on the ShowingTime index score, which looks at average showing appointments per listing. But that’s not the whole story. The July 2022 index – 158 – is still 27.9 percent stronger than the July 2019 index, and 27.6 percent above July 2018.

Indeed, the market has cooled off. But demand is out there, and many sellers were still finding success this summer. In July, the National Association of Realtors reported that 39 percent of homes sold above asking price, and average home received 2.8 offers in that same month.

While inventory is on the rise, it’s still tight enough for the market to be leaning in the favor of sellers – particularly in high-demand regions like Northern Colorado. Don’t let today’s headlines fool you into thinking any differently.

Call me to discuss if it might be a good time for you to sell your home.

IF THE PRICE IS RIGHT, THE OFFERS WILL FOLLOW

Sellers beware. Days of bidding wars are past. Days of pricing properly are here – and will be sticking around for the foreseeable future.

Since the peak of the real estate rush last winter and spring, higher interest rates have helped to steer the housing market closer to a balanced state of supply and demand. Buyers are out there, but they’re not clamoring for just any available listing. There’s enough choice in the market where buyers can afford to be more selective, which means sellers must adjust to be more competitive.

All the standard advice for sellers – invest in “curb appeal,” freshen up the paint, clear out the clutter, etc. – still holds true. Don’t brush it aside. But nothing makes a difference more than setting a price that suits the property and the location.

If you set the bar too high then you run the risk of seeing your home linger on the market for an extended period of time, and possibly forcing you to reduce your price. It’s not a good look to post a “For Sale” sign in your yard for two months. It might also cause buyers to wonder what’s wrong with the property.

Working with a trusted real estate advisor can help you come up with a pricing strategy, so you’re not asking too much, or too little. A skilled Realtor can help you assess recent sales of comparable homes in your neighborhood or community, and help you understand seasonal trends that might affect demand where you live.

TURNED OFF BY RISING RATES? CONSIDER A MORTGAGE RATE BUY-DOWN

Increasing mortgage lending rates have brought on a corresponding increase in monthly mortgage payments. As a result, many would-be homebuyers have been forced to rethink their plans – or at least think about buying at a lower price point.

But for homebuyers with a little extra cash on hand, there is an option to temporarily take the sting out of higher rates. A mortgage rate buy-down allows the homebuyer who can put up extra money at closing to lower the interest rate for a period of time, which helps the buyer get in the door at a lower monthly outlay.

How does it work? One common buy-down agreement is known as 2-1 buy-down. For an additional fee on top of the down payment, you would shave 2 percentage points off the mortgage rate for the first 12 months of the loan.

For the second 12 months, you would pay 1 percentage point less. Beginning the third year, and for the remainder of the 30-year loan, you would pay the full mortgage rate – barring a decision to refinance at a later date.

In the case of a buyer who is starting with a traditional 20-percent down payment on a 30-year loan, the cost for the 2-1 buydown is typically about 2 percent of the purchase price.

How does it affect your payment? If you’re buying a $500,000 house, with an interest rate of 6.5 percent, you’re borrowing $400,000 after the 20 percent down payment. At 6.5 percent interest, the monthly mortgage is $2,528.27. With a 2-1 buydown, you’ll pay just $2,026.74 per month the first year (4.5 percent), then $2,271.16 the second year (5.5 percent), before starting the full payment. For this scenario, your upfront cost to buy down the mortgage would be $9,103.68.

Call me to talk about if a mortgage rate buy-down could be a good idea for you.

THE GROUP DIFFERENCE

HAPPY HALLOWEEN!

Every Halloween season, The Group’s talented marketing and technology team produces an original Halloween movie. They film the movie after work in just a few hours: It’s essentially their version of the 48 Hour Film Festival. The team always has fun writing scary scripts, and it’s even more fun seeing them come to life on screens, big and small. Click HERE to watch this year's short film.

Happy Halloween from your friends at The Group!

WHICH HOME IMPROVEMENT PROJECTS PAY OFF FOR SELLERS?

If you’re thinking of putting your home on the market, chances are you’re taking a long look at how to make your house look better for buyers.

What’s a good use of your home improvement budget?

Just look up.

The 2022 Remodeling Impact report from the National Association of REALTORS® tells us that a new roof is one of the outdoor projects that brings the best return on your investment. The NAR says 100 percent of the roof replacement costs come back to you when you sell.

While a new roof is not necessarily an eye-catching attraction, it does provide peace of mind to the buyers, says Jessica Lautz, Vice President of Demographics and Behavioral Insights for NAR.

Speaking to the L.A. Daily News, Lautz said, “Homebuyers know that replacing a roof is a costly, messy, loud, dirty, miserable job, so they will pay for that.”

Also fetching 100 percent return is a new garage door, the report said. For indoor projects, refinishing existing hardwood floors earns the best ROI, at 147 percent. Installing a new hardwood floor returns 118 percent.

Speaking of household investments, Colorado Biz magazine recently listed popular architectural touches that are taking hold among Colorado homeowners. Leading trends include:

REAL ESTATE BY NUMBERS

  • 493,172. Square footage of The Promenade Shops at Centerra. The retail center in east Loveland was recently listed for sale. According to marketing information for the property, 140,000 vehicles pass by The Promenade Shops – located at Interstate 25 and U.S. Highway 34 – each day.
  • $45.5 million. Price that Dallas-based investors paid for the 151-unit Collins Aire mobile home park, located at 401 N. Timberline Road in Fort Collins. The property includes 23 acres of land.
  • 122. Combined number of affordable housing units in the Reflections Senior Apartments and Woodbridge Senior Apartments, both in Fort Collins. The two properties were recently bought by California-based Preservation Equity Fund Advisors, LLC. A purchase price was not announced.
  • $9 million. Price that Larimer County officials agreed to pay for the 1,547-acre Heaven’s Door Ranch west of Loveland. The property, which includes an 8,433-square-foot house, will be maintained as public open space.
  • 61.2 percent. Percentage of homes for sale in the U.S. that were on the market for 30 or more days as of July, according to a recent report from Redfin.
  • $7.5 million. Price that Leprino Foods heiress Gina Vecchiarelli recently paid for a Cherry Hills Village home. The 8,465-square-foot home includes six bedrooms and 11 bathrooms.
  • 30. Number of low-income housing units for the Immaculate Plaza Apartments, located near downtown Greeley. Archdiocesan Housing Inc. recently broke ground on the three-story, 24,600-square-foot project.
  • 2.2 percent. Share of Colorado home purchases that were made by individual out-of-state investors during the first half of 2022, up from 1.2 percent in 2019, according to ATTOM Data Solutions.
  • $71 million. Purchase price for the 163-unit Kensington Apartments, located near the University of Colorado at Boulder campus. Nashville, Tenn.-based investors bought the property.
  • 8.1 percent. Average increase in Colorado home prices between July 2021 and July 2022, according to Redfin. Total sales in July declined by 29.6 percent from July 2021.
  • $9 million. Price that the Denver Broncos’ new owners recently paid to buy the land on which the team operates its organization headquarters and practice facility. The site, known as Dove Valley, is located in unincorporated Arapahoe County.
  • 17.9 percent. Share of Americans who worked from home in 2021, up from 5.7 percent in 2019, before the outbreak of the COVID-19 pandemic, according to U.S. Census data. Among states, Colorado ranked third for work-from-home residents, at 23.7 percent.
  • $367 billion. Amount that Americans paid on home improvement projects in 2021, according to the Harvard Joint Center for Housing Studies. More than 1 million home improvement loans totaling $131 billion were taken out last year.
  • $102.5 million. Combined sale price for two office buildings in the Interlocken business park in Broomfield. The two buildings total about 480,000 square feet. One of the buildings houses the headquarters of Vail Resorts Inc.
  • 2,760 square feet. Average home size in Colorado Springs, making it the city with the largest homes in America, according to U.S. Census data.

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