Opinon on The Market

The question I am asked most often about real estate is, “How is the market?” When I hear that question I'm often reminded of the Kentucky Congressman who was asked what his opinion was regarding liquor. Here's what he said: “Now if by liquor you mean that evil product that breaks up families, that liquid upon which money is spent instead of on food and clothes for the family, or causes deaths by DUIs, or the product that often gets into the hands of teenagers causing many calamities…if by liquor you mean that product, then I am absolutely against it.

But on the other hand, if by liquor you mean the product that is made at our local factory providing numerous jobs and tax base and keeps people out of the homeless shelter, and provides tax money to the state and the County and the city, and if by liquor you mean that little muscle relaxant so many of us enjoy after a hard day at work that just so happens to provide employment to the farmers who raise all the hops and barley and other grains… then I want you to know that I'm absolutely in favor of it.”

Opinions on the market are just like opinions on liquor... there are some good things and there are some bad things. Here are some of my thoughts on the current market. Remember that you can go to my website www.BuyDurango.com and view these statistics. Here is the link: Durango Real Estate

Bad things
The dollar volume of all types of property sold in La Plata County from ‘08 compared to’ 07 was down 30.23%.
The dollar volume of residential-only sales in La Plata County in ‘08 compared to ‘07 was down 24.87%.
The number of residential units sold in the County went from 898 to 683 a decline of 215 units when comparing ‘07 to ‘08.
If you're one of the fortunate people to have a home valued at $1,000,000 or more, the current absorption rate is 124.8 months to get all of the current inventory of homes sold based on the ‘08 sales level.

Good things
Interest rates are at a roughly 50 year low right now. It has not been since the Korean War that rates have been as low as we see them today.
In-town Durango residential sales dropped by only 10 units in 2008 compared to 2007. That is a decline of just 3.17%.
The average price for an in-town Durango home rose slightly in 2008 compared to 2007. And the average price for a Durango rural home also rose slightly in 2008 compared to 2007.
Sometimes we are not sure if the government getting involved is a good thing or a bad thing, however, Washington is certainly working hard to try to help the housing industry. In particular, the $8,000 first time home buyer tax credit will have an impact in that $200,000 to $400,000 price range. Take a look at my previous blog article regarding this tax credit.
Single-family FHA loan limits are now at $443,750 for La Plata County. An FHA loan is a loan that only requires a 3.5% down payment.
The median price for in-town Durango homes has grown 9.9% per year since 2000.
From the landlord standpoint, residential vacancies remain very low (below 4%) and rents have continued to increase. With credit tightening, some tenants who wanted to be property owners won't qualify, so they will need to remain as renters. If you're interested in being a landlord, this is a good opportunity for long-range financial planning.
The overall sales price to list price percentage for 2008 was 96.05%... nothing like people are seeing in Phoenix and Las Vegas and in Florida where homes are selling at 35% to 50% off the asking price. Thank the Lord we don't live in Detroit.
The most active market segment in the County is between $200,000 and $400,000. That is certainly a price range that many in this town can afford.
Average days on the market went up slightly in 2008 compared to 2007 but that still lies within the normal Durango marketing time that I've witnessed over the last 33+ years.
There is a lot of press about the foreclosures all around the country and even here in La Plata County. But the reality is the number of foreclosures per household in La Plata County is one of the very best in the state and is so much better than other areas that no one legitimately can say that we are having foreclosure problems in Durango. Many Front Range Colorado counties are seeing one foreclosure sale for every 50-70 households, while in La Plata County we have one foreclosure sale for every 763 households. In 2008, less than 30 properties went through the entire foreclosure process in La Plata County. Unless all the foreclosures are within a three or four block radius of each other… which they aren't… the effect of foreclosures is very minimal in our market.
The number of residential properties that sold for all cash…. that is there was no loan on the property involved…. increased again. In ‘07 13.9% of all residential transactions were for cash while in ‘08 that figure increased to 18.7% of all residential transactions were for cash. Somebody… and I think it is smart money… feels Durango real estate is a good place to put cash.

Warren Buffett is often quoted as saying “Sell when the people are greedy and buy when the people are afraid.” That just happens to be the exact recipe for how to “Buy low and Sell high”… which everyone wants to do. And right now, because of uncertainty, people are fearful. All too often we look opportunity squarely in the face…and don't recognize it.

So what should I do?
If you own property in the $200-$400,000 price range, then you should consider selling it now while that market is strong, (That is a sell high move) and trade up to the next higher price range which currently has softer pricing. (That is a buy low move.)

If your home is currently on the market, or you're planning to put it on the market, then it really needs to be in the best condition possible. There is a lot of competition out there so you want your buyers to desire your home, not simply tolerate it in a lesser condition.

If you are buying in that very active price range of $200,000-$400,000 I would suggest getting preapproved by your lender. Lending criteria have tightened dramatically if you can actually get to the preapproved status, then when you write an offer to buy a home using close more quickly and offer a seller much more certainty of that closing.

Please feel free to contact our team at any time as we would love to help you with your real estate needs.
Rick Lorenz