Exhibit 1:  Shadow Inventory and other types of troubled properties in Denver.

Note 1:  These are properties that are 90+ days late on mortgage.

Source:  Your Castle Real Estate analysis, MLS data.

Shadow inventory circled in Exhibit 1 and is either:

• Real Estate Owned (REO) by a bank, or
• Consumer-Owned that is more than 90 days late on their loan.

If it is REO, that troubled property could be…

• Actively on the market, available for purchase today
• On the market, but under contract
• Not actively on the market – a part of Shadow Inventory that has to be sold eventually.

If it is a consumer-owned property, property could be …

• Actively on the market, available for purchase (as a short sale or regular sale)
• Under contract or pending bank approval of short sale terms
• Not on the market – but likely to get a loan modification
• Not on the market – but likely to be sold as a regular sale or short sale soon, in an orderly way
• Not on the market –the owner is in denial, and the home will eventually become a foreclosure.  This is part of the Shadow Inventory.

The rest of the article explains how we estimated the size of the Shadow Inventory and what it might mean for people buying and selling Denver real estate.  There are three reasons why Denver does NOT have exposure to this problem.

Reason 1 – Homes in Denver are more likely to have positive equity and not be underwater.

The Denver market has fallen 16% from its peak.  Prices have been stable or slightly increasing for three years.  Many cities in the US had much more dramatic gains and falls.  As a result, if you look at the average equity gain over the last three years, Denver is the best among the largest thirty cities in the US.  Las Vegas has suffered the most.  Foreclosures are much more of a problem in a market where prices are still declining.

Exhibit 2:  Average Three Year Equity Gain  (as of 12/31/11)

Source:  National Association of Realtors, Your Castle Real Estate.

Reason 2 – As a result, the number of homes owned by banks is very low in Denver.

Because Denver’s home prices didn’t appreciate as much during the bubble and began the correction before most markets, Denver has already processed the majority of its REO (real estate owned by banks) inventory.  Only San Antonio and Kansas City have smaller REO inventories.  Miami has the most REO inventory.

Exhibit 3: Number of Homes Currently Owned by Banks,  30 Largest Cities (12/31/11)

Source:  NAR, Core Logic, Your Castle Real Estate analysis, MLS data

Reason 3 – The number of late mortgages in Denver is less severe than most markets.

Notice how severe the problem is in Miami, compared to Denver.  In Denver, we have about 29,500 homes that are 90+ days delinquent on their mortgages but are still owned by the consumers.  What will happen to them?

• According to NAR (National Association of Realtors), 2500-3500 homes in Colorado receive a loan modification each quarter.  We might expect that 10,000 of these delinquent loans are cured by modification.
• Some of the homes have equity and can proceed thru a normal sales process.  That might be another 5,000.
• Some of the homes do not have equity.  Pro-active sellers will conduct a short sale, and avoid foreclosure.  That might be another 5,000.
• Finally, some of the homes will go all of the way thru the foreclosure process.  That might be another 9,500.  However, it’s just an estimate – it could be anywhere from 5,000 to 15,000.  Regardless of the number, these Shadow homes probably won’t hit the market for 3 to 12 months.

We estimate the total Shadow Inventory to be about 16,000 homes in Denver.  The question is: over what time period they be brought to the market?

Exhibit 3:  Total Number of All Mortgages, 90+ Days Late (as of 12/31/11)

Source:  NAR, Core Logic, Your Castle Real Estate analysis, Denver MLS data

What does it mean for Denver’s Real Estate Market?

We don’t think the likely size of the Shadow Market poses a threat to home price appreciation in Denver.  Here’s why.  Exhibit 4 shows you the average inventory of homes and condos for sale over the past twenty years.

Exhibit 4: How REO and Shadow Inventory could impact the Denver Market (as of 3/31/12)

Notes:  As of 4/1/2011

Source:  Inventory: Gary Bauer, Metrolist.  Shadow range:  YCRE analysis and estimates

You can see that our inventory in 2012 is at the lowest point in about a decade.  On a per capita basis, we’re near the lowest inventory we’ve ever had.  Of the 9,500 REO properties, we estimate that 3,000 are currently on the market.  It’s likely that about 2,000 are under contract and 1,000 are active (and thus in the 10,325 active homes).  Among the 29,500 seriously delinquent properties, we’d estimate about 2,000 are currently listed as short sales and are pending approval from the banks.  Another 1,000 are active on the market.

If you review Exhibit 1, there are 16,000 Shadow Inventory properties.  We estimate these properties will come to market over the next twelve months – around 1,000 per month.  In Exhibit 4, you can see how the available inventory would increase in such a scenario.  In a crisis situation, we might assume that around half of those troubled homes all get dumped on the market at once.  That is the upper line estimate in Exhibit 4.  Even in this crisis scenario, you can see this only increases the number of active properties on the market to the level we were at in 2010.  This isn’t an issue.  We currently have a shortage of inventory at most price points under $450,000.  Bringing these homes on the market would be a good thing for buyers – particularly first time buyers, and investors that want to bring rental properties to the market.

The Shadow Inventory is a significant problem in many markets – especially Miami, Las Vegas, Chicago, and many parts of Arizona and California.  However, in Denver, our housing market never got into as much trouble as these speculative markets – and we’re reaping the benefits now as a result.

Now, the new Soup Nazi comes as an appraiser and he is not so funny.  Rules recently established for him are making it much more difficult for homes to appreciate and the Denver real estate market to recover.

Appraisers now can say No just like the Soup Nazi.

More frequently, it’s possible to find a buyer who initially is willing to pay the asking price for a home only to find that the appraiser does not agree that the value is sufficient to obtain a loan.

When this happens, there are three possible results.  First, the buyer can sometimes pay an additional down payment equal to the deficiency of the appraisal.  Second, the seller can lower the price.  Or, the parties can agree to each pay a portion of the deficiency.  But the real problem is that the buyer may be so scared of the appraisal that he decides not to buy the house.

This just happen to me.  I put a gorgeous new home on the market in Greenwood Village.  In spite of a reasonably aggressive price, the seller obtained three offers within 10 days.  The property when under contract essentially at full price.  But that was before the soup Nazi entered the picture.

The appraiser was a half hour late for the appointment to see the house.  I should’ve realized then that this was not a good sign. Still,  I provided the necessary supporting comparables for the value of the house to the appraiser when she finally showed up.  But, she did not use all of my comparables and found some others at lower values.  The result was that the appraiser valued the home $12,000 less than the agreed-upon price between the buyer and seller.

This created a problem that could have jeopardized the entire transaction.  The seller was outraged that a third party was interfering in what had been a meeting of the minds between the buyer and seller.  The buyer was afraid that he’d made a mistake and overpaid for for the home. The result was a compromise where the seller lowered the price and the buyer agreed to bring more money for a down payment.

This scenario is going on throughout the Denver metropolitan area right now.  Stronger demand can be seen in several of the better neighborhoods in Denver.  But sometimes appraisers are not valuing the home at those higher prices.  The result is that some transactions are simply falling before they can get to a closing table.

Two weeks ago another broker called me asking for help.  She had a condominium unit under contract at a good price because the unit was an outstanding condition and have full mountain views.  But the appraiser placed the value $60,000 below the agreed-upon price.  I gave her the best comparables I had for that building.  But it didn’t help.  The buyer ultimately was scared off by low appraisal.  The seller realized that the unit would simply not appraise for the value in this market and withdrew the listing.

Appraisers are not the villains.  They are the victims.  New appraisal rules make it difficult to properly adjust for differences between properties.  These rules were set up to hinder the kinds of bogus appraisals that were prevalent during the real estate boom in the early 2000’s. But now, the result is the same rules are keeping the real estate market from recovering.

If appraisers were allowed to make the proper adjustments values would be reached.  For example, the appraiser of the condominium likely was not able to make adjustments of over $100,000 for views.  But that indeed is what the market will bear in that building.  It’s outside the scope of the new appraisal rules but it is the reality.

Who suffers? Buyers can be prohibited from buying the homes they want at the price they want to pay.  Sellers are prohibited from receiving market value for their property.  And the real estate market slows down more than it otherwise would.  New sellers become discouraged and decide not to sell at values appraisers will reach in this market.  So, there are fewer homes from which to choose and fewer sales.

This is a perfect example of the law of unintended consequences.  When an autocratic bureaucracy attempts to fix one problem it creates another.  Now, the new rules to  inhibit bogus appraisals are instead hindering the real estate market recovery.

Welcome to the Soup Nazi and all the rules he has to follow.  It’s just the way it is.

High rise condos are good investments in downtown Denver due to low vacancy rates.

Low vacancy rates are making both investment properties and home ownership of Denver real estate more attractive. Within the nationwide market for real estate,  Denver stands above the rest in terms of performance for investment and residential real estate.  Our great urban plan in Downtown Denver, transportation network, growing business base, low unemployment and of course the amazing 300+ days of sunshine also make this a wonderful place to live. Throughout the Downtown Denver markets the popularity of our city has been driving vacancy rates lower creating two audiences who benefit from home ownership.

Low vacancy rates in Denver are have created an increase in rental prices.  As reported in the Examiner article Vacancies scarce in Denver rental houses, rents rise”…

“Vacancies in for-rent condos, single-family homes, and other small properties across metro Denver rose slightly during the fourth quarter although the market remained tight with a rate of 2.1 percent.”

For our investor clients Denver offers a very unique opportunity to find properties with attractive capitalization rates.  The capitalization rate (or “cap rate”) is the ratio between the net operating income produced by an asset and its capital cost (the original price paid to buy the asset) or alternatively its current market value. The rate is calculated in a simple fashion as follows: Annual net income is getting a boost from low vacancy rates driving up the rental rates generated while low interest rates are reducing the financing cost.    Two things that help investors realize higher returns and early payback.

Of course investors aren’t the only one who benefits.   Those who currently rent and are facing higher and higher monthly payments are able to take advantage today’s low interest rates to make home ownership more attractive.

Downtown Denver condo and Downtown Denver loft home owners are enjoying a more comfortable monthly budget and the peace of mind that they don’t have to worry about annual rent cost increases.

We love our city… and so do many others.  As Denver’s population continues to grow vacancies may continue to tighten and rents may continue to increase.  Call today to learn more about market trends for Denver investment or home ownership opportunities in your neighborhood.

Tulips are blooming in Boulder, Colorado and Pearl Street Mall comes alive.

Boulder, Colorado has much to offer visitors and local homeowners alike.  It is it the home to the National Oceanic and Atmospheric Administration, the University of Denver, the only Chautauqua west of the Mississippi and an eclectic population to rival most in the United States. It boasts one of the friendliest and most beautiful pedestrian streets in America. 

Pearl Street, in the heart of Boulder, was designed after Burlington, Vermont’s walking street mall. It is home shops, restaurants, music venues and one of the most eclectic group of pedestrians you’ll ever see in Colorado. There are students, “street people”, up-scale Boulder homeowners, tourists and gawkers. It is a people-watching feast for the senses.

Boulder's outdoor Mall attracts residents and visitors alike.

This year, with an early spring of crisp evenings and sunny days, the Pearl Street Mall’s tulips are as lush as they have ever been.  Strolling musicians, street performers, outdoor cafes and characters abound.  The Farmer’s Market has opened two blocks to the south and is a perfect way to extend your Saturday visit.

We had a most amazing dinner the other night at the Black Cat Bistro at 13th and Pearl.  The chef/owner, Erik Skokan, maintains his own farm, The Black Cat Farm, and his meals are dependent on what is being harvested and available.  Right now, the greens are fabulous.  He also has a booth at the Farmers Market.
This is so typical of Boulder with our eco-counscious, green orientation. Boulder leans to the left not only in politics but also in holistic and organic foods. In the case of the Black Farm this combination certainly works magic on our taste buds. We had a truly culinary delight.
So, whether you are into good food, fun shopping or just the best people watching, it is the perfect time to stroll the mall and discover what the essence of Boulder is all about. Who knows you might like it so much you decide to become one of those Boulder residents! If you are thinking about becoming a Boulderite, I can help. After all, I am a Boulder Realtor. And, while Boulder homes for sale can be pricey, you can did find some very affordable housing in Boulder

Ok, that link was a joke. But, really, there are some nice homes in and near downtown Boulder I can show you!

The Easter Bunny visited the children of Pradera as part of the Easter Celebration held at The Golf Club.

While my wife and I were driving out of Pradera on Easter Sunday afternoon, a sense of pride overcame us with the Pradera community we reside in.  Not only is the scenic drive awe inspiring every time  we drive to or from our our Pradera home, we had just finished sponsoring our Fifth Annual Photos with the Easter Bunny at The Pradera Clubhouse.  What a wonderful and fun tradition this has become.  

We had approximately 100 children come through the line to have their photos taken with the Easter Bunny.  In addition to the free photos with the East Bunny we provided to the families, we handed out a golden, foiled chocolate Easter Bunny for each child to take home and enjoy.  It was a joy to see so many children and parents laughing and smiling as the photos were being taken on the Easter Bunny’s lap.

Before or after photos with the Easter Bunny, most families enjoyed an elegant Easter Champagne Brunch in the dining room of the clubhouse.  The Club at Pradera provided an amazing spread of food in the dining area.  The cold, hot, dessert and manned stations had a huge assortment of food for the members.  While savoring each bite of the Easter brunch in the dining area, members had the privilege to enjoy the picturesque views of the golf course and Pradera Valley.

The Golf Club is focus for social activities too at Pradera.

There are numerous other events planned throughout the year for residents and members of the Pradera community.  Upcoming events at The Club at Pradera in Parker, Colorado include a family dinner with bingo, a daddy/daughter dinner and dance, and a “Surf and Turf Dinner” each Thursday and Friday nights.   This summer The Club plans on having an outside movie shown on a gigantic screen with participants watching the movie in a golf cart or on the grass.

A very special event is planned for “Newborns in Need” on Wednesday, May 2^nd from 5:30 p.m. to 7:30 p.m. at The Pradera Clubhouse.  Newborns in Need is a program formed to benefit thousands of at-risk babies born at Denver Health this Year.  A “Newborns in Need” benefit baby shower will be held on this evening to assist mothers of newborns in easing their transition from hospital to home.  There will be a presentation by former Colorado First Lady, Frances Owens.  This event is only for Pradera Club members and their guests.  But, information regarding this very worthwhile organization can be found by visiting the website at www.denverhealthfoundation.org.

As a member of The Club at Pradera, golf and tennis are also part of the spring, summer and fall activities.  Kerensa Cox at The Club at Pradera can answer any questions regarding membership and rates.   Her email address and phone number are:  kcox@brightstargolf.com and 303-607-5672.

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Northeast Park Hill was "Denver's Best Secret" until investors and owner-occupants started snatching up these cute brick homes.

(Part 2 of my Park Hill Neighborhood Series. See Part 1 here)

Denver’s renowned and nationally acclaimed Park Hill has a secret! The north and east areas are now among the most  popular and desirable areas of Metro Denver. These two areas as outlined on the east side of this Central Denver Map have been shunned over the last decade; but now are being sought after by home buyers and investors alike.

These solid brick homes with hardwood floors, coved ceilings, and glass block windows are now in demand. Where else can you purchase a 900-1100 square foot home in good condition with a full basement in the $200,000 range.

There has previously been a stigma on this area of northeast Park Hill due to the changing times and certain individuals who were deemed as trouble makers in our society by many. The crime rate was troublesome for potential homes buyers. But, now there are some specific reasons for the change in attitude toward these areas of Park Hill.

First, the residents have taken measures to clean up their community and remove the troublemakers from the area through a form of neighborhood watch. You can check out crime reports by address right here on this website at Denver Crime.

Park Hill residents can use the Stapleton Town Center just minutes away.

Second, the advent of Stapleton and its many amenities raised the awareness of the true values of the homes, logistics, and location. Residents of northeast Denver are very close to all amenities Stapleton has offer. Good restaurants, a great King Soopers grocery store, shops and entertainment are all open to the public. and, Park Hill residents are just minutes away.

Third, when the market demanded more decent homes in the $150,000 to $300,000 price range, these areas began to pop up in the searches and the tours of the neighborhoods revealed what great values these great homes are.

My family has resided in Northeast Park Hill since the mid 60′s and I highly recommend it. I have lived here comfortably and enjoyed the Park Hill neighborhood. I have no qualms about helping my friends and clients purchase a piece of Denver history in the form of a older, Park Hill home for sale.

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Penterra Condos are luxury, high-rise units in the Denver Tech Center. 32 new condominiums are for sale and rent.

Penterra Plaza Partners, LLC has purchased the last 32 new units from Simpson Housing, the original developer of the luxury condominium high-rise in the Denver Technology Center. Now, I have listed those units for sale and they are also offered for lease by DenverRental.com.

Previously, Simpson had removed the last units for sale from the market while it settled a dispute with the Homeowners Association. That dispute is scheduled for trial in October but could be settled earlier. That has raised  some questions from potential buyers and renters. I have tried to answer them below.

This Condo for sale at Penterra, the luxury high-rise, has 2 bedrooms plus study at $459,900.

We at The Kentwood Company had those Penterra condo units listed for sale until about 2 years ago when Simpson removed the units from the real estate market. At that time, the Homeowners Association filed a construction defects lawsuit before the end of the statute of limitations. Since then, both sides have been attempting to research the alleged issues and move toward a settlement.

However, title companies and lenders refused to approve the building during that time period. So, for a while, there were no loans or title insurance polices available. After reviewing the issues now, several lenders and Land Title Company have agreed to approve the building. So, Penterra Partners is now able to sell condominium units one at a time. Still, buyers have questions and I have attempted to answer some of them here.

Frequently Asked Penterra Questions

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One of the many advantages to living in Lowry is the fabulous neighborhood that surrounds us! Daylight savings has come and gone, and spring is officially here! Combining the season and the neighborhood is just what the Residents in Lowry Denver have decided to do along with other great Denver neighborhoods like Stapleton.

Coming up, for one day only, on April 28^th is the THE GREAT DENVER CLEANUP – NEIGHBORHOOD CLEANUP DAY. This city-wide cleanup day applies for all Denver residents and will take place from 9AM – 2PM. This is your opportunity to discard and unwanted household items at free drop sites!!  This is a great convenient way to get rid of your unwanted items without having to call and pay for your own hauling/cleanup company.  The free drop sites are below:

- Cherry Creek Transfer Station (7301 E. Jewell Ave @ Cherry Creek Drive and Quebec Street)

- Lowe’s Mercado – 1330 S. Federal Blvd. (S.E. corner of S. Federal Blvd. & Louisiana)

- Fred Thomas Park (S.E. corner of E. 26th Ave. & Quebec St.)

- Chambers Rd. & 48th Ave. (S.E. corner of E. 48th Ave. & Chambers Rd.)

- North High School – 2960 N. Speer Blvd. (Eliot St. & W. 32nd Ave.)

THE FOLLOWING ITEMS THAT ARE ACCEPTABLE FOR DROP OFF ARE:

-Household & Outdoor Furniture – Mattresses – Lawn Mowers Acceptable – BBQ Grills (No ashes) – Yard Debris- Small Appliances – Toy, Swing Sets and Slides – Bikes, Carpet
*Yard waste separated from other debris will be composted.

THE FOLLOWING ITEMS ARE NOT ACCEPTABLE FOR DROP OFF ARE:

-Large Appliance – Rocks and Concrete – Commercial & Industrial Waste – Tree Stumps – Railroad Ties – Demolition Debris – Soil or sod – Electronics (Computers, Monitors, TVs) – Auto Parts (Including Tires) – Branches Over 4 ft. in Length or 4 inches in Diameter – Fireplace and BBQ Ashes – Construction and Building Materials – Household Hazardous Waste (oil, paint, batteries, etc).

Together – We’re Keeping Denver Clean & Beautiful!

The Great Denver Cleanup and the Great American Cleanup® are coordinated locally by KEEP DENVER BEAUTIFUL – a program of Denver Public Works/Solid Waste Management . We are proud to participate in this neighborhood beautification project. Wherever you in Denver, you can join in too!

Historic downtown Louisville, Colorado is surrounded by award-winning suburbs.

Number of Residential Homes Sold: 20 (Jan/Feb 2011: 18)

Total Sales Volume: $9,128,643 (2011: 6,900,870)

Average Price: $456,432 (2011: 383, 382)

With spring like conditions hitting earlier than normal this yr, the real estate market in Louisville has heated up quicker than normal!!  Inventory is low, demand is high.  

Job creation has been on the rise, Louisville continues to get national media attention for one of the best places to live and raise a family, and close proximity to the mountains, Boulder, and Denver are all major reasons why prices are going up.

To have a competitive advantage over the competition Buyers must utilize All Denver Real Estate’s home notification system.  It is connected to data in the Denver MLS Searches. So, you will listings from almost all real estate agents. You easily do your own easy search in the box at the upper right portion of this page.

Or, I’m more than happy to help you set these alerts up, or you can do it yourself, but you need this tool in order to see properties that meet your criteria the day they hit the market.  Otherwise, your competition is going to see them first and able to move on them before you. This is in fact a Seller’s Market now.

Stay tuned for the lineup on the popular Free Concert Series that takes place every summer in Old Town Louisville.  Old town really comes to life during these Friday night concerts: local vendors have booths set up, jump castles/slides/face painting, etc for the kids makes for a great family outing.  The Farmers Market will be starting soon, a great way to get organic veggies/fruits from local farms.

Please contact me for more info on Louisville Real Estate for sale, or any general Louisville questions you might have!

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Washington Park homes for sale in Denver are selling very quickly too under $400,000.

The news seems to be coming from all corners about the strength of the Denver Real Estate Market.  Whether it is Downtown Denver condos or Washington Park Denver homes, the market has seen an increase in demand.

On the nationwide level many news agencies have been reporting on the strength and attractiveness of the Denver Market.  Just this month MIG Real Estate announced plans to invest $600 million in the markets that it considers the strongest investments.

On that very short list you will find Denver.  That is certainly no surprise to those of use who have been watching our great city’s fundamentals.

We watch the local statistics closely, from median prices to number of days on market to total inventory in order to understand the housing trends.

The Denver areas have been getting tighter in some very popular neighborhoods such as LoHi or Park Hill inventory may be down creating a much stronger sellers market while neighborhoods like Downtown Denver may have more inventory creating an opportunity for buyers.

Glass House is an example of how quickly Downtown Denver condos are selling.

In tracking the statistics we also like to stay updated on those unique opportunities that occur in whatever our clients target market may be.   In any market, information and timely response can be the most valuable asset.

For example this past week a unit in Glass House on Riverfront Park came on the market as a bank owned property.  Originally purchased for roughly $375K this came on the market at a list price of just $295K.

The market reacted with multiple offers going above the listing price.

Even in this market great opportunities exist for buyers to obtain short sale or foreclosure properties.  Often it is simply a matter of recognizing an undervalued property or negotiating on behalf of our buyer clients.

Denver’s market is certainly a great place to be for both buyers and sellers with the right information.  Contact me today to learn how market conditions are in your neighborhood either to sell or to purchase that ideal dream home.

As far as that Glass House listing..  if you missed this one contact us so we can keep you updated on the next listing