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Home sales still in the slow lane

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Foreclosures peak as prices shrink and buyers wait for market to hit bottom

By Vicky Gits

With the economy on the rocks and the job picture uncertain, 2008 turned out to be one of the slowest years in recent history for the Evergreen-Conifer residential real estate market.

Homeowners can take some consolation in the fact that prices in general dropped only 3 percent on average for the year. But the average selling price of $415,000 was slightly lower than the average selling price of $418,000 in 2005.

Although foreclosures are relatively few in absolute numbers, statistics show that foreclosures in the Evergreen-Conifer area were the highest in eight years — more than 200 in 2008, up from 50 in 2000.

In 2008, some 897 homes were sold, a 24 percent drop compared to the year before, and only the second time since 1990 that total home sales have dipped below the 1,000 mark. The number of annual sales is typically closer to 1,500 or so.

The lack of activity is reflected in an average 3 percent reduction in the sales price of an existing single-family home in the combined Evergreen-Conifer market.

The good news is that in six months, the market will have finally bottomed out, meaning transactions and prices will begin to pick up again — according to the forecast of Patricia Silverstein, a prominent economist familiar with the Denver area economy.

But it has been mostly bad news for even the most established Realtors, who are seeing their incomes evaporate along with “sold” signs. It’s been good news for buyers who have both a steady job and a down payment. “You have more selection, depressed prices and incredibly low interest rates,” said Tupper Briggs, a real estate broker with Remax Alliance Evergreen.

The other plus is that, for the first time in recent history, plenty of homes are on the market for under $200,000.

“There used to be nothing,” said Briggs.

A search of the MLS database Jan. 26 produced 67 listings from $150,000 to $200,000 in Evergreen, Conifer, Pine, Indian Hills, Kittredge, Idledale, Morrison and Golden.

Of course, along with the decreasing number of houses being sold, the price of housing continues to deteriorate. The median selling price in 2008 in the Evergreen-Conifer area was $335,000, down 8 percent from $365,000 in 2007, based on Briggs’ annual report of real estate statistics, released last month at www.tuppersteam.org.

The average selling price of a house was down 3 percent to $415,000 in 2008. The average time on the market was 152 days, compared to 136 last year, a 12 percent increase. Sellers were discounting the original prices by about 10 percent to seal the deals.

Prices from a seller’s view compare favorably to prices in metro Denver as a whole, which declined 15 percent on the average in 2008 compared to 2007, according to the Colorado Association of Realtors.

To sum up, though, it’s not a pretty picture for many Realtors.

“During the fourth quarter, we looked up from our desks and noticed it was a lot slower,” said Briggs.

The long-range view

Like everywhere else, Evergreen is being affected by the national recession, declining employment rates, increasing foreclosures and the collapse of the subprime mortgage market. The recession was more than a year old in January and could take another six to 12 months to run its course, many economists believe.

Economist Silverstein, who is based in Littleton, expects metro-Denver median home values to increase 1.5 percent by the end of this year.

“We see great deals being driven by very attractive mortgage rates through the rest of the year,” Silverstein said. “On the price side, we are sticking our necks out and saying we could even see a 1 percent upside in prices and a little more sales activity.” Most of the action will take place in the last half of the year, she predicted.

One reason for that forecast is the lack of new construction.

“Our forecast is 8,000 new residential units, mostly multifamily. … In the year 2000 we built 28,300 new units,” Silverstein said.

And the impact of foreclosures is trending downward.

“The foreclosure situation is really being helped by outreach and also the fact that home sales activity really spiked in 2004 and 2005, when everybody was embracing the exotic mortgage products.”

Foreclosures stemming from doomed loans take about three years to materialize.

Waiting it out

The prevailing wait-it-out psychology appears to be slowing down sales.

“Most buyers are saying they want to wait for the bottom of the market. But if prices fall 10 more percent and rates go up 1 percent, it’s a wash,” Briggs said, noting today’s buyer can get a 30-year fixed loan for about 5 percent.

The direction of the market caught Briggs by surprise, he said.

“Last year I saw the housing market peaked and was trending downward in 2006. In 2007 we had the subprime mess and the financial market meltdown in ‘08. I didn’t see the magnitude of the problem. The thing I didn’t see was the financial markets falling apart.”

So, one wonders, have we reached the bottom yet?

“No one will see the bottom until you are past it. Then the buyers will come flooding back,” Briggs said.

Huge inventory of houses

Realtor Rita Hansen of Metro Brokers at Evergreen had the same story, and she has been in the business for 35 years.

“I think it’s worse than last year,” she said. “We are getting more phone calls, but people are really dragging their feet. We aren’t buying anything new. It’s just a feeling that we have to pull in our horns — that we have overdone it. There is a fear people won’t have enough to live on.”

In her best year, Hansen sold 20 homes. Last year she sold 10. Of the few houses that have been sold, sellers are reducing the price by as much as 25 percent, Hansen said.

She thinks the biggest problem is the media keep harping on all the bad economic news, which only makes things worse.

“I have a huge inventory of houses and land on the market,” Hansen said. “… I looked at a house in Spring Ranch, very private, beautifully decorated. But there are six houses in Spring Ranch on the market, and they had no sales last year. A lot of people are redoing kitchens and bathrooms. They are most important. And the front entry — it’s got to be attractive.”

Hansen’s best current deal is a 1976 $1.3 million one-story on 5 acres in Soda Creek. She said the owners want to downsize and can find something smaller for much less.

Hansen thinks things are going to pick up somewhat with Barack Obama as president.

“People seem to be enthused. We are getting more phone calls and setting some showings. I think it will pick up,” she said.

Likewise, Susan Williams, a broker associate with Coldwell Banker in Evergreen, hopes that Obama’s influence will bring forth change in 2009. In a market study of Soda Creek, Williams found only five homes sold last year, compared to 20 in 2007.

“Sellers in this rampant buyer’s market need to be serious and motivated,” Williams said. “Needless to say, the upper-end market is SLOW.”

Tangible improvements

Mark Footer with Intero Real Estate Services of Evergreen thinks the turnaround may already be in progress.

“We have seen from the beginning of the year a tangible pickup in people looking and getting qualified,” Footer said. He described 2008 as “another year of muddling through … but what’s going to be the trigger point?”

The volume of business in his office is about the same compared to a year ago, but the type of business is different, because there are fewer traditional sales and more short sales, in which the homeowner is unable to pay the mortgage and the bank is looking for a buyer at a slight discount.

Footer’s current best deal is not bank-owned but an “exceptionally good deal” at 425 Upper Elk Valley Drive in Saddleback behind Ski Country Antiques on 35 acres in ZIP code 80439.

Built in 2001, the stone-and-stucco home has sunlight, views, four bedrooms, five baths and a five-car garage. The listed price is $899,000, down from $1.2 million. It has been on the market for nearly two years.

“People are waiting for that one bit of news that makes them feel confident,” Footer said.

The question is, when will the angst-filled attitudes turn around?

“I think we are getting very close to that point,” Silverstein said. “I don’t think they are going to be able to play that game much longer. Within the next six months, we will see more solid performance.”

Evergreen-Conifer median selling price, number sold by year

(Source: Tupper Briggs, MLS, Remax Alliance Evergreen)

• 2008 — $335,000, 897 homes sold

• 2007— $365,000, 1,179 homes sold

• 2006 — $340,725, 1,324 homes sold

• 2005 — $375,000, 1,360 homes sold

• 2004 — $350,495, 1,167 homes sold

• 2003 — $326,975, 1,237 homes sold

• 2002 — $275,882, 1,195 homes sold

Homes sold by area 2008

median selling price, days on market. (The median is the price at which half of homes sold for more and half for less.)

• I-70 corridor, 123, $498,000; 171 days

• North Evergreen, 181, $425,000; 129 days

• South Evergreen, 165, $360,000; 141 days

• Conifer/U.S. 285, 242, $317,750; 161 days

• Pine/U.S. 285, 186, $211,750; 160 days

2008 TOTAL: 897, $335,000; 136 days

Foreclosures

The number of foreclosures in the Evergreen-Conifer area matches the trend in the Denver area as a whole. The peak for foreclosures came in 2008, about three years after the point where people who were poor credit risks were buying homes with low down payments and no-interest loans.

Data reflect the number of foreclosures applied for at the Jefferson County public trustee’s office in each year for selected Zip code areas.

Source: Jefferson County Public Trustee Office data base

Evergreen (ZIP code 80439)

2000 27

2001 21

2002 47

2003 57

2004 51

2005 49

2006 79

2007 89

2008 123

Conifer (ZIP code 80433)

2000 23

2001 12

2002 29

2003 29

2004 44

2005 29

2006 55

2007 63

2008 80