Five Reasons For The Drop In Home Inventory

Five Reasons For The Drop In Home Inventory

February InventoryWhere Did All The Homes For Sale Go?

It seems that the headlines around the country in stories written about real estate inevitably have two major themes; low inventory and increasing prices. And for anyone who is familiar with economics at all this isn’t a surprise. They should go hand in hand. Given equal demand,  a decrease in the supply of any good will result in an increase in the price of that good. The technical term is scarcity.  It results not only in a buyer paying more for something but in most cases they also have to demonstrate patience as they wait for delivery. But this equation doesn’t always end up with the same number of transactions taking place. Many of the would-be buyers get discouraged with the process of the purchase and decide to make other arrangements.

In the real estate world “other arrangements” mean that a would-be buyer decides to stay where they are or decide to rent instead of buying a new home. The market isn’t operating efficiently and in the end, the result is fewer sales.  We are already seeing all of these variables come into play: lower inventory, higher prices, fewer sales. Here in Boulder County inventory is down approximately 50% from the same point five years ago.

The question that I haven’t seen adequately answered is “where did all the homes for sale go?”  I don’t have ‘the’ answer but here are my ideas on the reasons why inventory of homes for sale has steadily decreased both nationwide and locally.

  1. Financial Distress – When homeowners don’t have enough equity or cash to sell a home they have three choices; pursue a short sale, let the home go into foreclosure or keep making the payments and hang on to the house until their equity rises to a point where their costs to sell are covered. Prices have risen and we are through the worst of the latest foreclosure wave but the most recent recession was deep and home prices did fall to a point where the recent appreciation in many areas is just now making up the accumulated loss. If you bought in 2005 – 2007 chances are that your equity vs. selling cost equation is still about breaking even. Therefore, the mindset for many people is, that I have made it this far and prices seem to be headed in the right direction so if I hold on a bit more it will be even better. Many in financial distress either can’t afford to sell or are waiting for more appreciation.
  2. Trade-up Conundrum – For homeowners hoping to trade-up to a larger, more expensive, or different house there are two parts of the equation, selling and then buying. Right now the selling part is easy. In the Boulder County area if you have a decent house you can sell your home for a good price in fairly short order. But once you sell you must find a new home, and fast. There are two problems here. 1) Low inventory means that a buyer has very few choices on the buying end and it might take a double move to make it work. 2) Prices are rising and there might not be enough equity (see #1 above) to put into the new home to make the financing and monthly payments work.
  3. Investment Buyers – When a new listing does come on the market competition between buyers is tight. Exasperating this competition is the proliferance of investors who many times make cash offers. More buyers means that it takes even more new listings to satisfy the demand.
  4. Rising Prices – I had a prospective seller do some quick math at the kitchen table recently. He knew that prices had risen approximately 9% over the past year on his $500,000 home. This meant that every month his home was going up another $3,750. There are some serious assumptions in this equation, but I don’t doubt that many homeowners do the same math. The answer to this optimistic equation for them is “let’s stay here another year and sell it next year for $50,000 more”. I love the optimism, but this type of thinking doesn’t work in perpetuity. If you follow the housing market, the stock market, the commodity market or any other free market, you know that these forward looking assumptions are easier to make than they are to collect on.
  5. No Place To Go – “Sure we could sell our house, but where would we go?”. These words are echoing across the area, and alas the nation. Instead of taking the plunge into the market, these would-be sellers/buyers then decide to do nothing, thereby fueling the self-fulfilling spiral of even lower home inventory. In our area this is further exasperated by a lack of rental homes that in a different market take up the slack if the logistics don’t work just perfectly.
When to Upgrade Your Property

When to Upgrade Your Property

Home ownership is a long term relationship. And just like other long term relationships in our lives, it needs constant attention and care.

Let’s imagine a typical situation. A family purchases a new home and uses most of their savings to do so. bad_bathroomThe first few years are spent installing landscaping and furnishing and personalizing the rooms. Everything is new and fresh and all is good with the world. After awhile the house is either just the way you want it or good enough. For a long time the homeowners live happily in the relatively new home, not much to be done but enjoy.

As many years go by the house starts showing some wear and tear and features that were once fresh and hip are now showing up on the “before” side of the “before and after” shows on HGTV. But the house still works so you live in it and fix something when it breaks. Unexpectedly you get a new job out of town and you have to sell your home in a hurry. Your realtor comes in for a meeting and nicely tells you that your home is dated. There’s not enough time or money to upgrade everything at once so the only option is to set a low price and hope for the best. It might take many years to get to this point but I see it time and time again.

The other option is to proactively upgrade your house over time. Yes, there is a honeymoon period on a brand new home where you don’t need to upgrade, but after five or six years you will want to start looking at your property with a discerning eye to determine what project is next. When you take one reasonable project at a time you will be continually improving your investment. Using this strategy you will not only keep your investment on the top end of neighborhood values you will be able to enjoy and take pride in your house as you live in it.

Here are some ideas of yearly projects to consider for your home:bathroom-before-updates

  • Replace flooring in a bathroom.
  • Upgrade the light fixtures throughout the house (sconces, bathroom light bars, chandeliers)
  • Upgrade the countertops in the kitchen
  • Replace the furnace and air conditioning
  • Re-carpet
  • Replace the vanity in a bathroom
  • Paint the exterior or interior of the home
  • Replace the front concrete walk with something more eye catching
  • Replace the appliances (non matching appliances are not a good selling point)
  • Re-stain or install a new deck

Take on one project a year and when the time comes to sell you will be ready to maximize the value.

 

Recent Testimonials

Recent Testimonials

I love serving my clients and it’s great to get feedback on how I’m doing.  Here are some testimonials I have received from clients I have helped over the last few months.

“We worked with Neil Kearney for the sale of our Gunbarrel home during our relocation out of state and were extremely happy with him!  He provided a comprehensive market analysis in a short time so we could price our home competitively.  His marketing of the house drove traffic to our home and led to multiple offers in a short time, allowing us to achieve our target price for the sale of the house.  Neil’s personal touch and communications while we were out of the state were a great comfort to us during our busy relocation.  He took care of all of our worries and kept us informed during every step of the sale of the house.  We highly recommend Neil for your agent!”

Jim and Anna McClatchey

 

“In selling my home I was searching for a realtor that had plenty of experience in pricing and selling properties, is familiar with my neighborhood and surrounding area, has a friendly demeanor.  Above those qualities, the single most important thing to me was being confident that my realtor would know how to price a house right without listing it for too less or too much.   A friend had recommended Neil Kearney to me, as he had told me that his experience with Neil had surpassed his expectations.  I took my friend’s recommendation and Neil Kearney personified each of those qualities I was looking for in a realtor very well.  Neil did his homework and helped me price the house right.  Three days later I was under contract.  From the first handshake to the closing of the sale, Neil made my home selling experience a pleasant one.”

Shaun Tomkins 

 

“Neil Kearney is a great realtor and we highly recommend him!  Neil’s knowledge, skill and personal qualities make him a highly successful realtor which made our real estate transaction smooth and enjoyable.

Neil recently helped us purchase a home in Broomfield.  He is very knowledgeable about real estate in Boulder County, Longmont, Broomfield and other neighboring areas.  We looked at houses in all of these areas and his manner of quiet, patient, competent service made it a smooth process to find the right house.  As individuals returning to the Boulder area from out of state, it took us a while to determine the right location at the right price for us.  We also were unsure about the type of housing we wanted and thought we wanted to downsize.  After looking at smaller properties, we realized that we wanted a home that was similar in size to the one we had most recently.  Using his strong knowledge of the communities and how they related to our housing needs and desires, he guided us through the process of finding the house that suits us perfectly.  His provision of the on-line search capability was also very helpful.   In addition, he has a ready sense of humor and it is fun to work with him.

Neil quickly and efficiently made our offer for the house.  He monitored all of the steps of the purchase with ease including recommending potential inspectors and working with the title company.  It made it very simple for us.  It was a pleasure to work with Neil and if the opportunity arises, we would anticipate using his services in the future.”

Kent and Jan B.

 

To see more testimonials go here.

Why I love my Career as a Realtor and Owner of Kearney Realty

Why I love my Career as a Realtor and Owner of Kearney Realty

SONY DSCWhy I Love Being a Realtor

My plan coming out of college was to be a real estate agent long enough to put myself through graduate school. I did just that, and after four years of night school I had a freshly minted MBA and no desire to do anything else but to continue on my path in real estate. Sixteen years later (24 in all), I still feel the same way.  I’m really lucky to love going to work every day and here is why. I get to work with great people. I get to be creative, I get to work for myself and…

 

 On any given day and within any given day I’m a:

  • CEO
  • Janitor
  • Customer Service Representative
  • Accountant
  • Web designer
  • Graphic Designer
  • Counselor
  • Chauffeur
  • IT troubleshooter
  • Confidant
  • Furniture Mover
  • Problem Solver
  • Marketing Specialist
  • Blog Writer
  • Public Speaker
  • Video Editor
  • Social Media Director
  • Board Member
  • Ethics Committee Chairman
  • Recruiter
  • Negotiator
  • Decorator
  • Sales Person
  • Copy Writer
  • Database Specialist
  • Photographer
  • Advisor
  • Office Manager
  • Transaction Coordinator
  • Sign Installer
  • Researcher
  • Strategic Planner
  • Manager
  • Bathroom cleaner
  • Babysitter

Each day I am responsible for putting forth a professional effort in an increasingly competitive market. The perks are many and as you can see the variety and scope of what I do are large.  I’m apt to work seven days a week for weeks on end, answer work emails at 11 pm, take business calls at 7:30 in the morning. But I also get to arrange my schedule so that I can watch most of my kids games and go on vacation without asking for permission. The responsibility to my clients and my personal code of excellence are my only boss. And I wouldn’t have it any other way!

Top Three Buyer Mistakes In A Hot Real Estate Market

Top Three Buyer Mistakes In A Hot Real Estate Market

Budding trees, singing birds and swarms of home buyers. These are the signs that spring is just around the corner.  The first two happen every year but this year especially home buyers are our early and in droves. As we learned from the ‘birds and the bees’, ying and yang and Marvel Comic Books, it takes opposing forces to create balance.  Right now the balance of the Boulder real estate market is off kilter. There are not enough homes on the market to satisfy the demand of the buyers.

Over the past week 171 properties have come on the market in Boulder County. Already 24% of those homes have gone under contract.  If you look back two weeks that number jumps to 32%. It is a fast moving market. We just listed a home in Louisville and over the three days on the market there have been 18 showings.  Multiple offers are very common and many buyers are getting caught up in the frenzy.  Here are the top three mistakes I see being made in this market.

Paying Too Much

When you are at the supermarket comparing products and prices is easy. For example, you want some soup so you compare the choices available and decide; what flavor, what brand, what size, etc. It is easy to decide because there are ample choices and whether you are a value shopper looking for a generic brand or are willing to pay for organic soup with a brand name, you can easily make that choice. But if you go to a remote store, like you often find near a campground with one soup choice the decision is whether paying $5 for a can of Campbells is worth it to you. The scarcity in choice allows the seller to raise price and at that price soup will be worth it for some and not worth it for others.

Pardon the extended metaphor, but right now there is a scarcity in the real estate market and buyers are faced with buying decisions with limited options.  In many cases the decision is, do I pay more than seems reasonable or do I wait and hope that something better comes on the market.  I have seen many sellers pushing the market and some are being rewarded by buyers willing to pay high prices.

So, if you are a buyer how do you balance being competitive in this market where 18 buyers are looking at the same property within a few days and making a smart decision. The first tip is to do research like an appraiser would do. Look at the sales in the neighborhood over the past six months or year (depending upon how many have sold) and find the homes that are most like the home you are looking at. Compare the upgrades, price per square foot and I like to compare the assessed values as set by the county appraiser.  After comparing the sold homes to the home you are interested in you should have a good idea if you are within a reasonable range or if you are going to be setting a new record for the neighborhood.  If you are getting a loan, the appraiser hired by the bank will be doing the same analysis and they are much more conservative than the normal buyer who is newly in love and is riding an adrenaline high from beating all of those other buyers. If you have paid too much the appraisal will stop the sale.  So save yourself some time and money and work with your Realtor to see if what you are paying is reasonable.

Getting Caught Up In A Scarcity Mentality

When houses are flying off of the market and you may have missed out on a home or two, it may be easy to start to think that the house you have just seen (and might just work) will be the only one and if we don’t make an offer now…  Home buying is a process and sometimes there is a delicate balance between patience and action. This is where advice from a good buyers agent is invaluable. The truth is, even though you think that there will never be another house like the one you just lost out on, new listings are coming on the market all the time. A home buyer must always look forward and never dwell on houses that “might have been”. The right state of mind is one that objectively looks at the options and sees each house that doesn’t work as one step closer to the one that will work.

Not Acting Quickly Enough

In a sellers market the competition for good houses is fierce. Being a part-time buyer is frustrating and futile in many ways. In order to be successful you must be ready to pounce on a good home. Here are the steps that a buyer must take to be a active buyer, ready to buy.

  • Financing Ready – You must have your ducks in a row. A lender letter is required with all offers and it is best that you are already in the process of loan approval, just waiting for the property, verification of your information and an appraisal.  You also must have liquid funds for earnest money ready to go.
  • Quick Information – Knowing about the homes on the market is the next hurdle. If you are waiting for the Sunday paper you are most likely missing most of the homes. What I do for my clients is to set them up with a search that automatically scourers the MLS for new listings every few hours and sends us both an email with the results.
  • Quick Showings – Once you know about the new listings you need to get out there are see them quickly. Flexibility is a key and seeing promising new listings on the first day gives you an advantage.  I showed a listing this week that had just come on the market at 10 am.  We met at 5 pm and there were four other groups meeting there at the same time. What a zoo!
  • Quick Offer – Being ready to make an offer quickly is another key.  Be ready to analyze the data (see above) and make a strong offer is key to getting an offer accepted. A few weeks back I was able to make an offer on the spot at the house by writing the contract on my IPad and having the buyers sign on the spot. The seller and listing agent were about to meet so we had a tight deadline and we were able to meet it.
  • Be Smart- As coach John Wooden said “Be quick, but don’t hurry.” Buying real estate is a long term decision with large consequences if you don’t get it right. Be ready to make your best offer but don’t get caught up in the wave of competition.
Buying a home in a tight market is a stressful situation and under pressure it is much easier to make a poor decision.  I hope the three tips above help you navigate the process a bit easier.
If you are looking for a proactive buyers agent call me Neil Kearney 303.818.4055
My Services – Automatic Listing Search and Personalized Home Search Website

My Services – Automatic Listing Search and Personalized Home Search Website

MySite Introduction Video

It’s easy to find homes on the internet.  Search sites are everywhere but I know it is frustrating when the information is outdated. It also is a big job to sort through all of the homes each time to find the new listings or the price reductions. I can help! I can set up an automated search that sends new listings automatically to your email. This way you know what is happening in the market but don’t have to sort through all of the homes you have already seen or don’t care to view.

The best part is the website that goes along with the service. Each of my clients can have a personalized, password protected site in which to view all of the information available on a given home. On your MySite, you can view, sort or delete listings so that you can easily come back and view or share what you have seen. The site updates automatically so when a house goes under contract or has a price change you will know about it when you log in.

This is a great service and I would like to set it up for you. Take a look at the video above for a quick demo on how it works and how it looks.  You will love it!

Just call me at 303.818.4055 or email me

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