AURORA, Colo. (CBS4)– Realtor Todd Crosbie is showing a home that just might be the right deal for a couple moving to town. Crosbie has found the market is changing.
“They’re pulling the trigger more regularly saying, ‘I don’t want to miss out on this house,’” said Crosbie.
Potential buyer Jason Poullard is moving from the Orlando area, where the market is far softer. Jason and his wife considered renting but with rising rents in the metro area and current mortgage rates dipping in and out of record territory, they figured they’re better off owning.
“Definitely,” said Poullard.
Crosbie has seen bidding wars. Interestingly, one ended with one buyer winning out, but then the financing didn’t come through because the underwriter looking at the loan did not believe the value of the house was as high as the bid.
Crosbie thought the market would bear the price, but the underwriter did not yet have value data indicating the price was justified.
After the potential buyer had to back out, the home went back on the market because the other buyer had already found another property.
So the market is quirky, but there is definite positive momentum.
As far as he can tell, Ryan McMaken, who crunches data for the state’s Division of Housing says, “The worst is over.”
“We know that vacancy in single family rentals is very, very low, two percent or so. Vacancy in apartments is about 4.3 percent. Those are very low levels,” said McMaken.
That is one factor putting pressure on housing demand. Another is cost.
“Colorado is consistently in the top three of the places college grads say they want to move. People are moving here. They’re staying here. Because where else are they going to go?” said McMaken.
People are doubling up in apartments because rents are high and vacancies rare. There are more people coming to the state than there are homes getting built.
“You’re still going to see price increases probably in the big scheme of things go up everywhere,” said McMaken. “Simply because as those desirable markets go up, people are going to move into the less desirable markets.”
And the price increases and tightening sales are across many price ranges.
“For homes that are in that middle range, say 200 thousand, 250 thousand, there’s a lot of demand for those now. We hear about a lot of bidding wars at prices at those levels– and if they’re in a neighborhood that is seen as being close to employment as being in an advantageous location. You’re going to see price increases that go up substantially.”
Builders are looking at brighter numbers. We gazed out the window of a home under construction and looked out over a handful of foundations on a street in the North Creek Farms subdivision. All of the homes we could see were already sold.
“Our sales are up 54 percent over last year,” said Christina Presley, Colorado division president for Meritage Homes.
The company bought lots in the development after two different developers decided to get out at the bottom of the housing drop in 2010.
Now they’re building a year ahead of schedule.
“It’s been an exceptional year,” said Presley. “We have sold more houses in the first six months of 2012 than we did in all of 2010.”
A recovery? Yes, said McMaken. Full recovery.
We may never build as many homes as we did before the recession. Colorado was putting up too many then. Banks and builders are not likely to join in overbuilding again. But Meritage and other builders are responding to demand.
Purchasing power is now the best it has been since 2003-2004.That means pent-up demand is kicking in.
Housing looks to be on its way back. But still we’ll put up only about 7000 homes in 2013.
With so many people still moving to Colorado, John Covert of housing data company Metro Study believes the number should be about 15,000 per year to balance with demand.
That may still be off in the future. But if you own a home now, chances are with demand rising and inventories dropping, the price of that home, is heading up.