Residential real estate round-up
On the heels of a tough 2008, January 2009 kicked off with guarded optimism from the realtors and home builder industries.
Existing home sales for 2008 fell 10 percent, compared to the year before, according to the National Association of Home Builders. But, by January 2009, the Federal Reserve had lowered interest rates, making a home purchase more affordable. A 30-year fixed rate mortgage started the year at about 5 percent, and new foreclosure filings began their march to record levels.
Home-sales trends by year end, however, were looking up.
While single-family sales volume for January through November 2009 was off 6.3 percent to $1.76 billion compared to the same period last year, according to the Pikes Peak Association of Realtors, sales for the first 11 months of the year exceeded 2008 totals by 3.6 percent. Condominium closings were down slightly from 1,023 for 2008 to 1.007 during 2009 — a 1.7 percent decline.
More good news came in the form of existing home sales price improvement. During November 2009, existing homes sold for a median price of $185,000, up 3.4 percent from the prior year. In addition, the number of total active listings fell almost 22 percent — perhaps reflecting absorption of properties in foreclosure and the originally-announced deadline to qualify for the First Time Homebuyer Tax Credit.
The National Association of Realtors, the NAHB and their local affiliates also became proactive, lobbying Congress for relief from the subprime mortgage meltdown of 2008.
Housing and Building Association of Colorado Springs President Ralph Braden, said during 2009 that his organization’s 650 members hoped the new year would bring stabilization and government support for new home construction and sales taxpayer incentives. With the annual pace of new El Paso County residential building permits off by more than 60 percent from the highs of 2006, in a January 23 interview with the CSBJ, he described the coming year as “filled with unknowns.” Local builders solidly supported the NAHB’s Fix America Housing First Initiative which included a provision for $7,500 in tax credits for first-time homebuyers along with a tax credit extension and mortgage cap incentives.
Congress responded, and President Barack Obama signed the First-Time Homebuyers Act into law on Feb. 17. The bill approved an $8,000 tax credit for first-time home buyers on the purchase of a principal residence closed on or after January 1, 2009 and before December 1, 2009.
The National Association of Realtors, another of the legislation’s beneficiaries, also applauded a second bill, passed on Nov. 5, that included an extension and expansion of the original $8,000 tax credit for first-time home buyers through April 30, 2010. Current homeowners with a qualifying income are now eligible for a $6,500 tax credit through April 30, provided they have lived in the home they are selling, or have sold, as principal residence for five consecutive years in the past eight years.
With luxury home demand down, days on the market spiked to more than a year’s inventory for property priced from $750,000. Realtors and their sellers reacted, especially in upscale foothills and Tri-Lakes area neighborhoods where 5 to 10 percent price reductions were common. Entry-level and moderately priced homes under $300,000 sold fastest, and the average sales price of homes in the Pikes Peak region rose from $195,000 during January to about $212,000 through November 2009. Median home sales prices for the same period remained flat at about $190,000, according to the Pikes Peak Association of Realtors.
A growing number of realtors were forced to deal with short sales — a new reality as subprime mortgage resets took monthly payments to new highs for those who’d bought their homes since 2004. ReMax Properties owner Joe Clement began offering in-house short sale training classes for his 200-plus brokers and other offices followed suite.
There were bright spots, however.
As the year came to an end, the black cloud of new foreclosure filings finally began to lift, but not before El Paso County Assessor Tom Mowle predicted during early December that filings had reached last year’s record total — and would top 5,000 before year end. The good news was that new foreclosures starts in November were down from previous months — the lowest total since January.
The surge in home buying and refinancing that occurred this summer clearly has come to an end …it now seems extremely unlikely that we will release 40,000 deeds of trust this year,” he wrote in his December report, adding that about 60 percent of foreclosure starts would result in a sale and deed.
And, thanks to provisions of the American Recovery and Reinvestment Act that provided $2 billion in funding for the Neighborhood Stabilization Program (NSP) and Community Block Grant programs, a Pikes Peak region nonprofit partnerships headed by Greccio Housing was able to purchase the 24-unit Bentley Commons apartment complex for $1.7 million. Greccio also bought the Citadel Arms Apartments for $534,500. Both properties were acquired for at-risk families and individuals.
In addition, a total of 1,239 new county building permits were issued through mid December, compared to about 1,200 for all of 2008.
Realtors saw increased existing home sales push active listings down to 4,300 for November 2009 — down from almost 5,000 during first quarter. The First Time Home Buyer tax credit also helped drive a 3.5 percent increase in home sales for the 11 months ending November 2009, compared to the same period during 2008, according to PPAR statistics.
Banning Lewis Ranch saw the addition of two new builders, Richmond American and Oakwood Homes at Northtree, along with the exodus of John Laing Homes and the sale of remaining Capital Pacific Homes’ lots. Through third quarter 2009, the community’s inaugural Northtree neighborhood closed on home ranging from the high-$100s through the mid-$300s, said Vice President of Project Operations John Cassiani. “We’ve sold 450 of a total of 850 available lots since we opened in September 2007 and expect between 65 and 70 new move-ins for the year,” he said, adding that financing issues prevented some builders from larger quantity purchases.
Entry-level homes were definitely the best performers. Challenger Homes added a new model and sales office at Gold Hill Mesa when John Laing left the market, and owner Brian Bahr said his strategy would be to continue to build homes in the affordable “high $100s to mid-$200s.” Challenger builds at 11 different sites in Colorado Springs and Monument, and 10 of those target first-time homebuyers.
Lorson Ranch reported a total of 150 new homes occupied by yearend at the 1,400-acre master-planned community. The project’s most active builders, purchasing about 140 lots combined during 2009, were Journey Homes, Premier Homes and Saint Aubyn Homes. Due in part to the First-Time Homebuyer’s Tax Credit, approved during February and extended into 2010, Lorson’s low $200s average pricing made it the most permitted and fastest selling subdivision in El Paso County, according to Home Builder’s Research data through third quarter.
Builders in the mid-to-upper range of the market were not completely shut out, however. Keller Homes closed on 20 homes, Campbell Homes on 17 and Saddletree reported 12 sales through third quarter at Cordera where homes start from about $400,000, and Classic’s Flying Horse community saw 17 lot sales for the same period. Wolf Ranch builders, Goetzmann Homes and Classic Homes recorded a combined 20 sales through September. Luxury builders, on the other hand, remained busiest with projects already in the pipeline — in some cases, selling off custom lot inventory — and did little, if any speculative building.