Is Thinking of Real Estate As a Seasonal Market Useful Anymore?
Any specific answer to this question depends on who’s doing the asking, but the general answer is, not as seasonal as it used to be. The front range is a complicated market with constant changes, keeping things interesting for Heather and Sean.
To best answer the frequently asked question “Should we wait,” let’s focus on just one area: Evergreen. And I’ll keep my commentary focused on only three segments.
We can call the first segment, with prices of $500,000 and less, our “Hot” market. These properties seemingly evaporate immediately once they hit the market.
We will refer to the $600,000 -$800,000 segment as our “Average” market because well, statistically, it is.
For our high end, I like $1,500,000 to $3,500,000 for obvious reasons, but also because that’s where this pricing segment begins to behave statistically differently.
The separation of these three price points is useful, because when we try to view them all together without any differentiation at all, the data resembles a mid-year glob, reinforcing the slightly antiquated and lazy May-to-August pattern, and hiding a variety of important insights. The truth gets lost and the message becomes pessimistic and just not very helpful or accurate.
We Service Many Price Points & Markets
This issue is important to Heather Graham and myself because we service many price points and markets year around, seeking to understand all of them so we may best service our clients. All addresses and all price points have both challenges and advantages. In order for us to perform at the high level our clients have come to expect, we believe the best way to understand these factors is to examine the conditions that enable them.
I would be remiss if I did not point out that today, we’re discussing residential properties to the exclusion of land, income or Investment properties. We are happy to lend our expertise to discussions regarding these other segments, so please don’t hesitate to call us at 303-895-4663, or 720-201-4187. We love to talk shop.
After a decade of selling real estate in the highly specialized markets of Evergreen, Conifer, Genesee, Golden and Morrison, Colorado, I have come to the conclusion that the conventional wisdom regarding local real estate practices run contrary to our results when it comes to seasonal considerations. In researching for this article I am seeking to understand why Heather’s and my personal expectations have been a bit out of sync with that of some of our peers.
For example, the fourth quarter has traditionally been our most productive quarter. This also seems to be true for most (not all) of the top producers serving our area, while the warmer months seem to be more popular for the typical local Real Estate talent. We understand. What Realtor does not love selling property in the Spring and Summer, with the awe-inspiring promise of rebirth and rejuvenation, warming sun and real estate signs safe from the danger of snow plows?
But Spring & Summer Are Only Half the Story Up Here.
Census data tells us that while Evergreen has a rare combination of top-rated schools and an active lifestyle, less than 23% of households in Evergreen have school age children, and a highly mitigating percentage of their moves stay within district.
My Sotheby’s contemporaries in Texas tell me that sales slow there during their brutal Summer months and pick up in the Winter. This is important knowledge about one of our largest feeder markets, but Texas markets are well behind mid western areas like Chicago, with its brutally long and cold winter months when it comes to sending people to the Colorado foothills. This population shows up in force and truly appreciate our climate all year round, but especially our relatively mild and pleasant winters. These other markets could start to explain why our experience with the local fourth quarter real estate market has been so productive.
In Today’s Market, “Hot,” Is an Understatement
Our hot $500,000 and lower market segment was the first to recover from the great recession, aided by investors absorbing as much of the “have-to-sells” as they could, as fast as they could. For the most part, the remainder consisted of pent up demand and discretionary sellers, as inventory burned off quickly. Lately, however, the demand has caused such appreciation that appraisers are challenged to keep up with the new values.
The current average days on market have been under two weeks, making the word “hot” to describe this segment seem like an understatement. This price point starts to take off in mid-February, and performs quietly and steadily under the radar until April, because of the effect of attrition on still low inventories.
By April our Hot Market is at a pretty good sprint, lasting until the end of August, when availability is again challenged. Even through the winter this effect is measurable, with sales volume dropping by two thirds.
The notable issue here is that inventory drops faster than sales, creating a shortage. This shortage creates a seasonal log jam because sellers have no place to move to. This seems to affect the Hot Market more than the other segments.
When looking at the graph, one might ask “How much of a contributing factor is Inventory?” My answer is that it is a substantial factor, and was a major issue, as our Evergreen inventory actually dropped to fewer than fifty homes for sale early last spring. The start of 2016 was painful for this segment, then the annual log jam broke.
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Just a few years ago, our market’s median price stood at about $675,000. Today, it is closer to $869,000 as our market continues to thrive. This number vacillates considerably as we progress through the year in a seasonal pattern, but it is showing signs of stabilizing. In order to differentiate and follow this segment, the range of $600,000 to $800,000 works well to allow us to talk about an Average Market. Our Average Market typically starts to hit its stride in May, before tapering off in September, although in 2015 we saw this segment continue to perform well through November.
This pattern seems to be trending. For example the Winter sales volume lows of the Average Market segment were not as severe as the drop off in the Hot Market this season. This pattern is showing strong and optimistic signs of resilience, as the duration and depth of the slower season becomes more forgiving year after year.
In other words, winter is not nearly as worrisome for this market as it once was. We really like to see this and hope the pattern continues to improve. Stability and steady growth are more promising for a sustainable increase in property values, especially when compared to the difficult to sustain, double digit growth that can create the dangerous conditions that lead to housing market bubbles.
Historic Sales By Year: $600,000 – $800,000
Positive Signals in the Luxury Market
To best measure our Luxury Market, let’s start at $1,500,000 and measure up to $3,500,000. This price point represents the most recent market segment to recover from the great recession. But like every good Cinderella Story, its arrival is dramatic. This unique segment of our market is if anything even less seasonal than the others. It’s also changing so fast that it’s a little tough to get a good read on it right now.
The numbers for 2016 are not all in yet, of course, but anecdotal information from our pipeline – along with reports from other top producers – indicates that another strong fourth quarter is on the horizon.
The first three quarters of 2016 are what we can see from here, and we like what we see so far. As with most election years, the fear of a slowdown in the luxury housing market has been present, but contrary to these fears, the potential speed bump was smaller than anticipated. In terms of sales volume, the number of solds for the high end segment has increased by 20% for 2016 when compared to this same point in 2015. And 2015 enjoyed 20% more sales than 2014 for the same months measured. In short, we are very excited to see what happens when the election year fog clears.
A Glance of Insight
A glance of insight into why this market is a late year performer may be derived from an informal interview process performed by my partner Heather and myself. During August of 2015, Heather and I had six properties under contract, ranging in price from $980,000 to $1,850,000. All six properties closed successfully. All of these properties were our listings, and all had buyers from out of state. When we asked the buyers or their agents “why did you purchase now?” five of the six reported that they were freed up from their real estate commitments by other buyers who were moving ahead of the school year’s commencement.
We identified this as a sort of “shadow market,” that appears to have accounted for at least part of the 4th quarter surge in 2014 as well. Another insight we can share from experience as longtime occupiers of this work space is that these buyers tend to be more discretionary and will take a long, long time to pull the trigger.
And remember those feeder markets we were talking about earlier? About 70% of these buyers are from out of state. Of those out of state buyers, approximately 30% came from Chicago. We don’t believe this is indicative of a second home market. We are still a primary home market, functioning as a bedroom community to Denver for most of this segment.
More Reasons to Love the 4th Quarter
There are a few other reasons we love the fourth quarter. While sales volume does slow to some degree, inventory drops fast enough to actually improve the outcome for many sellers, depending on their location and price point. This effect is measurable enough to cause us to advise some listings to hold off on competing until local inventory is reduced.
Of course, life marches on, and so do job transfers, graduations, marriages, deaths and divorces – each one of these life circumstances contributing to demand. Life circumstance buyers tend not to be the tire kickers discretionary buyers can sometimes be. In fact, we’ve found that while showings sometimes slow down during the 4th quarter, and these homes can sometimes hang out on the market a bit longer, the exposure can be much more potent, with fewer showings required to get to the sale.
Even our marketing seems to be much more effective as our competition follows the bears into hibernation.
In short, there is no room in the fourth quarter to ease up. We are still up and at it, bright and early in the morning, with our wool real-estate socks on. And why wouldn’t we? We love our area and chosen professions.
The idea of a sales season and a pessimistic season for our area is quite frankly becoming dated. Our market is growing and remains quite active throughout the year. Should low inventories in Denver continue to push out of area Realtors up the hill in search of lifestyle and liveability, this data becomes even more important, as our local talent is the front line of defense against perception. Real Estate is local, and so are the best experts.
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Call Sean & Heather at 303.895.4663 or 720.201.4187, & let us help you sell your home.
The Mountain Metro Association of Realtors Governmental affairs Committee serves Realtors and the mountain communities by seeking out information, educating and advocating for those who represent property owners.
Septic Use Permits:
Jefferson County requires a continued use permit to ensure environmental and public safety due to potentially faulty or under functioning septic systems. Occasionally this is not achieved. The results range from some systems remaining unchecked to lawsuits from new homeowners. Through conversations with Jefferson County, MMAR’s governmental affairs committee has learned that Jefferson County was one of Colorado’s first Counties to have a Septic use permit policy with many Counties following suit. Boulder and Larimer are some of the stricter and more demanding counties and Clear Creek is expected to follow with a policy of their own. Jefferson County Public Health is considering a change to their use permit regulations; a new provision that if a use permit was not issued prior to the sale of a property, the new owner would be required to obtain one within 30 days after being notified by the Department. MMAR’s Realtor membership was polled with the resulting concerns and opinions forwarded. Please contact a Realtor regarding this policy as it develops.
Fire Red Zones:
Our Governor’s office has formed a task force to address local and state wildfire risks and the insurability of homes. Some exciting legislation is being considered, ranging from property tax credits for mitigation to resources supporting fire equipment and personnel. The House Bills that are being considered would enact these proposals. The Colorado Association of Realtors is concerned with potential “Red Zone Areas” affecting many parts of the state. The effects on homeowners could be a financial hardship.
The talk and rumors have not yet materialized but state real estate lobbies are keenly aware and are watching for the beginning of any legislative action. Conversations with the Government Affairs Director and chief lobbyist for the Colorado Association of Realtors, Ted Leightly, prefer long term planning rather than expensive time of sale solutions.
“Policy proposals that are focused on educating property owners and incentivizing activities that reduce the risk of wildfire are more likely to have a long term impact. Educating homeowners about the risk of wildfires and providing resources to help them properly prepare are the best means by which to mitigate the risk and it is critical to changing behavior over the long term.”
Home Owners Associations:
Current and future home owner’s feelings on HOAs are as varied as the paint samples at our local home improvement stores. For some it is not even on their radar to consider a home purchase but for others it is of primary concern. In the foothills like the rest of the country, associations can range from loosely organized neighbors around pot luck dinners having discussions about road sharing agreements, architectural committee issues to very well organized and involved groups that take the rules and standards of their community very seriously and govern with consequence. Most HOA’s maintain documents that must be disclosed per the Colorado Division of Real Estate Contract to Buy and Sell Real-Estate and frequently a fee is charged by these HOA’s to provide these documents. These fees are often significant and may include additional transfer fees. As of August 7, 2013 all HOA’s have at least one thing in common, HB 13-1134. The Colorado Department of Regulatory Agencies requires annual registration of HOA’s. The Annual Commission Update states “Every unit owners association shall register annually with the director of the Division of Real Estate and a failure to register or the expiration of annual registration suspends an association’s right to impose or enforce a lien for assessments or pursue an enforcement action, until the association validity registers.” MMAR nor its Government affairs committee have a position or opinion regarding HOA’s but odds are that you do or someday will. MMAR wants you to be informed when buying and selling real estate. We recommend 6 points to consider as you proceed.
Consult a Realtor, not every licensed agent is a Realtor.
Take advantage of the Colorado Division of Real Estate promulgated electronic contracts. The contracts along with disclosures for existing bylaws, recent minutes and other HOA documentscan be found on the Department of Regulatory Agencies website under real estate.
Work with a title company along with your Realtor toany lingering and unresolved community guidelines.
Consult DORA (Department of Regulatory Agencies) to see if the HOA is registered.
Consider getting involved in your HOA to make sure the new guidelines are being met.
Consult an attorney, interpretation or lack of awareness of the law may lead to legal difficulties.
Your MMAR Realtor can help educate you when it comes to: Use Permits, fire red zones, HOA’s and real estate matters. Your MMAR Realtor can be invaluable, they have state and national support through the Colorado Association of Realtors and The National Association of Realtors. Not every licensee is a Realtor; please consider their ethical commitment, education and professionalism when choosing representation in real estate matters.
Security and Monitoring Alarm Considerations
in Today’s Automated Home
A home security and surveillance system is an essential part of
any modern automated home and should be designed early on during the
pre-construction design phase. This was our forth building project and by far
our most ambitious. The scope of this article concerns the basic security and
monitoring considerations used in selecting
the final security blueprint. Did I say “final”, no such luck.
As the industry advances, so do all the extra bells and whistle add-ons that
make the security/monitoring design both easier to apply and maintain. The result
is both peace of mind when away as well as when you are occupying your home
either day or night.
The basic design of a security system begins with analyzing the
needs of the occupants, studying the layout of the house as well as the land it
sits on, surveying existing technology
and hardware, reviewing system costs, considering monitoring choices, and
finally planning the installation.
In addition to the advanced perimeter and interior protection offered by most
security systems, most new designs allow
for surveillance monitoring which include features that enable the owners to observe both real-time video and environmental
conditions inside and outside the home when at home or away.
Home surveillance system, video cameras and display systems are
considered by most contractors to be optional after the sale items. However, I
feel they should now be part of the original design process.
Our heavily wooded ranch style home sits on a rolling 7 1/3 acre site,
approximately 7,400 square feet of living area in multiple living areas, 5 fireplaces, 15kw standby generator, significant landscaped and irrigated gardens,
5 acre perimeter monitoring, and attached 2,400 square foot 5-car garage with workshop, and a monitored
and gated 700 foot driveway. I wanted a system that was easy to operate as well
as easy to maintain. Our final design consisted of over sixty sensors of
various types both hardwired and wireless. During construction we hardwired
“all” perimeter entry doors as well as hardwired significant glass
break coverage for all windows in a
multi zoned design which included motion traps, and numerous smoke and heat
detectors per our local building codes.
After we planned for the hardwired detectors we went back and
installed redundant wireless monitors which included garage door sensors, and service utility rooms monitoring for heat, cold, motion, water, smoke, and
carbon monoxide. Our home contains a radiant heat system in all areas including
the garage spaces so it was important to us to monitor three zones with cold temp alarms. We have a monitored 5 acre
pet perimeter invisible fence installed as well. Our home has a fully featured
professional weather station installed and well as numerous wireless and wired
IP cameras to finish off the system. Our master alarm panel is not only battery
backed up but we have added a standalone UPS system to it.
The master panel is constantly monitored by a central station
which offers us a significant discount on our home insurance policy as well as
our continued peace of mind while we are away. It is nice to see it snowing
while we are away in Florida on the beach. Likewise we can monitor our property
via the IP cameras from our cell phones as well as receive alerts from our
monitoring company from practically anywhere with cell phone or internet
access..
A little thought goes a long way, and we are continuing to add
features to our security and monitoring system as these features expand and
become more reliable.
“The Five Star Real Estate Agent Program is designed to identify and showcase real estate agents in a local market who score highest in overall satisfaction. Look for the results in the September edition of 5280 Magazine.
As part of an in-depth research process real estate agents are evaluated by consumers based on customer service, integrity, market knowledge, communication and negotiation skills, closing preparation, helping you find the right home, marketing the home being sold, and overall satisfaction.
10,000 to 50,000 recent homebuyers (all area residents who purchased a home over $100,000 – $200,000 within a 12-36 month period depending on the market size) are asked to name and evaluate real estate agents with whom they have had direct, personal experience with. Recent homebuyers can evaluate up to two agents. Both positive and negative responses regarding each agent are accepted. In addition to the survey results, other criteria such as acceptable disciplinary action is incorporated into the overall evaluation process.
The final list of Five Star Real Estate Agents includes the real estate agents, of those evaluated, in the local market that scored highest in overall satisfaction. This list represents less than 7% of the real estate agents in the local market.”
Interview with Richard Hansen Crystal Ridge developer & Dream Weaver Homes builder/owner
By Sean Endsley /Sothebys Realtor at Lake Shore Café
(Sean) Richard, what is Crystal Ridge?
(Richard) Crystal Ridge is a private, gated 88 acre community overlooking Evergreen’s Upper Bear Creek Valley. These seven large estate lots (starting at 10 acres) come together to create my dream of weaving the harmony of nature with big views and artful sophistication. The culmination of dream, efforts and location became an exceptional place to live.
(Sean) It is said that land opportunity in Evergreen is rare and all of the slow rabbits have been caught. How did you find it?
R – I knew that it had to be out there. I had my eye on this particular piece of real estate for at least a dozen years or so and have searched for anything like it since. I knew great mountain land had to be South facing with big views. It had to be large enough to afford the privacy and space that myself and my neighbors would require. Abutting 1000 + acres of Denver Mountain Parks added to the exceptional quality of this find.
S – And 12 + years?
R– Not for the lack of trying but when the group of doctors who previously owned it put it on the market 9 years ago I drove up in a snow storm and secured it the very next day on the market.
S – So is it a success? I would say so.
R – After years of creating a turn key infrastructure I sold three lots to one now proud neighbor who built a great trophy home and we get along quiet well.
S – Turn-key, how so?
R – It’s not exactly like buying raw land and definitely not saddled with the same hidden costs. I had underground power stubbed to each site, as well as natural gas. For a project of this caliber of community the entry had to be tastefully gated with retaining walls for the approach which are in along with 18’ paved new or improved roads at the minimum. The well water production is high and the best I’ve tasted.
S – So CR is paved?
R – From each site all the way to the airport and well within the recommended 10% grade.
S – With names like Hawks View, Monkey Rock and High Meadow, how did these properties get named?
R– Like most things my wife Lynn had creative input and we named them together. Hawks Nest is a pristine view lot that hawks tend to enjoy as they sore around the rock outcroppings. Monkey Rock had its name before we got to know it but gets its name from the predominate rock outcropping that enhances its vista views. And High Meadow you can imagine does have an almost spiritual elevated meadow with its own panorama of big snowcapped views.
S – It sounds like you have put some time into Crystal Ridge.
During and after the heavy lifting of the developmental and infrastructure phases yes, this is where I like to spend time. I enjoy the landscaping and grooming that keeps me outside. At this point the park like condition is established but I can always find something else to do. I’ve been manicuring CR for years.
S – Are you a visionary?
R – takes a sip of coffee, “I know what I want and listen to what the land tells me. I am a steward for it. The name of my custom home building company is Dream Weaver Homes”.
S – I’m putting you down as visionary. I also know you have been in the custom home build industry since 1993. Are you the exclusive builder for this community?
R– Let’s say preferred, I’m open to another builder creating a well built, exceptional home if they pass the sniff test and have the reputation to back it up.
S – Ok, obvious but not the only choice. What is Dream Weaver Homes?
R – Like you said I have been doing new builds and remodels for a long time. The name Dream Weaver came from others before I adopted it but I have a talent for understanding the dreams of others and transforming them into a sustainable quality product with sound construction and business practices with a consistent attention to detail.
S – Nice to hear “sound business practice”.
R – My dad was a CPA and I have degree in finance so it’s in my DNA. But reputation is what got me here and I am humbly grateful for mine. A clean job site and a clean conscience allow me to sleep well at night. Well, that and the peace of Crystal Ridge.
