Highlands Ranch

Highlands Ranch has an enviable quality of life that makes it simply one of the best places in the U.S. to live and work from. 20 min from Denver, with 300 annual days of sunshine and the nation’s largest public park system, Metro Denver residents dabble in everything from skiing to hiking, mountain biking to river rafting. Perhaps that’s why Metro Denver is the fittest city in the U.S. which also makes its workforce healthy, active and fit for business.

Denver has been projected as one of the few cities that will show housing market recession rates below the national average. Due to the zealous work put into the city by its state government to diversify the types of businesses, develop a sound infrastructure for the modern world and invest heavily in alternate fuel energy.

Some numbers to illustrate the present condition of the Highlands Ranch housing market locally.

UNDER CONTRACT OR CLOSED UNITS

This month 3,637 residential real estate units on the Highlands Ranch housing market went under contract or closed. Last month 4,504 the reported residential real estate units went under contract or closed on the housing market.

Percentage Change # -19.2% + -31.8% adjusted for a true calendar month.

UNSOLD HOMES ON THE HOUSING MARKET:
This Month 21,761 of real estate activity.
This Month, Last Year 27,127

Percentage Change + -24.7%

AVERAGE PRICE OF PROPERTIES CLOSED:
Single-family
This Month $226,895 $161,615 $242,557
This Month, Last Year $268,826 $165,533 $297,812

MEDIAN PRICE OF PROPERTIES CLOSED :
Condos
This Month $130,000 $195,000
This Month, Last Year $139,000 $229,500

$825 billion economic stimulus package
So let us make clear what the big $825 billion economic stimulus package is, with $7,500 home purchase tax credit to help the housing market.
What are the parts to the agenda, The House Financial Services committee chairman, predicted that Congress and President Obama would devote as much as $100 billion of bailout money to help financially-stressed home owners out of foreclosure on the housing market.

1. The government plans to help the housing market by encouraging lenders to reduce delinquent borrowers’ principal balances and payments in exchange for a federal guarantee that they’ll incur no additional losses, even if the borrowers default again.
2. Mass modifications not only of delinquent loans but for non-delinquent borrowers heading for payment problems because of job loss or income declines will also benefit the housing market
3. Passing legislation allowing bankruptcy judges to step in to prevent foreclosures by unilaterally reducing the monthly payments, interest rates and principal balance for owners who file for bankruptcy.
4. A return to last year’s higher mortgage limits for high-cost areas around the country.

The banking regulators have been widely criticized for being too passive during the excesses of the housing market boom years there is a demand for reform that will probably have long-stalled anti-predatory lending legislation that would toughen penalties for lenders or brokers who put home buyers into mortgages they couldn’t afford.

So for an immediate Silver lining is: The Internal Revenue Service wants to remind taxpayers in preparing their tax returns to be aware of recent tax changes including new credits as well as recently reinstated deductions involving real estate purchases on the housing market and or probable purchases

“Change has come to America.” Those were the eloquent words of President elect Barack Obama during his November 4, 2008 presidential acceptance speech in Chicago. Following a three year declining real estate market, change couldn’t come sooner for most Americans, especially when it comes to the real estate sector. Our economy has been mired in one of the deepest and longest downturns the nation has seen in decades and as part of that downturn, Highlands Ranch real estate market prices and sales have suffered. But many experts agree that despite all of the bad news of late, the U.S. economy is expected to emerge from the recession sometime around mid-2009 and that prognosis may be just what the Highlands Ranch real estate market doctor ordered.

The Four Step Prescription for Recovery
Possibly the most important ingredient in the 2009 Highlands Ranch real estate market correction is the fact that real estate makes up 20% of the Gross Domestic Product in this country and regardless of which side of the political fence you fall on, our country cannot be fixed without first fixing the housing sector. Real estate market should be gaining a great deal of attention over the next several months, particularly by our new administration. With this important information in tow, it is important to point out that we currently have several key indicators that may position our country for a Highlands Ranch real estate market recovery in 2009:

1. Dropping Interest Rates-According to NAR’s December 17, 2008 article entitled Fed Action Creates Best Interest Rates in 50 Years, Realtors® Report, “Mortgage rates which had averaged 6.3 percent in the third quarter, have recently fallen into the 4 percent range in some parts of the country.” The article went on to report, “NAR has estimated that a one percentage point decrease in mortgage rates will increase home sales by more than 500,000 homes.” Great news for the Highlands Ranch real estate market.

2. Improving Affordability-According to the Multiple Listing Service data, the median sale price of single-family homes in the Denver metro area during November 2008 fell 15 percent from the previous year to $195,000, while the median price for condos was off 6.5 percent to $130,000, the same as October. This increased Highlands Ranch real estate market affordability has helped to work through excess inventory and the number of unsold homes on the market in November fell nearly 25 percent from a year ago to 21,761 units. It marked the sixth straight monthly decline in inventory. The steady drop in inventory could help bolster sale prices in the coming year as the Highlands Ranch real estate market moves back into balance.

3. Government Intervention-As we noted before, with real estate making up 20% of the Gross Domestic Production in this country, it is imperative that the government take action to correct the housing sector. We need to move through the current financial crisis and restore the flow of credit so that qualified buyers are able to take advantage of improved affordability and successfully purchase homes in the Highlands Ranch real estate market. To respond to this, the government is currently looking at a number of corrector options including tax benefits, home ownership credits, subsidies or interest rate stabilization, to name a few. President-elect Obama and his economic team are in the process of developing an economic recovery plan designed to help Main Street and Wall Street with an ultimate goal of creating at least 2.5 million jobs while rebuilding our infrastructure, improving our schools, reducing our dependence on oil and saving billions of dollars. According to CNNMoney.com’s December 23, 2008 article Obama Closing in on Stimulus Plan, Vice-President-elect Joe Biden was quoted saying, “While our short-term goal is to start creating jobs as quickly as possible, we plan to invest in areas that will produce long-term benefits for the long-term health of our economy.”

4. Slowing of Distressed Properties-The timing of our Highlands Ranch real estate market recovery may depend on how quickly the government takes steps to mitigate foreclosures. We expect sales of distressed properties to peak in early 2009-a critical factor in the Highlands Ranch real estate market that directly impacts the timeframe for stabilization in the median price. NAR reported in its December 17, 2008 article entitled Fed Action Creates Best Interest Rates in 50 Years, Realtors® Report, “To boost the economy, it is critical to stem the rising tide of foreclosures and boost home buyer confidence in the housing market,” McMillan said. “Lower interest rates coupled with increased foreclosure mitigation are the key ingredients to stabilizing the housing market and preserving communities and homeownership.” Looking forward to 2009, many experts agree that the financial system will begin to show signs of stabilization in early 2009 and we may begin to see a real estate turnaround by the summer. If you are considering buying, this should serve as a good indicator that now may very well be the time to purchase real estate in Highlands Ranch real estate market.

1. Should I refinance my existing mortgage?
People refinance their existing mortgage for a number of reasons including obtaining a lower interest rate, to save on monthly payments and to change the term of the loan. People also choose to refinance their mortgage if they want to switch from an adjustable rate to a fixed rate or to consolidate debt by refinancing for a higher loan amount and using the difference to pay off other debt.

2. What costs are involved in refinancing my mortgage?
You may pay an application fee as well as the appropriate closing costs. You may also choose to pay discount points if you want to buy down the interest rate. There may be mortgage origination fees also involved which may be negotiated.

3. What is a cash-out option?
If you have enough equity in your property, you can refinance with a loan amount greater than your current mortgage and keep the difference! You can use the money for home improvement, debt consolidation, or whatever else you would like.

4. What is roll-in refinancing?
Rolling-in your mortgage costs is especially attractive when refinancing. By rolling-in your costs, you incur no expense and therefore have no “payback period”. The payback period is the time required to recoup the cost of your new loan through the monthly savings you get from the difference between your new lower payments and your old ones. For example, if your new loan’s payments are $100/month less than your old one, but you had to pay $1200 to refinance, you’d have a payback period of 12 months before you’d actually start saving. By rolling-in the cost of your refinance, your actual savings begin immediately. Rolling-in your costs is particularly appropriate if you’re planning to sell or refinance again in a few years because it will matter less that the actual loan amount is higher because you will immediately be able to enjoy to the savings.

Many of you have probably read some of the negative articles published locally and nationally about the state of the real estate market. Newspapers and television are publishing gloomy reports on the real estate market in Colorado, California, Florida and most other states around the country. These reports mostly generalize the situation without taking a closer look at defined areas.

Do you listen to the national weather report each morning to decide what you should wear before you go out in the Denver area, or do you listen to the local weather station to see what is happening with the weather in Denver? The point is, stop listening to national real estate market news and direct your attention to the local real estate news and the real state of the market. In Highlands Ranch real estate market, for example, the figures are much better than you might think.

The average days on the market for a single-family home in the metro Denver area as reported by Denver Metrolist for the third quarter was around 96 days. But in the “Denver/Highlands Ranch/Lone tree” real estate market, the average days on the market for a single-family home is less than 68 days. For condominiums and townhomes, the average days on the market in metro Denver was around 102 days, but less than 86 days for Highlands Ranch real estate market.

Overall inventory for single-family homes and condominiums/townhomes in the metro Denver area is the lowest it has been since prior to 2004 and has been consistently lower for the last seven months. The third quarter inventory is down over 18% compared to the third quarter of 2007. The inventory for the DHL is down about 6% compared to 2007 third quarter and down 12% compared to 2006. So if you’re looking to buy a home or sell your current residence in Highlands Ranch real estate market or Lone Tree, the market is definitely in your favor and the future of these communities is strong.

Losing one’s home to foreclosure is becoming increasingly prevalent in America today. When a person defaults on a loan, the lender will take ownership of the home resulting in a foreclosure in Highlands Ranch. These banks keep track of the repossessions by making various listings. These Highlands Ranch foreclosure listings can be obtained by contacting the institution. However, it is best to stop the process before it is too late to ensure you are not put on the list.

What are Mortgage Foreclosures?
When most people purchase real property, they do not have enough money to simply purchase the property outright. In order to make the purchase, they are required to borrow money from a lender. In exchange for lending the money, the lender will hold a lien against the property. If the borrower does not make the required payments, then the loan goes into default and the lender can exercise the lien against the property, in order to take legal possession of the property for the purpose of selling the property to pay off the borrower’s loan. This process is called mortgage foreclosure.

Did you know Chapter 13 bankruptcy can stop foreclosure?
The DHL (Denver/highlands Ranch/lonetree) area is one of the lowest areas in metro Denver for foreclosures. Of all the homes sold in the DHL area, less than 8% are foreclosures, but more than 25% for the entire metro Denver area, with some specific communities as high as 50%. This is one big reason that the Highlands Ranch/Lone Tree area is holding its value and selling quicker. These two cities do not have a lot of foreclosures and short sales (pre-foreclosure) pulling down the resale prices.

When thinking of buying a home keep in mind that as a fairly general rule homes appreciate about four or five percent a year. Some years will be more, some less. The figure will vary from neighborhood to neighborhood, and region to region. When looking at buying a home, you may think that five percent may not seem like that much at first. Stocks (at times) appreciate much more, and you could easily earn over the same return with a very safe investment in treasury bills or bonds, rather than risking buying a home.

But take a second look…
Presumably, if you buy a $200,000 house, you did not pay cash for the home. You got a mortgage, too. Suppose when buying the house you put as much as twenty percent down – that would be an investment of $40,000. At an appreciation rate of 5% annually, a $200,000 home would increase in value $10,000 during the first year. That means from buying the home you earned $10,000 with an investment of $40,000. Your annual “return on investment” would be a whopping twenty-five percent. Of course, you are making mortgage payments and paying property taxes, along with a couple of other costs. However, since the interest on your mortgage and your property taxes are both tax deductible, the government is essentially subsidizing your home purchase. Your rate of return when buying a home is higher than most any other investment you could make.

With mortgage rates approaching reaching historic lows, the application volume for mortgages jumped a seasonally adjusted 48 percent last week compared with the previous
week, according to the Mortgage Bankers Association’s weekly survey.

Mortgage application activity for the week ending December 19th was 124.6 percent over the same period a year ago, the Washington, D.C-based MBA said. The spike in applications coincided with another drop in mortgage rates, as the government’s efforts to unfreeze the residential-mortgage market show further signs of having the desired effect.

Applications to refinance existing mortgages increased 62.6 percent on a week-to-week basis, while applications filed for mortgages to buy homes increased a seasonally adjusted 10.6 percent.

Refinancing made up 83.2 percent of all mortgage applications filed last week, up from 76.9 percent the previous week.

According to the MBA survey, interest rates fell across the board:

• Rates on 30-year fixed-rate mortgages averaged 5.04 percent last week, their lowest level in more than five years.

This was down from 5.18 percent the previous week. This week’s rates are at the following:

• Fifteen-year fixed-rate mortgages averaged 4.91 percent, down from 4.93 percent the week before.
• One-year ARMs averaged 6.36 percent, down from 6.63 percent.

With more homes selling in the lower price ranges in the Denver area, the median price of a single-family home for sale declined 15 percent in November compared with the same month a year ago, according to data released Tuesday.

The median price of Colorado homes for sale was $195,000, compared with $229,500 last year and $206,000 in October. For condos, the Colorado homes for sale median price were $130,000, a 6.7 percent decline from the same month last year.

The median price just tells us where the buyers are going, It doesn’t mean there’s mass depreciation of homes for sale. Where most of the buyers are showing up is in the $150,000-to-$250,000 price range. Homes for sale priced at $1 million or more declined 61.5 percent compared with a year ago. It’s indicative of the fact that people who are buying those types of properties are just paralyzed. It’s congruent with the idea that big-ticket homes for sale aren’t selling right now.

Overall, the number of properties sold in November dropped 16.1 percent to 2,920, compared with 3,482 the previous year. Homes sold are down 31.8 percent from October. It looks like we’re going into the holiday hibernation mode, The homes for sale slowdown is pretty common, but there may be a little more of a holiday effect this year than in years past. Houses were on the market an average of 97 days, down 4.9 percent from October and 5.83 percent from last year.

That shows we can still create a little activity in the marketplace, when the days on market starts to run away, that’s usually an indicator that the product is way overpriced. There were 21,761 homes for sale on the market, a 19.8 percent decline from the same period last year. Colorado has fared better than many other markets across the country. Home sales across the country of both new and existing homes are weaker than Denver’s numbers right now, Housing starts are the weakest in 20 years.

Home Prices

Colorado’s foreclosure hotline for financially troubled homeowners continues to do brisk business even though foreclosures fell during the last quarter in Colorado. Calls to the foreclosure hotline more than doubled in November, even as foreclosure filings fell by 24 percent during the third quarter. During the first nine months of the year, calls to the hotline climbed a more modest 32 percent over last year.

Hotline officials said news about the financial crisis and recession spurred concern among many homeowners. Callers are phoning in at earlier stages of delinquency than in the past, increasing their likelihood of avoiding a real estate foreclosure, said Ryan McMaken, spokesman for the Colorado Division of Housing, which oversees the 2-year-old hotline. Hotline workers urge callers who face the prospect of foreclosure to meet with a housing counselor to review their finances and mortgage options. A quarter was able to sell their homes or convey them to the bank without a foreclosure. Bankruptcy claimed 14 percent, 17 percent went into foreclosure, and 14 percent had other outcomes, such as being referred to a housing agency. Loan modifications, which accounted for 7 percent of the total and involve the lender reducing monthly payments, have become a hotly debated policy issue.

The Colorado Foreclosure Hotline does not track what happens to homeowners after they reach a resolution such as a modification or repayment plan, McMaken said. The face-to-face counseling and close attention to borrowers’ financial situation provided by the foreclosure hotline are likely to produce better results, he said.

Modifying a loan when home prices are declining may backfire if the homeowner still owes more on the house than it’s worth three months later. The homeowner still has an incentive to walk away, he said. Home prices are still falling in some states, including California, and that may have affected the comptroller’s numbers, he said.

Mortgage delinquency status of hotline callers
35% – Current
8% – 1 month
17% – 2 months
17% – 3 months
12% – 4 months
14% – 5 months or more

Percentages exceed 100 because of rounding