After five years of falling prices all major real estate markets are seeing gently increasing prices in the past months, especially Colorado. These increases are there even when you take out the foreclosure and short sale data.

One challenge that we are experiencing is, for the interim time until prices seriously increase, there is a severe shortage of housing. The good news is that, when inventory shrinks, sellers can ask and receive higher prices. We are seeing a return to bidding wars on many transactions. In the short term, prices may spike higher as buyers act quickly to put homes under contract before someone else does. Interestingly, this situation exacerbates the housing shortage since sellers may hold off on listing their property in hopes of even higher prices to come.

This will likely be short-lived since if price increases last sellers will relax and inventory will grow. Those sellers who were previously ‘under-water’ will then be able to sell their home without financial penalty and inventory levels should stabilize.

The new home building industry has been slow to jump back into the constructing at former levels. In fact, new home starts are at less than half of ‘normal’ levels. Even though fully recovery is most certainly a long time away, increasing prices are likely to be the key component to reshape our entire real estate market going forward.

Call me to discuss! Marie Callaway 303-437-6999

Looks like Spring. Feels like Spring. Time for spring cleaning right?  Along with your closet, basement and garage, it's also time to do a spring clean-up of your computer!

Where to start? First, start with your temporary folder if you haven't deleted files here for a while, the task is long overdue and very rewarding. The more .tmp files sitting there, the longer it takes for your machine to boot up, print and load some programs. Go to the Desktop, open My Computer, right-click on your C: drive, Select Properties, and click the Disk Cleanup button. Make sure the only boxes checked are the Temporary Files and Recycle Bin, then click OK.

Second, clean up Internet Explorer's cache & history. Start Menu, Settings, Control Panel, Internet Options, then click the Delete Files button in the area titled "Temporary Internet Files". Also click on Clear History. Initially your browser will be sluggish as it saves the pages you often visit, but in a few days things will speed up since it won't need to sort through outdated files. Third - Go through your email box and delete all the old emails you've been saving all this past winter. And don't forget to clean out the Sent files folder. You'll be shocked at how much unnecessary history lays there collecting dust. There's nothing like a Spring clean-up to clear your mind - and your computer!!

Dear Marie,

I recently read an article in which a builder told his sales staff to not sell homes as an investment. I totally disagree!

While housing is not the speculative darling of a few years ago, your home is an investment. All elements of life require an investment of capital, or time , or of your spirit, and we all seek a return on that expenditure. A home is the perfect embodiment of return on investment in that all three can be realized. Quality real estate will still provide a return on capital, perhaps more slowly at times, but over a period the dollar value is there. But, the most exciting gain from home ownership is about your time and spirit. The time you spend with family and friends at a new place that is so inviting the kids pals always want to hang out at your house. Room to entertain or just be private and enjoy some solitude. Revitalization of your spirit. This is truly your profit, an ideal yield on investment. For most families the home is the largest expense, so why not make it the source of greatest compensation. Isn't that what it's all about? 

Dana
D.R.H. Builders Inc.

Bob Buch shared this excellent article with me, I just had to pass it along.
Author: Bryan McNee, MBS Authority
Source: Bob Buch, Envoy Mortgage as provided by MBS Authority, all rights reserved.

After half a decade of withering sales and slumping prices, there are strong and diverse signs that the single-family housing market is poised for a rebound. In some metropolitan areas, the market has bottomed, with both sales and prices on the rise and foreclosures on the decline.

This contrarian — and largely overlooked — thesis flies in the face of the persistent gloom that has nagged the industry since 2007, when the subprime crisis flared. Industry analysts and players cite a number of reasons — some traditional (employment), others unique to the post-credit bubble era (foreclosures)  — for the long-awaited sea change. An analysis of industry and government data also support the forecast. “It has become increasingly apparent to us that the pieces for a housing rebound next year are beginning to fall into place,” declared Barclays Capital analyst Stephen Kim in a recent note to investors.

Proponents admit that the nascent rebound could easily be derailed, but stress that after years of government efforts to support sales and prices as well as the volatile impact of foreclosures, the market has regained a measure of normalcy.

“With the exception of really hard-hit markets, the vast majority is ready to turn around,” adds Jerry Howard, president and CEO of the National Association of Home Builders, NAHB. "The Washington, D.C., area is not only ripe for recovery, they need to start building units.”

There’s been little conventional, however, about this housing slump, which is one reason it's had so many false bottoms. Among its many firsts — housing starts fell through 1 million annual units, foreclosures topped 2 million in three consecutive years, and home prices declined on a national basis.

The catalysts to recovery are mostly the same: for potential buyers, residential rents have now risen enough to consider buying; existing-home inventory is the lowest in five years, while that of new homes is at a 40-year low; affordability is at a record high; delinquencies have peaked; consumer confidence is on the rise; and job growth is accelerating.  For investors, with a continuation of the gold rally in question, real estate is beginning to look like a viable inflation hedge alternative, while rising rents mean greater profits.

Finally, there’s the intangible fatigue with bad news, and a desire to end the negative feedback loop. “We believe there is sizable housing demand that could be released into the market," says Lawrence Yun, chief economist of the national Association of Realtors, NAR. The NAR is forecasting existing home sales will rise 5 percent in both 2012 and 2013; prices will edge up 2 percent in each of those two years, then 4 percent in 2014. The NAHB is forecasting a 5.1-percent increase in new home sales and a 10-percent increase for new home starts in 2012.

Jobs, Jobs, Jobs

A turnaround in the housing market will require continued improvement in the job market. The economy has created jobs 13 months in a row for a total of almost 1.9 million. Weekly jobless claims have been routinely below the key level of 400,000, and the national jobless rate is down to 8.6 percent. There are already signs in some markets that an improving emploment picture is boosting housing demand and sale prices.

In cities such as Tampa, Fla., South Bend, Ind., Grand Rapids, Mich., Raleigh, N.C., Wichita, Kan., and Green Bay, Wis.., the median sales price of an existing single family home increased 1-2 percent in the third quarter, during which time the jobless rate and/or payrolls growth improved dramatically.

Even in the Cape Coral-Fort Myers, Fla. metropolitan area — considered the epicenter of the foreclosure crisis a few years ago — prices were just 1.4 percent lower in the third quarter than the previous year. A new index by the NAHB and First American, the Improving Markets Index, IMI launched in September, tracks housing markets throughout the country that are showing signs of improving economic health. Thirty cities – including San Jose, Pittsburgh, New Orleans and Winston-Salem, N.C. – are showing growth in permits, sales and employment. In San Diego — where in the last year the jobless rate has fallen from 10.4 percent to 9.7 percent and 24,000 jobs have been added — home inventory is down to two months; in some areas of San Francisco (9.4 vs. 10.3 percent), it is one month. More broadly, 40 percent of all states showed existing home sale increases on both a quarterly and annual basis in the third quarter, according to national Assocatio of Realtors data. That includes high foreclosure-rate states, such as California, Georgia, Michigan and Utah. All but six states showed double-digit gains year over year.

What Happened to Rates Last Week:
 
Mortgage backed securities (MBS) lost -20 basis points from last Friday to the prior Friday which moved mortgage rates higher. MBS traded in a very tight range for the week. We received much better than expected economic data which normally pressures mortgage rates. ISM Services, Initial Jobless Claims, Wholesale Inventories and Consumer Sentiment all came in stronger than market expectations.
MBS sold off on Friday (causing rates to increase) after the European Union Summit released details of their new agreement with Eurozone countries.  This removed some of the "flight to safety" premium that has kept mortgage rates low. 

What to Watch Out For This Week:
The following are the major economic reports that will hit the market this week.  They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages.  I will be watching these reports closely for you and let you know if there are any big surprises:

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.