Front Range Real Estate Market Feeling Burn of Appraiser Ahortage
Posted: September 26, 2016 | Author: Fred Smith | Filed under: Colorado Real Estate, Denver Housing Market, Home Buying, Loans | Leave a commentHome appraisals are taking longer to complete and costing more, and that is vexing home buyers, mortgage borrowers, real estate agents and loan officers along the northern Front Range.
“As the Denver real estate market has roared back, we’ve been met with a shortage of appraisers to keep up with the record number of homes that are going under contract and being sold each month,” said Anthony Real, chairman of the market trends committee at the Denver Metro Association of Realtors.
Rael’s research shows that the cost to appraise a standard home in metro Denver, which ran around $350 a few years back, is now costing closer to $600 and looks headed on its way to $800. Some of that increase reflects the rush fees that already overloaded appraisers are charging to meet closing deadlines.
Closing deadlines are getting pushed back because of the appraiser shortages and complicating life for buyers and sellers alike, and in some cases causing tempers to flare, Rael said.
“It is worse than you know,” said Lou Barnes, a veteran loan officer with Premier Lending Group in Boulder. “There are simply fewer appraisers. We are running into a time-versus-price auction.”
The tightness became noticeable when the metro Denver housing market started heating up again in 2013. But the breaking point came this summer when the Brexit vote caused interest rates to plunge, setting off a surge in mortgage refinancings in the middle of the peak home selling season.
Appraisers, booked solid, charged premiums to get the work done and the level of desperation grew.
Warren Boizot III and Ned Garber both work seven days a week, 12 hours a day with their Denver firm BLG Appraisal Group, taking only two weeks off a year for vacation to recharge and a day now and then to attend courses to stay on top of their craft.
They have followed that crazy schedule, winter and summer, since 2013, motivated by memories of the housing crash where work was hard to come by.
“We are working as hard as we can,” said Garber, who is quick to add he isn’t complaining.
The appraisers said they are booked three weeks out. If someone wants to get in faster, they and other appraisers charge a fee, which irks some in the real estate industry. But if they promise a delivery date, it is as good as gold.
“It is a grind. Some day I will wish I had a Sunday off,” Boizot said.
Boizot said for every appraisal he accepts, there are about 15 to 20 that he turns away, either because the timing doesn’t work or the customer doesn’t want to pay a rush fee.
He uses the analogy of someone needing to see a dentist on short notice for a hurting tooth. Dentists book patients months ahead, but can keep the office open late on short notice at an added cost.
As with so many things wrong about today’s real estate market, the problems go back to the housing boom and bust. When the housing market came to a screeching halt, a lot of appraisers had to find other work to survive.
Regulators cracked down, trying to create distance between those requesting appraisals and those doing them and they boosted training requirements and the amount of time it took to do an appraisal.
Licensed appraisers must have an associate degree or 30 credits of college coursework and take 150 hours of appraisal-related courses. Certified appraisers, a step up, need a bachelor’s degree or equivalent.
Back in 2007, Colorado had 3,431 licensed and certified appraisers, but this year that count is running close to 2,500, said Eric Turner, education, communication and policy manager with the Colorado Division of Real Estate.
Not only are there fewer appraisers, but as a group they are getting older, with an average age nationally of 53. And hardly any new ones are coming into the fold in Colorado, even though work is plentiful.
Last year, the state issued just 52 new licenses or approved an upgrade of a licensed appraiser to certified. This year, the number of new entrants or upgrades is running around 37.
“Out of that 52, more were upgrades than new licensees,” Turner said. Contrast that with the loss of about 100 appraisers a year on average in Colorado since 2007.
So why aren’t more college-educated and underemployed millennials rushing into the field? To obtain a license, an appraiser must spend 2,000 hours in an apprenticeship over the course of a year or more with an experienced appraiser. A certified appraiser must spend 2,500 hours across two or more years.
The only way to become an appraiser is by doing appraisals, and there’s the rub.
Garber and Boizot said they are so busy, they don’t have time to train anyone. Even if they did, they don’t know of a noncompete agreement strong enough to keep an apprentice in this market from walking out the door with a year’s worth of training on their dime.
“No one wants to take an apprentice under their wings,” Garber said.
Not only are there far fewer people doing appraisals, each appraisal takes much longer to complete — about six to eight hours on average — and the penalties that come with getting it wrong are much higher.
“The way the system has changed, it is becoming more cumbersome and less profitable,” said Thomas Raff, a certified appraiser in Westminster. “The report is more comprehensive now than it has ever been. It takes much more time.”
Trying to pin down values in a rapidly moving market like Denver’s is a more complicated task than working in a flat and stable one, which in turn exposes appraisers to more risks if they get it wrong.
“The analysis of comparables is a black art and very valuable,” Barnes notes.
Buyers, after getting repeatedly outbid, can become so desperate to win that they make inflated offers above already elevated list prices, leaving appraisers to absorb their wrath when the valuation comes up short.
“My job is not to hit that contract price,” Garber said. “We are not obligated to hit that number.”
Coming in low, if anything, actually is more time-consuming, in that it requires dealing with more complaints. But appraisal objectivity is an important line of defense in protecting the financial system, he said.
Boizot said one change that could go a long way toward making the home sales process more efficient would be basing the list price on an actual appraisal, rather than an agent’s estimate.
Appraisals are one of the last pieces to fall into place, and buyers and sellers rush toward a closing. Any kind of delay further up the chain often shortens the time appraisers have to get the job done, he said.
Housing sales are already leveling off as summer moves into fall and a slowdown could become a more permanent feature. If mortgage rates rise, that too could put a dent in demand for refinancings.
Still, the more pressing problem of not enough appraisers working the craft remains.
Denver Real Estate Market One of 10 Most Stable in U.S. in 2016
Posted: July 13, 2016 | Author: Fred Smith | Filed under: Colorado Real Estate, Denver Housing Market, Home Buying, Home Selling | Leave a commentThe Denver, Colorado real estate market is currently one of the most stable in the nation, according to a recent ranking by SmartAsset. Boulder and Fort Collins were ranked #1 and #6, respectively.
Read more: http://www.homebuyinginstitute.com/news/denver-market-most-stable-733/#ixzz4EJ4PzfZh
Spring Has Sprung for the Denver Area Housing Market Prices Reach All-Time Highs, Inventory Levels Increase
Posted: April 12, 2016 | Author: Fred Smith | Filed under: Colorado Real Estate, Denver Housing Market, Home Buying, Home Selling | Leave a commentGREENWOOD VILLAGE, CO – April, 7 2016 – The latest data from REcolorado, the provider of REcolorado.com, a home search site for Colorado home buyers, sellers and renters, reveals that home sales prices have reached another all-time high. Demand remains strong, with home sales seeing an impressive 39 percent jump from last month.
All month-over-month comparisons indicate the housing market for the Denver Metro and surrounding area is holding strong, thanks to an influx of new listings that boosted the number of homes for sale. At month end, inventory levels were up 10 percent as compared to last month and six percent year over year. Still, weeks of inventory remained at six, meaning it would take just six weeks to deplete existing inventory if sales continued at the same pace.
The average price of a Denver-area home continued its steady upward trend, reaching a record high of $387,547. Average sales price increased four percent month over month and nine percent year over year.
“Continued low interest rates combined with an undersupplied market put Denver-area home listings at a premium,” said Kirby Slunaker, president and CEO of REcolorado. “For those who have ever considered putting their home on the market, now is about as good as it gets.”
March home sales showed a 39 percent increase as compared to February. With 4,111 homes sold, sales were down 11 percent as compared to last year at this time. March ended with 6,083 homes under contract, 15 percent higher than last month.
Colorado’s Home-Price Pressure Eases With Influx Of New Listings
Posted: August 11, 2015 | Author: Fred Smith | Filed under: Colorado Real Estate, Denver Housing Market, Home Buying, Home Selling | Leave a commentThe inventory of new home listings in metro Denver jumped up 12.8 percent over the same period last year in July, creating some breathing room in a market that has remained constricted for several months.
In July, there were 7,494 new listings for houses and condos on the market, according to the latest report from the Denver Metro Association of Realtors. The number of new listings also represents a 5 percent increase from June, when there were 7,131 new listings on the market.
The increase in the number of homes available put some downward pressure on the average price of a home in metro Denver, which spiked above $400,000 earlier this year.
The average price of a single-family house in the metro area dipped by 1.8 percent month-over-month to $412,996, while the average price for a condo decreased by 1.9 percent from June to $254,513.
“The Denver-area’s overall real estate market was showing signs of ‘easing up’ or ‘cooling off’ as we entered the prime home-buying season, and some sellers were beginning to sense a slight shift in the market,” said Anthony Rael, chairman of the DMAR Market Trends Committee.
“This is all welcome news for homebuyers who have survived the recent months of our market frenzy. Even with the most recent decline in average and median sales prices, sellers have done remarkably well by realizing double-digit price appreciation in our year-over-year analysis,” Rael said.
But year-over-year, home prices are still up.
The average sold price for a house is up 9.8 percent from last year, when houses sold for $376,101 on average, and condo prices are up 13.9 percent from last year’s average of $223,454.
“The number of available homes for sale has been steadily increasing throughout the year, a positive sign for buyers as we head into the second half of the summer selling season,” said Kirby Slunaker, president and CEO of REcolorado. “We’ve seen prices stabilize over the last several months, which suggests the market is finding more of a balance.”
Homes are spending even less time on the market than they have been, with the average number of days on market for a home in the metro area dropping to 20, down from 23 in June and from 28 in July 2014.
Colorado yet again led the country for home-price appreciation, according to the latest report from Irvine, California-based CoreLogic, which said earlier this week that home prices appreciated 9.8 percent year-over-year in June, faster than any other state.
Average Home Price In Metro Denver Tops $390K
Posted: March 6, 2015 | Author: Fred Smith | Filed under: Colorado Real Estate, Denver Housing Market, Home Buying, Home Selling | Leave a commentThe average price of a home in metro Denver increased to $390,067 in February, up from $326,958 in February 2014.
The increase of 19 percent year-over-year includes both single-family houses and condominiums, according to the latest data from the Denver Metro Association of Realtors.
Average prices were likely impacted by continued strong demand in the housing market, including the luxury market of homes priced at $1 million and above, 84 of which sold in January and February in the metro area, compared with 56 for the same period last year, a 50 percent increase.
Median home prices also increased, to $329,000 from $280,000, a 17 percent jump.
Demand in all price segments remains high, with millennials in particular entering the market, DMAR said. Interest rates hovering near March 2013 lows are also keeping buyers in the market.
“As year-over-year housing prices continue to increase, home affordability is going to become a greater issue as the entry point for first-time buyers grows higher and higher,” said Anthony Rael, chairman of DMAR’s Market Trends Committee. “The continuation of a strong job market in Colorado will hopefully offset the drag from an expected increase in mortgage rates this summer.”
Active listings of single-family homes and condos combined on the market dropped again in February, to 4,079 from 6,103, a 33 percent drop. Separately, the number of single-family homes on the market fell by 31 percent to 3,338 in February and the number of condos on the market fell by 41 percent to 741.
But the number of new listings increased for single-family homes and condos in February, by 2.7 percent from 3,004 in 2014 to 3,087 this year.
These new listings demonstrate increased willingness from sellers to put their homes on the market, which is a good sign for easing the inventory shortage, but it’s still not enough to bring prices back down.
“We’re seeing an impressive number of new home listings come on the market this year as sellers begin responding to consumer demand,” said Kirby Slunaker, president and CEO of REcolorado, the multiple-listing service formerly called Metrolist.
“Even with the increase in new listings, our historically-low inventory levels remain the biggest challenge facing the Denver-area housing market, as they are undoubtedly contributing to rising average home prices and reducing the amount of time homes are on the market,” Slunaker said.
Earlier this week, a report from Irvine, California-based CoreLogic showed that Colorado led the nation in home-price appreciation in January, with Denver’s appreciation reaching even higher than the state as a whole.
Denver Area Home Buying Continues Slowdown
Posted: November 7, 2014 | Author: Fred Smith | Filed under: Colorado Real Estate, Denver Housing Market, Home Buying, Home Selling | Leave a commentThe metro Denver residential real estate market continued its slowdown in October, with fewer active and new listings than a year ago, but average sales price increased and time-on-market dropped.
The latest Metrolist data shows that the number of active listings in October in the metro area was 8,041 compared to 10,376 last year, a decrease of 23 percent. New listings dipped 2 percent to 4,843 from 4,964, demonstrating continued low inventory in the market.
Year-over-year in October, the average sales prices for a home in the metro area increased by 7 percent to $303,328, and days on market fell to 34 from 45, a 24 percent decrease.
“With inventory levels remaining tight in October, the market stayed nearly as competitive as it was during the summer selling season,” said Kirby Slunaker, president and CEO of Metrolist. “Home prices climbed a bit, and days on market remained low, indicating continued demand.”
Even with recent declines in the market, local experts are optimistic about the home buying market, which has been strong throughout 2014.
“Overall, the news is not all bad as we point out strengths in our market with a year-to-date average sold price of $324,362 and a closed dollar volume of $14.8 billion,” said Anthony Rael, chairman of the Denver Metro Association of Realtors Market Trends Committee.
“Seasonality will likely impact transactions as we enter the holidays, but demand remains strong for millennials looking to use the offseason to trade their high rent prices to purchase in the Denver area, as well as buyers who will continue to look for the home of their dreams,” he added.
Residential Real Estate Market Softened In Denver During August
Posted: September 22, 2014 | Author: Fred Smith | Filed under: Colorado Real Estate, Denver Housing Market, Home Buying, Home Selling | Leave a commentHome sales in metro Denver decreased by 7 percent from July to August, accompanied by a dip in prices, but the cooling of the market is the result of an annual end-of-summer slowdown in home-buying.
“As kids head back to school, we tend to see a slowing of the housing market; this year is no exception,” said Kirby Slunaker, president and CEO of Metrolist, which released its monthly real estate data this week. “This summer selling season was strong, and many areas remain very active, with buyers quickly making offers on properties that are priced right.”
Metrolist’s report also shows a 2 percent decrease in average sold price in August, from $335,427 to $329,396.
Year-over-year comparisons showed similar trends in number of sold listings in the metro area, with a 7 percent decrease from 5,732 in August 2013 to 5,346 in August 2014.
But prices increased year-over-year in August, with the average sales price increasing 6 percent from $309,905 in August 2013.
Supply continues to be an issue in the market, with 6,071 new listings entering the market in August. This represents a 13 percent decrease in new listings from July and an 8 percent decrease from August 2013.
Active listings dropped by 14 percent from 11,021 in August 2013 to 9,623 this year.
“The market absorption rate continued to indicate a high level of demand for properties,” Metrolist said in its report. “There was a supply of just eight weeks of inventory at August month-end.”
Continued demand for homes is reason for confidence among the real estate community, in spite of August’s decreases.
“Despite the August trends showing a slowdown in the market, many brokers, including myself, remain confident the market will bounce back in September, and the selling season will remain strong heading into fall and throughout the holidays,” said Anthony Rael, chairman of the market trends committee for the Denver Metro Association of Realtors.
Metro Denver Home Prices Continue Climbing, Report Says
Posted: April 4, 2014 | Author: Fred Smith | Filed under: Colorado Real Estate, Denver Housing Market, Home Buying, Home Selling | Leave a commentDennis Huspeni Reporter- Denver Business Journal
No matter which national real estate company’s data you look at, home resale prices in Denver continue the march upward.
CoreLogic Inc.’s latest home price index (HPI) showed metro Denver homes sold for an average of 9.7 percent higher in February than they did a year earlier. That number included the sale of distressed, or foreclosed, properties in the Denver-Aurora-Lakewood area.
The index climbed 0.4 percent from January 2014.
Excluding foreclosed, or real-estate owned (REO) sales, the index rose 7.6 percent in February from the same month in 2013. The month-over-month increase was basically flat at 0.2 percent, according to the CoreLogic report issued Tuesday.
That mirrors the data from the latest S&P/Case-Shiller Home Prices Index, which showed a 9 percent year-over-year price hike.
Real estate data company CoreLogic (NYSE: CLGX) owns Case-Shiller, but issues a separate report.
Nationally, home prices including REO jumped 12.2 percent in February for a two-year run of monthly year-over-year price increases. Without REO property, the national index rose 10.7 percent.
“As the spring home-buying season kicks off, house price appreciation continues to be strong,” said Mark Fleming, chief economist for CoreLogic. “Although prices should remain strong in the near term due to a short supply of homes on the market, price increases should moderate over the next year as home equity releases pent-up supply.”
The report notes that Colorado was one of five states that “reached new home price highs.”
Statewide, the CoreLogic HPI climbed 8.7 percent in February from a year earlier, excluding REO sales. Statewide prices without foreclosure sales rose 7.1 percent from February 2013, the report shows.
CoreLogic tracks sales of the same homes over time; it includes detached homes and condos.
Case-Shiller and CoreLogic are two of several popular measures of home prices, using different methodologies, covering different housing types and geographical areas, and giving somewhat different results.
December 2013 Year End Stats
Posted: February 11, 2014 | Author: Fred Smith | Filed under: Colorado Real Estate, Denver Housing Market, Home Buying, Home Selling | Leave a commentMETROPOLITAN DENVER REAL ESTATE MARKET
DECEMBER, 2013 YEAR END
RESIDENTIAL (Defined as Single Family plus Condo or Detached Single Family plus Attached Single Family)
By the numbers, there were 7,275 homes available for sale at year end (↓6%), 67,550 new listings came on the market for the year (↑12%), 67, 429 homes went under contract (↑20%), 54,024 homes closed
(↑17%), average days on market was 58 days (↓25%), average sold price was $306,910 (↑10%), and closed dollar volume was $16.6 Billion (↑29%). 2013 was a year that set many records.
A review of 2013 versus 2012 provides the following observations:
The inventory of active listings, homes available for sale, started a downward trend in 2011, which continued through 2013. In March, 2013, the inventory of active listings was 6,682 homes, an all time low. Active Listings continues to be a primary sustainability concern for the home market.
Home affordability declined due to median home price increases.
The month’s supply of inventory started and finished the year at 2 months.
Once again, rental rates continue an upward trend and rental availability continues to decline.
With declining distressed properties, foreclosures and REO, at less than 10% of the market and low active listings, new home builders will again be an alternate in the housing market.
The largest number of Single Family and Condo properties sold in price range of $100,000 to $499,999 for 2013. The largest number of Single Family homes sold in the price range of $200,000 to $299,999.
The largest number of Condo homes sold in the price range of $100,000 to $199,999.
Million dollar plus homes closed/sold were up 16% when comparing 2013 versus 2012.
Million dollar plus home closings accounted for $1.5 Billion of the $16.6 Billion total 2013 volume.
Mortgage interest rates started to increase and then fluctuated downward to later increase again during the year, with an overall increase of approximately 1%.
Footnotes:
In the Residential property type narrative, the (↑ or ↓ %) represents the percent change when comparing year to date 2013 to year to date 2012.
This representation may or may not reflect all real estate activity in the market.
Source: Metrolist, Inc.
Record-Setting Year For Metro Denver Home Sales
Posted: January 13, 2014 | Author: Fred Smith | Filed under: Colorado Real Estate, Denver Housing Market, Home Buying, Home Selling | Leave a commentMetro Denver homes sales in December capped a record-setting year of price gains and volume, according to the latest reports from Metrolist Inc.
The average sales price in December stood at $306,910 — a 7 percent increase from December 2012’s average of $289,926. Buyers snapped up 3,229 homes last month, down 5 percent from the 3,400 sold a year ago and down 8 percent from November’s 3,500 sold level — but a dip in home sales is normal for December.
But looking at the year-end volume, there were 17 percent more homes sold in 2013, at 54,024, compared to 46,299 sold during 2012. Year-end average sales price was up a healthy 10 percent from 2012’s year-end average of $279,601.
“The Denver metro area real estate market saw all-time highs in 2013 for both home sales and average price,” said Kirby Slunaker, CEO and president of Metrolist. “While the market cooled slightly at year-end, as one would expect, the numbers year over year are just incredible.”
Metrolist, of Greenwood Village, is metro Denver’s multiple listing service, a database of home sales activity for real estate professionals.
Some year-end data highlights:
• A record number of single-family detached homes sold, 42,762, eclipsing the prior record of 41,682 set in 2004.
• Condo sales spiked 23 percent in 2013 through November, to 11,262 over last year’s 9,135.
• The days on the market average continued its downward trend, dropping 25 percent to a 58-day average.
• Inventory levels dropped too, to 101,208 homes — down 16 percent from 2012’s 121,019.
“Our brokers and agents have seen a very busy year with a record-setting selling season,” said Slunaker.
Here’s some December highlights:
• Inventory levels stood at 7,272 homes, down 18 percent from November’s 8,905 and down 6 percent year over year.
• Average days on the market stood at 57 days, up 30 percent from November’s 44-day average and down 22 percent from 73 days in December 2012.
National real estate companies including CoreLogic Inc. and S&P/Case-Shiller also have reported strong numbers from Denver’s market in recent weeks.
By Dennis Huspeni
Source: http://www.bizjournals.com/denver/blog/real_deals/2014/01/record-setting-year-for-metro-denver.html?ana=e_du_pap&s=article_du&ed=2014-01-08&page=all
Fred Smith 