Tony Greer\’s Blog

We are finally finished cleaning up after ourselves from our invitation-only barbecues in Canon City and Penrose. On July 19th, we had a big blowout at our 465 Valley Road office and had about 150 in attendance. We roasted about 200 pounds of beef, 120 hoagie buns, 12 cases of soda, 3 gallons of baked beans, and 100 ears of corn. It was a really fun time and a great way to get acquainted and re-acquainted with our friends and neighbors at Dawson Ranch, Gold Canon, and Wolf Park. We had a contest for 2 tickets on the Royal Gorge Dinner Train for the person who came closest to guessing the average sold price of homes sold in the three developments from January 1st through July 19th of this year. The winner was Thomas Powell from Colorado Springs, who guessed $279,000. The answer was $275,449.

On July 26th, we did the same thing out at Top Rail Ranch and the turnout exceeded our expectations. We didn’t expect as big of a turnout primarily because our mailing house rejected our invitations to the folks that own property at Top Rail Ranch, so Montoya and I went door to door on Saturday and invited everyone individually. When all was said and done, we went through almost the exact same amount of food. The Top Rail contest winner was none other than Mr. Fred Ferro, cabinet maker extraordinaire. Fred guessed came closest to guessing the average sold price of the homes sold in Top Rail Ranch from January 1st through July 26th. He answered $289,500 and the answer was $287,000. Fred and his wife Juanita will be enjoying dinner for two on the Royal Gorge Route as well.

We’re planning one more barbecue for September, we don’t have a date yet, but we might just make it a Keller Williams Premier Realty anniversary party and celebrate our rocket-like climb to the top of the Fremont and Custer County real estate market. Can you believe it? In just 4 short years, we made it to Numero Uno!

I was updating my realty website and doing some research this week.
Local market statistics, which I have taken from the RGAR MLS, indicate some interesting things going on in our market. we use six months‘ inventory, or absorption rate, as the standard for a stable market. Less than six months’ inventory would be considered a SELLER’S MARKET and more than six months’ inventory can be considered a BUYER’S MARKET.

In Canon City, for instance, the market stats through the end of may indicate about 7 months of inventory of homes between $75,000 and $150,000, indicating a fairly stable market leaning toward a BUYER’S MARKET.

From there, the story changes dramatically. Between $150,000 and $250,000 the absorption rate is about 24 months,and for homes above $250,000, the absorption rate is about three years. There have been no homes sold in the MLS over $400,000 since December 2007.

The Penrose, Colorado market has not fared much better. A total of 23 homes sold year-to-date, 5 of those homes were over $250,000. During that time frame, 60 homes came on the market. For the year-to-date period ending May 31, the median sold price was $123,500. Average days on the market for sold properties was 162.

Mortgage interest rates are still very, very good, according to bankrate.com. The National average rate for a 30-year fixed mortgage (conforming) was 6.27%, down from 6.28% last week. Don’t expect that to last forever. With the mergers and acquisitions taking place in the United States, things could change for the worse very rapidly.

There have been a lot of articles written over the past six months about a “down” market. The stock market, the housing market, the money market, etc. I suppose that’s one way to look at it. It is a difficult time to be in the real estate racket, no doubt about it. However, there is a silver lining behind every dark cloud, and the current market is no exception. In these dark times, many brokers are questioning the sanity of remaining in the real estate business. The truth is, we who are serious about gaining market share in today’s market are sharpening our skills, and utilizing this brief break in the action to get back to the basics and build our businesses to the highest level. If you are a broker and want to learn how to take back your share of the market, call me for a confidential consultation. Our volume is down but our share of the pie is getting larger, and it ain’t no accident.

I was reviewing some data today, and I realized   that in one of my neighborhoods, Dawson Ranch, there is a noticeable lull in sales. Here’s what it looks like:

Year             2Q SOLDS           YTD SOLDS
2008             3                             13

2007             13                               20

2006             11                               17

Is that a cause for concern? You bet! But there are things we can do about it. In the past, we have had the luxury of blindly adding 5%-10% of previous sale prices and in a couple of months, a home would sale. Today’s market requires a more intelligent approach. I use the “Minus 3″ approach. We have a year’s worth of inventory, yet some houses sold last month, and more will sell this month. The buyers are making the market today, and they shop by price first. It stands to reason, then, if you want your home to be the one that sells this month instead of waiting your turn, you can “jump to the head of the line” by analyzing your market value and subtract 3% from that figure. Voila! You are instantly at the head of the line.

You say you don’t want to leave money on the table? Let me ask you this, does it matter to you whether you give that 3% to the buyer or the bank? Take a $300,000 house with an 80% mortgage, for instance. If you put it on the market today at 3% under today’s value, it will cost you $9,000 to sell your home. If you put your home on the market at 100% of today’s value, you’re likely to have to wait your turn, which is currently about 13 months away. In 13 months, that $240,000 mortgage is going to require you to pay 13 mortgage payments of   $1438, which will add up to $18,694 in payments, $3,200 of which is principal and the rest is interest. Congratulations, you sold your home for full price and it only cost you $15,000 and a year of your life to save that $9,000 we talked about last year!

Now, I’m not the kind of broker that will beat up a seller week after week to reduce the price on their home. I’ll be in this business 10 years from now, and I can wait for your home to sell at the price you want. The question is, CAN YOU?

My personal hard drive crashed last Saturday. Luckily, I had a backup, but even so, it took me about 14 hours to reinstall everything and restore my backed up files.

 In the meantime, I had multiple offers on a vacant lot in Dawson Ranch, a new subdivision (Top Rail Ranch) to market, multiple offers on a lot in Top Rail Ranch, a new mobile home park listing, two meetings in our Colorado Springs office, a closing in Gold Canon, a back-and-forth offer on our model home  that still isn’t settled, and a protester at two subdivisions, who was slandering every contractor, subcontractor, homeowner, and the City of Canon City.

I was doing a little research, and accidentally stumbled upon some data that showed that for the second time in 3 quarters, Keller Williams Premier Realty closed more gross volume real estate than any other company in the Royal Gorge Association of Realtors, according to our MLS on February 28th, 2008.

Things are heating up in Canon City, and the Tony Greer & Associates team is starting to rock and roll. I found a GREAT deal on a 36-unit apartment building that one of my clients wants to take a closer look at, and a couple of new listings that are priced right and won’t be on the market long.

I honestly don’t know what we’d do if we weren’t in a “down market.” We have been working 12 and 14 hour days to keep up.

I have a couple of really nice rentals available, a newer 1700 sf tri-level in  a nice neighborhood and a neat Victorian on 1 acre in Lincoln Park that’s for sale, for lease, or available for a lease-option.

I was talking with some friends the other day, when one of them mentioned that historically, market drops come hand-in-hand with interest rate hikes. The first thing that came to mind was, “What effect would this have on monthly payments.”

As soon as I got  back to the office, I  opened up Excel and went to work. Now, I’m no mathematician, but this is pretty simple math. Here’s what I found:

A $200,000 loan at 5.5% requires a monthly payment of $1,135 for 30 years.  Suppose home values drop 5% in the next year (not impossible, but it has never happened in Canon City), and interest rates rise by 1% during the same period  (more likely than a  5% drop in home value). Then the same house would require  a $190,000 loan at 6.5%, and the  monthly payment rises to  $1,201 for 30 years.

The increase of $66 per month probably won’t break the bank, but it could  increase a potential buyer’s debt ratio  enough to disqualify some buyers that could afford to buy the $200,000 home today.

If you’re a buyer, this is another reason why IT’S A PERFECT TIME TO BUY A HOME.  Interest is low and there are a lot of homes to choose from. If you’re a seller, don’t wait to lower your price, get your home in the market today and get it sold before interest rates rise again.