“Banana Belt” my foot!
Whenever someone tells me they’ve heard that this is a banana belt I laugh and usually point out that while the North Fork has plenty of cherry, peach, and apple trees, you won’t find a single banana tree. And, after post-holing around in a foot of snow looking at property the other day, my clients understood clearly that we do get winter here.
The good news is that even with difficult conditions the local real estate market is keeping us quite busy and instances of multiple / competing offers are occurring more frequently. Multiple offers are a strong indicator of what economists call pent up demand and we call buyers in the bushes – people whom are ready to buy but are waiting for the right thing to come along. Every Realtor in the valley has them and these days news of a new listing travels fast.
It’s amazing how soon after a new listing is posted to the MLS the phone starts to ring (and text tone buzzing) because a client has an “automatic notification” set to alert us when something that fit their criteria hits the market. Zillow is the most used, but Trulia, Realtor.com, Homes.com, and our own website WesternColoradoRealty.com all offer this feature.
When it comes to new listings, as you might suspect, the cheapest ones get the most attention. With foreclosures back to a much more normal level there are fewer opportunities to pick up a real bargain and through competitive bidding we’ve seen some of them sell for as much, and more, per square-foot as similar homes that were in much better condition. There’s something about human psychology that can work against our better judgment when things get competitive. It’s the job of a real estate agent to help their client avoid falling into that – the key word here is ‘agent’.
In Colorado real estate brokers are, by default, a “Transaction Broker” working to facilitate the transaction without advocating for either party (buyer or seller). The word agent means advocate. And, as an advocate, the broker has a fiduciary duty to their client to give them advice, help them negotiate, and coach them through the buy/sell process. A transaction-broker works more like referee – making sure things are done right but without the level of duty that an agent has. It’s important to understand the difference and how it can affect a deal.
The stock market starting the year with such a big drop wasn’t on anyone’s list of New Year resolutions so it will be interesting to watch the Federal Reserve to see whether or not to expect another rate increase anytime soon. I suspect not, at least not to the point it will affect mortgage rates enough to dissuade motivated buyers. However, what is on the minds of many, and starting to have an effect on the local real estate market, is coal and its future here.
The recent announcement of an indefinite moratorium on future coal leases coming just weeks after Arch Coal filed for bankruptcy is looming large over the local economy. The perceived risk of this causing a number of homes to “flood” the market makes some would-be buyers nervous. People tend to wait if they think prices might drop in the future. At this point the perception is far greater than the reality but if that changes it certainly be a relevant market variable.
Another piece of the puzzle that is shifting a bit are loan-underwriting rules. Mortgage reform under the Dodd-Frank act continues to evolve and change the loan process. I recently had a client, who is self-employed, describe having to provide copies (front and back) of every check he’d deposited for the past two months. What a pain. The closer we get to April the more likely the bank will ask for a copy of your 2015 tax return too, so better not procrastinate if you’re thinking about shopping for new home this year. Ah, April … has a nice ring to it, doesn’t it?