The Market Difference(s)

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The Market Difference(s)

LIV Sotheby’s International Realty downtown managing broker, Steve BlankThe basic objectives of buying and selling a home have not really changed since I graduated from DU in 1975 and became a real estate broker. However, virtually everything associated with a real estate transaction has become more complicated, but also more consumer oriented and transparent. Some of the more obvious changes include:

STYLE OF HOME – More open, more modern and Green. Quality is better and the average size has gone from 1,300 sq. ft. in the 1950’s – 1970’s, reaching about 2,100 sq. ft. today.

“BUYER BEWARE” – Not So Much! We have become a consumer oriented society which is quite apparent in the world of real estate and is typically the largest financial investment people make during life. In 1975 the state approved real estate contract was less than one full page. Today it is considerably more comprehensive with 16 pages, important Seller disclosures, and the opportunity to perform valuable “Due Diligence”. This allows the buyer to learn and become satisfied with such things as their preferred financing, the home’s value, title, choice of homeowner’s insurance and the property itself. Property inspectors have become more compressive then in past year’s. They evaluate all elements of the home including mechanical systems, roof, foundation, appliances, windows/doors, insulation and more. If anything looks questionable they will call for an inspection from licensed vendor’s such as roofers, HVAC technicians, sewer scopes, plumbers, etc.

THE ONLY THING CONSTANT IS CHANGE – Over the years the real estate market has, and will, rise in value. The average price of a Denver home was $80,000 in 1983. Today it is over $400,000 and that is after two recessions (mid 1980’s and from 2008 – 2011) where prices became soft and depreciated in value (temporarily). We have experienced Buyer’s markets (most recently 2007 – 2011) and Sellers’s markets (2013 – 2016) with various stages of a healthy and more balanced market. Currently, there are visible differences between the lower-mid price ranges and the upper end markets in Denver and also nationally. Home buyers will likely have different experiences as they shop for their new home. Buyers looking under $400,000 find tough competition from other buyers, with lower than normal available inventory and rising prices (10-15% annually). More move-up buyers ($500,000 to a $1 million) see a better selection of homes and a more balanced market rising 7-12% in most Denver neighborhoods. Buyers looking for luxury homes (over a $1 million) are finding an improved level of inventory (up 25% from last year) making it a little less competitive and in some cases, (especially homes on the market more than 60 days) more negotiable in price.

FINANCING – Up until the financial debacle (recession) over 5 years ago, a perspective buyer/borrower could arrange to obtain a mortgage by simply possessing a pulse. Today qualifying is actually based on one’s financial history and credit-worthiness. By 2012-13 lending guidelines became much tougher (appropriately). With good or improved credit, one can now borrow with a 3-5% down payment. Lenders are increasing their mortgage options with more loan types to fit consumer needs. In 2015 the average credit score (FICO) on closed loans was 723 with almost a third of the purchases having a score under 700 and 10% of those scored under 650.

SINGLE WOMEN – This demographic is proving to be a very important piece of the home buying market. They are the largest demographic, after married couples, which includes all age groups from Millennials to Baby-boomers. Their incomes are increasing quicker their male counterparts and we should expect this to continue.

HIGH TECHNOLOGY – Computerization has changed how we look for a home, process mortgages, design and inspect homes, and even navigate (GPS) to the home. At the end of the day, buyers and sellers are drowning in information and yet starving for good judgement. Information does not necessarily translate into wisdom. Buyers and Sellers can better utilize their Realtor, lender, inspector, etc. to receive the guidance they need and deserve. There will be issues that can make you feel like your state of affairs is hanging on by a thread during any transaction. Finding a true real estate professional will help you avoid serious problems and be your most valuable resource in orchestrating and protecting your financial (and emotional) welfare.

For more information, contact LIV SIR downtown managing broker, Steve Blank, at 303.520.5558. To service all of your real estate needs visit www.livsothebysrealty.com

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