Report From State Division of Insurance Details Extent of Underinsurance in Marshall Fire  

Since the devastating Marshall Fire last December in Boulder County, many homeowners may have contacted their insurers to see whether they might be under-insured, meaning that their homeowner’s policy does not cover the full cost of repair or replacement of their home should a similar disaster strike.

You may be interested to read the following April 26 release from the Colorado Division of Insurance containing initial estimates of the extent to which the homes destroyed in that fire were underinsured.

Here are the relevant paragraphs from that DOI release, omitting the charts referenced, which you can see on the division’s website:

Of the 951 total loss claims analyzed, 76 homes had guaranteed replacement coverage, meaning that the insurance policy on these homes provides coverage for replacement of the home with similar quality, square footage, finishes, etc. without a cap — meaning under-insurance is not a problem for these homes. These 76 homes represent 8% of the homes in the analysis. 

Determining the extent of the underinsurance issue is largely dependent on the anticipated rebuilding costs. The Division analyzed under-insurance using various rebuilding costs — $250, $300 and $350 per square foot. Of the 951 policies, here is the breakdown for how many are underinsured. [Chart omitted—see it on DOI’s website.] Note that these policies that are underinsured include both policies that have extended benefits coverage, meaning coverage that provides some additional coverage if rebuilding costs exceed policy limits (83% of policies), and policies without such extended coverage (9% of policies).

At a rebuild cost of $250 per square foot, a total of 344 (36%) policies are underinsured. 

 At $300 per square foot, 523 (55%) policies are underinsured.

At $350 per square foot, 639 (67%) are underinsured. 

The DOI also calculated the average amount of underinsurance per policy, using the same rebuilding costs of $250, $300 and $350 per square foot. 

At $250 per square foot, for the 344 policies, the average amount of underinsurance per policy is estimated at $98,967. 

At $300 per square foot, for the 523 policies, the average amount of underinsurance per policy is estimated at $164,855. 

At $350 per square foot, for the 639 policies, the average amount of underinsurance per policy is estimated at $242,670.

    The DOI will hold a town hall the week of May 16th to discuss this data and any other next steps that have been identified for assistance. As soon as a date and time are decided, information about the town hall will be posted on the Division’s Marshall Fire Response website, and information will be sent to the Division’s Marshall Fire email list.

I checked the Division of Insurance’s website, and it did not yet have information on when that town hall will take place. You can check it yourself in coming days at http://doi.colorado.gov.

I was disappointed that the report didn’t clarify why it was providing estimates based on those three different price-per-square-foot rebuilding costs, without mentioning why an insurer would use one or the other and why different insurers might use different cost figures for homes that were, for the most part, tract homes built to the same quality by the same builder or builders.

Consult your own insurance agent to see whether your policy contains “guaranteed replacement coverage” or if it could be added.

DMAR Creates a Smartphone App for Realtors & Homeowners  

    The Denver Metro Association of Realtors (DMAR) just released a new app called the DMAR Home Kit. Download it free from the App Store or on Google Play..

    We downloaded it, and you’ll find it useful, especially for finding vendors in multiple trades, plus discounts from some of them. Since Golden Real Estate’s own service provider app vendor went out of business, I find this a good substitute.

    You can search for vendors by key word. For example, I entered “fireplace,” “sewer” and “mortgage” and found vendors that I would recommend myself. What each vendor has in common is that they are dues-paying affiliate members of the Realtor association, which is a good measure of business ethics and responsibility. They won’t disappoint you because they want to maintain a good reputation among Realtor members. There were no vendors under “heat pump” or “electrician,” but maybe the existence of this app will encourage one or more of them to become affiliate members of DMAR.  I recommend it!

     The app also provides access to the association’s statistical reports. You can search statistics by individual city or county. Download and play with it!

Just Listed: 1939 Tudor in Denver’s Mayfair Neighborhood

This 1939 brick Tudor at 1301 Glencoe Street was built by a neighborhood builder for his own family and it has many unique features.  You have a rare opportunity to own this very special home since this is only the third time in 65 years that it has been offered for sale.  (I know it well, since I lived two blocks from this house in the 1990s.)  You’ll love the vaulted ceiling in the living room and the beautiful main level hardwood floors.  What sets this home apart from other Tudors in this area is its deceptive size: 4,030 total square feet (3,526 finished).  An extra large master suite with built-ins and private bath, 2 additional bedrooms and a 2nd full bath are on the first floor. Two non-conforming bedrooms, full bath, large family room and a huge workshop are on the lower level.  Flexible room layouts are ideal for a home office (or two) or a hobby room.  A detached garage is accessed from 13th Avenue.  On a price-per-square-foot basis this home comps out well above $1.1 million, but the seller chose to price it to sell quickly.  A broker-only open house will be held on Friday so ask your broker to attend or call Jim Smith to set a private showing.  Also, the narrated video tour (click on thumbnail below) at www.MayfairHome.site is like a showing by Jim Smith.  Click on the thumbnail below to view the video tour. Watch it before calling for an in-person showing.

Morrison 2-Story Just Listed by Ty Scrable  

This home at 4839 S. Coors Ct. has it all! This corner lot gem welcomes you into the home with hardwood floors, custom window coverings and 10-foot ceilings. You will find the living room and custom kitchen of your dreams, featuring high-end Kitchen Aid appliances with floor to ceiling cabinets. A covered deck is off the kitchen and a backyard that has been professionally landscaped. The yard was carefully planned to include an aspen grove, apple trees and custom masonry. Upstairs you will find four bedrooms and another living area. Three of the bedrooms, including the primary suite, have west-facing mountain views. The basement is unfinished and ready for your personal touch. Built in 2014, this home is in the perfect location for easy access to Red Rocks and Golden. Hwy. 285, C-470 and I-70 provide easy access to the mountains. Photos are at www.MorrisonHome.info. Then call your agent or Ty Scrable at 720-281-6783 for a showing. Open house will be Saturday, May 14th, 11 am to 2 pm.

Are Investors Snapping Up Homes, Squeezing Out Other Buyers?  Yes and No.  

Media reports have created the impression that “Wall Street” interests are dominating the purchase of homes for sale, squeezing out individual buyers and causing the low inventory of homes for sale. That’s not exactly true.

What’s happening is that those purchases are happening through an off-MLS process, with very few on-MLS listings, based on my own observation and experience, being purchased by those large investors.

In fact, I can’t think of even one transaction that involved a large entity purchasing one of Golden Real Estate’s listings. And they certainly did not hire us to buy another brokerage’s listing. All our listings have been purchased either by owner-occupants or by small investors — homeowners themselves, who may have a portfolio of rentable homes or condos.

If you’re a homeowner, you’ve likely received, as Rita and I have, many solicitations to sell your home without putting it on the MLS — a bad idea if you want to get the highest price for your home. Also, brokers like me regularly receive emails and texts asking whether I have a “pre-MLS” listing that they or their client could buy “as is” before it’s put on the MLS. My standard reply to such solicitations is that I would never encourage a seller to sell their home without putting it on the MLS, because that’s a sure way to get less than their home is worth. I consider it my responsibility as their agent to get the highest possible price by exposing their home to the maximum number of buyers. That is not achieved by selling one’s home to an investor without putting it on the MLS.

Media experts and others continue to treat the low active inventory on the MLS as the result of reduced number of homes being entered on the MLS, including by off-MLS sales. In fact, the number of new listings this April was higher than both prior Aprils, but the number of active listings keeps declining because those new listings sell so quickly.

Yes, some of those off-MLS sales might have ended up on the MLS if they had not been solicited, but I think mostly they are homes which the owners had not intended to sell before they got “an offer they couldn’t refuse.”

In researching this topic I found a March 31, 2022, article from The Washington Post which highlighted this very problem of big investors buying up homes and converting them to rentals. Using data from Redfin, it reported on major spikes in such purchases from 2020 to 2021. The Denver market had less such activity than most other major markets, but still the percentage rose from 8.4% in 2020 to 12.4% for 2021.

Above is a chart from The Post’s article, based on the Redfin data. Each of those thin lines represents a different metro area. I inserted a carrot symbol at each end of the line for transactions in the Denver metro area. What’s remarkable is that all but two of the metro areas show a spike in investor purchases in 2021. Those metro areas that didn’t show a spike are New York City and adjoining Nassau & Suffolk Counties.

It’s hard to ignore that the pandemic must have played a role in that abrupt rise in purchases by big investors, defined in that article as entities with 100 or more purchases.

The article confirmed that these transactions typically originated from letters or postcards sent to homeowners offering an off-MLS purchase of their homes “as is.” It also showed that majority non-White suburbs experienced most of this activity, giving the process a racial tinge I didn’t expect to see.

Here’s an excerpt from that March article: “In Charlotte and elsewhere, according to The Post’s analysis, investors have purchased a disproportionate number of homes in neighborhoods where a majority of residents are Black. Last year, 30 percent of home sales in majority Black neighborhoods across the nation were to investors, compared with 12 percent in other ZIP codes.” The article didn’t claim that the letters and postcards targeted such communities, only that most sales occurred there.

Just Listed by Chuck Brown: One-of-a-Kind ‘Prairie Style’ Home in Denver’s Wash Park Neighborhood

The architect designed this home at 801 S. Gilpin Street in the “Prairie Style” made famous by Frank Lloyd Wright, with large roof overhangs, ribbon windows and glass brick. Chuck Brown just listed it for $1,897,000. Built in 1994 with 2×6 exterior walls, it’s located in the heart of the Washington Park neighborhood and has at least two features Wright couldn’t incorporate — Cat5 ethernet wiring and a 5-kW solar PV system which combines with the home’s passive solar design to make it highly energy efficient. The primary bedroom is on the main level with two guest bedrooms, one with wood flooring, and full bath on the second floor. The 1,000-sq.-ft. basement is 2/3 finished, with a large entertainment room and 4th bedroom plus full bath and lots of storage. On the main floor is an office with built-in desk, shelving and wall cabinets plus a private entrance, making this an ideal home for a professional or other work-at-home situation. It could be adapted for a mother-in-law, au pair, or other use, too. There will be no open house, so call your agent or listing agent Chuck Brown at 303-885-7855 to arrange a private showing. Find more pictures and floor plans for all three levels at www.WashParkHome.info.

801 S. Gilpin Street is bottom center in this picture, with Washington Park 1/2 block west.

Lakewood Duplex Near Belmar Park Just Listed by Jim Swanson  

This duplex with detached 2-car garage is located on a corner lot at 365-375 Carr Street in Lakewood’s Foster subdivision. It is listed as “Coming Soon” by Jim Swanson for $575,000. It has a single legal description, so it can only be sold as one. Pictures will be uploaded soon to www.LakewoodDuplex.info. It’s in a quiet location near Belmar Park, shopping, etc. There are 2 one-bedroom units. The larger ranch unit is 1,127 square feet with one bedroom and a full bath. It also has a full basement that is great for extra storage. The cozy smaller one-bedroom unit is 600 square feet and is built above where the original one-car attached garage was. Each unit has its own electric meter and laundry room. The lot measures approximately 1/3 acre. This property has been a solid long-term rental and has good bones, but could use some updating. The tenant in the smaller unit would like to stay. Call Jim Swanson at 303-929-2727 with questions or to arrange a private showing.

‘Community Solar’ Makes Solar Available to Condo Owners and Apartment Dwellers  

Driving around the metro area and elsewhere, you have probably noticed huge installations of solar panels on open land and wondered who built and who benefits from them.

Bigger installations, such as in the Mojave Desert, are utility-scale installations owned by electric utilities to replace fossil-fueled facilities. Smaller installations, such as the one north of 64th Avenue on Highway 93, are owned by community solar companies or non-profits.

The concept of community solar is to rent or sell portions of such installations to individual utility customers. The kilowatt-hours generated by those solar panels are then credited to the usage on subscribers’ electric meters.

It’s a perfect solution for customers like Rita and me, who sold their home and are now living in an apartment or condo building where they can’t install their own solar panels. The really neat thing about community solar is that when you move, your solar generation is merely reassigned to your new electric meter — no need to buy new panels.

Small businesses can also take advantage of community solar. Golden Real Estate, for example, moved last November from its solar-powered office on South Golden Road into a storefront on Washington Avenue in downtown Golden. Community solar is the only way that we can continue to be solar-powered since we can’t install solar panels.

Denver-based SunShare describes itself as the nation’s oldest community solar company with over 10 years’ experience building and maintaining “solar gardens” across the state. Their website says that they have built 116MW of solar panels and have 14,000 subscribers and three utility partners. Learn more at their website, www.MySunShare.com.

Community solar was legalized in Colorado in 2010 with the passage of the Community Solar Gardens Act  (HB 1342). The following year, SunShare opened for business, and in 2015 the Colorado Energy Office partnered with GRID Alternatives to construct a community solar demonstration project to serve low-income Coloradans.

Colorado Springs Utilities was the first utility to create its own solar garden for 278 subscribers in 2011. That 0.5-MW installation has since grown to a 2-MW installation serving 435 customers.

Community solar can be a good deal for rural landowners, providing a predictable revenue stream for otherwise non-producing acreage.

Renting or buying photovoltaic panels in a solar garden costs money, so you’re still paying for electricity, but the rule of thumb is that what you spend on community solar is about 10% cheaper than buying the same amount of electricity from the utility.

Some of us don’t worry about the size of the savings but simply “go solar” because it’s the right thing to do.

To learn more, in addition to visiting SunShare’s website, I suggest Googling “community solar Colorado.” You will find other companies offering community solar, learn the history of it in Colorado, and decide whether it is right for you.

You may find that existing solar gardens are sold out and you’ll be put on a waiting list for a future solar garden.

Whether you are putting solar panels on your own property or subscribing to a solar garden, consider upsizing your investment instead of basing it on your current usage, since the chances are that you’ll be buying an electric vehicle and you’ll want electricity from the sun to power it, too.

If a Slowdown in the Real Estate Market Is Coming, April Statistics Don’t Show It  

Last week I predicted a slowdown in the real estate market because of the abrupt and severe increase in mortgage rates, and I stand by that prediction, but it will not be apparent, I believe, until we see the market statistics for May 2022.

April statistics won’t be available until mid-May, but below is a table showing March statistics over the past 6 years. As you can see, especially in the last two columns, the seller’s market was only accelerating. Despite a surge in new listings and a high number of pending and closing listings resulting in a record low number of active listing, the median days in the MLS was at its lowest — 4 days — and the ratio of closed price to listing price was at its highest.

Although the numbers for April aren’t yet available, I checked the pending and closing listings from April 1 through April 24th on REcolorado, the Denver MLS, and found that DOM was still only four, and the ratio of sold price to listing price had swollen to 105.5%.

Keep in mind, however, that those listings which are pending now or have closed in April probably had interest rates that were locked in back in March before the abrupt increase in mortgage interest rates which I still believe will soften the market in May and beyond.

Here are a couple other statistics as of April 24th that suggest an increased seller’s market: There are only 4,995 active listings in the entire MLS, but there are 10,649 pending listings. Compare that to the above chart.

4-BR Westminster Ranch Just Listed by Jim Swanson

This move-in ready south-facing ranch home with updates at 3865 W. 63rd Ave. is ready for new owners. It was just listed by Jim Swanson for $559,000. The corner lot and low maintenance yard is great for pets. The open floor plan features a large living room with vaulted ceiling, plus a dining area with French doors adjacent to the kitchen. Quality kitchen appliances are included. There are 2 bedrooms and 2 baths on the main level, and 2 bedrooms, a full bath, and a nice family room in the basement. You’ll like the high ceilings in the basement. Built in 1987, the Arlington Meadows neighborhood has great access to Denver and Interstates 25, 76 and 70. The Tennyson light rail station is only 10 blocks away, as well as the large Tennyson Knolls park. View more pictures and take a narrated video tour at www.ArlingtonMeadowsHome.info, then call your agent or Jim Swanson at 303-929-2727 for a private showing.

https://youtu.be/uHPJa1e7uIg