Experts Are Predicting a Surge in Foreclosures, But I See the Situation Differently

With the continued high unemployment rate and the expiration of Pandemic Unemployment Assistance (PUA), many homeowners are hurting, so it makes sense that we may have a foreclosure crisis in our future.

CoreLogic reported recently that back in June (when the Feds were still sending $600/week in PUA to Americans) the share of mortgages with payments 90 to 119 days late had already risen to 2.3%, “the highest level in 21 years.” A rate that high could result in a foreclosure crisis, the report said. Not only could millions of families potentially lose their home, but that would also create downward pressure on home prices.

But I see the situation differently, and after consulting with Jaxzann Riggs of The Mortgage Network, here’s why I don’t expect that flood of foreclosures.

First of all, foreclosure should only happen when a seller owes more on their home than it is worth. That’s because sellers lose all their accumulated equity in a foreclosure, and most people have accumulated a lot of equity thanks for the sellers’ market we have been experiencing.

Secondly, federally mandated forbearance is in effect, which is unlike the forbearance which delinquent borrowers may have enjoyed in the past. Under the current plan, lenders add extra payments at the end of the loan instead of requiring any kind of catch-up payments. This mandate could be extended, too.

The only people likely to face foreclosure will be those who recently took out 100% VA loans or 96.5% FHA loans or conventional loans with only 3% down payment, and for whom there is hardly any equity to lose in a foreclosure action.

Being on forbearance doesn’t affect one’s credit rating even though you are not making payments (again, part of the federal mandate), but once you resume payments, you need to make a minimum of three on-time payments to qualify for a Fannie Mae or Freddie Mac loan, which will restrict your ability to sell your home and purchase a replacement home. Some lenders require six months post-forbearance loan payments.

That, too, will slow down any surge in what are known as “distressed listings.”

Golden Real Estate Welcomes New Broker Associate, Tyler Scrable

Tyler Scrable has joined Golden Real Estate as a broker associate. Ty (as he likes to be called) has been a licensed broker for 7 years. Within that time, he has gained extensive experience in the property management business. He also is well versed with fix-and-flip projects.

Ty and his wife live in the 12th Street Historic District of Downtown Golden. They welcomed their first child in March. He got to know us when we donated a Black Lives Matter banner to Golden United. Ty is a co-chair of the Golden Anti-Racism Collective and his group led a community effort to hang the banner under the Welcome Arch in downtown Golden.

After much community discussion, the council decided to hang a Golden specific banner that reads “Golden Stands with Black Lives” for sixty days (not all consecutive).

Like his fellow agents at Golden Real Estate, Ty will specialize in residential real estate, but is open to helping renters and landlords. If the right opportunity presents itself, he may open a property management division under our name and license. In a previous management position, Ty oversaw 240 units in 12 buildings in Downtown Denver.

My broker associates and I welcome Ty to the Golden Real Estate team. You can reach him anytime at 720-281-6783 or at Ty@GoldenRealEstate.com.

A Reader Asks How to Handle Inspection Objections

Inspection is the first and biggest hurdle in any contract to buy and sell a home. It’s an area in which experience by your agent really counts!

Usually the buyer will only ask for serious issues to be addressed by the seller. The seller rarely agrees to all the demands, nor is that expected. A common practice is to fix the easy items but give the buyer a price reduction or credit toward closing costs in lieu of making the big dollar repairs. When the buyer wants older appliances that are still working replaced, one solution is for the seller to purchase a home warranty covering those and other appliances.

Good luck with your inspections!

Price Reduced on Golden Home on 0.78-Acre Lot

4820 McIntyre Street – Listed at $874,000 – Open House Sunday

This beautifully updated home sits on a large corner lot with breathtaking views from the balconies off both bedrooms. Enjoy views of North Table Mountain and the Boulder flatirons. The sellers realize that the best use of this parcel may be redevelopment, such as has happened both north and south of it, since the 0.78-acre lot is large enough for several homes or condos. Meanwhile, this is a lovely home with a gated driveway with lots of space for all your toys! With three sheds, including one that is 20’ x 50’ with heat and electricity, you have lots of covered storage. Inside the home you will love the gourmet kitchen and fabulous tiled bathrooms. Originally a 1901 farmhouse gutted and rehabbed in 2011, this home has all updated electrical and PEX plumbing throughout. It comes with wine fridge too!  More details, picture and video tour are at www.FairmountHome.info. It will be open this Saturday, Sept. 27, 11am to 2pm.

This Lakewood Patio Home Is Now Ready to Show

9695 W. LaSalle Avenue = Listed at $525,000

This 3-bedroom, 4-bath home, which was listed several weeks ago, is now vacant and ready for showing starting this Friday, Sept. 25th. It’s located in the gated Primrose Above Bear Creek subdivision, west of Old Kipling Street adjacent to the Bear Creek Greenbelt. Take a narrated video tour at www.LakewoodPatioHome.info, then come to our open house this Sunday, Sept. 27th, noon to 2 p.m. or call your agent or Jim Smith at 303-525-1851 for a showing.  Enjoy care-free and maintenance-free living in this lovely and peaceful gated community. In addition to a main-floor master and laundry, there’s a second master and loft upstairs, a home theater and third bedroom in the finished basement. On the website, you’ll see pictures of the subdivision’s clubhouse and swimming pool, plus the nearby trails and amenities of the greenbelt.

Despite Global Pandemic, Our Real Estate Market Was the Hottest Ever for August

Much to the consternation of observers, the real estate market in metro Denver was hotter this August than it was in any previous August, according to the Market Trends Committee of the Denver Metro Association of Realtors (DMAR). At this rate, 2020’s statistics at year end will likely exceed 2019’s statistics.

The report covers an expanded metro area, including 11 counties instead of the 7 urban and suburban counties that you and I think of as “metro Denver.” The non-urban counties included in the report are Clear Creek, Gilpin, Elbert and Park.

Detached single-family homes sold like crazy in August—up over 6% from August 2019, despite 50% fewer active listings at month’s end. The average sold price was up 13.8% from last year, and average days on market was down 23%.

Attached homes sold on a par with last year, although their inventory was also down — 19% fewer listings at month’s end. They did sell quicker, though, with days on market down by over 27%.

Unlike DMAR, I like to define the metro Denver market as within a 25-mile radius of the state capitol, as shown here, instead of by county. Using that method, the number of detached homes sold this August was up 13.7% from August 2019, and the sold price per finished square foot (my preferred metric) was up 7.0%. Average days on market dropped by 31%, but median days on market plunged 57% from 14 days in August 2019 to 6 days this year.

Even more interesting to me is that median days on market was in double digits until March 2020 — the first month of Covid-19 lockdown — when it dropped by 40% to 6 days, and remained in the 5- to 7-day range through August. It could be said that “Stay at Home” and “Safer at Home” really meant “Buy a Home” in the real estate business!

Average sold price within that  25-mile radius rose by 13.4% to $597,290, while median sold price rose by 11.6% to $505,000. The gap between average and median is attributable to a large number of million and multi-million dollar closings. I wish others would stop focusing on average stats for that reason.

The number of active listings (what we call “inventory”) plummeted from 6,483 in August 2019 to 3,444 in August 2020, a 47% decline.

Another measure of market strength is how many listings expire without selling. That number was 777 in August 2019, but it fell by 37% to 493 this year.

The average ratio of sold price to listing price was 100% both last August and this August — suggesting that roughly half the listings sold above full price. With half the homes selling in 6 days or less, it’s to be expected that there were multiple offers and possibly a bidding war on many listings.

This week my downtown Golden fixer-upper closed at $665,000, which was $40,000 over listing price. My Lakewood listing from last week is already under contract at $55,000 over full price. Clearly, the seller’s market is still hot despite the pandemic.

If you have considered selling your home, there couldn’t be a better time than now to put your home on the market. And you couldn’t do better than call one of us listed below to talk about it. Your home would, of course, be featured in my weekly Denver Post column and on this blog.

If you let us represent you in the purchase of your replacement home, the listing commission could be as low as 3.6% and qualify you for totally free moving!

Jim Smith— 303-525-1851

Jim Swanson — 303-929-2727

Carrie Lovingier — 303-907-1278

Chuck Brown — 303-885-7855

David Dlugasch — 303-908-4835

Carol Milan — 720-982-4941

Just Listed: Mid-Century Modern Ranch in East Denver

1930 Roslyn Street, Denver – Just Listed at $475,000

This 3-BR, 2-bath home is about 2 blocks south of the Stapleton (now Central Park) neighborhood. No basement, large, well cared for front and back yards with in-ground sprinkler system. Hardwood floors in the living room and bedrooms. Bedroom #3 is non-conforming (no window). Updated kitchen with stainless steel appliances, plenty of cabinet space with a coffee bar. Family room features a wood burning fireplace, carpet and a brand new 8-foot sliding glass door that leads to a covered patio in the private back yard. The 24×24 oversized garage is accessed from the alley and features a 9-ft high garage door. Another feature of this home is its proximity to several parks, Stapleton Town Center and Stanley Marketplace. This house is perfect for entertaining. Take a narrated video tour of this home at EastDenverHome.info. Open house Sat., Sept. 19, 11 a.m. to 2 p.m., or call Chuck Brown, 303-885-7855.

Just Listed: 3-Bedroom, 3-Bath Golden Townhome

This townhome at 416 Gladiola Street is nestled in area known at Sixth Avenue West, east of Indiana Street, behind a couple extended stay hotels and a medical center. It was just listed at $350,000. It has some nice updates in it, including an open floor plan and mostly finished basement. Take a narrated video tour of it online at www.GladiolaTownhome.com.

Mountain view from living room and from master bedroom above it.

You Decide: Boutique Hotel, B&B, or Luxury Home!

This hotel has all the luxury and amenities of a fine hotel, and then some. No expense was spared building this newer European-style boutique hotel located on a mountain river. It pampers guests by offering a distinctly different hotel experience, from flatscreen TVs to steam showers, espresso machines, hot tubs and fireplaces. The owner, a friend of Rita and me, has approximately $2.5M in build-out costs alone! High-quality landscaping, construction, and beautifully appointed design throughout the property make this home a must-see! The property also includes separate apartments for manager and owner. 

A vacationer’s dream, where guests are treated like royalty as the Five-Star reviews on all major websites proclaim! It is located just minutes from world-class skiing, and offers panoramic views for its guests. Virtually endless possibilities for adventure abound — anything from skiing, enjoying all types of restaurants/brewery, and shopping in the winter to fishing, hiking, cycling, etc. in the warmer months. You name it, it’s close by! There are myriad growth opportunities for an investor to turn this property into whichever profit center one would desire. Anything from a high-end boutique hotel as it is currently, to a B&B, long-term rental, or an amazing extended family mountain home! (Would require change of zoning.) There is growing development in the area, and the business has several, large, extended-stay clients, which can easily be expanded upon. The revenue from these extended-stay clients, even at a discount, makes this newer 10-room hotel property a solid investment.  For more information or to see it, call Jim Smith, 303-525-1851, or Wayne Wright, 720-436-1472.

Just Listed: 1901 Farmhouse on Large Fairmount Lot

4820 McIntyre Street, Golden – Just listed at $875,000

This home sits on a 0.78-acre lot with three outbuildings, one of which is a 20’x50’ heated building with electricity, water and an indoor garage space. For a 1901 structure, this home is beautifully updated and comfortable, but, with its large lot, the seller realizes the highest and best use of the parcel may be redevelopment, such as has already happened both north and south of it. Meanwhile, it’s a lovely home with a gated driveway and is fully fenced, providing lots of space, covered and uncovered, for all your toys! You could even add more out-buildings! Inside the home, the plumbing was updated to PEX throughout, and the electrical was updated in 2011. The metal roof is about 15 years old and survived multiple hail storms with no damage. There are porches on three sides, although not connected. The east-facing porch includes an outside kitchen with its own refrigerator, propane grill with griddle and unplumbed sink set in a granite countertop. This has been a lovely family home for decades! Check out the numerous still photos and narrated video tour at www.FairmountHome.info, then call Jim Smith at 303-525-1851 for a showing.