If Home Prices Fall by June 30, It Could Lower Property Taxes

We’re all looking for silver linings, so here’s one you probably haven’t thought of.

In Colorado, property taxes are based on what your home might have sold for on June 30th of every even numbered year.  County assessors are required by the state constitution to estimate what your home could have sold for on that date based on what comparable homes sold for during the 24 months leading up to that date. Using computer programs, their software “ages” each sale to come up with a value as of June 30, 2020.

Thus, if a home comparable to yours sold for, say, $500,000 on December 31, 2019, the computer figures out how home prices in your area, on average, changed from Dec. 31st to June 30th in order to come up with an “aged” value to use in valuing your home on that date.

Therefore, if, as some experts suggest, home prices drop in May and June of this year, that $500,000 comp may have a valuation for assessment purposes of less than that on June 30, 2020.

In conclusion, if we have a dip in home values by the end of June, but the values recover in 2021 and 2022, as the same experts suggest, your property tax bill may be lower for the next two years as the result of that temporary dip.

Price Reduced on Ranch Home Near Green Mountain

1957 S. Taft Street, Lakewood — Price just reduced to $450,000

This home at 1957 S. Taft Street is a sturdy brick home within a mile of two Green Mountain trailheads and even closer (150 yards) to a trail in Hutchinson Park. Devinny Elementary School and Dunstan Middle School are only a half-mile away. There is no HOA in this 1970s neighborhood so you can take advantage of the RV parking space next to this home’s driveway. Due to this home’s elevated location, you’ll enjoy the partial mountain view from the window above the kitchen’s Corian countertop and sink. The quiet backyard (below) features over a dozen lichen-covered boulders, a deck with pergola, hot tub, and two storage sheds. Take a narrated video tour at www.LakewoodHome.info, then your agent or me at 303-525-1851 to set a showing!

What Will Be the Short- and Long-Term Effects of Covid-19 on Real Estate?

As I write this column on Tuesday, April 28th, the infection rate of Covid-19 seems to be leveling off, and the rule against in-person showings has been relaxed, although open houses are still banned.

The inability during much of April to show listings not only made it harder to sell homes, it also resulted in a reduction of roughly 50% in the number of homes being listed. Despite that, homes that were listed continued to go under contract quickly, thanks in part to good pictures and virtual tours.

It may be that the smart thing to do in April was to list your home. It was a matter of supply and demand — many fewer listings meant less competition for the homes that were listed, while buyers were apparently still willing to “pull the trigger.”  The key was to have good pictures and a narrated video tour because of the limit on showings.

I predict that there will be a bigger than usual surge of new listings in May and June, now that the no-showings rule has been relaxed. Although Denver and five other metro counties have extended their stay-at-home orders through May 8th, it was the Division of Real Estate and the state Attorney General’s office that were setting the rules about showings and open houses, and they don’t enforce local ordinances, so it’s expected that in-person showings will be happening throughout the metro area starting this week. Don’t, however. expect real estate offices to be open for walk-ins during this period.

So, what about the market going forward? The fact that mortgage rates are staying low, heading inexorably in the direction of 3% for a 30-year fixed loan, means that buyers are going to be supercharged as they go house hunting under fewer restrictions. There is pent-up demand, and there is also pent-up supply.

Nevertheless, we can’t ignore the near-depression economic conditions we face nationally in May. There will be many buyers not going back to work and unable to qualify for a home loan. However, the estimated 70% of Americans who were able to keep working from home or who had “essential” jobs, such as construction and health care, have been making good money — many earning overtime and/or hazard pay — and may want to reward themselves with a new home once things calm down.

So, while we real estate professionals have remained fairly busy during April,  I expect we’ll be even busier in May and throughout  the summer — especially as rules are relaxed. There will, however, be some subtle and not-so-subtle changes to the way we practice.

Most real estate agents were already accustomed to working from home, only going to their offices for floor duty, to handle paperwork, or to meet with buyers and sellers. Contract software has been online for a decade or more. We are used to emailing documents and having clients sign contracts electronically instead of on paper, which has served us well during the stay-at-home period. That will continue unchanged.

Showing appointments for nearly all MLS listings are handled by one company, ShowingTime, and increasingly the showings are being set online instead of speaking with an operator.

Where we will see the most changes will be with those activities that still require personal contact. Fist bumps and elbow bumps will probably replace handshakes long-term. We’re becoming hardwired as germophobes, I suspect.

Offices will be much cleaner. We’ll disinfect hard surfaces and wash hands more often. We’ll go back to having open houses eventually, but there may be fewer lookie-loos.

It will be a while before buyers want to ride in our cars, preferring to follow us to showings in their own cars.  I will continue to carry disposable gloves and Clorox wipes in my car, to use when showing homes.

More agents will learn to do their own narrated video walk-throughs of their listings, as Golden Real Estate agents have been doing for 13 years. And more buyers will look for those video tours and be more selective about the homes they choose to see.

In conclusion, real estate has shown great resilience during the pandemic thanks to how online the industry has already become, and I believe it will emerge from the current situation stronger than ever.

Why Real Estate Won’t Crash Like It Did Before

Many buyers and sellers of real estate are wondering whether we’ll see the kind of crash in real estate values that we saw in the Great Recession of 2008 onward. Experts agree that we will not.

In an April 22nd post, realtor.com explained that circumstances this time are quite different from then. Reasons cited by realtor.com’s economist, Danielle Hale, include the following:

First, the 2008 crash was created by a rash of bad mortgages — a situation that was remedied because of that crash. Second, there was an oversupply of houses for sale, whereas today there is an undersupply.

According to the realtor.com post, “There are simply too many would-be buyers out there: millennials eager to put down roots and start families, folks who lost their homes during the last recession and want to buy another property, and boomers looking to downsize.”

Lawrence Yun, chief economist at the National Association of Realtors, predicts that home sales will pick up again quickly and that prices will not fall.  He sees the luxury market taking the biggest hit, largely because the buyers of those homes may have lots of financial liquidity, but it is in stocks which they don’t want to sell while prices are low.

Also, widespread mortgage forbearance will prevent the surge in foreclosures we saw before.

Back on the Market: Fabulous 5-BR Luxury Ranch in Arvada

11948 W. 66th Lane – Listed at $945,000 (Price Reduced)

This home provides luxury living at its finest. Everything is “top shelf,” from the immaculate finished garage with epoxy flooring to the “invisible” surround sound speakers in the great room. (You can’t see where they are!) The main-floor master suite opens through a sunroom onto the covered east-facing deck with great design elements, which is also accessed from the great room. The master bathroom has a heated tile floor, 6-foot jetted tub and walk-in shower. The main floor features hickory hardwood flooring, with beautiful berber carpeting for the bedrooms, study and dining room. The walk-out basement has a family room with another surround sound system and wet bar, plus three more bedrooms and tons of unfinished storage space. The backyard is beautifully landscaped, with several garden beds along the south-facing side of the house.

To fully appreciate this home, watch the narrated video tour below, then visit www.ArvadaRanch.info for additional info, or call Jim Smith at 303-525-1851 for a private showing.

Watch this narrated video tour — it’s just like an actual showing led by Jim Smith!

Real Estate, Oddly Enough, May Be the Last Industry to Adopt Live-Action Video

The term “virtual tour” was introduced to the real estate industry a couple decades ago, but only because photography vendors were able to convince listing agents to hire them and competed to offer the coolest technology.

Early vendors wowed us with 360-degree still photos of each room, although that is now out of style.

The latest “shiny object” is a 5- or 6-year-old product by Matterport. I remember getting a demo of it at a trade show in San Francisco. They call their product an interactive virtual reality (VR) tour of still photos in which you can use your mouse or finger to rotate each photo manually left to right or up and down. Gray circles indicate new photo points. You click or touch them and you are taken to that place where you can, again, rotate horizontally or vertically. Thus, you can, at your own pace, navigate around the entire listing choosing which room you want to enter and leave.

The “coolest” feature of Matterport is the “dollhouse” view, shown here. You remember dollhouses, where one side was open so you could look inside each room? That’s what Matterport’s dollhouse view is like except that it’s on your screen and you can rotate it on any axis. 

Still, it’s only a collection of still photos with no narration.  Personally I find it kind of dizzying and nowhere near as useful as being walked through the home by a listing agent with a video camera who explains the obvious and not-so-obvious features of the home. I wouldn’t call anything less a “virtual” tour.

I have been selling real estate now for 18 years and seen maybe a dozen different variations of the “virtual tour” concept, but almost all of them are nothing more than still photos presented in different, often interactive ways. None have the advantage of a simple video walk-through of a home by the listing agent.  That’s what we do at Golden Real Estate, and have been doing since 2007. Click on any of our listings at www.GRElistings.com to see what a good narrated video tour looks like.

What amazes me is how few agents do what we do. In the article below, I mention that 114 homes listed last week went under contract by week’s end, at a time when in-person showings and open houses were not allowed. Assuming they followed the 2-week-old rule against in-person showings, buyers of those listings had only the photos and “virtual tours” on the MLS to go by in making their decision to submit an offer.

One might assume that those 109 listings had great virtual tours, but almost none of them did. Surprisingly, only 65 of the 114 had any “virtual tour” on the MLS, but more surprisingly only two of them had a narrated video tour. Five of them had video walk-throughs with music. One had no sound track at all, and one really cracked me up. The agent held his smartphone horizontally, but his footsteps and breathing were all you could hear. Imagine if an agent walked you through his listing in person and never said a word about anything — that’s what it was like!

The two narrated tours were quite good in the detail which the agents shared, but they both shot with their phones in vertical mode and one was quite shaky since it was handheld. Too bad she wasn’t using the Osmo camera that we use, which has a gimbal, making the picture totally steady.

About half of th0se 65 listings with virtual tours had Matterport tours, which I found very disappointing. Others were just slide-shows with music, and many were just a collection of still photos or brochures.

The Number of New Listings Remains Low, But They’re Selling Fast

Each week I have been checking the MLS to see how many homes are being listed afresh and how many are going under contract as the Covid-19 stay-at-home order remains in place.

In last week’s column I reported that during the 7-day period from Sunday April 5th to Saturday April 11th, a total of 819 homes within 25 miles of downtown Denver were entered on Denver’s MLS, This past week — from Sunday April 12th to Saturday April 18th — that number dropped slightly to 799.  Of those, 23 had already been sold privately, compared to 22 the previous week, so there were only 776 new active listings last week. Amazingly, 114 of those went under contract by Saturday, compared to 124 the previous week, despite stricter enforcement of the “no-showings” guidance from the Division of Real Estate. Another 74 of those new listings went under contract by Tuesday evening, April 21st.

Bottom line?  The roughly 50% drop in listings from previous years which we saw last week has become the “new normal” for the current situation in which in-person showings are not allowed until a buyer has signed a contract to buy a home.

This is actually a great time to list your home! The fact that so many buyers are still submitting offers without even seeing a home in person should inspire more sellers to offer their homes for sale. Just be sure you do it with a narrated video tour like we do for all Golden Real Estate listings.