There’s a term in residential real estate to describe Buyers who are ready to go:  Ready, Willing, and Able.  These people have their ducks in a row, are qualified financially (both literally qualified with lender, and figuratively qualified, meaning they have assets and employment to support a purchase without having to do anything else).  Their intention is to purchase a property in the short term, i.e. within the next 90 days typically, and in a normal market, this usually results in these buyers completing a purchase quickly.   Right now, in Real Estate in the US, but ..read more

June 16, 2023 There’s a phenomenon known as “Golden Handcuffs” being mentioned for a large part of the reason why inventory levels in Denver are very very low.   The concept is that due to people having low mortgage rates, they will not sell.  This is partly true, but there is more nuance to the issue at hand.  The fact of the matter is that the vast majority of people with mortgages (98% by some estimates) have “below market” mortgage rates.  The market rate today for a 30 year fixed rate mortgage is around 7%. Thus, virtually everyone with a mortgage has a rate lower th ..read more

May 11, 2023 The concept of the property ladder in Real Estate is simple.  A buyer starts with a “starter home” at a younger age, then moves up to a bigger house as say, their growing family needs that.  There may be another move up into an even larger home as kids age, school choices change, etc.  This might be the “forever” home.  At some point then, there may be a down-sizing into a condo or a smaller house.  For a textbook property ladder, you may have 3-5 homes owned by a single buyer over their life, each one serving a different purpose.  It’s a concept that ..read more

May 3, 2023 Many of my recent posts have been pessimistic in nature about the current state of the local Denver and Colorado Real Estate markets.  Prices are declining, and the prices, both in real (accounting for inflation and interest rates) and nominal terms are higher than they have ever been in history.   It’s been a bit of a falling knife right now with housing.  If you try to catch it, you may get the handle, but you may cut yourself.  We’ve got prices declining, and we may be in the early innings of this price deflation story, yet at the same time, we have borrowing ..read more

May 2, 2023 There have been numerous bank failures in the US over the past few months. The main cause for the failures has been deposit flight (customers with deposits pulling their deposits from the bank). A bank does not keep very much money liquid on hand to cover a very large percentage of customers who would like to withdraw all their deposits. When this happens at any sort of scale, the bank is forced to sell assets. Banks over the last 3-4 years, during the period of time when the FFR (Fed Funds Rate) was at 0%, and 10 year yields were <1%, were still buying these long dated US treas ..read more

April 21, 2023 It’s been just over a year since Mortgage rates spiked up significantly, from all-time lows of around 3% to where they currently are in the high 6%’s (average rates always assumes 30 year fixed rate mortgage, excellent credit).  As you can imagine, this has been a damper on demand since many people cannot afford to buy now at these rates and prices.   The market pumpers, including most real estate agents, homebuilders, even the media, are attempting to assuage would-be homebuyer fears by sticking to the narrative that high home prices are here to stay, and that this i ..read more

Sources for New Supply In Real Estate, you will often hear that prices are determined by Supply and Demand.  While Supply and Demand is a fundamental tenet of markets, it’s important to understand that with the housing market, both the supply side, and the demand side, can be, and are often artificially manipulated, sometimes on purpose, and sometimes inadvertently.   There are really 3 types of new supply. Normal Annual Turnover  The “normal” annual turnover of houses in a given year.  This can be predicted fairly accurately “in a normal year.”  There is x amount of h ..read more

Mark 30, 2023 A typical school of thought in financial planning/management is that any debt is a liability.  Your car, your student loans, your credit cards, and your mortgage.  Some financial gurus have encouraged people to aggressively pay down or pay off all debts, including the mortgage.  Normally this is pretty sound advice, but it’s also “one size fits all” advice, and as it related to mortgages, it may be bad advice.   Most debt is in fact bad and is in fact a liability.  Take cars, student loans, and credit card debt.  We can examine each one.   Auto ..read more

March 29, 2023 I was recently looking at the latest DMAR (Denver Metro Association of Realtors) Market Trends report (DMAR_MarketTrendsReport_March2023_020323X) for March 2023, which would include data up through the end of February.  The interesting thing about data is that its presentation to the public can be spun (or manipulated) by being presented in a certain way, for instance, only showing one category of something or focusing on the “least bad” category while glossing over the more important categories.  This happens all the time and many people don’t bother to read past ..read more

March 27, 2023 Just How Far Will Denver Real Estate Prices Fall in 2023 and beyond?   Well, this is a question that may be on the mind of just about everyone these days. It’s clear now that home prices are down from 2022 highs which probably signals the highs of the 2010-2022 twelve-year mega cycle, and there appears to be great turmoil building in the economy, and in the financial system.  If you are a potential buyer you probably don’t want to buy knowing that the prices will be lower or much lower in the near future.  If a potential seller, you may feel like your “equity” is ..read more