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Only One Month of Housing Inventory in Denver!

The story remains the same: no inventory!

When I say “no inventory,” I mean that we are consuming homes as fast as the market is producing them (1,429 new listings vs. 1,416 sold units in August). We typically see a reduction in active listings around mid to late fall but not during the summer months. Active listings for August were nearly as low as what we saw this past May. Buyers who were searching back in May suffered through several offer rejections before they were able to get under contract.

It’s not all doom and gloom though! 30-year mortgage rates continue to decrease, homes are taking a few extra days to sell, and the median price dipped slightly from June’s highs.

Pro-tip to buyers: keep your guard up, and treat every new listing like one that will be gone on Monday. Rely on your broker’s offer recommendations and don’t forget the competitive market clauses as a free insurance policy in the event that the home you are submitting an offer on is “the one.”

Want more detailed information about the market in your neighborhood? Please reach out!

U.S. Real Estate News Recap: August 2021

Here’s a quick digest of what happened in U.S. real estate last month:

+ CoreLogic forecasts that homes will appreciate a more modest 3.2% over the next year compared to the mind-boggling 17.2% gains they saw over this past year.

+ COVID may have killed open houses, but it hasn’t stopped home sales. Live video and virtual 3D tours are helping the 10% of buyers that purchased homes this year without physically seeing them first.

+ Home prices have risen for the third straight month nationally, which are up 18.6% from a year ago. Denver is one of the six cities leading the hot housing market, seeing record price appreciation over the last year.

 


 

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Real Estate Finance News Recap: August 2021

Here’s a quick digest of what happened in real estate finance last month:

+ Mortgage rates have stabilized around 2.87% (as of 9/2/21), as economic growth and inflation have moderated in the last month.

+ 1.71 million borrowers currently remain in forbearance. Of those, 400,000 homeowners will enter their final month of forbearance in September, unless the maximum term is extended.

+ With rates remaining low, some homeowners may want to finally get around to refinancing their home. No-cost closings can help some homeowners refinance without out-of-pocket costs.

 


 

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Denver Real Estate News Recap: August 2021

Here’s a quick digest of what happened in Denver real estate last month:

+ Downtown Denver has been starving for new condos over the last decade. Its hunger pains will begin to subside when the the largest condo project since 2009 breaks ground soon at 18th & Glenarm.

+ Median home prices fell for a second month in August. Buyers, don’t be relieved yet — inventory is tightening again, as active listings fell 11.7% between July and August.

+ Relief for Denver renters has dissipated in the Denver metro area. Front Range rents increased 14.4% year-over-year in August and are up 12.8% since March 2020.

+ A San Francisco-based developer has purchased an entire block of RiNo for $27.5M. Plans are still in the early stages, but may include a 500-unit apartment project, stretching 12-stories.

 


 

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Should I Make Any Home Improvements Before I Sell?

One common question home sellers ask is, “what should I do to get my home ready to sell?” This is a loaded question because the answer depends on their timeline, their budget, and the current market (sellers, neutral, or buyers). The answer for you will also depend on these factors.

No matter how much money you have allocated to get your home ready to sell, it’s your timeline sets the stage for what you are able to accomplish. If you need to sell quickly, forget the major upgrades and try to accomplish as many deferred maintenance items as possible, while considering what refresh items will provide the most benefit. Your real estate broker and their team will be able to help you create a punch list and prioritize the items based on your situation.

There are three areas to focus on when it comes to pre-listing home prep:

 

1. Major upgrades

What they include:

Major upgrades include large projects such as a kitchen remodel, renovating a  master bedroom/bathroom, or adding a backyard patio.

Who should do them:

Typically, these work best for those with a hefty budget and lots of time on their side before looking to list.

Best time to do:

A great time to do any major upgrade is right after you buy the home, especially if you know you might sell it within the next 5-10 years. Who better to enjoy the upgrades than you! If you are going to end up footing 1/2 the bill you might as well get some enjoyment from it!

The ROI:

These types of projects will give you about a 50% return on investment. While it will make your home more appealing and raise the list price, you may end up a little disappointed at closing.

2. Deferred Maintenance

What it includes:

Think smaller when it comes to deferred maintenance. Instead of the “oohs and ahs” that major upgrades provide, these are the little items that show buyers you’ve tenderly cared for your home — leaving buyers questioning less about the condition of your home. (more…)

Is the housing market slowing down in Denver?

The current catchphrase in Denver’s real estate market is “market shift.” While my day-to-day observations agree with that, the statistics aren’t necessarily reflecting a shift!

Denver’s median sale price dropped $10k to $650,000 since June, which could indicate the start of a slowdown or it could be an early seasonal cool-off driven by a super-hot spring and early summer sell-off. Inventory remained unchanged from June, but days spent on the market dipped to 13 — the lowest it’s been since we began tracking it in 2007! One thing to point out is the majority of July’s closings are from contracts that were signed in June, and June was still a super-hot month. August’s numbers should be interesting and we’ll definitely be chomping at the bit to analyze the data as soon as we can!

Want more detailed information about the market in your neighborhood? Please reach out!

Real Estate Finance News Recap: July 2021

Here’s a quick digest of what happened in real estate finance last month:

+ 30-year fixed mortgage rates remain below three percent for the fifth consecutive week and 15-year rates hit a new low as the economy works to get back to its pre-pandemic self.

+ As the Fed discusses cutting back on buying mortgage and Treasury bonds, could housing prices finally cool down?

+ Brett Arends of MarketWatch gives us another reason to own our home in retirement — rents are rising three times as fast as inflation. Ouch!


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Denver Real Estate News Recap: July 2021

Here’s a quick digest of what happened in Denver real estate last month:

+ Things may be looking better for home buyers as Metro Denver saw its second biggest jump in its supply of homes for sale — triple the 3.1% jump seen nationwide.

+ … but perhaps not when considering that Metro Denver home prices set multiple home price appreciation records (15.5% in April and 16.2% year-over-year in May) and July rents rose 11.6% statewide. At least we’re not seeing increases like in Phoenix (25.9%), San Diego (24.7%), and Seattle (23.4%).

+ The Biden administration is developing a new eviction moratorium after a previous ban expired last weekend. While 12% of Denver renters owe back rent, landlords do not believe an eviction crisis is looming.


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U.S. Real Estate News Recap: July 2021

Here’s a quick digest of what happened in U.S. real estate last month:

+ Home sellers are still making big profits as home prices keep setting records, but their margins took a hit in the second quarter. Is this a cause for concern? While purchase prices have skyrocketed and length of homeownership has decreased, we haven’t seen a dip in profit margins during the second quarter since 2008.

+ Finding a home to buy can be quite a challenge today — especially when you have one to sell and don’t want to end up without a place to live. NerdWallet offers some strategies to help you avoid this situation. Too much to take in? reach out to us and we’ll walk you through it!

+ The U.S. Supreme Court ruled racially restrictive housing covenants unenforceable, but many property owners are shocked to find these restrictions still remain on paper. State lawmakers are working on legislation to help homeowners remove “whites only” covenants from their property records.


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Lender Costs and Buyer Expenses While Under Contract

The Pre-Read Summary

Costs that you, as the buyer, will incur while under contract include appraisal (varies by appraiser; cannot be up-charged by the lender) and inspection (paid directly to the inspector and specialists you hire), and, when applicable, a survey (paid directly to the survey company) and condo certification (charged via the lender).

The biggest expense, and sometimes surprise, is lender costs. Upon close, lenders will charge buyers for fees such as origination, processing, and underwriting. Other money is held in escrow, such as for property insurance and taxes. Just another great reason to pick your lender before making an offer — you’ll have a pretty good idea of what these expenses might entail! Also, regardless of who is paying for the title insurance, the buyer will pay for the lender’s title policy.

A quick heads up before we jump in. Upon going under contract, earnest money will be due. This is what you, the buyer, are “putting up” to demonstrate your commitment to go through with the transaction. Is it an expense? Well, kinda. You, the buyer, will deliver the check to the title company (as a neutral party to the transaction) within a few days of going under contract. The check is then cashed and held in trust until the transaction is either terminated (by an applicable deadline) or closes. Upon close, the money is applied to your closing costs and down payment — not a penny wasted! Sellers determine what they want for the earnest money deposit. A good estimate is 1-1.5% of the home’s value, but we’ve seen 3% often enough to say, have that available.

Now, onto the fun stuff!

Lender Fees: $$$$$

What: Origination, processing, and underwriting to name the majority

Who: Lender

When: Paid at closing

How Much: Varies by lender and home, typically a few to several thousand

Know This: All lenders charge fees to underwrite and process your loan. This is part of every transaction that involves a mortgage (i.e., not paying all cash). Fees vary by lender. Some lenders offer programs that help minimize your expenses at the closing table, such as rolling some fees into the loan. Keep in mind, this helps on day one, but also means you’re paying interest on that amount over the term of the loan. Talk to your lender about their costs and any reservations you may have — they might be able to help. Although you don’t pay your mortgage for the first month, that’s only technically true. Upon close, you’ll be paying the prorated interest, which does make up most of your monthly payment, decreasing incrementally as the principal is paid down. Since this varies depending on when you close, an estimate is kinda tough, but if you save for a mortgage payment, that’s probably close enough!

Important: The time to interview lenders and select a lender is before you go under contract. Although it is your discretion to change lenders, switching can create uncertainty in the eyes of the seller… Why rock the boat when there aren’t even any waves? And, you’re busy during the contract — going to inspections, the riveting excitement of reading a title commitment and the HOA’s rules and regulations — fun times. But before all of this kicks off, you have time to compare rates and costs between various lenders and see if the one you liked best can match the cheapest!

Appraisal: $$$

Who: Appraiser via the lender

When: Paid upon appraisal, may be paid at closing

What: Determines the valuation of the home

How Much: Varies by appraiser and property, typically around $700

Know This: Appraisals are required when a mortgage is used to purchase the home, with a few exceptions, like with a significant down payment. Lenders require the appraisal to qualify the value of the home at or above the agreed upon purchase price. It also gives buyers peace of mind that you’re not overpaying, and sometimes that you’re getting instant equity! If you’re paying cash, most buyers opt to save the money (you know, for new yoga equipment for your workout room).

If an appraisal is completed, the buyer may still be charged for the appraisal by the lender, even if the contract is terminated and does not close, and regardless of whether or not the termination is a consequence of the appraisal. It’s up to the lender. If the contract terminates before an appraisal is performed, this expense is avoided. That is why most appraisal deadlines are set after the inspection.

Inspections: $$-$$$

Who: Inspection company and other specialists

When: Paid upon inspection directly to the inspection company

What: A visual examination of the home’s present condition and major systems

How Much: Inspections run about $500+ on a typical home, increasing by size. Additional inspections, such as sewer scope or radon, and other specialists will charge additional fees.

Know This: A home inspection is used by buyers to “pull back the curtain” and gain additional insight into the home. Additional services can include radon, specialists (HVAC, electrician, plumber, etc.), sewer scope, structural engineer, etc. Although a home inspection is not required to purchase a home, it is very strongly recommended even if the home is being purchased “as is.”

If an inspection is completed, the buyer must pay for it, even if the contract is terminated and does not close and regardless of whether or not the termination is a consequence of the inspection. Most inspectors will not provide a copy of their report until the invoice is paid in full.

Important: Plan ahead — some inspections, such as radon, require a few days to complete the test. And you may decide to get quotes or additional inspections by a plumber, for example, which takes time to schedule. Keep in mind, the more you do during inspections, the more expenses you’ll face. But, you’ll also know more about your prospective home!

Side Note, Surveys: For those buying a home where a land survey is needed or desired, this is paid similar to an inspection — upon completion of service to the survey company and before a report will be released. Surveys can cost a few hundred dollars to several thousand, depending on the type. Sometimes, a survey will be required by the title company to verify boundaries, encroachments, etc., in which case they’ll specify what is needed. Otherwise, you and your surveyor will determine what type of survey is most appropriate for your specific property and they will give you a quote before doing any work. If the survey is too expensive for you to continue with the transaction, it is your discretion to terminate before the survey deadline. If not, continue on!

Lender Title Policy: $$

Who: Title company

When: Paid at closing

What: Policy insuring title to the property for your lender

How Much: Varies by title company and property, usually around $600

Know This: If you’re paying cash, the lender’s policy is not applicable, as there is no lender! But, as long as there is a lender involved in the transaction, the buyer will be paying for the cost to insure title for the lender. Although the seller usually pays for the owner’s title policy (which runs $1k to $2k+), the buyer pays to insure the title for your lender.

Condo Questionnaire: $

Who: HOA via the lender

When: Paid upon request of certification, may be paid at closing

What: Condo certification

How Much: Varies by HOA, approximately $250, the exact amount is what is charged

Know This: Condo certifications are ordered early in the transaction, so talk to your lender about when and how this will be charged. As is the case with the appraisal, the buyer will likely pay for this upon charge and regardless of whether or not the transaction closes, although some lenders simply roll it into closing costs (only paid upon close). Condos must complete a questionnaire for lenders to confirm they meet standards needed for lending, which can impact the type of loan a lender can use to lend on the property. For example, if a condo is “unwarrantable” because too many units are used as rentals, the buyer may need to use a portfolio loan instead of FHA or conventional. Clear as mud? Great! Because you don’t need to worry a whole lot about it unless it applies to your transaction, in which case your realtor and lender will explain!

Other Costs…

Who: Where do we start?

When: Depends on what it is, but mostly paid at closing

What: Again, where to start?

How Much: Not much (most likely)

Know This: Other costs are going to show up on your closing settlement statement, which you will receive a few days before close. These could include prorations for property taxes, HOA dues, water bills, and the like. There will be a $25 (+/-) recording fee from the county to record your title. In most cases, this only accumulates to a couple hundred dollars more, if that. However, if there’s a large HOA transfer fee, for example, it could be more. In short, prorations are determined down to the day to make it fair and so costs are exact. Not a penny is wasted.

Still awake? Overwhelmed?

Do not fret! It seems like a lot the first time you buy a home — and maybe the second time, too! Preparation will help immensely.

First, have money readily available for your earnest money deposit, 1-3%.

Second, pick your lender and get a rough idea of costs to close the loan, what they’ve seen lately for appraisal charges (dust off your report on supply and demand), and other expenses you should expect. Know that your earnest money will be applied to this, and might even cover most of it.

Third, have money set aside to cover mid-transaction expenses like inspections, more if you’re looking at larger than average homes or unique situations.

Finally, and this wasn’t discussed above as it’s a totally different topic, but talk with your lender about how different terms and down payments can affect your interest rate, payoff amount, and monthly payment. What is the minimum required for your loan? What will eliminate mortgage insurance? When it’s all said and done, the down payment is the biggest “expense” you have when buying a new home.

And don’t be scared, because you’re not alone!

Your favorite Love Your Hood broker is going to guide you through the process. As related to these costs, they’ll help you navigate the timing of the steps throughout the transaction. A little preparation and a great realtor will help immensely!

Now that you’re prepped and ready… happy home shopping!

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