Forecast presenters: economy continues to struggle but showing signs of recovery

How do consumers feel about the economy?


But that’s no different than they felt about the last couple of recessions the U.S. experienced, Dr. Lawrence Yun, chief economist for the National Association of Realtors, told about 475 attendees at the fall Re/Max of Boulder Inc.’s 2010 Real Estate Conference on Nov. 18.

“Consumers are saying that things are rotten in this country,” he says, adding that their confidence about the future is not good, but it’s not as bad as it was in the early and mid-1980s. “If people do not believe in the future, are they going to be confident about making a major decision such as the purchase of a home?”

Yun pointed out other issues holding back from the “Recovery to Normalcy,” or a balanced market, such as businesses keeping their purse strings tight even though their profits are improving.

Federal Housing Administration loans are performing well, but Yun says the “residual impact” of overly enthusiastic lending – foreclosures – will continue through 2012. “All bad loans are made in good times,” he says.

Freddie Mac and Fannie Mae loans made since 2009 are doing well – better than pre-bubble times and perhaps too well – because they are being made only to “super high-quality” individuals, he says. People with reasonably good credit and looking to stay within their budget are being turned away, and that’s stifling the market.

“That’s what we are working on,” he says, noting the NAR is in discussions with the FHA, Fannie Mae, Freddie Mac and the Federal Reserve to lift some of the restrictions on lending.

To reach “normal,” Yun says, the U.S. needs robust job creation. Adding only 100,000 jobs per month is only treading water, and to add more, businesses need to start spending again.

Yun noted that locally, Fort Collins is doing better at creating more jobs compared with 10 years ago, but Boulder is about the same.

Now that the tax credit for first-time and move-up home buyers is over and the winter months are here, the nation will get a better idea of whether the real estate market is returning to normal, he says. That means generally low sales activity during the winter but the spring could bring a normal buying season.

Builders who want to stay in the industry are finding niche and wanting to get back to building – something they weren’t doing because of competition with foreclosures – but they can’t get back to work because they are unable to get government loans, Yun says.

Yum warns that inventory is low and if not enough homes are on the market when people are ready to buy, that means prices will start rising again – which is good for property owners but not buyers. “Under normal lending criteria, people will be priced out,” he says.

And, true to form, Yun stressed that even in the new “normal” economy now developing, home ownership is still the key to financial stability.

“The long-term path to self-reliance may be helped from long-term housing wealth gains,” he says. “That’s the old fashioned way and I think we’ll be returning to the old-fashioned way of building wealth.”

He predicted moderate expansion of the Gross Domestic Product in the next year, mortgage rates rising to 5 percent in 2011 and 5.9 percent in 2012 and no meaningful change to home values.

Local real estate forecast 

D.B. Wilson, president of the Boulder Area Realtor Association and manager of Re/Max of Boulder, Inc., describes the last few months following the homebuyer tax credits as a “hangover.”

Now that the “hangover” has passed, it’s time to look for signs of recovery in the local real estate market.

Here are some of the highlights from Wilson’s presentation:

• Home values have returned, for the most part, with a nearly 8 percent increase in the median and average sales prices of Boulder County’s single-family homes in the first nine months of 2010.

• The average sales price of attached dwellings dropped less than 2 percent.

• Expect housing inventories to continue in a fairly stable range and home prices to drop little, if at all.

• Boulder County saw a 7.7 percent increase in the number of single-family homes that sold in the first nine months of 2010 compared with the same period last year.

• Sales of attached dwellings dropped nearly 7 percent through September 2010 compared with 2009.

• Boulder County has about a 10.5 percent absorption rate of new condos and plenty of supply.

• Foreclosures for the area were down 18 percent through September but they increased slightly in October.

• The good news for sellers is that values have held study, in part because of limited inventory, but that’s not so good for buyers because they don’t have much from which to choose.

• At the end of the third quarter of 2010, Boulder County had 1,988 single-family listings, compared with 1,969 in 2009, with 2,054 sales compared with 1,907 in 2009 (a 7.7 percent increase);

• Indicating the importance of pricing a home right, 33 percent of new single-family listings sold in the first nine months of 2010 compared with 50 percent selling the previous year.

• The number of active attached-dwelling listings was down from 725 through September 2009 to 704 in the first nine months of 2010; sales were down 7 percent.

Wilson also advises that with how low interest rates are now, people who are considering buying need to think about what will happen to their buying power if the interest rate goes up.

“You don’t live with your price … but you have to live with your payment,” he says.

Denver-Aurora lands on 'best of' list with jobs, affordable homes

Cities with low crime and good schools have taken a back seat to places with jobs and affordable homes for those looking to relocate, according to

But the sprawling metro of Denver-Aurora meets the latter criteria, as well, landing ninth on’s 10 Best Cities to Move to in America. Pittsburgh, Penn., took the top slot.

The list takes considers a wide range of data, from cost of living to crime rates, the number of colleges and how healthy the population is, as well as access to museums, shows, sporting and other events as well as stability. The latter refers to modest, controllable growth, minus the big booms that lead to disruption and big busts in time and livability.

Denver-Aurora scored high on stability and affordability as well as for its attractive downtown. noted Denver has plenty to offer in the way of arts in museums and public art, as well as four professional sports team - the Denver Broncos football team, the Colorado Rockies baseball team, Colorado Avalanche hockey team and Denver Nuggets basketball team. It also recognized the mountains surrounding Denver-Aurora for both their beautiful and plethora of outdoor activities.

Aurora also offers shopping and cultural events, as well as more than 1,800 acres of park land, at least a dozen golf courses and a 200-acre nature center.

The unemployment rate is 7.4 percent, below the national average of 10.2 percent, and lands Denver-Aurora as the No. 11 job market, according to, with two job seekers for every job available, according to

Pittsburgh, says, has transformed from a major industrial steel town into a hub for education, health care and the arts yet has remained affordable, with a cost of living 12.2 percent below the national average and an average home price of $116,400, well below the national average of $171,700.

Its crime rate is low, it ranks high on both arts and colleges, and it's at low risk for a natural disaster such as an earthquake, hurricane or tornado. With three professional sports teams – the six-time Super Bowl champion Pittsburgh Steelers, the Pittsburgh Pirates baseball team and the Pittsburgh Penguins hockey team – it has its share of loyal sports fans.

Pittsburgh’s unemployment rate is 7.8 percent, and has named it the No. 18 job market.
Here’s a look at all the cities appearing on’s 10 Best Places to Relocate to:


Local real estate market keeps to its slow pace in October

October’s real estate statistics for Boulder County offered both good news and bad news, depending on your point of view.

“The bad news is the market hasn’t changed much from last month,” says Ken Hotard, senior vice president of public affairs for the Boulder Area Realtor Association. “The good news is the market hasn’t changed much from last month.”

With 230 single-family homes and 66 condos/townhomes selling in October, compared with 227 and 72, respectively, selling in September, sales are holding steady though at a low level, he says.

If that “good news” isn’t good enough, Hotard points out the “solid improvements and minor declines” of Boulder area average and median home prices.

The average sales price dropped in only three communities, and then only slightly, and the median sale price dropped in only two communities – again, only by a slim margin. That means home values increased in most Boulder communities last month.

Hotard also notes that inventories of homes for sales of decreased over the last several months, which means it takes fewer months for the houses on the market to sell and keeps prices stable or improving slightly.

“That’s good news, that the market has taken that shape, because it helps to maintain values,” he says.

But for homes priced at $1.5 million or higher, the absorption rates begins to climb into the double digits (10 months or more), Hotard says.

New home construction projections recently fell almost 12 percent from 600,000 units annually to 519,000, nationwide. That helps bolster the resale market by keeping the supply low and absorption rates in balance, he says. “Buyers looking for homes today are most likely looking at re-sales.”

For people considering putting their home up for sale, “they’ve got a stable market in which they should have an opportunity to sell a quality home that’s priced well. They won’t see as many low-ball offers from buyers trying to take advantage of a weak market,” Hotard says.

Hotard points to the lack of mortgage financing and the over-tightening of credit standards nationally to the lackluster performance of the real estate market.

“It’s gone beyond point of credit tightening for good reason to the point of credit tightening just for the sake of credit tightening,” he says.

Quoting, Hotard says, “'We’ve gone from silly to stupid,'” captures lenders’ recent behavior."

For the time being, not much will change, he says.

“I’m not encouraged that the outcome of the recent elections will yield much in the way of dramatic action to improve our economy in the short run,” Hotard says. “I think we have a real possibility of gridlock and inaction for a period of time.”

Hotard says he expects some reduction in sales volume through the end of 2010, but inventories will continue to decline and prices will hold well.

“The first quarter of next year will be very instructive as to what to expect going into springtime when markets usually accelerate,” he says. “I don’t think we’re out of the woods yet. This downturn has been deeper and longer than has been expected by the best experts and has exceeded my expectations as to its duration.”

Many still believe buying a home is smart decision

Although the economy has put a damper on the buying and selling of homes, it hasn’t changed the fact that most people still believe buying a home is a wise financial decision.

That’s according to nearly eight out of 10 respondents to the 2010 National Housing Pulse Survey, which the National Association of Realtors released in October, reports the NAR’s Realty Times.

The survey measures how affordable housing issues affect consumers. Despite the unstable economy, 68 percent of those surveyed believe now is a good time to buy a home – down from 75 percent last year but up from 66 percent in 2008 and 59 percent in 2007.

According to the Realty Times, more than 25 percent of renters are “thinking more about buying a home than they were a year ago,” perhaps because of lower home prices and record-low mortgage interest rates. And 63 percent of renters responding to the survey said that owning a home is a future priority and nearly 40 percent said it was one of their top priorities. Lower home costs resulted in only 57 percent of renters reporting fear that they could never buy a home because of affordability, compared with 63 percent in 2007.

However, 79 percent of respondents still consider having enough money for a down payment and closing costs to be among of the biggest obstacles to buying a home. Another obstacle is a lack of confidence in their ability to be approved for a loan, reported by 73 percent of respondents, the Realty Times said.

Move or improve? Ask these questions

Most families eventually grow out of their first homes as they add more members or their children get bigger, or perhaps they add a business or more cars. It’s at that point that they need to decide whether to sell their house and buy a bigger one, or if they should remodel and perhaps add on to their existing home.

Bradley Tuttle of Real Estate Loans 4 You offers these four questions to determine whether you should improve your current home or buy another. He advises that homeowners who are happy with their current neighborhood and school district (usually the top two owners' priorities) are wise to weigh answers to the following:

1. How long do you intend to keep the house?

It doesn’t make much sense – financial or otherwise – to pour money into a house only to sell it. If you've ever lived around and through a remodeling project before, you’ll want to get enough joy out of the improvements to offset the emotional upheaval wrought by the construction.

2. Will you be able to recoup the cost of improvements when you sell?

Even if you aren't thinking of moving in the near future, be sure to do the math before wading knee-deep into a project. A real estate agent or appraiser can show you comparable properties (comps) of recent sales to determine how much, if any, the improvements will increase market value. If you make improvements that don't add to market value, be prepared to walk away from what you've spent, especially if selling in a short period of time (less than five years on the average, depending on the type of improvement.)

3. Are the improvements you're considering logical given the age, size, and location of the house?

Just as you wouldn't install a new sunroof on a dilapidated car, don’t make expensive additions to a house littered with obsolete functions and features. Appraisers would tell you that it's much tougher to recoup the investment from home improvements if they aren't similar in style and design/era to the existing home.

4. Could additions/changes over-improve the house?

A house at the top of the market for the neighborhood can take longer to sell since buyers often purchase on the low side, hoping to maximize equity and improvements made over time. And certain buyer segments don’t welcome some additions, such as families with young children are likely to shy away from home with a swimming pool, since it's the No. 1 cause of death for children under age 5. And retirees will not want a master suite in a third-floor loft, even if it has been remodeled.

Even though you may want to make additions/changes based on your immediate needs and desires, it never hurts to consider a potential, future buyer to avoid over-improvements you can't recoup.

The answers to these four questions may not provide all the information you need to adequately weigh improving the house versus moving to another, but they will serve as talking points to get you focused on solving your housing needs in an organized and cost-effective manner.