It was a busy week for economic news, much of it encouraging. Perhaps the most positive data came out on Friday, showing that U.S. consumers grew more confident in May than a month earlier as declining gasoline prices helped lift Americans’ spirits.
The Thomson Reuters/University of Michigan final index of consumer sentiment increased faster than expected to a three-month high of 74.3 from 69.8 in April. Economists had forecast a reading of 72.4, the same as the preliminary figure issued earlier this month, according to the median estimate in a Bloomberg News survey.
The upward trend is encouraging for those of us in the housing market. As real estate people know all too well, consumer confidence plays a critical role in the housing market. If buyers are positive about their job prospects and the overall economy, they’re more likely to take the leap into buying a home or trading up to a larger one.
Also encouraging: U.S. corporate earnings continue to improve. In a new report, Deutsche Bank said that earnings for the first quarter beat analyst median forecast by a full 50%. Earnings for the three-month period surged 18 percent year-over-year, far exceeding the 12 percent expectation at the beginning of the quarter.
This marked the ninth consecutive quarter of sequential earnings growth. Earnings were driven by cyclical sectors such as Materials (up 55 percent), Energy (up 40 percent) and Industrials (34 percent). Altogether, revenues rose by a healthy 9 percent for the quarter, an indication that earnings were not solely driven by cost cutting, a very good sign.
But despite the overall improvement in the economy and the financial markets, the nation’s housing market overall continues to struggle to gain momentum. Pending sales of existing U.S. homes dropped more than expected in April to touch a seven-month low, the National Association of Realtors reported on Friday.
NAR’s Pending Home Sales Index dropped 11.6 percent to 81.9 in April, the lowest since September. Pending home sales lead existing home sales by a month or two. Economists, who had expected pending home sales to fall 1.0 percent last month, said bad weather in some parts of the country might have affected home shopping.
So what to make of the mixed bag? Overall, the nation’s economic recovery is moving forward, albeit at a modest pace. Nationally, the housing market is fighting to work through the overhang of foreclosed and distressed properties. It’s not easy, and will take time. But it will happen.
However, more than ever, we’re reminded of how much real estate is about location, location, location. Things are far better here in Colorado. The overall market is much more stable than elsewhere in the nation, and in some pockets, actually fairly robust.
To learn more specifically, take a look at our latest market-by-market report from our local offices:
Colorado Springs—Our market has been steady the last few weeks. Showings have remained steady during the week but slow on the weekends. Sales have improved over the past weeks by about 20% as buyers are taking advantage of very low interest rates. This has caused a decrease in listings, but we expect that to change in the upcoming weeks.
Devonshire—Our showing and overall activity seem to be increasing in and around the office. Brokers seem to be very busy with listing preparation and contract preparation. It is a little harder to gauge actual broker activity as our office construction has quite a few of our brokers working from home.
Denver Central—We seem to be steady in the downtown Denver area. However, with FHA mortgage insurance going up on April 18th, it is affecting some of the lower end buyers and what they qualify for. New listings are slowing down because parts of the foreclosure market are slowing down possibly because some of the banks are holding back some inventory.
Larimer County—If Pomp & Circumstance is ringing in your ears – it is certainly drowning out some of the activity here in Fort Collins. Showings dropped quite a bit in the last two weeks as high schools & colleges captured most of the public’s attention. While our office is taking more and more listings, the inventory at large is still substantially lower than in previous years creating pressure and limited availability in some price points. Interest rates have remained surprisingly stable in spite of the projected end of the Fed’s Quantitative Easing. One recent development that Buyers should take advantage of is Coldwell Banker Home Loan’s single premium mortgage insurance option. On a $210,000 loan using this program, buyers can save in upwards of $100 a month on their mortgage payments as compared to conventional PMI. That kind of savings can really add up to more buying power! Contact your local CB branch to get more details!
Longmont—The summer busy season has hit the Longmont area. Buyers are attending graduations, weddings and end of school events. Our showings have taken a dip this last reporting period. Investors are in the market to purchase. They are looking at bank owned properties & HUD listings for the most part. They are shying away from short sales due to the uncertainty of timing associated with those properties. Appraisals are once again becoming an issue in getting deals done. It is so true that real estate is local…very local…from one subdivision to another subdivision it can make a world of difference in values.
North Metro—Many sellers are preparing their homes to put them on the market now that it is becoming the height of the buying season. The agents in our office have already listed 60 properties this month. Due to the competition and number of homes on the market it is so important that sellers ensure their home is staged, the yard pristine & priced correctly for the market. Open house activity has increased as well. This month we have already placed 114 homes under contract. This is a large increase from this time last year. We’ve had several agents that put on Neighborhood Garage Sales. You don’t want to miss these as many homes participate in this great event. Visit us at the Denver Century Ride on June 11th & 12th at INVESCO Field.
Parker—The steady activity and the number of listings over the past few weeks have caused the prices in most neighborhoods to stabilize. Although we are not at a point yet where we can declare a balanced market, it is visible. The decline has slowed down and even come to a halt in many areas. The continuous inclement weather has caused showings to decline slightly.
SE Metro—Here we are in the full swing of spring. What we are seeing is that if you are out looking for homes & you see something that you like & that meets your needs, you had better get an offer in to the sellers. Houses that are in good areas & in nice shape are selling very quickly, often with multiple offers. Now is the perfect time to get homes onto the market. When we have a new listing in the office, we usually see more than five showings in the first week. The consumers are really realizing that with interest rates at historic lows, now is the time to move forward. No one can say what interest rates will do going forward. In the upper end of the market, we are seeing houses going under contract faster than we have seen in some time. Once again, sellers need to get their homes on the market as soon as possible. The pent up demand is leading to a shortage of homes available for buyers so we will see prices begin to escalate. Now is the time!
SW Metro—May started out a little slower than April however we are back on track. Our agents have been very busy with buyers and sellers. We are still seeing buyers actively seeking to buy homes. Our mortgage rep has been very busy these past two weeks, he is seeing a steady flow of buyers ready to buy. Open houses have been very busy & have provided good leads. Floor continues to be active. We’re seeing homes in the $300,000 to $450,000 range doing very well in our market. Interest rates are great and we are getting our message out there that a mortgage is sometimes cheaper than renting. Our market at this time has been good & we look forward to a good spring/summer.
Denver West—We attribute fewer showings to high school activities, graduations, Mother’s Day and other events in May. Denver West agents are still very busy listing and selling properties. We believe that buyer’s now believe the information they received about historically low interest rates, great inventory and low home prices. Sellers that are priced right are experiencing an offer within a week and two or three times a week we see multiple offers on properties.
Loveland—It was great to have our showing activity return to normal. Sellers are realizing this is the time to put their homes on the market. Potential sellers are asking for full service realtors. They know that marketing their property is best done by a professional. New home activity is picking up. Builders are once again selling from model homes & offering quick build times. We are seeing activity in Loveland by businesses ready to service the companies that will be associated with the ACE project. It is an exciting time in Loveland and Northern Colorado.
That’s it for now. Have a good week!