Colorado Association of REALTORS® Everitt Real …...faster with more realistic underwriting standards. Shadow inventory continues to loom over the market. Local banks are holding

Colorado Association of REALTORS®

Everitt Real Estate Center

2011 Residential Survey Results

Background

The Everitt Real Estate Center (EREC) began working with the Colorado Association of REALTORS® (CAR), Colorado Mortgage Lenders Association (CMLA), and the Colorado Association of Home Builders (CAHB) in January 2011 to coordinate the development of inaugural surveys of their respective memberships to provide a comprehensive view of the residential market in the state of Colorado. As a land-grant university committed to the delivery of industry-applied research for the state of Colorado, we appreciate the time and efforts of CAR, CMLA, and CAHB leadership to fulfill this important mission.

Surveys were jointly designed by EREC and individual associations. Each association disseminated the survey either through notification on web pages or email blasts between mid-February and early March. Final results are based on the number of survey respondents as of midnight on March 18, 2011. The total number of survey respondents by survey are: (A) 272 for CAR, (B) 164 for CAHB, and (C) 138 for CMLA.

Several survey questions were consistent across all three surveys that allows us to test for significant differences in opinions and future expectations. The CAR survey included questions that were similar to the Northern Colorado Residential Survey 2010 such that comparisons of answers between state-wide members in 2011 and Northern Colorado survey respondents in 2010 are possible even though geographic coverage is dissimilar. EREC conducted a CMLA survey in 2010 and comparisons to 2011 results are included as appropriate.

Thank you to the survey respondents for taking the time to answer the confidential online surveys. We trust continued support from CAR, CAHB, and CMLA in the years ahead to track significant trends and expectations for the Colorado residential market.

Colorado Association of REALTORS® 2011 Survey

2

Summary findings

• CAR respondents are generally more optimistic in terms of economic issues than CAHB or CMLA respondents

• More transactions, short sales, and regulations in 2011 – No significant change in days on market 2011 expectations over 2010

• Buyer confidence and qualifications remain top barriers to sales

• Distressed sales, appraisals, and seller perceptions impacting residential valuations

• Lack of confidence in proposed changes with Fannie Mae and Freddie Mac

• MMDs? Negative impact on neighboring home values


3


4

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Worse Same Better

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Worse Same Better

Employment growth Mortgage rates

CAR CAHB CMLA

Source: Colorado Association of REALTORS®, Colorado Association of Home Builders, Colorado Mortgage Lenders Association, Everitt Real Estate Center, March 2011

% R

esp

on

den

ts

Higher expectations for jobs than interest rates across all three associations in 2011 compared to 2010

Harder to find money in 2011 vs. 2010; mixed results by

association on consumer confidence in 2011


5

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Worse Same Better

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Worse Same Better

Construction financing Consumer confidence

CAR CAHB CMLA

Source: Colorado Association of REALTORS®, Colorado Association of Home Builders, Colorado Mortgage Lenders Association, Everitt Real Estate Center, March 2011

% R

esp

on

den

ts

Representative regional distribution

Denver Metro, 87, 34%

Mountain, 39, 15%

Northeast, 74, 28%

Northwest, 25, 10%

Southeast, 22, 8%

Southwest, 12, 5%

6 Colorado Association of REALTORS® 2011

Survey

Region, # respondents, % distribution

Source: Colorado Association of REALTORS®, Everitt Real Estate Center, March 2011

Approximately 85% residential brokers

225

13 2 3 1

22

0

50

100

150

200

250

Residentialbroker

Appraiser Lender Service provider Governmentagency

Other

# R

esp

on

de

nts

7 Colorado Association of REALTORS® 2011

Survey

# Respondents by Membership Classification


Two-thirds have 10+ yrs residential experience

0

20

40

60

80

100

120

140

160

180

Less than 1 year 2 to 5 years 6 to 10 years Greater than 10years

Residential Commercial


8

# Respondents by Residential Real Estate Industry Experience


Most work in residential sector

Residential, 220, 83%

Commercial, 29, 11%

Resort, 12, 4% Farmland, land, or ranches,

5, 2%


9

Property sector, # respondents, % distribution


Mortgage rates concern, but upbeat on consumer

confidence and job growth

0

20

40

60

80

100

120

140

160

Local and regionalemployment

growth

Mortgage interestrates

Residentialconstruction

financing

Consumerconfidence

# R

esp

on

de

nts

Much Worse Worse About the Same Better Much Better


10


Compared to 2010, what are your expectations for 2011:

DOM expectations – about the same

2.5

%

32

.8%

39

.3%

22

.1%

3.3

%

2.0

%

33

.0%

38

.0%

23

.0%

3.0

%

0%

10%

20%

30%

40%

50%

Significanlydecrease

Slightlydecrease

Remain thesame

Slightly increase Significantlyincrease

2010 2011

Colorado Association of REALTORS® 2011 Survey 11

Do you expect 2011 days on market compared to 2010 to:

No significant difference

between 2010 and 2011

expectations


More transactions but more regulations

0

20

40

60

80

100

120

140

Propertytransactions

Foreclosures Short sales Regulatoryrestrictions

# R

esp

on

de

nts

Much less Less About the same More


12

Compared to 2010, what are your expectations in 2011 for the following in your local market and business:


Valuation issues major barrier to sales impacted

by distressed sales, sellers, and appraisals

0 50 100 150 200

Appraisal regulations (HVCC)

Closing due diligence

Seller value perception

Distressed sales

# Respondents

Harder to close sales No or limited impact Easier to close sales


13

Compared to 2010, how will the following factors impact your business in 2011


Buyer confidence and qualifications still highest hurdles

4.9

4.4

3.7

2.9

2.6

2.2

4.2

4.5

4.3

3.0

2.7

2.2

1 2 3 4 5

Interest rates

Advertising and marketing

Inadequate inventory

Impact of distressed sales

Buyer qualitifactions

Buyer confidence


14

Average barrier to sales scores

2011

2011


Hig

he

r b

arri

er

Green homes mystery for now, increasing importance,

but potential for education (standards too?)

0 50 100 150 200

Green homes are easier to market and sell

Demand for green homes will increase overthe next 5 years

Buyers understand the benefits of greenhomes

Green homes demand a premium

Underwriters and appraisers understandgreen home valuation methods

Strongly Agree

Agree

Neither Agree nor Disagree

Disagree

Strongly Disagree


15


Indicate if you agree or disagree with the following statements concerning 'green' homes

Skepticism with Fannie Mae and Freddie Mac proposed

changes

24.0%

53.0%

17.0%

5.0% 1.0%

0%

10%

20%

30%

40%

50%

60%

Much Worse Worse About theSame

Better Much Better

% R

esp

on

de

nts


16


Confidence

How will the proposed changes to scale back Fannie Mae and Freddie Mac impact the residential mortgage market in the future?

Approximately 75% believe MMDs impact

neighboring home values

38% 36%

19%

6%

0%

10%

20%

30%

40%

Significant negativeimpact

Limited impact No impact Not applicable

% R

esp

on

de

nts


17

How will residential-licensed medical marijuana dispensary (MMD) properties impact neighboring home values?


74%

Random respondents’ comments


18

Condo financing has been a huge hurdle so far this year. The condo market would likely recover much faster with more realistic underwriting standards.

Shadow inventory continues to loom over the market. Local banks are holding back the sale of REO properties, specifically vacant land.

The inability to obtain financing on resort condominiums.

Buyers contacting Realtors thinking they will qualify for a loan, especially if the home is distressed and they are contractors. They are

surprised that they can not get a loan and if they do the interest rate may be the same as a building loan and then they have to re-finance. Most people do not have the cash necessary to put down on homes, you wonder where they have been the last few years, totally clueless

about qualifying for a home loan.

Lack of new construction the past 3 years will impact available inventory. May help median sale price to recover, with less supply and more demand, but when it turns, we will be struggling for inventory.

The new HVCC regulations, increased government regulations and stricter lending policies by banks are having the most significant impact

on our market right now -- in a negative way.

Surveys and Realtors attitudes should reflect the truth-this is a great Buyer's market, especially for first time homebuyers. Stop spreading doom and gloom!

All new Mortgage regulations will have a significant negative impact on our residential business for at least 2 years. It will be much harder for

1st time buyers to come up with more down payment, and to pay more for Mortgage Insurance Premiums, while interest rates are

slowly creeping up at the same time.

A carpenter walks into the local bank and says, "Mr. V.P. , I'd like to get a loan to build a Spec House." The banker immediately called security and had him removed from the lobby.

Continuing, and unwarranted Government Regulations are basically all designed to "protect or help" the consumer, and are all instituted after the Horse is out of the barn. Let the markets regulated themselves. Fear and loathing among lending underwriters and government meddling are

problems! Unintended negative consequences are many and solid transactions are lost and investors are unfairly treated. The buyer pool is thereby reduced. REO properties are very poorly managed which results in loss of collateral and

negative impact on pricing for those properties and others. This is counterproductive to the recovery!


Additional Charts

Distributions of major barriers to sale rankings

0

20

40

60

80

100

120

Advertising andmarketing

Buyer confidence Buyerqualifications

Inadequateinventory

Impact ofdistressed sales

Interest rates

# R

esp

on

de

nts

1 2 3 4 5 6


20


Please rank the following factors in terms of major barriers to sales (1=highest, 6=lowest)

Distributions of marketing strategy rankings

0

10

20

30

40

50

60

70

Charity andvolunteer

work

Companywebsite

Direct mailand printed

media

MLS Phone calls Socialnetworks

1 2 3 4 5 6


21


Please rank the following items based on your marketing strategies (1=best, 6=worse)

For more information and research reports, go to http://www.realestate.colostate.edu

http://www.realestate.colostate.edu/

Colorado Association of REALTORS®

Everitt Real Estate Center


Documents

Colorado Association of REALTORS® Everitt Real …...faster with more realistic underwriting standards. Shadow inventory continues to loom over the market. Local banks are holding