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State of the Union, State of Housing

March 26, 2011

Let’s see.  It is about the same as last time we corresponded.  Again, I am shocked that the DOW is still as high as it is.  I feel as if this is all hanging by a thread and could collapse at any time.  Not trying to perpetuate doom and gloom scenarios, but I am still very skeptical.  Where are these happy numbers coming from?  Does anyone have the answer?  If so, please share it with me because I want to know.  Gold, silver and other precious metals continue to increase in value because people want a “safe haven” for their money.  Another thing investors have been doing lately?  Cashing in their stocks and bonds and buying….RENTAL PROPERTY!  I know we have talked about this before but this market keeps getting hotter and hotter.

Fort Collins is a rental driven market.  We have a ton of college kids here, and we constantly have people relocating here for work contracts, sometimes long term and sometimes short term.  Also, and this is true throughout America, it is very difficult right now to get a loan.  That means that more and more people have to rent instead of buy.  This is NOT helping the housing market recover.  It IS helping landlords….this is a great time to be a rental property owner.  Some management companies are raising rents to the tune of 10% across the board on EVERY property they manage.  This means greater cash flows for the property owners.  The rental market is what is driving the housing market as a whole right now, it seems.  Also, the under $250,000 market remains pretty hot as well.

Generation X will most likely drive the housing recovery, if and when that occurs.  We are talking about those adults that are 31-45 years old.  This segment makes up 32% of the total population in the US and they are considered the most mobile group.  In other words, this is the group most likely to move from house to house.  They are in full force with their careers, are nearing their peak earnings, and are having children, all of which equate to needing bigger/better digs.  Nearly 50% of them say they prefer a house with a large lot in suburbia.  This is also the generation most likely to purchase the so-called McMansions. A lot of them also prefer “green building” techniques and “compelling design”.  Some of the things these buyers would be willing to pay a premium for are : green features, dark wood cabinets, 5 piece luxury baths, and gourmet kitchens.  Well, seems like the Gen Xers have good taste!  Let’s hope we (I include myself since I am 31) can get the loan we need, to help with housing recovery this country needs!

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