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2009 Summary Review
Not a Pretty Market for Small Income Property!
The total number of small income property sales fell again from 408 in 2008 to 349 in 2009. Down from a high of over 600 in both 2004 and 2005!
Total sales volume dropped to the lowest total since I started keeping track in 2003. At close to only $83 million, the total sales volume is at less than half of its 2005 high of over $200,000,000.
The average sales price followed the downward trend, with the 4 county figure at less $240,000. The same four county average was above $350,000 only 3 years ago! Adams and Arapahoe counties are now down to about 50% of their recent highs!
Days on Market (DOM) is the amount of time a property is available For Sale before selling. The average DOM in 2009 for all 4 counties is now over 4 months!
Is there any good news in the numbers?
Foreclosure sales of 2-4 unit properties in 2009 are down from 2008!
In 2007, we had only 70 lender owned sales or about 18% of the market. In 2008, in the 2-4 unit market, the number rose to 154 bank owned sales out of the 347 total sales which equaled 44%.
In 2009 one of every 3 sales was a bank owned deal. 34% of all 2-4 unit sales were lender owned sales versus the 44% in 2008. 99 out of the total 298 sales were from lending institutions.
Adams county was highest at 39% but down from 47% last year. Arapahoe which was at 57% in 2008 dropped to ‘only’ 33% in 2009. Denver and Jefferson County were at 33% in 2008 and came in at 30% and 35% respectively in 2009.
It is possible that foreclosures may trend higher in 2010. Lenders may have held back on starting some foreclosures. Also, the many adjustable rate mortgages made in 2005 will adjust too much higher payments this year.
Sales Concessions are down again in 2009.
Only 23% of sales included any sales concessions. Nearly all the under handed practices that were so prevalent in 2006 have been stopped. Some of the nefarious operators were hoping for concessions at their sentencing hearings, but sadly, many are long gone with their ill gotten profits.
Rents and Vacancies - Mixed
The vacancy rate fell in the 3rd quarter of 2009 to 7.4%. That was the 1st drop in 7 quarters. A slight drop in unemployment and small population increases were stated as the likely contributors. Denver and Arapahoe counties were at 8.5%, Adams at 6.7% and Jefferson at 6.3%. The average rent was up from the previous quarter but still down from the previous year.
1031 Tax Deferred Exchanges
The bankruptcies and closing of several 1031 accommodators in 2008 have helped culled the herd. Several stronger companies have survived and are thriving even in the slow sales market. I am thankful that none of my clients lost any money during this debacle.
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