Elephant fun

My wife absolutely adores elephants. Not just their cute babies and funny faces, but their intelligence and community ethic. I stumbled on this video and had to share it –too cute:

Real Estate Research Tools

Here’s a couple new tools to do some quick research on home values. I think Zillow still does a pretty good job, although not always accurate, and of course nothing beats a custom CMA done for you by a Realtor. But these tools from Realtor.org can give you a bigger picture of your local markets overall movement, and certainly more accurate than hearing that “prices are down” on CNN.

The first is by State and the second is by MSA (metropolitan statistical area) within your state.

Let me know what you think of these. Are they useful to you?

Sotheby’s in Denver and Boulder

Scott Webber recently went on IPtv for a quick interview on Sotheby’s International Real Estate’s new presence in Denver.

Plan to rent out your house?

I’ve talked to several people lately that want to buy a new primary residence and keep their current home as a rental.  The rental market is great right now, and nothing builds wealth over time like real estate so at first glance this is a good idea.  There are, however some financing issues you’ll want to keep  in mind.  As always consult your tax and legal professionals on how you may be affected personally. Thanks to Ann and Mo at Kensington Mortgage Group for the following:

In June of 2008, new requirements were released for borrowers who are purchasing a new primary residence and intend to convert their existing principal residence to a second home or rental property.  We thought it would be important to re-visit the issue again as we are getting many calls around the changes and it could impact your ability to qualify for the new purchase.

In our current market, many borrowers may decide to rent their current home versus selling it.  In the past, the rules regarding this type of transaction would allow for 75% of the rental income, verified by a lease, to be used to offset the payment on the current home.  While the 75% rule is still in place, there are additional caveats that impact the ability to use this income and additional requirements surrounding the lease.

New Criteria for Conforming Loans:
1-75% of the rental income may be used to offset the mortgage payment on the current home if there is documented equity of at least 30% in the existing property (FHA allows the equity position to be 25% versus 30% for Freddi Mac). The equity position is determined by an appraisal. Some will say that an AVM or BPO is acceptable (Asset Valuation Management and Brokers Price Opinion). We would not advise using this as lenders, in the end, are really asking for an appraisal.

2-The rental income must be documented with a fully executed lease agreement and the receipt of a security deposit from the tenant and proof of the deposit into the borrower’s account.

3-If the 30% equity in the current home cannot be documented, both the current and proposed mortgage payments must be used to qualify the borrower for the new transaction AND 6 months of PITI for BOTH properties is required in reserves.

IT IS IMPORTANT TO NOTE THAT IF THE BORROWER HAS HAD THE HOME LISTED FOR SALE AND THEN DECIDES TO RENT IT, THE LIST PRICE WILL INFLUENCE THE UNDERWRITER EVEN IF THE EXISTING HOME APPRAISES FOR A HIGHER AMOUNT THAN WHAT THE BORROWER HAD THE HOME LISTED.

The only bail out we need…

I talk to hundreds of people every week about our real estate market.  The only common sentiment among most people is that no one knows what’s coming next, so they are going to wait.  But if you wait to sell your home in order to move up to a better home you could lose big when the market turns around.  And remember we never know when the bottom of the market is until it’s behind us.  If you’ve lost 10% of the value on your $200,000 home that’s $20,000, but you’ll save $30,000 by moving up to that $300,000 home that has also lost 10%.  If you were to wait for the market to turn for the better and you’ve gained that 10% back you’ll make $20,000 on yours but turn around and pay $30,000 more for your new home.  Would you rather buy that home for $300,000 or $330,000? What will interest rates do to that monthly payment if they go up while your waiting for the market to “get better”?

It’s difficult to give advice to people who are contemplating investing in real estate today, but it all boils down to a few key factors:

1-Inventory of homes for sale- Are there homes for sale that fit your needs?  Undoubtedly.

2-Interest rates- Arguably the best time to finance a home is right now.   Yes, rates might improve in the next 6 months, but right now they are fantastic hovering in the 5.25% range which we haven’t seen in forty years.

3-Your ability to move- Yes it is more challenging to sell a home these days, but I have been in two competitive bidding situations recently, and twice this year I put a seller and buyer together on transactions for homes that weren’t even on the market yet.  Buyers are grabbing good properties quickly, so if you need to sell we can make it happen.  Take these steps; Get storage space and de-clutter, do the fix up you’ve been putting off, stage the home professionally, price it below the competition and use the best quality most professional marketing to advertise the home.

I read a great article this morning at Realtycheck, a CNBC real estate blog.  A reader of the column asks the same question I hear everyday; should I wait?  Her answer sums up my feelings exactly:

“…it will also be up to average Americans to take a chance on our economy again, after bearing the wrath of laughable oversight, reckless corporate leadership and broken market systems. A home should be a place to take comfort and a comfortable, albeit conservative, nest egg. The greatest holiday gift to all of us would be to remember that.”

The opportunities are are out there and I hope your 2009 will be the best year yet!

“Denial ain’t just a river in Egypt” — Mark Twain

America is in one of the worst housing crisis in history, yet 49% of U.S. homeowners believe their home’s value has increased or stayed the same over the past year, according to Zillow’s Q3 Homeowner Confidence Survey.

In reality, 74% percent of homes have lost value in the past 12 months, according to preliminary findings in Zillow’s Q3 Real Estate Market Reports, which will be released Nov. 12.

Other findings from the survey:

• Supporters of Republican presidential nominee John McCain have more confidence about their homes’ values than supporters of Democratic nominee Barack Obama.
• Fewer people expect to buy or sell a home in the near future:
  • Three percent plan to sell their home in the next six months, down from 5 percent last quarter.
  • Three percent plan to buy a home, down from 4 percent in the second quarter.
• …and much more!

Click here to view the entire survey

I’ve found Zillow to be fairly accurate, but of course if you need a custom market analysis for your home please let me know.

Where do you want to live?

I work with a lot of buyers from out of state.  One of the first questions I ask them is “where do you want to live?”, and the answer is inevitably, “we don’t know!”.  Of course, it’s my job to help them figure that out.  I empathize with them because it is difficult to quickly learn a new city before investing in a home. 

Like most cities, there are many different price ranges and types of neighborhoods on the front range (Denver/Boulder metro area).  Frontdoor.com has come up with a cool little slide show that describes the 12 basic types of neighborhoods.  Denver and Boulder have all these types of neighborhoods, minus the palm trees, and hopefully this will help some of you narrow down the lifestyle you’re looking for. 

Check it out and let me know what kind of neighborhood you want.  I’ll tell you where to get it and how affordable it can be!  http://www.frontdoor.com/news/article/373/p1

Report offers hope in housing

Denver and the surrounding areas have certainly suffered from the sub-prime mortgage fallout.  The impact differs in Denver from the national picture just as it differs from one neighborhood to another (just look at Boulder compared to any other Boulder county area). 

The data behind the bad news shows leading indicators of a recovery for Denver.  For example, in most areas the number of listings on the market are down by as much as 30% compared to a year ago, but prices on those homes are rising in most areas at least 5%.  The supply of homes on the market appears to have caught up with the demand.  That is just one indicator though.  This article from the Rocky Mountain News talk more about the others:

Denver area stronger than many others

The Denver-area housing market is looking strong compared with many other places in the country, according to a national report released Tuesday.

Only a dozen cities across the country were ranked better than the Denver-Aurora area, according to the PMI Mortgage Insurance Group’s Winter 2008 Risk Index.

LaVaughn Henry, director of U.S. economic analysis, said PMI uses a “high-faluting economic model” to judge each metropolitan area by five metrics: housing price movement, affordability, changes in local labor markets, housing supply and foreclosures.

“Denver looks pretty good in four of the five,” he said. “The positives in four of the five more than make up for your foreclosures, your one weak area.”

 

The Cost of Commuting

Have you ever wondered what all that time you spend in the car going to and from work is really worth?  In our current real estate market we are seeing an urban contraction, which is a fancy way of saying people are moving back to urban centers and close-in suburbs.  The majority of foreclosures, short sales and “deals” are found a little further out and this can be tempting for home buyers to consider a trade off; commuting for more house.

I’ve found a new tool which can take into account all the impacts that a longer commute may have on your life.  Some of these are obvious such as the cost of gas and maintenance, but have you considered how much more house you could buy with that money, or the size of your “carbon footprint”?  The picture below links to the page on my website where you can find the actual calculator.  You can download the tool for free to  put up on your own website.  As always please leave me a comment and let me know what you think!

 

5 Signs of a Housing Market Pickup

We are all looking for signs of when the housing market will turn around.  As a Realtor, I don’t have all the answers.  Shocking I know.  Most news you hear is national and has nothing to do with your neighborhood, not to mention that many sources for this “news” have alterior motives, but that’s for another post.  But there are other indicators — not including the familiar days-on-market, new listings per month, and new contract activity — we can monitor to see if the market is turning around.
Fewer Builder Concessions

Look for new-home builders in your area, as a sign of new confidence, to curtail their offerings of free mortgage payments, new toasters, designer landscaping, and other concessions they rolled out at the start of the downturn.  Also, look to see how many homes are under construction that are not under contract.  This is a good indicator of their confidence in their ability to sell those homes in the near future.

New Jobs vs. New Housing

Historically, one new home owner is created for every two new jobs, so if job creation continues in your area and builders are scaling back on production, it’s just a matter of time before the supply and demand equation moves toward equilibrium.  Your local chamber of commerce can help with those numbers.

Months’ Supply

The country had about a 10-month supply of housing at the end of last year, but the figure you’re interested in is the months’ supply for your market. The historical norm is closer to six months.  I’m happy to help, so let me know if you’d like the numbers for your neighborhood.

Visitors per Listing

Look at the visitor trends tracked by your local MLS using today’s computerized lockboxes. You can see not only how many visitors view a house but how long they stay; more visitors staying longer suggests buyers are getting serious.  Not all Realtors use these right now.  We’ve tried a couple different systems, and between the cost, and shall we say –a resistance to embrace technology on the part of Realtors, these systems are slow to take hold. 

Rising Apartment Rents

Healthy rental rate increases show strong demand for rentals, but if such increases go on for too long or rates rise too steeply, renters will start inquiring about buying.