Ron Estell\’s Blog

Mortgage Rates Poised for Change

Interest rates continue to be newsworthy.   Recent 30 yr fixed interest mortgage rates have hovered at about 4.5% (APR).   This is significantly lower than the 4.75% rate offered just 2 months ago.

Where will mortgage interest rates go?   No one really knows, but economists tell us several things.   First, investors balance the need for safety of their money vs return.   So, if other investment opportunities offer a significantly better return that justifies the risk, money will move to that investment.   That means if potential rewards in the stock market are strong money will move in that direction.   Recently the stock market has been weak so, mortgage rates have been low as investment money has flowed to the bond markets.   More money in the bond markets means lower rates for business and consumers.

One concern economists are pointing out right now is that QE2 (the federal governments purchasing of bonds to keep rates low) will end this month.   If the private sector doesn™t take over there will be less mortgage money available and rates my rise.

If world economic markets improve then investor™s money will flow to the stock market.   Less money in the bond market will force higher rates.

Although we are uncertain which way interest rates will move we know that home prices, based on income levels, are the lowest they have been in decades.

Historically low home prices and low mortgage rates make for a great opportunity if you are considering a home purchase now.

Economist prediction as reported in the Denver Post
œAs QE2 ends, interest rates expected to rise.

National Real Estate News and Video Report.

HIRING TAPERS OFF IN MAY
Friday’s job report showed non-farm payrolls grew by just 54,000 in May. If McDonald’s hadn’t added 62,000 positions last month, net hiring would have been negative.   The administration’s waiver for McDonald’s health care costs is widely believed the reason.

Recovery Underway

January 2011 sales continue the increase.   Buyers are beginning to understand that the combination of low interest rates and affordable homes is a winner.   There was a 185% increase of pending sales over December.   Active listings are slightly down by 2%.     Pending sales recorded this month should translate into significant gains when the month of February closes.  Average sales prices are up 5.9% over last January.   Interest rates have been somewhat volatile, fluctuating between 4.75 and 5%.

 This Month In Real Estate “National Trends

The Selling Season is Here

If you are thinking about selling your home, the time to begin is now.   Here are things to do that will best prepare your home for sale.  

·  Prepare a check list of things to do before a Realtor shows your home.  It can contain some of the following items. ·  Like momma said, first impressions are critical.

·  Oil stains in the driveway or garage?   Use a commercial degreaser.   Use caution and follow all the manufacturers directions before use.

·  Paint or re-stain the front door.   If you are painting choose a semi-gloss accent color.

·  Repaint, repair or replace the garage door.

·  Freshen the landscaping plantings in the yard.   Make sure there is plenty          of color.

·  Trim back shrubbery and trees.   Trees and shrubbery should not hide the house or provide a hiding place for burglars.   Guests must feel safe.

·  Water the lawn and make sure everything is green.   Turn on the sprinkler so that when the house is viewed the landscaping will have a fresh clean scent and a shimmer.

·  Inside your home replace all the light bulbs with 100 watt bulbs and open all the window shades.   The additional light will make your home look larger.

·  Have the carpets cleaned and vacuumed.   A clean home will always sell quicker and accentuates the fact that you are meticulous about the appearance of your house.

·  Freshen the paint in your entryway and re-paint any room that needs it.   It makes your home look brighter and more inviting.

·  Appliances and counter tops should be clean at all times. An empty        counter top will look spacious.

·  Organize the garage.   Clean it up and store everything at a friends house    or storage unit to make the garage look larger.

·  Abundant closet/storage space is a major selling point.   Remove as many    of your personal objects as possible.  

 Sales Are Up

Bolstered by government incentives, December 2010 single family home sales were inline with 2009 sales.   January 2011 sales are 4% higher than last January.   That is with no incentives and with climbing interest rates The month over month change comparing December to January was an astounding 13%.  Single family homes now stay on the market 90 days.   A year ago homes were on the market an average of 97 days.  

Median prices are up from $229,900 to $235,000    

QE2 “ 2 months later

The goal of QE2 was to stimulate the economy by lowering interest rates to stimulate the economy.   Two months later, home mortgage rates approach 5%.   November 5th rates were 4.25%.   Rather than lowering mortgage rates QE2 has caused rates to increase.   In theory depressing bond prices would decrease rates, but investors fear inflation   and this keeps rates from falling.  Most industry experts do not see rates falling back to last years levels.   Some analysts see rates rise to the high 5 to low 6% range during the course of the year.    

Warren Buffet, one of the country™s most successful investors,   just locked in   $1.5B   in debt by basically refinancing his adjustable loans to fixed.   Mr. Buffet has not commented, but it is pretty clear that his move reflects his opinion that rates will gradually move higher as the US economy improves.  

Mortgage Income Tax Deduction

The administration’s Deficit Reduction Commission has endorsed a  plan to eliminate the Mortgage Income Tax Deduction (MID).   The MID benefits primarily middle and lower income families. Sixty five percent of families who claim the MID earn less than $100,000 per year, and 91 percent who claim the benefit earn less than $200,000 per year. As a percentage of income, the biggest MID beneficiaries are younger middle-class families.  

The MID helps many families become home owners by reducing the carrying costs of owning a home. The ability to deduct the interest paid on a mortgage can mean significant savings at tax time. A purchase of a home with a $200,000, 30-year, fixed-rate mortgage, assuming an interest rate of 5 percent, could save nearly $3,500 in federal taxes when they file next year.  

Unlike the very rich, much of whose wealth is tied to the stock market, the wealth of most middle-class American families is connected to their home. Millions of these Americans bought their homes with the understanding that mortgage interest is tax-deductible, and many of them have steadily paid down their mortgages to build equity in their home. Eliminating or reducing the MID would destroy part of this hard-earned equity for all home owners, independent of their tax filing status.  Contact your representatives in Washington and let them know how you feel about the proposed elimination of the Mortgage Income Tax Deduction.  

QE2 “a month later
The goal of QE2 was to stimulate the economy by lowering interest rates to stimulate the economy.   A month later, home mortgage rates have risen to 4.6%.   November 5th rates were 4.25%.   Rather than lowering mortgage rates QE2 has caused rates to increase.   In theory depressing bond prices would decrease rates, but investors fear inflation with a recovering economy.   As a result, mortgage rates are going to be kept artificially high and may continue to rise.  We talked a few months ago how interest rates impacted monthly payments.   Since last month, mortgage payments for a $200,000 loan work out to be $1,476 per month with a total of over $231,000 in interest paid over the life of the loan.   At 4.6% payments are $1,537 a month and over 254,000 in interest paid over the life of the loan.   At 5% the payments would be $1,610   and a whopping $279,767 in interest paid over the course of the loan.   If you buy at today™s rates, when rates hit 5% you will have saved almost $26,000 on your purchase.   If you have considered buying or selling now would be a good time to protect against future increases.  

Low Vacancy Rates
On Wednesday the Denver Post reported: œThe small-property vacancy rate in the seven-county metro area dropped to 2.9 percent in the third quarter, the lowest rate in that period since record-keeping began in 2001, according to a survey released Tuesday by the Colorado Division of Housing. To read more: Denver-area rental homes tougher to find as vacancy rate drops – The Denver Post http://www.denverpost.com/business/ci_16802616#ixzz17qOSdF4x

Low vacancy rates signal that now is a great time for investors.   Investors can profit in 2 ways.   It is now as easy as ever to create a positive cash flow.   And, statistically many of today™s renter™s will become buyers.   Between cash flow income, appreciation and the expectation of being able to sell later for a profit indications are that now is a good time to consider real estate as an investment.   On TV we are told that œGold™s value has never been zero.   That is true, but it has been much more risky and volatile than real estate.But What About Sales?
Sales are following seasonal patterns.   Variations from last year are easily explained by the tax credit incentives that existed through this past April.     As you can see in the chart below, credits shifted demand out of the year™s later months to the beginning of the year.   Average sales prices in many areas of the city continue to rise as investors continue to pursue properties and first time home buyers make life decisions.Consumer confidence continues to rise and the home affordability rate is higher than it has been in years.   Here is to a prosperous new year!  

Complimentary Real Estate Information and Property Searches at www.DenverHomeGuy.com

What is Selling?

An interesting pattern that holds true on a consistent basis is that about 1/3 of all sales occur in the first 30 days of listing, 1/3 sell in 31-90 days, and 1/3 take more than 90 days to sell.

Why are homes selling within 30 days? Homes that are selling are the nicest in their price range. Just logical, right? When we make a major purchase we are all careful to try to get the best for our money.

Keys for Selling in 30 Days

The formula is simple but the implementation can be easily spoiled. Everything has to integrate perfectly. First your home must be in show home condition, the price must reflect the market, and marketing must be effective and on target.

It doesn’t matter whether you are buying or selling, the natural place for buyers and sellers to want to meet is at 1-30 days on market. The seller gets 97.9% of asking price and the buyer gets a great home.

Stirring the Pot

If you listen to the national news you are told foreclosures are running rampant. The truth in the front range is that foreclosures over the last 6 months have been just 7.8% of total sales. In that same period over 28,000 single family residential homes have sold.

As the local news reports, sales are down year over year. Yet average sales prices continue to increase. Historically low interest rates continue to encourage buyers. Buyers, in turn, are buying nicer homes than they could previously afford.

  ·  Measures of price change and volume can appear to vary widely. The widely followed Case-Schiller monthly results showed a 1.8% price increase nationally and .7% for the metro area year over year.   The metro increase is an 8 month trend in rising prices through the current measured month, June.  

·  Case-Schiller reports same home sales.   In other words to be included, the home must have had a previous matching sale.    

·  Local statistics, that include all home sales, have exhibited a similar trend.   Butour current month is August, not June.   This month home prices are 7% higher than the same month a year ago.    

·  Last year™s homebuyer credit, results seen in sales during the fall of 2009, and the credits offered during the earlier part of this year encouraged buying that normally would have been delayed to this summer and fall.   As a result, year over year sales are 21% lower than the same month a year ago.  

·  But, prices remain strong because there are just 3.3 months of inventory in the metro area.  

·  Interest rates this month reflect a slight uptick but remain in the 4.25% to 4.375% range.   With an economy that   appears to be strengthening, we believe that rates would be more likely to increase than decrease.  

So, what does this all mean to you?  The short answer is that it depends on where you live.   Metro statistics can indicate general trends, but the true real estate market is represented by homes in your area that are similar to yours.   In areas where there are only a few homes available sellers are able to command better prices.    

Here are the components of knowing the value of a property:   1) Location (you can™t do anything about it other than through relative price levels)   2) Condition (you control this 100%)     3) Similar home sales (your value reflects the reality of area prices, taking into account Location and Condition.)  The only you can know the value of your home is to have a value analysis performed for your neighborhood.   If you have an interest I can help with your neighborhood.  

A Green Tax Season

Don™t wait for the end of the year œWhat do I do to minimize Taxes rush. There are things you can do right now to reduce taxes.     EnergyStar.gov is the official website for full details on tax credits for making your home more energy efficient.   ·  The 30% tax credit for upgrades to Insulation, HVAC, Roofs, Water Heaters, Windows and Doors are set to expire December 31, 2010.   ·  Geothermal, Residential Wind Turbines, and Solar energy system credits continue through   the end of 2016.   Fuel Cells and Micro Turbines are also included.     ·  The state offers rebates and cooperative programs with power providers which include Solar Electric at rechargeColorado.com.    

·  The rebound we expected from the federal tax incentive expiration hit July housing numbers.   Sales were down 27% over last year and   nearly 20% over last month.   Remember, this was expected.  

·  Despite the numbers, homes are still selling.   Nearly 3,300 sold in July.  

·  The listing pictured on this month™s œHow™s the Market sold in 4 days last week at full price.   People are out actively looking.  

·  Prices are 6.7% higher than this month last year.   There is plenty of demand.   A lot of it just got crammed into the incentive months.  

·  Will sales recover?   I think it is likely that next month will rebound over this month™s numbers, despite lower pending sales statistics for the month.  

·  Average days on market are down 15% this month.   That is a positive reflection on the state of the housing market.  

·  The Federal Reserve announcement this week should stimulate additional sales.   Rates have hovered around 4.5% recently, sank to 4.25% and may just fall even lower.   The Fed said it will reinvest proceeds from expiring mortgage-backed securities into longer-term U.S. Treasurys, which should serve to keep rates on Treasurys low, and keep a cap on long term rates.  

·  What is really needed, of course, is jobs.   Historically, the number of chronically unemployed has been double the number of   the unemployed receiving benefits.   With unemployment running at 9.5% that would indicate 19% unemployment.   When we see unemployment decrease, we™ll know the economy is on the way to recovery.  

·   Should you wait for a general economic recovery to buy real estate?   As we can see from this month™s housing numbers, prices have stayed up and days on market are down.   If mortgage rates should decline any further, the housing market could turn on a dime.   We will only know the market has improved after the fact.   By then it will be too late to catch today™s combination of low rates and great prices.    

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·  Sorry to be so late this month.   I’ll try harder to get the report out each month by the 12th.

·  Better than the tax credit.   Mortgage interest rates remain low. Rates were running 5.125% and are now in the mid 4% range. That saves you as much as $56,000 on a 30yr mortgage. Consumers looking to buy and sell are well advised to make their decisions while rates are low.   Ask for more details by email or phone.   I™m happy to help.

·  The close of the tax credit impacted June actuals as we expected.   Sales were down 3.3% over the same month last year.   However, pending contracts are holding steady and are up .05%.

·  Sales prices are up both on a month over month (10%) and a year over year (5.8%) basis.

·  The number of days on market is up this month, but remains 17.9% lower than last year.   The combination of lower interest rates and fewer days on market indicate better market strength than last year.   The overall trend remains positive.

·  Many consumers assumed that the government would extend the tax credit and postponed their real estate decisions.   While I don™t expect a rapid recovery I do believe the market is showing greater underlying strength.

·  The closely watched Case-Shiller Price Index also reported Denver-area home prices rose an average of 4.4% in April from the same month last year, marking the sixth consecutive month of year-over-year gains.

·  If you are interested in reviewing sales performance in your part of town, or even in your neighborhood, let me know.   I am happy to share that information with you.

·  For a report on national trends and an update on FHA loans, which represent 80% of all loans issued last year, check out œThis Month on KW Connect

What is an Endorsement?

An endorsement is a rider attached to a Mortgage or an Owner policy to expand or limit the policy coverage. The title policy is designed for standard real estate transactions. Attaching an endorsement to the policy adapts the coverage to meet the needs of the insured. By issuing an endorsement, the insurer may take on additional risk normally not covered under the policy. A premium is usually charged for issuing any endorsement.  

Pundits are telling us the financial markets are settling and that business   leading indicators such as large truck sales and durable goods are up.   A recovering financial market lays the foundation for a healthy real estate market.  

·  Mortgage interest rates remain low because stock market investors sought safe returns during the recent market volatility.   They bought mortgage backed bonds.   With a return to stock market profitability those same funds will flow out of bonds and into stocks.   This could cause an increase in interest rates.   Consumers looking to buy and sell are well advised to make their decisions while rates are low.   Ask for more details by email or phone.   I™m happy to help.  

·  Thanks to the Home Buyer Tax Credits 20% more homes were sold in May than May 2009.   May sales were also higher than April Sales.   ·  Average days on market dipped to 76 days.   This is a 27% improvement over last year and   5% better than last month.  

·  The combination of greater sales and fewer days on market indicate the rush that occurred prior to expiration of the tax credits.  

·  At the end of May there were 27% fewer homes under contract than there were for the same period last year.   Many consumers assumed that the government would extend the tax credit and postponed their real estate decisions.   We believe that as the month of June progresses buyers will return to the market to compete in the traditionally strong summer months.  

·  Average sold prices increased by 2% across the metro area over May 2009 levels.    

·  If you are interested in reviewing sales performance in your part of town, or even in your neighborhood, let me know.   I am happy to share that information with you.  

·  According to a first quarter report by Grubb & Ellis, Metro Denver™s industrial market vacancy rates have outpaced the office market following each of the prior threerecessions. The region™s industrial market is already showing signs of strength. Metro Denver™s industrial market vacancy rate declined in the first quarter, and low property prices have prompted many tenants to purchase space.     Metro Denver is expected to be one of the nation™s most rapidly recovering industrial markets.                            

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 If you notice a spring in my step, it is because buyer demand is continuing despite the end of   government buyer incentives and interest rates have remained low despite the withdrawal of federal support in the mortgage market.   Better yet, the free enterprise system still works.

·  1,194 more homes were sold in March and April this year than last.   This April alone 586 more homes were sold than March 2010.    

·  Average days on market is a very respectable 80 days.   This is a 22.7% improvement over last year.  

·  At the end of April there were 1,433 more homes under contract than there were for the same period last year.   ·  30 year fixed mortgage rates have been hovering at 4.875%.   It appears that volatility in the stock market has driven investors to mortgage backed securities, which has kept rates low.  

·  Median prices have increased $20,000 on single family homes since the first of the year.   Average prices have increased from $260,000 to $274,000.  

·  Sales are reflecting general improvements in consumer confidence.   Even after the end of government incentives we are seeing strong interest in buyers and sellers attitudes toward the housing market.  

·  If you are interested in reviewing sales performance in your part of town, let me know.   I am happy to share that information with you.  

·  Some new home builders are offering pre-season incentives for early purchasers.   I can also help with the new home purchasing process.   It won™t cost you a cent.   ·  HUD homes are easy to purchase and there is good inventory.  

·  Foreclosures and Short Sale inventory are in big demand.   If you have an interest, let me know.   I hold certification as a Short Sale and Foreclosure Resource (SFR).  

·  HUD™s 203k program is specifically designed to rehabilitate and repair single-family homes. It is a single mortgage loan that provides funds to purchase both the home and make repairs and improvements.  Ready to sell your home? Here is what I offer my clients: Included home staging consultations (no, not me.   I hire people that know how to make your home beautiful). Professionally produced virtual home tours. A minimum of 20 photographs of your home and neighborhood featured on the internet on tons of popular sites.   I advertise your home it™s own unique website. Would you like me to put your home in front of all the top realtors in the metro area?   I do that too.  

If you are thinking about buying, I can match you with any new or previously owned home in the area. Pay as little as 3.5% down in most cases.   Some no down loans are still available.    I™m also searching daily for properties listed by every realtor in town for the very best prices that could translate to investment opportunities for my clients.      

 If you notice a spring in my step, it is because buyer demand is continuing despite the end of   government buyer incentives and interest rates have remained low despite the withdrawal of federal support in the mortgage market.   Better yet, the free enterprise system still works.   ·  1,194 more homes were sold in March and April this year than last.   This April alone 586 more homes were sold than March 2010.     ·  Average days on market is a very respectable 80 days.   This is a 22.7% improvement over last year.   ·  At the end of April there were 1,433 more homes under contract than there were for the same period last year.   ·  30 year fixed mortgage rates have been hovering at 4.875%.   It appears that volatility in the stock market has driven investors to mortgage backed securities, which has kept rates low.   ·  Median prices have increased $20,000 on single family homes since the first of the year.   Average prices have increased from $260,000 to $274,000.   ·  Sales are reflecting general improvements in consumer confidence.   Even after the end of government incentives we are seeing strong interest in buyers and sellers attitudes toward the housing market.   ·  If you are interested in reviewing sales performance in your part of town, let me know.   I am happy to share that information with you.   ·  Some new home builders are offering pre-season incentives for early purchasers.   I can also help with the new home purchasing process.   It won™t cost you a cent.   ·  HUD homes are easy to purchase and there is good inventory.   ·  Foreclosures and Short Sale inventory are in big demand.   If you have an interest, let me know.   I hold certification as a Short Sale and Foreclosure Resource (SFR).   ·  HUD™s 203k program is specifically designed to rehabilitate and repair single-family homes. It is a single mortgage loan that provides funds to purchase both the home and make repairs and improvements.  Ready to sell your home? Here is what I offer my clients: Included home staging consultations (no, not me.   I hire people that know how to make your home beautiful). Professionally produced virtual home tours. A minimum of 20 photographs of your home and neighborhood featured on the internet on tons of popular sites.   I advertise your home it™s own unique website. Would you like me to put your home in front of all the top realtors in the metro area?   I do that too.  If you are thinking about buying, I can match you with any new or previously owned home in the area. Pay as little as 3.5% down in most cases.   Some no down loans are still available.    I™m also searching daily for properties listed by every realtor in town for the very best prices that could translate to investment opportunities for my clients.      

 Positive News  

Forbes magazine reported that the incentives to buy based on buy/rent analysis have increased and also identified locales where economists predict home prices will go up the most over the next five years.   Denver Metro was #5 on the list.  Home prices in the Denver area showed a year-over-year increase in the latest S&P/Case-Shiller Home Prices Index for 2009.   The trend is continuing this year.   Nationwide, only Dallas and San Francisco saw larger year-over-year price increases  Foreclosures completed in Colorado in 2009 are down 4.1 percent from 2008′s total and down 18.4 percent from the peak year of 2007, the state’s Division of Housing reported February 4th.

Shea Homes Colorado is rolling out its first new community at Reunion in four years. The development is the local launching pad for a smaller, simpler product designed to appeal to younger, more mobile buyers.   I can help in negotiating with builders.  

Strength In The Economy

The Federal Reserve raised the discount rate to 0.75% from the  previous 0.50% on February 18th. The change signals improved financial market stability where banks can now better fund their own needs from the private sector.  Mortgage rates are still hovering around 5%.   As part of the economic recovery efforts, the Fed has been buying mortgage backed securities and are phasing out the program which is to end the end of March.   Most analysts are suggesting that higher mortgage rates will result.  

Investing

The stock market has staged a respectable recovery since March but has recently displayed recent increased bouts of hesitancy. After experiencing major losses in their retirement accounts many people are choosing to diversify their investments.   Increasing home prices are signaling the future of the real estate market.    

I™m searching daily for properties listed by every realtor in town for the very best prices that could translate to investment opportunities for my clients.   If you would like to explore fix and flip or investment opportunities, let me know what questions you have.   HUD, Short Sale, and potential subdivision opportunities are now available to investors at below market prices.   Create a passive cash flow to fund your future dreams or enhance your retirement.   Some examples:

SOUTH  KALISPELL     3BR, 2BATH     $149,900
SOUTH LINCOLN           3BR, 2BATH     $199,900
SOUTH LOWELL           2BR, 1BATH       $185,000
SOUTH CROCKER       2BR, 1BATH       $162,000
SOUTH PERRY                 2BR, 1BATH       $160,000
SOUTH LOGAN              2BR, 1BATH       $138,000
WEST ILIFF                       2BR, 3BATH         $110,000
HAZEL COURT               3BR, 1BATH        $  89,000
WEST ADRIATIC         3BR, 2BATH        $   88,000
PEGASUS DRIVE         3BR, 2BATH        $174,900
EAST RUSTIC DR      3BR, 2BATH        $199,900
ASPEN COURT               3BR, 2BATH          $180,000
COMANCHE ST              3BR, 1BATH       $108,900
MILLBRIDGE AVE       3BR, 3BATH        $190,000
SUFFOLK CIR                3BR, 2BATH         $184,900
DUSK WAY                       3BR, 2BATH         $159,900
WESTON RD                   3BR, 2BATH         $154,500                                

I was very late posting this article this month.   So late that I hope to have the February market summary completed  in the next 2 weeks.   If you like you can have my articles a week earlier than they are posted by subscribing to my mail list.   Just send an email to subscriptions@RonEstell.com with the words How’s the Market in the subject line.

2009 in Review

Due to the Home Buyer™s Tax Credit and low interest rates November sales rose spectacularly for both single family homes and condos.   December condo sales remained strong while single family weakened.   Overall 2009 sales were 42,070 vs. the 2008 performance of 47,837.   Government Stimulus Extension of the First Time Home Buyer™s Tax credit of $8,000 now includes all contracts written through April 30, 2010. In addition the Buy-up Tax credit for existing homeowners of $6,500 was instituted and will also extend through the end of April.   The First Time Home Buyers credit significantly stimulated sales of homes under $200,000.   We expect the Buy-up tax credit to benefit homes over $200,000.

This year™s challenge will be interest rates.   The federal government bought mortgage backed securities in order to keep interest rates low.   The announcement has been made that the purchase of mortgage backed securities will continue until June of this year.   After that point we expect that market rates will increase.   The difference between   5% and 6% rates on a $250,000 loan would mean that payments would rise from $1,041 to $1,342.   Buyer incentives and historically low interest rates between now and the end of April offer awesome buying opportunities.   Bank owned and short-sale investment opportunities will also be plentiful but, with foreclosure rates declining there may not be the continued downward pressure on prices later in the year.  

For details on the  tax  credit email or call me with ˜Home Buyer™s Tax Credit™ in the subject line.FHA loan limits, raised last year to stimulate higher-end home sales were set to extend at the end of last year have now been extended. FHA loans remain the choice of most home buyers due to the fact that they are readily available and in most cases offer the best rates available to buyers.

Economic pressures mount in the form of unemployment, rising medical costs, and credit card company™s rate policies.   If you know anyone caught in the pinch of needing to sell but find that their home sale will not cover what they owe, suggest that they give me a call for a free, no pressure consultation.   There are solutions to help those facing hardship.

  Market Heats Up

The number of new contracts written on Condominiums and Townhomes were up more than twice any November since 2005!   This is an amazing statistic.   In part it reflects a strengthening market due to investor activity.   But, the primary reason is the Home Buyer™s Tax Credit.  This week the Home Buyer™s Tax credit was extended to include all contracts written between December 1, 2009 and April 30, 2010.   First time home buyers retain the tax credit of up to $8,000.   This will give buyers the breathing room they needed to complete the loans that were in process and to be encouraged to actively stay in the market.   Current home owners can qualify for up to a $6,000 tax credit.   The credit will decrease dollar for dollar income taxes owed.   I™ll send you details if you will email me with ˜Home Buyer™s Tax Credit™ in the subject line or if you call me.  Both Single Family (chart 1) and Condo (chart 2) sales and inventory charts are very telling.   Inventories are at record lows and are declining at a greater rate than sales.   Sales of condos and townhomes turned positive for the first time this year.

Interest rates remain around the 4.875% mark.   In stock market futures trading investors are predicting a quarter point increase by mid 2010.  FHA loan limits, raised last year to stimulate higher-end home sales are set to end at the end of the year & revert to, lower amounts -hindering the housing recovery process.     The National Association of Realtors is working on your behalf with legislators to extend the higher limits. Contact your representative & support this great benefit.                                      

 How™s the Market?

Mortgage rates have risen since last month™s report of 4.75%.   Bond market uncertainty has pushed interest rates towards the 5.6% mark.   Local inventory of unsold homes continues it™s downward trend.   Buyers in some areas are finding it difficult to find the home they want at the price they want.   Sales in the $250,000 and below range are still moving rapidly.   Some banks are discovering that they need to fix up that foreclosure before it can be sold.   Analysts are still predicting that the Denver metro area will be among the first to pull out of the market slump.

 News 2 Use

A bill was introduced to Congress this week that would expand eligibility for the federal tax credit on home purchases.   It also proposes an increase in the credit to $15,000.   Obviously a lot of debate will be expended on the proposal and it likely will not emerge from Congress as proposed.   But, we™ll track this one as potential good news.  Did you know that Excel Energy is offering energy audits that have been discounted by 60%?   The audits are conducted by local firms under the watch of Excel Energy.   The audits are customizable with a maximum charge of $125 for an entire audit that includes infrared imagery and blower door tests.   Energy conservation is just as important in the summer as the winter.   I found out that an inefficient freezer in my basement was causing my electric bill to far exceed what it should have been for the number of people in my household.   Call if you would like more info on this program.   Ask about the Governers™ incentive program and others that will contribute to your energy efficiency.  

I™ve been asked if I received my ™Green™ certification.   I did!   If you are looking for answers on environmentally friendly products or energy conservation, let me know.   I™ll be happy to provide you with the information you will need to achieve your environmental goals.  I™ve updated my CentennialHomeGuy.com website to include the week™s new HUD listings and Short Sales that have just hit the market.   If you are an investor or just looking for a good deal you will want to take advantage of this information.Also, check out the free home search information available on CentennialHomeGuy.com and RonEstell.com.   Conduct your own Foreclosure search on my site or ask me to set up a search for you.   I™ll be looking forward to your call.  

How™s the Market?

Mortgage rates continue to hold steady at about 4.75%. I honestly don™t see them moving significantly lower. As the selling season ramps up and the market strengthens, there will be more demand for mortgages. Increased demand normally signals higher prices. The trend of falling inventory (fewer homes on the market for buyers to look at) continues.   We count the number of expired listings (homes that have been taken off the market because they didn™t sell) and find historically low levels here also.   Sales will need to pick-up, however before we can declare a seller™s market.  

News 2 Use

Not everyone needs to buy or sell a home.   I try each month to bring you news that is valuable to everyone.   I think that is the least I can do for those of you who read this newsletter every month.   Let me know what you think.  Did you know that you could get a federal rebate for purchasing a new home?   Call me for details.  

For those of you considering home purchases that would move you to a more energy efficient home, now is a great time to buy both new and previously owned homes because of today™s rates and prices.   Additionally, buyers that want to upgrade the energy efficiency of their prospective homes can readily obtain improvement loans that will allow them to upgrade before they move in.  

Should Smoke detectors be replaced?

Studies show that untested smoke detectors lose about half of their dependability after a 5 to 7 year period. As a result many experts recommend that smoke detectors be replaced about 8 to 10 years. Read the manufacturers instructions as they usually have recommendations.  Can I clean my smoke detector? Dust can damage your detector’s sensitivity. Most units need to be cleaned at least once a year, just use your vacuum cleaner to clean dust out of unit. Read the manufacturers instructions manual.  Tip: There are a significant number of rebates and tax credits available from government and energy providers for homeowners that want to improve the comfort of their homes through energy efficiency.   ..Enough that it could be confusing to determine if an energy improvement you are making qualifies for a plan, or what incentives are being offered.   Don™t miss out on benefits that you should receive as a taxpayer and utility subscriber.   Call me for more info.  

• How™s the Market? Rates have held steady at about 4.75% for the month.   Single family homes on the market, yet unsold (inventory) been reduced 20% since March of last year.   Condominiums inventory is down 16%.   Sellers will find this an attractive situation as the economy builds steam and consumer confidence returns.Sales, however, continue to lag behind last year by 12% for single family homes and nearly 19% for condominiums.   We are seeing more 1st time home buyers in the last few weeks.   This leads us to believe that the $8,000 tax credit will spur sales in the area.   Some buyers are getting their tax credit up front to use as down payments, through a new program offered by CHFA (Colorado Finance and Housing Authority). Visit www.colohfa.org. News 2 Use If you are replacing smoke alarms, this might be a good time to update to a combination smoke/carbon monoxide alarm. Beginning July 1, 2009, the Real Estate Commission will require all sellers of residential property to have a properly installed and operational carbon monoxide alarms near every sleeping area.   Call me for requirements.On May 7th I will receive a new designation from the Green REsource Council.   If you are interested in œgreen homeownership, be sure to give me a call.Fannie Mae and Freddie Mac modified nearly 24,000 loans during the fourth quarter of 2008.   See if you qualify.   Click here or go to:http://www.makinghomeaffordable.gov/modification_eligibility.htmlWould you like to learn about innovative home products and projects around the home that yield a high return, important home maintenance tips or receive periodic Project Starter Coupons for special savings at Lowe’s?   If you would, send me an email with œLowes in the subject line.

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How does the Stimulus Plan Impact Home Ownership?

 2008 Year-End Wrap-up

Mortgage rates are hovering around 5%.   Home buyer incentives have been implemented and more are expected. This is significant in that at 5% a $300,000 loan principal and interest payment would be $1,610. At 6.5% the loan would have carried a price tag of $1,896 per month.   Over the life of the loan the savings is $99,360*.  

The only thing we can be certain of when it comes to interest rates is that they fluctuate.   Will rates go down further?   I wish I knew.   But, at today™s interest rates you could save more in interest than you might save in sale price.   Remember, last month rates were at 4.75%.  

Mortgage and general economic impacts experienced since October had an impact that reverberated through all aspects of the nation™s business communities. There were 49,789 sales of single family homes and condominiums in 2007.   2008 closed with a total of   41,683 sales for an average of 3,474 sales per month.   Although the pace of sales was off of last year, sales did not collapse.  In fact, home inventory levels relative to sales reduced significantly over the course of the year.  

Ending inventory level for 2007 was 24,603 single family homes and condominiums.   We finished 2008 with an average of 19,600, a 25% reduction.This MonthDecember performance was 10.75% better than November and at .47% was slightly better than December 2007.  Single family residence sales were 9.77%, better than November and 5.34% better than December 2007.   The big month over month gain went to town homes and condominiums which was 14.87% better than November.   But, they were unfortunately lower than December 2007 by 15%.  

Average days on market declined for both residential components on a month over month basis, but sent a mixed signal when compared to the increase in December to December days on market.

* For illustrative purposes only.   This is not an offer to provide loans.