Archive for June, 2009
President Barack Obama signed the American Recovery and Reinvestment Act into law on Feb 17, 2009, here in Denver, whereby the bill provided more than $13.6 billion to HUD for public and assisted housing, homelessness prevention, jump starting low income housing tax credit projects, Neighborhood Stabilization Program, Community Developement Block Grants, lead based paint hazard reduction and Native American Housing Block Grants, and additional funds.
The main topic that affects the most buyers and sellers is the $8000 first time home buyer true tax credit for the purchase of a principle residence up until Dec. 1, 2009. This has 5 more months to go, and sales in Denver have been normal for this time of year. Summer in Denver has the highest sales, and there has been no spike in sales, or under contracts.
In the Denver Metropolitan real estate market, according to Metrolist sales for the last 6 months, 40% of all sales are either a short sale, or sale by the bank, as the recorded owner. To further breakdown the sales, 33% of the sales were bank owned and 10% were short sales. Given the length of time to do a short sale (over 2 months from institution notification) we should see more resulting short sales in the future. Hoping and counting on buyers sticking around through the whole sales process. This does not cover the new home builder sales.
Since the number of solds has not increased since February, and the solds are lender coordinated, a conclusion at this time is the the buyers are opting to go after the perceived value in short or bank owned sales. Time will tell.
We can always research your neighborhood or subdivision to give a detailed total market overview of your particular situation. Give me a call at 303-888-2488.
2nd month that a national media says, what we have known all along. We never were wild and crazy, like Las Vegas, Phoeniz, or Miami, just slow and steady. We learned from the 1980′s.
See the link here:
Let’s go buy a home.
Here is a quick reference for first time buyers thinking of buying a home in Highlands Ranch.
- Amount of the credit is now $8000.
- Eligible property are townhomes, condos and homes as a principle residence.
- It is refundable when tax returns are filed.
- No income limit.
- Purchaser may not have owned a principle residence that last 3 years.
- No repayment on purchases after Jan. 1, 2009, and before Dec. 1, 2009, a great savings.
- There is a recapture if home is sold within 3 years of purchase.
- Deadline is Dec. 1, 2009.
We also strongly urge you to consult an accountant, and we are also able to set up personal meetings to discuss your situation at our Highlands Ranch office, just south of the AMC theaters.
It is always great to see the national media take notice of us in the great state of Colorado. Here is a link to the NBC Today Show with Barbara Corcoran highlighting Denver as the number one recovering housing market, saying “Everything about Denver is pointing UP, UP, UP.
Just when you thought it was safe to buy a new home in Denver from a “reputable” builder, there seems to be news that another homebuilder has filed bankruptcy, leaving buyers and other realtors wondering what is up.
According to the website www.builder-implode.com, since 2006, over 80 major homebuilders across the United States have imploded and filed bankruptcy, or gone out of business. Is this more than average, given our financial problems, when credit was loose, and plenty of investors were signing contracts, pre build, putting $1000 down, and waiting for the house to be built over the next 15 months, to cash in their millions. Or did the builders leverage themselves on assumptions they would have a lengthy list of buyers who could readily buy, at the builders set (inflated) price.
In Denver we have had some highly regarded builders, implode, like McStain Enterprises, who filed voluntary Chapter 11, in late May 2009, or Village Homes who filed BK in late 2008, or Tousa Inc, that was the parent of Engle Homes that filed, or John Laing Homes (a latecomer to the Denver market) who filed Chapter 11 earlier this year.
This leaves the remaining big boys, who would need to have the financial capital to gather up the land with large option contracts to control the remaining land. It could have been the greater fool theory of buying a farm tract of land, spending money to rezone, and plat over 5 years, and then pass their costs onto the next buyer (builder) who then adds their profits, regardless of the true market value. Can’t the developers make the lots larger, thereby reducing potential inventory, or does their market research still say a buyer loves having a postage stamp yard, that they can mow with a weedwacker. Developers try to squeeze every inch of tract of land into “saleable” lots, to maximize their profits, then sell to a builder and tell them to build with 3 foot setbacks.
Back to the buyers who bought from a builder who went Chapter 11. Here are some questions to ponder.
1. Do you still want to buy?
2. Does the builders contract allow for you to get out?
3. How far along is the construction?
4. What about the eventual punchlist?
5. What about warranty work? Since you probably were getting a self insured warranty, from a builder that went BK.
6. Who has the earnest money, and your upgrades deposit? Probably the builder, of which you are now a creditor, fun.
I would strongly advise consulting very good real estate attorneys, and I am also more than happy to sit down to discuss your situation, or prepurchase of currentlly sound builders. I work as a buyer broker, never an agent of the builder.
If you do find a builder you wish to have a home built, check out this list of the top 15 things to watch for.
Home buyers in Denver and its suburbs are now thinking of taking advantage of both low interest rates, and a good supply of homes to upgrade, change or move up to another home. This is great, and a few buyers who do NOT need to first sell their home, are thinking of becoming a landlord, keeping the old homestead, renting it out, keeping the income, and selling in the future. There maybe a big financial windfall in the future, as we all know real estate in Denver will go up again.
But some things to think of first. Do you still have the financial capabilities to pay on the old homes loan, as of May 10, 2009, underwriters may not consider any rental income, unless: yes there is fine print,1) this move was a relocation with a current or new employer, over a considerable distance. Then they will need a copy of a real lease, even needing a copy of the security deposit. or 2) you the borrower have a loan to value ratio of 75% or less in the old home, determined by a current appraisal, or comparing the unpaid principle balance to the original sales price when you first bought.
Then the IRS needs to be considered, as you now will change a personal residence into a income property, and what most people forget is that the potential tax free exchange, the non 1031 exchange, may be lost. More thoughts:
1. Do you plan to be a landlord for over 3 of the next 5 years?
2. Do you need the equity you have built up in the current home?
3. Are you going to have positive monthly cash flow?
4. Will you be a long distance landlord?
5. Will you mind having a tenant potentially damage your home, and not have the security deposit to cover expenses?
6. Do you love depreciation deductions?
7. Do you love having someone else pay the mortgage?
It can be very easy to go over general numbers to see what works with you, your home, and your finances. Give me a call, at 303-888-2488.
In todays Denver real estate market, a home must be staged properly in order to stand out in the crowd. Remember your home is competing with other homes for sale, and also the new home construction. If it looks and is decorated exactly as you currently live in the home, the buyers looking will pass you by, and buy the competition.
If you are in direct competition with the new home builders, remember they have all the tools at their disposal, they have a professional home designer staging all their model homes, room by room. They do this 7 days a week, from 10-6, and they know it works.
My company works with Star Interior Solutions, an award winning firm that transforms rooms and homes through accessorizing and redesigning into saleable homes that get them sold faster than non staged homes.
The owner, Erica Starich, has 5 quick staging strategies just for the kitchen.
1. Clean everything, this is the most important room in the home. Seems simple.
2. Hide the trash can, rugs, and pet dishes, especially those that may have unwanted smells.
3. Countertops need to be cleared off. You need to show off the amount of counterspace you have, no one has too much.
4. Refrigerators; remove all art and magnets, you are selling your home, not presenting an art show.
5. Cabinets; replace or update the hardware, and or paint the cabinets if they are beyond “dated”.
In the Denver real estate market, buyers buy what they can see, not what you promise.
Due to the change in the luxury home market in Denver, the Home Builders Association (HBA) has this year modified their summer showcase. Now from June 5, 2009 to July 5, 2009, you can see 27 different million-dollar homes, from Niwot to Castle Rock. We know the real estate market in Denver is improving; it won’t happen overnight, but it will over time. Unfortunately the high end market, the luxury end, is moving the slowest, so instead of having 6-8 builders build homes to showcase over a 2 month period, and then hope to sell, the HBA has in a sense contracted with 27 different builders who already have completed inventory letting them have a glorified open house over one month. It is purely economics, last year the homes did not sell out, so why risk it this year.
Now in lieu of one stop shopping, at one location, they will have the Denver public drive all around town to find these homes and view them at limited times. Check out their website at www.denverluxuryhometour.com. Tickets are available online or at your local King Soopers.
Commercial plug: if you like any of these homes, I can offer my brokerage services to help you buy them. I do not own any of these homes, so there is no conflict of interest.
For a list of the top 15 things to watch out for when building a new home, click here.
Just when you think things are safe, and fun on the internet, along comes an email from someone you know who asks you to log onto ” a site”, and BAM you enter the spam twilight zone, and now you are paranoid of who will get your email address’s. Just some caution ahead of time, beware of Tagged.com. Just so know, nothing from me will really come from that site.