Real Estate Information Archive

Question:  Allison, we are looking to buy a home in Silverthorne, CO and we are wondering about prices and what are the predictions for the future?

Answer: Interesting news:  Predictions around the country for housing prices are looking up, up, up!  What does this mean for Summit County, CO?  Historically, our market tends to lag behind the national economy by about 12-18 months. We are starting to see our prices stabilize in many segments of our market and we are beginning to see multiple offer situations on the "cream puffs" that come on the market.

What’s a cream puff? Good question!  A cream puff is the property everyone is looking for- it is priced right and in super condition!  Cream puffs are not lasting in our market!  So, when you see a cream puff and you really like it and can see yourself making family memories there – I would advise you to take action on it.  Cream puffs don’t last.

Consider the following from the Keeping Matters Current Crew:

Two Additional Experts Upgrade their Pricing Forecast

 Last Monday, we reported that several analysts had upgraded their projections for home price appreciation in 2013. A few days later, the Wall Street Journal revealed that two additional analysts had also upgraded their forecasts.
Zelman & Associates
“Ivy Zelman, chief executive of research firm Zelman & Associates, said Wednesday she was now expecting prices to rise by 7% this year, up from earlier estimates of 6%, 5%, and 3%…She’s also calling for a 5% gain next year because she says the supply shortages and growing demand that fueled last year’s turnaround show no signs of easing.”
Her reasons:
“The shortage of housing capacity continues to resonate. Just as deflation was a national headwind that stretched deeper into the economy than anyone would have imagined, we believe that appreciation can carry broad, positive implications for the consumer and economy beyond many expectations.”
John Burns Real Estate Consultants
“John Burns, who runs a real-estate consulting firm in Irvine, Calif., is calling for a 9% gain in home prices this year, up from a 5% forecast late last year.”
 His reasons:
“Strong investor demand and low interest rates that have boosted the purchasing power of buyers.”
These two experts join a long list of housing analysts who have now called for a major rebound in housing prices in 2013.”

Major rebound?  Sounds good to us.  Now is an excellent time to buy real estate in Summit County – interest rates are fantastically low and credit is easing for second homes, prices are good and although inventory is down from first quarter last year, we have some great properties available.  Summit County is still on sale!!

For answers to your real estate questions, call Allison at 970-468-6800. Email - Info@SummitRealEstate.com. Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  Want to know the value of your Summit County property? Visit www.SummitHomeValue.com   

Question:  What’s Up with Housing Inventory?

I am excited to have Chip Wagner, an icon in the appraisal industry and friend of “Keeping Matters Current” as a guest writer today.  Although Chip’s observations are primarily about Chicago- it’s a great “primer” to remind us of how the housing sector works and it is relevant to the majority of the country.  I’ve said it before, and I’ll say it again – remember that the Summit County Real Estate market tends to lag behind Denver and the national economy by about 18-24 months, historically. Enjoy this information from Chip!

It’s All About Supply and Demand

Definitions of Supply and Demand:

 Dictionary.com

In classical economic theory, the relation between these two factors determines the price of a commodity. This relationship is thought to be the driving force in a free market. As demand for an item increases, prices rise. When manufacturers respond to the price increase by producing a larger supply of that item, this increases competition and drives the price down.

In real estate appraisal context, the principle of Supply and Demand states that:

The price of real property varies directly, but not necessarily proportionately, with demand and inversely, but not necessarily proportionately, with supply.

My most simple explanation of Supply and Demand is: It is the relationship between sellers present in a market, which is the supply; and buyers looking, which is the demand. This relationship is reported in months’ supply of inventory.

So, what is the latest challenge?

Some (or most) might say that there are not enough “good” homes for sale. This could represent a shortage of supply, something we have not talked about for several years. It is allowing sellers to raise their asking prices and buyers who have been ‘shopping around’ are now willing to pay higher prices based on other homes they are comparing and/or contemplating to the home that they want.

Why aren’t there many “good” homes for sale?

There are several contributing factors:

1. New construction – We are seeing new construction picking up again at all price points, which is certainly a positive. But with fewer builders, and more conservative approaches after getting burned, builders are not keeping up with the demand that is present. This is leaving buyers searching for resales. And because of the slowdown in new construction, (few new homes were built between 2007 and 2012) the nearly-new resales rarely exist.

Lack of new construction is a contributing factor as many builders folded or downsized significantly over the past 5-6 years.

2. Foreclosures – Foreclosures are a trend that is affecting supply of inventory. Banks are slower at foreclosing, in some cases taking over 3 years through the process. In some cases, the buyers aren’t even interested in these properties, and the investors are picking up these properties and flipping them at a profit.

Foreclosure properties, once viewed as a deal perhaps 25% to 40% under market values, are now being sold at only a 7% discount according to RealtyTimes.com.

3. Investors – Investors have entered the market at greater levels, some to purchase properties to rent, others to rehab and flip them. With the high inventory, investors were able to seek out the best deals, now there are fewer homes available for them.

4. Few people really want to sell at the bottom – Personally, I think the biggest reason that our inventory is low is simply because everyone wants to buy at the bottom; but what seller really wants to sell their home at the bottom of the market? That being said, there are many sellers who cannot sell.

Recently, I heard Steve Harney speak at the Leading Real Estate Companies of the World Conference; he stated there are over 10 million people that are still under water and cannot sell their homes. That is a significant number – these are ‘move-up buyers’ that will create a domino effect. A portion may also represent the potential downsizing buyers who have that upper priced home to sell. This is a very complicated situation. There are many opportunities in the market as demand continues to surge.

Move-up sellers have pent up demand and are ready to buy – if they can sell!

Remember, our market dropped 37.6% as a region since 2007 (some areas fell less than 20%, and other areas fell greater than 50%). The buyers with 20% down lost equity in their homes. Buyers with 5% or 10% lost substantial equity in their homes. If they sell today, they don’t have the down payment necessary for that next home.

Various predictions by “experts” suggest our recovery may be anywhere between 2% and 8% annually. At a conservative 4% annual rate of recovery, it is 5 more years before we can reach 20%.  Those who last purchased their home between 2006 and 2008 are being hurt the hardest in today’s market.

One positive is that renters are ready to purchase. Generation X and Y buyers now believe in homeownership; they want to get out of renting apartments because rents continue to go higher than taking out a mortgage. Interest rates remain at historic lows, with no indication of a significant increase of rates on the horizon.

Back to Supply and Demand …

A balanced supply of inventory is considered to be 4 to 6 months. A balanced supply is going to be neutral in pricing, while an undersupply is going to lead to upward pressure on prices – a Seller’s Market. An oversupply will lead to downward pressure on prices – a Buyer’s Market.

Our supply of inventory is at its lowest level since the end of 2006 and most areas have been reduced to a balanced supply of inventory, with undersupply observed in many sub-markets in the region.

The anticipation is that the pricing will continue to be pressured upward as the desirable properties (in terms of location and condition/modernization) will be gobbled up. Remember the multiple-contracts driving up values last decade? Many agents are now experiencing these trends again.

Get ready for a wild and crazy ride as our real estate market is pulled and pushed in all directions in 2013

Here are a few things to watch…

• Watch the days on market (DOM). Take time to understand if an area’s high DOM may be due to stale listings of homes that are overpriced, distressed and/or in inferior condition.
• Trend the increasing Sales Price-to-List Price ratios - in many sub-markets that I appraise in, I have seen these trend from 93% to 96% or higher just in the past year.
• Track the number of pendings in relationship to the number of listings? One appraiser friend of mine tracks this and calls this “market velocity.” Right now, I see some areas where there have more pendings than listings in a given sub-market.
• Are the pendings priced higher than the previous sales prices? Another indication of an increasing market that I am seeing in many areas.

Welcome to, we all hope, the Slow and Steady Housing Market Recovery!

For answers to your real estate questions, call Allison at 970-468-6800. Email - Info@SummitRealEstate.com. Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  Want to know the value of your Summit County property? Visit www.SummitHomeValue.com  

Hope this fun/crazy/busy month of December is treating you well and you are feeling the holiday spirit!! 

Here's a quick article to give you local scoop on Summit County, CO real estate!

http://www.summitdaily.com/article/20121205/NEWS/121209923&parentprofile=search

Enjoy the fun! 

Summit County, Colorado September 2012 Real Estate Highlights (data provided by Land Title Guarantee Company):

Market Analysis by Area for September: The past few months continue to show improvement-September beat August 2012 numbers and was the best month so far in 2012. Gross volume was up and there were plenty of high end home sales in September. The Gross Volume was $88,134,600 and there were 158 transactions in September.

Market Analysis by Area Year- to- Date ( 9 months): There have been 1055 transactions, with $514,123,600 Gross Volume in the past 9 months. The Median Residential Price stays at $410,000 and the Average PPSF is $285. Some areas to mention:The two sectors of Breckenridge total 39% of the transactions and 33% of the $ volume, Copper had increased activity with 32 transactions and 2% of the overall $ volume.  Keystone had 13% of the transactions and 12% of the $ volume and Silverthorne carries 11% of the transactions and 13% of the $ volume. Frisco also picked up with 11% of the transactions and 10% of the $ volume- YTD.

Market Snapshot YTD: The upper end activity in September gave our Snapshot values a jump. The Median Single Family YTD indicates a 4% increase ( $609,000 from $583,750 in 2011), The Median Price of Multi- Family YTD shows a 6% increase from 2011 ( $324,300 from $305,000 in 2011) and Median Residential Vacant Land continues to increase with a 31% jump ($229,000 from $175,000 in 2011). There is plenty of GREEN across the board in September showing solid median averages and PPSF numbers.

Market Analysis % Change showing years 2004-YTD 2012: YTD 2012, gross volume is up 4% from YTD 2011. Gross monetary volume is up September 2012 by 10% from September 2011. September 2012 is showing the highest $ volume since October 2009. Number of transactions YTD 2012 vs. YTD 2011 are up by 5%. Number of transactions in September 2012 are down by 2% vs. September 2011.

Residential Market Sales by Price Point for September: Residential volume in September had 124 transactions with $77,612,700 gross volume.  There were 43 Single Family and 81 Multi-Family Residential properties sold in September, with the majority being in the price range of $200K to $300K. There were 19 properties that sold for $1M and above in September.
 
2012 Average Price History:  The Average prices reflected an increase across the board from August-The Single Family Residential average price was $758,340, the Multi-Family Residential average price is $360,718 and the Vacant Land Residential average price up at $314,185.
 
Historical Cost Breakdown 2012:  There were 842 Residential transactions YTD in 2012 and $443,289,700 gross volume and 75 properties over $1M.  YTD 2011, there were 811 transactions and $427,985,100 gross volume, 77 properties at $1M and over and YTD 2010, there were 721 transactions with $419,305,100 gross volume, 91 properties at $1M and over.

Top Lender Graph:- Cash sales stick at 44% of all Real Estate Closings.REFIs are strong and the main difference this month in loans was the drop with Timeshare loan closings.

Bank Sales and Foreclosures: Bank sales were down in September with only 2. There were a total of 19 Fee Simple Foreclose actions in September.


Highest PPSF for September 2012:
9/5/2012 $1,050,000 Crystal Peak Lodge Condo Unit  7207 aka 1891 Ski Hill Road – 3 Bedroom 3 Bath YOC 2007 with 1,440 SF Living Area.  PPSF is $729.17.
 
Highest Priced Sale for 2012:
9/4/2012 $5,570,100 Timber Trail Subd Lot 18 aka 0457 Timber Trail Road – 7 Bedroom 9 Bath YOC 2008 with 9,536 SF Living Area on .498 AC Land. PPSF is $584.11.  This is a new construction on a slopeside lot.  It should also be noted that the same purchaser also purchased the adjoining slopeside lot on a separate deed:
9/4/2012 $1,500,000 Timber Trail Subd Lot 14 aka 0339 Timber Trail Road – this lot adjoins Lot 18 and is a vacant residential site with .5280 AC Land.  It is also a slopeside lot.  PPAC is $2,840,909.

Please click on the link below for the September Land Title Market Data.
Land Title Guarantee Company September 2012 Market Analysis

Thank you for your referrals and continued support!

For answers to your real estate questions, call Allison at 970-468-6800. Email - Info@SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field.  Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  Want to know the value of your Summit County property? Visit www.SummitHomeValue.com  

The beauty of our county is spectacular this month - I know I probably say this every year, but I don't think I've ever seen the leaves look prettier!  They are just breathtaking this year!

If you love Summit County and own a place here, but find, as many do, that life has gotten in the way and you just don't get up here enough anymore and if you are thinking of selling, I came across this article from the Keeping Current Matters Crew that you might ponder: 

5 Reasons to Sell Now

 Many sellers feel that the Spring is the best time to place their home on the market as buyer demand increases at that time of year. However, the Fall and Winter have their own advantages. Here are five reasons to to sell now.
1. Only Serious Buyers Are Out
At this time of year, only those purchasers who are serious about buying a home will be in the marketplace. You and your family will not be bothered and inconvenienced by mere ‘lookers’. The lookers are at the mall or online doing their holiday shopping.
2. There Is Far Less Competition
Housing supply always shrinks dramatically at this time of year. This year will be a little different as some of the distressed properties being liquidated by the banks (in the form of foreclosures & short sales) will enter the market. However, for those buyers looking for a non-distressed property, the choices will be limited. Don’t wait until the spring when all the other potential sellers in your market will put their homes up for sale.
3. The Process Will Be Quicker
One of the biggest challenges of the 2012 housing market has been the length of time it takes from contract to closing. Banks have been inundated with both purchase and refinancing loan requests. Both of these will slow in the winter cutting timelines and the frustration these delays cause both buyers and sellers.
4. There Will Never Be a Better Time to Move-Up
If you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by over 15% from now to 2016. If you are moving to a higher priced home, it will wind-up costing you more in raw dollars (both in down payment and mortgage payment) if you wait. You can also lock-in your 30 year housing expense with historically low interest rates right now. There is no guarantee rates will remain at these levels in years to come.
5. It’s Time to Move On with Your Life
Look at the reason you decided to sell in the first place and decide whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?
You already know the answers to the questions we just asked. You have the power to take back control of the situation by pricing your home to guarantee it sells. The time has come for you and your family to move on and start living the life you desire. That is what is truly important.

Enjoy the week and if you are in Dillon this week, stop by and say hello! 

 

If you own a condo, or would like to own a condo in Summit County, CO, you might find the following interesting!  

Condo Financing Issue Finally Making Waves In Washington
For years, the Colorado resort areas have clambered to the National Association of Realtors (NAR) that condo financing rules were killing the local markets, and that the FHA, Fannie Mae and Freddie Mac rules needed to be addressed. It was clear for the first time this year in Washington recently that the condo financing issue is beginning to stick.  Congressman Polis talked about his bill to address workforce housing condo rules, NAR had talking points on FHA condo rules that need to be addressed from a regulatory perspective and there is a letter being circulated by Members of Congress telling the FHA to take action. As of this morning, NAR reached out to the resort areas and offered to request a waiver or exemption for resort areas.  The Glenwood, Steamboat, Summit and Vail Boards will be working with NAR to draft and request the waiver for resort areas.   Due to the Washington political climate, it is possible that no changes will be made this year, but it is inevitable that the issue will be addressed in GSE and housing reform next year.

Let's hope that the Washington politicians can see that the fact that many lenders right now can not lend on condos with any short term rentals in them (which is just about EVERY complex in Summit County!) is really hurting our local market!

 

I hope the spring is treating you well!  We are enjoying a very warm, dry spring here in Summit County, CO... I'm not complaining... AND it is a little weird not having much snow in April! 

  Our market is proving to be steady as she goes right now... that's a good thing!  The number of sales is up slightly, prices still coming down slightly and inventory is down.  These are all signs of a market that is stabilizing....

Here's an interesting article on price and the market.

MARKET RECAP
Prices always make news, as well they should. A price is an important factor in determining loan amount and equity position. Price determines whether someone buys, sells, or holds. You could say that price is everything.
With that thought in mind, home prices have been volatile in 2012, which has lead to volatile sales data. But though prices have been volatile, they have been trending higher. S&P/Case-Shiller's 20-city composite home price index shows prices increased 0.2 percent in February compared to January.
Though the S&P/Case-Shiller index is the most monitored index, it's a little stale, being two months in arrears. We were more interested in contemporary price data released by Zillow, which show home values were up 0.5 percent in its 30-market index. Zillow believes 19 of the markets it follows have either hit bottom or are expected to hit bottom by the end of the year. Zillow chief economist Stan Humphries advises, "For people who have been waiting to time their home purchase close to market bottom, it’s time to start shopping.”
Not to pat ourselves too hard on the back, but we've been offering similar advice for the past six months. Now, no one can precisely call a bottom, but you can get a “vibe” in your market through experience and information. More of the vibes and much of the information is turning positive in many local markets. To be sure, bad news can still be found, but if you wait for nothing but good news, the bottom will have long been gone.
Existing home sales prove that the news still isn't all good. Sales for March came in softer than expected, posting at 4.48 million annualized units, a 2.6 percent dip from February. The good news is that market dynamics appear to be shifting from mostly low-end homes to higher-end ones: the median national home price rose a strong 4.6 percent to $163,800.
As for new homes sales, the news was decidedly good. New home sales posted a better-than-expected 328,000 annualized units in March, after being revised strongly upward to 353,000 units in February. The national median sales price dipped 1 percent, to $234,500, in March, but we'd be surprised not to see a price rebound in April, because of a dearth of new homes. In fact, the supply of unsold new homes fell to just 144,000 in March – the fewest on record dating to 1963.
Mortgage rates, meanwhile, continue to skim along the bottom, though they're showing no inclination to move meaningfully lower. Again, we can't stress enough the risk/reward paradigm in the mortgage lending market: Even after a spat of bad economic news in Europe, rates hardly moved. This suggests to us that waiting for still lower rates means incurring a great deal of risk for little reward.

 

I’ve had lots of questions lately about 1031 tax deferred exchanges and thought it might be time for an update!  This information is from Bankers Escrow Corp and Mary Lou Schwab.   

Great News! The I.R.S. will not challenge whether a vacation property or second home qualifies for a Section 1031 Exchange if certain specified ownership and use requirements are met.  The I.R.S. released Revenue Procedure 2008-16 providing definite guidelines for a safe harbor 1031 exchange. 

To meet the safe harbor requirements, a taxpayer, during the 24 months prior to the sale or after the purchase of a vacation property or second home must:

1. Rent the property at fair market rent for a minimum of 14 days during each 12 month period of the 24-month period.

2. Taxpayer’s personal use of the property cannot exceed the greater of 14 days per year or 10% of the days the property is actually rented during each of the two 12-month periods before or after the 1031 exchange.

Personal use is defined as:

• Use by the taxpayer or any other person who has an interest in the vacation or second home property, including a tenant-in-common interest.
• Use by any individual who uses the property under an arrangement which enables the taxpayer to use some other property.  No trading places allowed!
• Use by any member of the taxpayer’s family unless the vacation property is rented out as a primary residence at a fair market rent.
• Use by any other individual if rented for less than fair market rent.

Maintenance days do not count as personal use days. If the taxpayer is engaged in repair, upkeep and annual maintenance on a substantially full time basis for any day, a personal day is not claimed.  The taxpayer must be ready to prove that the actual work was done and this can include overseeing a contractor that is providing the work on the property.

In summary, a taxpayer can take a second home or a vacation property and rent it at fair market value for 14 days per year for two years and then exchange out of it. Remember that personal use must be limited during these two years.  Revenue Ruling 2008-16 provides these guidelines for a safe 1031 exchange.  Taxpayers must also satisfy all other requirements for a like-kind exchange. Always check with your tax advisor before engaging in any 1031 exchange transaction.

Mary Lou Schwab is a CPA and a Certified Exchange Specialist.  She oversees the 1031 division at Bankers Escrow Corp. and can be reached at 800-571-6595 or 303-986-4848.

For answers to your real estate questions, call Allison at 970-468-6800. Email - Info@SummitRealEstate.com. Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  Want to know the value of your Summit County property? Visit www.SummitHomeValue.com  

Summit Real Estate's Quarterly Sales Reports are here!

It is our pleasure to keep you informed on Summit County’s Real Estate Market.
Click the hyperlink below, fill out the information required and you will automatically be directed to the sales reports for Summit County.

Summit Real Estate Quarterly Report

We value your opinions and comments.  Let us know what you think!

For answers to your real estate questions, call Allison at 970-468-6800. Email - Info@SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate – The Simson Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field.  Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  Want to know the value of your Summit County property? Visit www.SummitHomeValue.com  

Q. Allison, I bought a rental home three years go and have been renting it out ever since. If I move into the home now and live in it for two years and then sell it, will I qualify for the full $250,000 home-sale exclusion?

A.The short answer is:  No. The maximum Section 121 exclusion you'll qualify for is $100,000 (40 percent of the full $250,000 exclusion for single taxpayers). I don’t claim to be a tax expert (quite the opposite, really!) but I came across this article by Steven Fishman that might be interesting to you:

One of the greatest boons in the tax code for the average person is the Section 121 home-sale exclusion. Homeowners who qualify for it don't have to pay any income tax on up to $250,000 of the gain from the sale if they're single, or up to $500,000 if they're married filing jointly.

Qualifying for the Section 121 exclusion is simple: You just have use the home as your principal residence for at least two years of the prior five years before it's sold.

As Section 121 was originally enacted in the 1990s, this meant that you could buy a house, rent it out for three years, live in it for two years, and then sell it and qualify for the entire Section 121 exclusion. Thus, you could avoid having to pay tax on up to $500,000 of otherwise taxable gain. And you could do this over and over again. However, those days are gone.

Section 121 was amended in 2008. For sales and exchanges after Dec. 31, 2008, gain from the sale or exchange of a principal residence allocated to periods of nonqualified use is not excluded from gross income. Nonqualified use means any period in 2009 or later where neither you nor your spouse (or your former spouse) used the property as a main home.

Example: You purchased a home on Jan. 1, 2009, and rented it out until Jan. 1, 2012, when you moved in and made it your main residence. You sell the home on Jan. 1, 2014 for a $100,000 gain. During the five years you owned the home there were three years of nonqualified use. Because three of five is 60 percent, only 40 percent of the $100,000 gain -- $80,000 -- can be excluded under Section 121.

However, nonqualified use does not include any portion of the five-year period in the two-out-of-five-year Section 121 exclusion that falls after the home is used as the principal residence of the taxpayer or spouse. In other words, if you live in the home and then rent it out, the periods of rental use after you lived in the home aren't a nonqualified use and your Section 121 exclusion won't be affected.

For answers to your real estate questions, call Allison at 970-468-6800. Email - Info@SummitRealEstate.com. Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  Want to know the value of your Summit County property? Visit www.SummitHomeValue.com