Market Trends Newsletter

Quarterly Market Report

Welcome Home to Colorado’s Playground!
 
Summit County truly is Colorado’s Playground. These aren’t just words – they are so true! Summit County, Colorado is absolutely loaded with just about all the outdoor adventure and fun you could ask for! You’ll feel like a student after exams when you start exploring all we have to offer here!
 
How’s our market? Depends who you ask, but in almost all segments of our market, we are seeing nice, steady sales. I compare it to a healthy river - the middle is moving along quite briskly, and the edges are flowing more slowly. On one side, we have some buyers who are trying to get into our market by grabbing a deep discount or scooping up a foreclosure (we had fewer than 15 actual properties that went all the way through the foreclosure process in 2007). On the other side, there are sellers who are clinging to the notion of getting another 30% appreciation this year.  Some have chosen to “eddy-out”- find a still moving pool – rather than move into the flow.  The middle of the river is very healthy, and moving at a brisk pace with buyers who want to buy, and sellers who are realistic meeting in the middle! So if you are ready to buy or sell property in Colorado’s Playground, jump on in – the water’s fine!
 
People ask me all the time, who is buying property in Summit County? According to the National Association of Realtors annual second home and investment property survey, here are some of the details:
The typical vacation-home owner is 59 years old, earned $120,600 last year, and purchased a property that is 220 miles from their primary residence, but 34 percent were less than 100 miles and another 34 percent were 500 miles or more. Eight out of ten drive to their property, and half of vacation homes are located within the same state as the owner’s primary residence. Eighty-three percent of owners are married couples.

Three-fourths of vacation-home owners purchased for personal use, although one-third also wanted to diversify investments, and 18 percent intended that the home would become a primary residence in retirement. Only 13 percent of vacation owners listed rental income as a reason to buy. The typical owner spends 39 nights per year at their property, and three-quarters do not rent out. Of those who do rent their vacation home, the median number is 12 nights per year.
 
For all second home owners, their most recent property was purchased a median of six years ago. However, most have held additional properties for longer periods.

As for attributes desired in a vacation home, two-thirds want to be close to an ocean, river or lake; 39 percent close to recreational or sporting activities; 38 percent close to vacation or resort areas; and 31 percent close to mountains or other natural attractions.

Half of vacation homes are located in resort or recreational areas, 18 percent in small towns and 16 percent in rural areas. Four out of ten are detached single-family homes, 22 percent are cabins or cottages, 21 percent condos in buildings with five or more units, 7 percent a townhouse or row house, 5 percent a mobile or manufactured home, and 3 percent are located in two-to-four unit structures; 1 percent were other. Six percent said their vacation home was a timeshare unit.

Three-fourths said the value of their investment property was lower than their primary residence, and 70 percent said their property was a better investment than stocks.

Of course, the range of demographics is much more diverse than these statistics indicate overall, but I think it’s interesting to see what the national trends are.
 
On a personal note, recently, I was recently asked by Howard Brinton to join his nationally acclaimed Star Power organization of an elite group of Top Realtors around North America and to become one of his “Stars”. "Stars" typically average over $35 million in annual sales volume and over 100 transactions per year. According to Brinton, “They always provide a variety of styles and niche practices that make them appealing to a wide audience. Competition to become a "Star" is tough, and eligibility requires having a willingness to share the factors that contributed to the Star's success and a desire to help others grow in a similar way.” This is such an honor for me to be able to teach and share my real estate expertise with other Realtors.
 
Summit Real Estate – The Simson/Nenninger Team would be delighted to put our expertise and knowledge of this market to work for you.
 
In a market that is constantly moving, it’s smart to work with talent that doesn’t sit still.
 
 
Allison Simson
Summit Real Estate ~ The Simson/ Nenninger Team

News around Dillon

 Dillon’s Waterfront Master Plan

 
Dillon’s Waterfront Master Plan encompasses both of the individual plans for Marina Park and the Marina itself. The Pavilion and Playgrounds project in Marina Park will begin this summer, with ground breaking the beginning of July. Highlights of this project include a large playground to be constructed this summer, additional picnic shelters in Marina Park, a study to consider improvements to the amphitheatre and possible other improvements as budgets allow.
 
The Marina Master Plan has been adopted and the town is moving forward with getting all of the engineering work completed. Some of the highlights of this plan include a two level parking structure, relocation and expansion of the break water, a wharf with a floating dock structure at the end, relocation of the maintenance facilities, expansion of the Tiki Bar, and new buildings for rental and retail for the marina and Yacht Club. There could also be a new building attached to the parking structure that might include any number of uses such as banquet space, marina offices, or a restaurant. 
 
Walgreens plans on opening their doors this winter and preliminary applications have been received for the 5 commercial spaces on the lot adjacent to Walgreens. In the 9000 square foot building there would be 5 available commercial spaces and 2 of those spaces might be quick serve restaurants and 3 retail. 
 
A new project called Alpine Lake Lodge has been approved by the Planning & Zoning Commission and will be located where the existing Ristorante Al Lago is located on Lake Dillon drive. This redevelopment would include 44 condos and 8500 square feet of commercial and retail space, including a restaurant. There is a discussion of including a small number of locals targeted housing in the complex, but the project is moving forward! 
 
The town is also initiating a blight study to determine whether or not to move forward to form an urban renewal authority which would give the Town of Dillon the ability to provide incentives through tax increment financing. Effective July 1st is a .5% sales tax increase with the monies going towards much needed street and sidewalk repairs. Repairs are estimated at $20 million and have already begun. 
 
There are many exciting things happening in Dillon, keep reading for future developments! 
 

1031 Exchange Guidelines

 

 

Vacation Property 1031 Exchange Guidelines                
By Mary Lou Schwab, CPA, CES
 
Great News! The I.R.S. will not challenge whether a vacation property qualifies for Section 1031 treatment 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 vacation property 1031 exchange. 
 
To meet the safe harbor requirements, a taxpayer, during the 24 months prior to the sale of their vacation home or the 24 months after the purchase of their vacation property as a 1031 replacement property 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.
 
  1. Limit personal use of the property during each 12 month period of the 24-month period not to exceed the greater of: 14 days or 10 percent of the number of days the property is rented at a fair market rent during each of the two 12 month periods.
 
The IRS defined personal use to include:
 
·         The taxpayer or any other person who has an interest in the vacation 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. For example, trading vacation property use whether or not a rental is charged for the use of such other property is considered personal use.
·         Use by any member of the family of the taxpayer 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.
 
Per the IRS, the “fair market rent” is based on all of the facts and circumstances that exist when the rental agreement is entered into, and all rights and obligations of the parties to the rental agreement are taken into account.
 
Maintenance Days do not count at personal use! Some taxpayer usage is not considered as personal use if the taxpayer is engaged in repair, upkeep and annual maintenance on a substantially full time basis for any day. The taxpayer must be ready to prove that the actual work was done.
 
In summary, a taxpayer can take a personal residence or a vacation home 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! 
 
This new Revenue Ruling provides a wonderful safe harbor and taxpayers must also satisfy all other requirements for a like-kind exchange under §1031. If your vacation property does not meet all the terms of the safe harbor it may still be possible to do a 1031 exchange but you could be subject to heightened scrutiny. Always check with your tax advisor before engaging in any 1031 exchange.
 
The author, 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 970-453-1446.