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Northern Colorado Real Estate Blog

Sharianne Daily


Displaying blog entries 21-26 of 26

Recent Colorado Highlights

by Sharianne Daily

Sixth edition of Toward a More Competitive Colorado released - Here are some highlights for the state from the Metro Denver Economic Development Corporation most recent report:
- #2 in the country for economic outlook
- #2 for adults with a bachelor's degree
- #4 for highest population growth
- Nation's lowest obesity rate and #2 for fewest retail prescription drug refills

Colorado ranks highly in key innovation measures:
- #2 for Small Business Innovation Research (SBIR) grants
- #3 for venture capital investments
- #3 for high-tech employment
- #10 for patents granted

Colorado's cleantech economy is advancing:
- #6 in clean energy employment; #9 in clean energy job growth
- #7 in wind energy generation; #6 in solar operations

Read full article:

Wall Street Journal - 10 Reasons to Buy

by Sharianne Daily

10 Reasons To Buy a Home

Enough with the doom and gloom about homeownership. Brett Arends explains why owning a home is a good thing.

  • Enough with the doom and gloom about homeownership.

Sure, maybe there's more pain to come in the housing market. But when Time magazine starts running covers that declare "Owning a home may no longer make economic sense," it's time to say: Enough is enough. This is what "capitulation" looks like. Everyone has given up.

 After all, at the peak of the bubble five years ago, Time had a different take. "Home Sweet Home," declared its cover then, as it celebrated the boom and asked: "Will your house make you rich?"

But it's not enough just to be contrarian. So here are 10 reasons why it's good to buy a home.

1. You can get a good deal. Especially if you play hardball. This is a buyer's market. Most of the other buyers have now vanished, as the tax credits on purchases have just expired. We're four to five years into the biggest housing bust in modern history. And prices have come down a long way– about 30% from their peak, according to Standard & Poor's Case-Shiller Index, which tracks home prices in 20 big cities. Yes, it's mixed. New York is only down 20%. Arizona has halved. Will prices fall further? Sure, they could. You'll never catch the bottom. It doesn't really matter so much in the long haul.

Where is fair value? Fund manager Jeremy Grantham at GMO, who predicted the bust with remarkable accuracy, said two years ago that home prices needed to fall another 17% to reach fair value in relation to household incomes. Case-Shiller since then: Down 18%. 

Brett Arends discusses why he thinks now is a particularly good time to buy a home.

2. Mortgages are cheap. You can get a 30-year loan for around 4.3%. What's not to like? These are the lowest rates on record. As recently as two years ago they were about 6.3%. That drop slashes your monthly repayment by a fifth. If inflation picks up, you won't see these mortgage rates again in your lifetime. And if we get deflation, and rates fall further, you can refi.

3. You'll save on taxes. You can deduct the mortgage interest from your income taxes. You can deduct your real estate taxes. And you'll get a tax break on capital gains–if any–when you sell. Sure, you'll need to do your math. You'll only get the income tax break if you itemize your deductions, and many people may be better off taking the standard deduction instead. The breaks are more valuable the more you earn, and the bigger your mortgage. But many people will find that these tax breaks mean owning costs them less, often a lot less, than renting.

4. It'll be yours. You can have the kitchen and bathrooms you want. You can move the walls, build an extension–zoning permitted–or paint everything bright orange. Few landlords are so indulgent; for renters, these types of changes are often impossible. You'll feel better about your own place if you own it than if you rent. Many years ago, when I was working for a political campaign in England, I toured a working-class northern town. Mrs. Thatcher had just begun selling off public housing to the tenants. "You can tell the ones that have been bought," said my local guide. "They've painted the front door. It's the first thing people do when they buy." It was a small sign that said something big.
5. You'll get a better home. In many parts of the country it can be really hard to find a good rental. All the best places are sold as condos. Money talks. Once again, this is a case by case issue: In Miami right now there are so many vacant luxury condos that owners will rent them out for a fraction of the cost of owning. But few places are so favored. Generally speaking, if you want the best home in the best neighborhood, you're better off buying.

6. It offers some inflation protection. No, it's not perfect. But studies by Professor Karl "Chip" Case (of Case-Shiller), and others, suggest that over the long-term housing has tended to beat inflation by a couple of percentage points a year. That's valuable inflation insurance, especially if you're young and raising a family and thinking about the next 30 or 40 years. In the recent past, inflation-protected government bonds, or TIPS, offered an easier form of inflation insurance. But yields there have plummeted of late. That also makes homeownership look a little better by contrast.

7. It's risk capital. No, your home isn't the stock market and you shouldn't view it as the way to get rich. But if the economy does surprise us all and start booming, sooner or later real estate prices will head up again, too. One lesson from the last few years is that stocks are incredibly hard for most normal people to own in large quantities–for practical as well as psychological reasons. Equity in a home is another way of linking part of your portfolio to the long-term growth of the economy–if it happens–and still managing to sleep at night.

8. It's forced savings. If you can rent an apartment for $2,000 month instead of buying one for $2,400 a month, renting may make sense. But will you save that $400 for your future? A lot of people won't. Most, I dare say. Once again, you have to do your math, but the part of your mortgage payment that goes to principal repayment isn't a cost. You're just paying yourself by building equity. As a forced monthly saving, it's a good discipline.

9. There is a lot to choose from. There is a glut of homes in most of the country. The National Association of Realtors puts the current inventory at around 4 million homes. That's below last year's peak, but well above typical levels, and enough for about a year's worth of sales. More keeping coming onto the market, too, as the banks slowly unload their inventory of unsold properties. That means great choice, as well as great prices.

10. Sooner or later, the market will clear. Demand and supply will meet. The population is forecast to grow by more than 100 million people over the next 40 years. That means maybe 40 million new households looking for homes. Meanwhile, this housing glut will work itself out. Many of the homes will be bought. But many more will simply be destroyed–either deliberately, or by inaction. This is already happening. Even two years ago, when I toured the housing slump in western Florida, I saw bankrupt condo developments that were fast becoming derelict. And, finally, a lot of the "glut" simply won't matter: It's concentrated in a few areas, like Florida and Nevada. Unless you live there, the glut won't have any long-term impact on housing supply in your town.

Market Stats for Northern Colorado

by Sharianne Daily

August home sales and median prices varied greatly throughout Northern Colorado, according to the most recent numbers released by IRES.  The report shows that single-family home sales grew from August 2009 by 8.5% in Fort Collins and 6.1% in the Loveland/Berthoud market, but dropped 2.3% in the Greeley/Evans market.  In all, 1,634 homes sold in Fort Collins, compared to 941 in Loveland/Berthoud and 966 in Greeley/Evans.  Home sales, however, grew from July to August, dispelling concerns that the federal first-time homebuyer tax credit pushed traditionally strong summer-season sales earlier. 

Interest Rates vs. Tax Credit

by Sharianne Daily

Just a few months ago the buzz over first time home buying was the $8,000 government assisted tax-credit. However, with the current interest rates reaching record lows at 4.32%, the low interest rates are proving to be more of a money saver for buyers who are looking to lock in these rates for the long term.

Today’s homebuyers have a greater opportunity to save on interest over the long-term than those buyers that took advantage of the $8,000 homebuyer tax-credit. First-time homebuyers who purchased any kind of home—new or resale—were eligible for the tax-credit, which expired April 30, 2010. Here is a comparison of costs between a buyer taking advantage of the tax-credit and a buyer purchasing in mid August when the interest rates were 4.42%.

A qualified first time homebuyer purchasing a home for $200,000 with 20% down would have a loan amount of $160,000. At the time of the tax-credit for a 30-year fixed loan, interest rates fluctuated around 5.21%. Based on these rates the buyer’s monthly payment would be around $880 per month. After 30 years (the term of the loan), the buyer would have paid $156,644 in interest. A buyer electing to take advantage of the 4.42% interest rate in August, with the same loan term and 20% down payment would have a lower monthly payment at $803. At the end of the loan term, this buyer would have paid $129,119 in interest.

After recouping the $8,000 tax-credit (which was not received by the buyer in August), the buyer would have paid $19,525 less in interest over the 30-year loan term than the buyer receiving the tax-credit.

What does this tell us? Right now is an optimal time to buy a home.

How LOW can they go?

by Sharianne Daily

Purchase Interest Rates on September 3, 2010

2.75% CONV 5/1 ARM (five year fixed adjusts yr 6)

3.625% CONV. 15 YR  (15 yr. amortization fixed rate)

4.25% CONV 30 YR  (30 yr. amortization fixed interest rate)

4.25% FHA 30 YR (30 yr. amortization fixed interest rate)

Remember, every percent drop in interest rates increases your buying power by 10%!

A new thought process for Buyers - instead of buying for the sole purpose of appreciation, they will buy a home because it meets the needs of their family, it is in the right price range, they like the street, they like the school district,  it is convenient to work. While they won’t ignore the potential for appreciation, it won’t be the driving force.   


Should I Buy a Home Now?

by Sharianne Daily

I'm often asked if this is a good time to buy a home. Some clients are concerned that home prices may fall further than they have already. They are assuming that the best course of action is to wait for the bottom in the market and then buy. The problem with this approach is that you don't know where the bottom is until you see it in the rear view mirror, meaning until you've missed it!

Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability. Even though interest rates have gone up in the last six months, they are still near historic lows. Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates up, it could cost you even more to service a mortgage on an identical home!

While a home is a major investment, it is also the center of your personal life. It's important to live in a home that reflects your taste and values, yet is within your financial "comfort zone." To that end, it may be more important to lock in today's relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.

Please give me a call if I can be of any assistance in determining how much home you can afford in today's market.

Displaying blog entries 21-26 of 26