I recently completed the course work to achieve the CDPE (Certified Distressed Property Expert) Designation. In these difficult times I have found that sometimes homeowners in distress don't always know about options other than foreclosure. The old adage that knowledge is power could not be more important than today with our current market conditions.
There are numerous options that may be available to a distressed homeowner. Two of the most frequently discussed are Foreclosure and Short Sale. Foreclosure is a court supervised process where a mortgage company or other lienholder institutes a legal proceeding against a homeowner who is in default. A Foreclosure process may ultimately result in a public sale of a homeowner's property. A Short Sale, on the other hand, occurs when the homeowner enters into negotiations with the mortgage company or companies to accept less from a third party purchaser than the full balance of the outstanding loan.
What many people do not know is that there are very important differences in homeowner consequences between Foreclosure vs. Shortsale. Let me outline some of those differences:
Issue: Future Fannie Mae Loan - Primary residence. In a Foreclosure, a homeowner who loses a home is ineligible for a Fannie Mae backed mortgage for a period of 5 years. A homeowner who successfully negotiates and closes a Short Sale will be eligible for a Fannie Mae backed mortgage after only 2 years.
Issue: Future Fannie Mae Loan - Non Primary. An investor who allows a property to go to Foreclosure is ineligible for a Fannie Mae backed investment mortgage for a period of 7 years.
An investor who successfully negotiates and closes a Short Sale will be eligible for a Fannie Mae backed investment mortgage after only 2 years.
Issue: Future loan with any Mortgage Company. On any future 1003 application, a prospective borrower will have to answer YES to question C in Section VIII of the standard 1003 that asks "Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?" This will affect future rates. There is no similar declaration or question regarding a Short Sale.
Issue: Credit Score. With a Foreclosure score may be lowered anywhere from 250 to over 300 points and typically will affect score for over 3 years. With a Short Sale only late payments on a mortgage will show and after sale mortgage will be reported as paid or negotiated. This will lower the score as little as 50 points if all other payments are being made. A short sale's affect can be as brief as 12 to 18 months.
Issue: Credit history. A Foreclosure will remain as a public record on a person's credit history for 10 years or more. A Short Sale is not reported on a credit history. There is no specific reporting item for "short sale." The loan is typically reported as "paid in full, settled."
Issue: Security Clearances. A Foreclosure is the most challenging issue against a security clearance outside a conviction of a serious misdemeanor or felony. If a person has a foreclosure and is a police officer, in the military, in the CIA, Security, or any other position that requires a security clearance, in almost all cases clearance will be revoked and position will be terminated. A Short Sale on its own does not challenge most security clearances.
Issue: Current Employment. Employers have the right and are actively checking the credit regularly of all employees who are in sensitive positions. A Foreclosure in many cases is ground for immediate reassignment or termination. A Short Sale is not reported on a credit report and is therefore not a challenge to employment.
Issue: Future Employment. Many employers are requiring credit checks on all job applicants. A Foreclosure is one of the most detrimental credit items an applicant can have and in most cases will challenge future employment. A Short Sale is not reported on a credit report and is therefore not a challenge to future employment.
Issue: Deficiency Judgment. In 100% of Foreclosures (except in States that do not provide for deficiency) the bank has the right to pursue a deficiency judgment. In some successful Short Sales it is possible to convince the lender to give up the right to pursue a deficiency judgment.
If you have any questions, please do not hesitate to call me. You can reach me, Don Ricedorff, at The Wells Group 970-375-7014, don@frontier.net, or at my website at durangorealproperty.com.
Don Ricedorff is a licensed real estate broker in the State of Colorado, with 16 years of experience, and he resides in Durango Colorado.He has numerous real estate designations, which have provided him with an unparalleled education to assist his clients. The designations include:
CRS, Certified Residential Specialist
CRB, Certified Residential Broker
CCIM, Certified Commercial Investment Member
CDPE, Certified Distressed Property Expert
ABR, Accredited Buyer Representation
GRI, Graduate of Realtor Institute
RSPS, Resort and Second Home Property Specialist
CIPS, Certified International Property Specialist
SRES, Senior Real Estate Specialist
He is also an active volunteer in the community and his church. His highest aspiration is spending time with his wife, Janet, and his three children Kelly, Katie, and Kyle. His other interests include playing tennis, fly fishing, hiking, boating, and water skiing.
Wednesday, April 8, 2009
Tuesday, March 10, 2009
Demand For Durango Colorado Real Estate Was Soft In January & February
The times are changing! January and February residential transactions were very low, while the inventory level on the market remains at nearly all time highs. For example, 43 homes have been reported sold in the MLS system for the two month period in La Plata County, and there are 982 homes on the market. This demonstrates the polar differences between supply and demand.
Of course, if you are buying, this is great news, and it is being reflected in tougher negotiations and significant price reductions. For example, Copperhead Camp homes in Edgemont Highlands have announced a price reduction on eleven of their homes ranging from a savings of $60,000 to $130,000. These homes are now priced from $299,900 to $549,900. If you have any interest in these homes, or other deeply discounted deals in the Durango area, please let me know.
If you are selling, this information shows the challenge. The questions to ask yourselves are:
1) Is my property priced aggressively in this market?
2) Am I making the most of any showing? Does it show well? Is it clean, and have the minor painting and updating projects been completed?
3) Am I being flexible in allowing showings per the buyers request?
4) How is the curb appeal, does a buyer want to come in?
In many cases, sellers are able to negotiate deeper if they are able to make it up on the next home, and if prices continue to decline, it is better to reduce the price early and get the home sold, rather than “riding” the market down.
We will survive this market adjustment. The stimulus plan combined with the low interest rates and the first time homebuyer credit offer buyers a great opportunity to buy, and it may give us the traction we need to get this market moving.
If you have any questions, please do not hesitate to call me. You can reach me, Don Ricedorff, at The Wells Group 970-375-7014, don@frontier.net, or at my website at durangorealproperty.com. Don Ricedorff is a licensed real estate broker in the State of Colorado, with 16 years of experience, and he resides in Durango Colorado.
He has numerous real estate designations, which have provided him with an unparalleled education to assist his clients. The designations include:
CRS, Certified Residential SpecialistCRB, Certified Residential BrokerCCIM,
Certified Commercial Investment Member
ABR, Accredited Buyer Representation
GRI, Graduate of Realtor Institute
RSPS, Resort and Second Home Property Specialist
CIPS, Certified International Property Specialist
SRES, Senior Real Estate Specialist
He is also an active volunteer in the community and his church. His highest aspiration is spending time with his wife, Janet, and his three children Kelly, Katie, and Kyle. His other interests include playing tennis, fly fishing, hiking, boating, and water skiing.
Of course, if you are buying, this is great news, and it is being reflected in tougher negotiations and significant price reductions. For example, Copperhead Camp homes in Edgemont Highlands have announced a price reduction on eleven of their homes ranging from a savings of $60,000 to $130,000. These homes are now priced from $299,900 to $549,900. If you have any interest in these homes, or other deeply discounted deals in the Durango area, please let me know.
If you are selling, this information shows the challenge. The questions to ask yourselves are:
1) Is my property priced aggressively in this market?
2) Am I making the most of any showing? Does it show well? Is it clean, and have the minor painting and updating projects been completed?
3) Am I being flexible in allowing showings per the buyers request?
4) How is the curb appeal, does a buyer want to come in?
In many cases, sellers are able to negotiate deeper if they are able to make it up on the next home, and if prices continue to decline, it is better to reduce the price early and get the home sold, rather than “riding” the market down.
We will survive this market adjustment. The stimulus plan combined with the low interest rates and the first time homebuyer credit offer buyers a great opportunity to buy, and it may give us the traction we need to get this market moving.
If you have any questions, please do not hesitate to call me. You can reach me, Don Ricedorff, at The Wells Group 970-375-7014, don@frontier.net, or at my website at durangorealproperty.com. Don Ricedorff is a licensed real estate broker in the State of Colorado, with 16 years of experience, and he resides in Durango Colorado.
He has numerous real estate designations, which have provided him with an unparalleled education to assist his clients. The designations include:
CRS, Certified Residential SpecialistCRB, Certified Residential BrokerCCIM,
Certified Commercial Investment Member
ABR, Accredited Buyer Representation
GRI, Graduate of Realtor Institute
RSPS, Resort and Second Home Property Specialist
CIPS, Certified International Property Specialist
SRES, Senior Real Estate Specialist
He is also an active volunteer in the community and his church. His highest aspiration is spending time with his wife, Janet, and his three children Kelly, Katie, and Kyle. His other interests include playing tennis, fly fishing, hiking, boating, and water skiing.
Thursday, February 26, 2009
Lifestyle And Amenities Are The Key To The Market On Homes Over $500,000 In Durango Colorado Real Estate!
As a Durango Colorado real estate broker, the homes in the price range over $500,000 are fun to represent, as it is all about life style. Most of the buyers in this price range are looking for enhancements to their busy life, and they have been drawn to Durango Colorado for the life style choices that are offered. It may be a primary home or a second home that one is choosing, but it is almost always about the great choices surrounding us. This is sometimes called the amenity driven market, and it is what attracts people to Durango Colorado. Often it begins with a visit to historic downtown Durango, with a heritage back to the old west and mining in the nearby mountains. The Durango Silverton narrow gauge train is a destiny for many, and it is a sight to see when it traverses through Durango and the Animas Valley. Many people are drawn to Mesa Verde national park, with the cliff dwellings of the Anasazi. Durango is a portal for the entire southwest, with easy access to Moab, Lake Powell, Canyon Lands, Monument Valley, and the high desert of New Mexico. Durango also offers abundant cultural events, unique for a town of its size. There are on going opportunities for music through the Fort Lewis College concert hall, nearly 20 art galleries in Durango, a community art center, Music In The Mountains, and exciting events all year long. Fort Lewis College offers wonderful musical performances, theater, and life long learning lectures, making Durango an exceptional cultural experience. In addition, the culinary standards are quite high in Durango, with many choices for people who like to dine in fine restaurants. It is said that Durango has more restaurants per capita than San Francisco.
Living here is about choosing the life styles and amenities that you would appreciate. With the approximately 300 days of sunshine in Durango, outdoor activities are in abundance. There are large communities of cyclists and mountain bikers, golfers, a community tennis group, skiers, snow boarders, fly fishing enthusiasts, kayakers, hikers, backpackers, and ice and rock climbers. Just last weekend, we went to Ouray and watched the world renowned ice climbing, and at the end of January, my son and I backpacked into Dark Canyon near Hite Utah.
Durango is special with its relationship with the Animas River, which flows right through town, and actually has good fishing. The river walk has been extended in recent years, and just this week, agreement was reached to extend it further north.
There are numerous rivers, high mountain streams, large reservoirs, and alpine lakes to fish. One of the favorite locations for many fishermen is the gold waters of the San Juan River.
There are many choices for life style in this price range. Some people choose to be in town in neighborhoods like Sky Ridge, Rockridge, Timberline View Estates, or perhaps a loft downtown or a historic home in the historic district. The in town homes are the most convenient for taking advantage of all of the dining and cultural events of Durango, and for families, the neighborhoods are close to schools, churches and shopping. Some of these neighborhoods offer greater privacy with larger lots and some with huge views of the peaks.
There are many people looking for that Colorado feel of being in the Ponderosa pines, and yet within 10 to 15 minutes of town for the convenience. Areas like Edgemont Ranch, Edgemont Highlands, Shenandoah, and King Mountain Estates are some of these choices. They tend to be on small parcels or on small acreage, with a value on views and privacy. Often, hiking or biking trails are available as amenities.
Some people choose the larger acreage parcels, generally in the 35 to 40 acre range, and some of the ones close to Durango include Durango Ridge, Rancho Mira Sol, Trappers Crossing, and open agricultural properties on the Florida Mesa. Buyers of these properties generally want long views, and privacy, or perhaps equestrian use.
North of Durango, the choices for amenities include golf communities at Dalton Ranch or Glacier Club, and skiing and other winter activities at Durango Mountain resort. The summer activities are centered around the national forest, and appreciating the great outdoors. There are many home choices in these communities.
We also have a few river or stream properties in the area. They tend to be scarce, but it is possible to live near or have access to a fishable stream in southwest Colorado.
I would love to assist you with your life style choices. My promise is to listen to you, find out what the important attributes that you would like to have, and match up your interests with the property choices in our area. This is an exciting time in Durango, and living here has never been better.
If you would like to have further information on Durango Colorado real estate, please contact me, Don Ricedorff at The Wells Group 970-375-7014, don@frontier.net, or at my website at durangorealproperty.com.
Don Ricedorff is a licensed real estate broker in the State of Colorado, with 16 years of experience, and he resides in Durango Colorado. He has numerous real estate designations, which have provided him with an unparalleled education to assist his clients. The designations include:
CRS, Certified Residential Specialist
CRB, Certified Residential Broker
CCIM, Certified Commercial Investment Member
ABR, Accredited Buyer RepresentationR
SPS, Resort and Second Home Property Specialist
CIPS, Certified International Property Specialist
SRES, Senior Real Estate Specialist
CLHMS, Certified Luxury Home Marketing Specialist
He is also an active volunteer. He is the President Elect of the Durango Area Association of Realtors, and he is involved in the community and in his church. His personal interests include spending quality time with his family (wife and three children), playing tennis, fly fishing, hiking, boating, and water skiing.
Living here is about choosing the life styles and amenities that you would appreciate. With the approximately 300 days of sunshine in Durango, outdoor activities are in abundance. There are large communities of cyclists and mountain bikers, golfers, a community tennis group, skiers, snow boarders, fly fishing enthusiasts, kayakers, hikers, backpackers, and ice and rock climbers. Just last weekend, we went to Ouray and watched the world renowned ice climbing, and at the end of January, my son and I backpacked into Dark Canyon near Hite Utah.
Durango is special with its relationship with the Animas River, which flows right through town, and actually has good fishing. The river walk has been extended in recent years, and just this week, agreement was reached to extend it further north.
There are numerous rivers, high mountain streams, large reservoirs, and alpine lakes to fish. One of the favorite locations for many fishermen is the gold waters of the San Juan River.
There are many choices for life style in this price range. Some people choose to be in town in neighborhoods like Sky Ridge, Rockridge, Timberline View Estates, or perhaps a loft downtown or a historic home in the historic district. The in town homes are the most convenient for taking advantage of all of the dining and cultural events of Durango, and for families, the neighborhoods are close to schools, churches and shopping. Some of these neighborhoods offer greater privacy with larger lots and some with huge views of the peaks.
There are many people looking for that Colorado feel of being in the Ponderosa pines, and yet within 10 to 15 minutes of town for the convenience. Areas like Edgemont Ranch, Edgemont Highlands, Shenandoah, and King Mountain Estates are some of these choices. They tend to be on small parcels or on small acreage, with a value on views and privacy. Often, hiking or biking trails are available as amenities.
Some people choose the larger acreage parcels, generally in the 35 to 40 acre range, and some of the ones close to Durango include Durango Ridge, Rancho Mira Sol, Trappers Crossing, and open agricultural properties on the Florida Mesa. Buyers of these properties generally want long views, and privacy, or perhaps equestrian use.
North of Durango, the choices for amenities include golf communities at Dalton Ranch or Glacier Club, and skiing and other winter activities at Durango Mountain resort. The summer activities are centered around the national forest, and appreciating the great outdoors. There are many home choices in these communities.
We also have a few river or stream properties in the area. They tend to be scarce, but it is possible to live near or have access to a fishable stream in southwest Colorado.
I would love to assist you with your life style choices. My promise is to listen to you, find out what the important attributes that you would like to have, and match up your interests with the property choices in our area. This is an exciting time in Durango, and living here has never been better.
If you would like to have further information on Durango Colorado real estate, please contact me, Don Ricedorff at The Wells Group 970-375-7014, don@frontier.net, or at my website at durangorealproperty.com.
Don Ricedorff is a licensed real estate broker in the State of Colorado, with 16 years of experience, and he resides in Durango Colorado. He has numerous real estate designations, which have provided him with an unparalleled education to assist his clients. The designations include:
CRS, Certified Residential Specialist
CRB, Certified Residential Broker
CCIM, Certified Commercial Investment Member
ABR, Accredited Buyer RepresentationR
SPS, Resort and Second Home Property Specialist
CIPS, Certified International Property Specialist
SRES, Senior Real Estate Specialist
CLHMS, Certified Luxury Home Marketing Specialist
He is also an active volunteer. He is the President Elect of the Durango Area Association of Realtors, and he is involved in the community and in his church. His personal interests include spending quality time with his family (wife and three children), playing tennis, fly fishing, hiking, boating, and water skiing.
Friday, February 20, 2009
The Stimulus Package Expected To Make A Difference In Real Estate, And It Should Help Us In Our Local Area, Durango Colorado!
I have just returned from the Colorado Association of Realtors winter meetings in Denver Colorado. There are a number of provisions in the Stimulus Plan, but this article will be limited to a few.
First, the $8,000 1st time homebuyers tax credit will help to put people in homes around the country. The National Association of Realtors expects this part of the plan will provide an additional 300,000 housing units to be sold! The income limits are $75,000 for single individuals, $150,000 for those who file jointly, and they phase out from $150,000 to $170,000. This is an improvement over the tax credit last year, as it does not have requirement for repayment, and of course, it is a little bit higher. The tax credit may be taken on the 2008 or 2009 tax returns. It expires on November 30, 2009, so the purchases must be from now until then. Each of these purchases should increase other economic activity by $60,000, from home improvements to furniture.
Second, the agency jumbo rates decreased at the first of the year, as the rules changed from 125% of median income up to $720,000, to 115% of median income to $625,000. They are now going back to the higher limits. This may help us get back up to $443,750 for FHA loans locally, from the current $379,750. This is preliminary and not final. The National Association of Realtors expects this to increase units sold nationally by 150,000 units.
Third, the next batch of TARP funds, utilized to buy back Freddie Mac and Fannie Mae loans, and help to keep low interest rates are expected to increase sales of homes by 400,000 units, according to NAR.
Last, investor limits on loans have been raised from four loans maximum by Fannie Mae and Freddie Mac to ten loans. This will assist in keeping investors interested in buying up properties for rental use.
All of these provisions in the Stimulus Plan will assist us in selling more real estate. Now, we need to spread the word of the timeliness in purchasing real estate. This is the perfect time to purchase with the high level of inventories of homes for sale, the depressed real estate market, the deeper negotiations offered by sellers, and it is critical for buyers to buy this year, while they can take advantage of the tax credit, and the artificially low interest rates.
If you would like to have further information on Durango Colorado real estate, please contact me, Don Ricedorff at The Wells Group 970-375-7014, don@frontier.net, or at my website at durangorealproperty.com.
Don Ricedorff is a licensed real estate broker in the State of Colorado, with 16 years of experience, and he resides in Durango Colorado. He has numerous real estate designations, which have provided him with an unparalleled education to assist his clients. The designations include:
CRS, Certified Residential Specialist
CRB, Certified Residential Broker
CCIM, Certified Commercial Investment Member
ABR, Accredited Buyer Representation
RSPS, Resort and Second Home Property Specialist
CIPS, Certified International Property Specialist
SRES, Senior Real Estate Specialist
CLHMS, Certified Luxury Home Marketing Specialist
He is also an active volunteer. He is the President Elect of the Durango Area Association of Realtors, and he is involved in the community and in his church. His personal interests include spending quality time with his family (wife and three children), playing tennis, fly fishing, hiking, boating, and water skiing.
First, the $8,000 1st time homebuyers tax credit will help to put people in homes around the country. The National Association of Realtors expects this part of the plan will provide an additional 300,000 housing units to be sold! The income limits are $75,000 for single individuals, $150,000 for those who file jointly, and they phase out from $150,000 to $170,000. This is an improvement over the tax credit last year, as it does not have requirement for repayment, and of course, it is a little bit higher. The tax credit may be taken on the 2008 or 2009 tax returns. It expires on November 30, 2009, so the purchases must be from now until then. Each of these purchases should increase other economic activity by $60,000, from home improvements to furniture.
Second, the agency jumbo rates decreased at the first of the year, as the rules changed from 125% of median income up to $720,000, to 115% of median income to $625,000. They are now going back to the higher limits. This may help us get back up to $443,750 for FHA loans locally, from the current $379,750. This is preliminary and not final. The National Association of Realtors expects this to increase units sold nationally by 150,000 units.
Third, the next batch of TARP funds, utilized to buy back Freddie Mac and Fannie Mae loans, and help to keep low interest rates are expected to increase sales of homes by 400,000 units, according to NAR.
Last, investor limits on loans have been raised from four loans maximum by Fannie Mae and Freddie Mac to ten loans. This will assist in keeping investors interested in buying up properties for rental use.
All of these provisions in the Stimulus Plan will assist us in selling more real estate. Now, we need to spread the word of the timeliness in purchasing real estate. This is the perfect time to purchase with the high level of inventories of homes for sale, the depressed real estate market, the deeper negotiations offered by sellers, and it is critical for buyers to buy this year, while they can take advantage of the tax credit, and the artificially low interest rates.
If you would like to have further information on Durango Colorado real estate, please contact me, Don Ricedorff at The Wells Group 970-375-7014, don@frontier.net, or at my website at durangorealproperty.com.
Don Ricedorff is a licensed real estate broker in the State of Colorado, with 16 years of experience, and he resides in Durango Colorado. He has numerous real estate designations, which have provided him with an unparalleled education to assist his clients. The designations include:
CRS, Certified Residential Specialist
CRB, Certified Residential Broker
CCIM, Certified Commercial Investment Member
ABR, Accredited Buyer Representation
RSPS, Resort and Second Home Property Specialist
CIPS, Certified International Property Specialist
SRES, Senior Real Estate Specialist
CLHMS, Certified Luxury Home Marketing Specialist
He is also an active volunteer. He is the President Elect of the Durango Area Association of Realtors, and he is involved in the community and in his church. His personal interests include spending quality time with his family (wife and three children), playing tennis, fly fishing, hiking, boating, and water skiing.
Thursday, January 15, 2009
Luxury Home Sales And Residential Investment Properties May Be Affected By Lending Practices. Durango Colorado Real Estate News!
Lending practices have been significantly impacted since the financial debacle in the 4th quarter of 2008. The governments take over of Fannie Mae and Freddie Mac in September has helped to provide the lowest interest rates in decades for conforming loans, but they have not improved the lending practices and rates on loans above the conforming limit. Conforming loans are mortgage loans under $417,000.
Loans above the conforming limit are classified as jumbo loans, and they have always carried a higher interest rate, for the additional risk, and they have not been supported by the United States government. Jumbo rates are for loans over $417,000, but please note that the national conforming limit may differ in some higher priced markets, so be sure to check with your professional mortgage lender for your area. Historically, there have been pools of money raised by investment groups to purchase jumbo loans, and the rates were relatively close to the conforming limits, perhaps 1/2 % higher on average. As we know, many of these jumbo loans have fallen into foreclosure in this down real estate market, and with the loose or predatory lending practices in the news. Today, financial institutions can not easily raise the investment funds for purchasing these types of loans. Consumers have not considered them to be a safe haven, and they have not had a desire to have them in their investment portfolios. Consequently, many of the sources for jumbo loans are no longer offering them, and those that do provide for them have much higher interest rates. For example, the Wells Fargo internet site today listed the 30 year fixed mortgage conforming loan rate at 4.875%, and the 30 year jumbo rate at 7.875%, three full percentage point difference! Lets look at the difference this makes. Let's assume that we have an $800,000 home and a 20% down payment, which would give us a $640,000 mortgage. Based on todays 30 year jumbo loan rate, 7.875%, the monthly payment for only pricipal and interest would be $4,640. If this was a conforming loan rate of 4.875%, the monthly payment would be $3,387. This impacts the cost of living in more expensive homes, but it also restricts the number of buyers who can afford to purchase the more expensive homes, thus lowering the total market of buyers. It also provides a challenge for homeowners who have variable loans that would like to convert to the safer 30 year fixed loans, and can not afford to make the change. This can and will dramatically impair the upper end of the real estate market.
On a positive note, there are some options. A borrower can take out a conforming loan and a second mortgage, and often save money with a blended rate between the two mortgages. Other options include variable rate mortgages, or shorter fixed rate mortgages, such as 5 year fixed, then a variable rate. These have lower beginning rates, but place the risk of future higher interest rates on the borrower. Also, the higher end buyers often purchase homes with cash, or they don't need more than the conforming limits for loans, and so they are not subject to the lending issues.
Investment real estate lending has also been through some major changes. The most noticable is a limit on the number of mortgages to receive conforming lending. An investor can now have only a maximum of four mortgages. As before, it is possible to have more than one unit to a mortgage. For conforming loans, up to four units can be in one mortgage. This change will limit investors who invest heavily in real estate.
The second change is pricing. Historically, there has been over par pricing on non-primary residential mortgages. A borrower could pay approimately 3/8 of a percentage higher rate with no points, or they could pay approximately 1 1/2 points to get the conforming rate. A point is 1% of the mortgage amount. For example, if a loan was $300,000, a point is 1% or $3,000. (ie. If the conforming rate was 6%, they could either get this rate on investment properties by paying 1 1/2 points, or they could increase the rate to 6 3/8%, and not pay any points). Today, the choice of paying the difference in the rate does not make sense, and a borrower is faced with paying approximately 3 points with a 20% down payment, or as low as 1 3/4 points with much higher down payments.
These changes make it more difficult for some investors, but again, on a positive note, the interest rates are at their lowest rates in decades, so the monthly mortgage amounts are lower. Most importantly, investors need to be aware of the need to pay points as part of the loan.
This article has been inspired by J.R. Spies of The Mortgage Link. He is a mortgage broker with years of experience, and he is widely regarded as one of the top mortgage lenders in the Durango area. Before you make any decisions on purchasing or choosing a mortgage, please speak to a competent mortgage lender, who will provide you with the education and choices available. Please also note that your individual credit history, and credit ratings will have a big impact on your choices, and the cost of your loans. If you want to reach J.R. Spies, you can contact him at 970-259-8600, or jr@linkdurango.com.
If you would like to have further conversations on Durango Colorado real estate, please contact me, Don Ricedorff at The Wells Group 970-375-7014, don@frontier.net, or at my website at durangorealproperty.com.
Don Ricedorff is a licensed real estate broker in the State of Colorado, with 16 years of experience, and he resides in Durango Colorado. He has numerous real estate designations, which have provided him with an unparalleled education to assist his clients. The designations include:
CRS, Certified Residential Specialist
CRB, Certified Residential Broker
CCIM, Certified Commercial Investment Member
ABR, Accredited Buyer Representative
GRI, Graduate of Realtor Institute
RSPS, Resort and Second Home Property Specialist
CIPS, Certified International Property Specialist
SRES, Senior Real Estate Specialist
He is also an active volunteer in the community and his church. His personal interests include spending time with his family, playing tennis, fly fishing, hiking, boating, and water skiing.
Loans above the conforming limit are classified as jumbo loans, and they have always carried a higher interest rate, for the additional risk, and they have not been supported by the United States government. Jumbo rates are for loans over $417,000, but please note that the national conforming limit may differ in some higher priced markets, so be sure to check with your professional mortgage lender for your area. Historically, there have been pools of money raised by investment groups to purchase jumbo loans, and the rates were relatively close to the conforming limits, perhaps 1/2 % higher on average. As we know, many of these jumbo loans have fallen into foreclosure in this down real estate market, and with the loose or predatory lending practices in the news. Today, financial institutions can not easily raise the investment funds for purchasing these types of loans. Consumers have not considered them to be a safe haven, and they have not had a desire to have them in their investment portfolios. Consequently, many of the sources for jumbo loans are no longer offering them, and those that do provide for them have much higher interest rates. For example, the Wells Fargo internet site today listed the 30 year fixed mortgage conforming loan rate at 4.875%, and the 30 year jumbo rate at 7.875%, three full percentage point difference! Lets look at the difference this makes. Let's assume that we have an $800,000 home and a 20% down payment, which would give us a $640,000 mortgage. Based on todays 30 year jumbo loan rate, 7.875%, the monthly payment for only pricipal and interest would be $4,640. If this was a conforming loan rate of 4.875%, the monthly payment would be $3,387. This impacts the cost of living in more expensive homes, but it also restricts the number of buyers who can afford to purchase the more expensive homes, thus lowering the total market of buyers. It also provides a challenge for homeowners who have variable loans that would like to convert to the safer 30 year fixed loans, and can not afford to make the change. This can and will dramatically impair the upper end of the real estate market.
On a positive note, there are some options. A borrower can take out a conforming loan and a second mortgage, and often save money with a blended rate between the two mortgages. Other options include variable rate mortgages, or shorter fixed rate mortgages, such as 5 year fixed, then a variable rate. These have lower beginning rates, but place the risk of future higher interest rates on the borrower. Also, the higher end buyers often purchase homes with cash, or they don't need more than the conforming limits for loans, and so they are not subject to the lending issues.
Investment real estate lending has also been through some major changes. The most noticable is a limit on the number of mortgages to receive conforming lending. An investor can now have only a maximum of four mortgages. As before, it is possible to have more than one unit to a mortgage. For conforming loans, up to four units can be in one mortgage. This change will limit investors who invest heavily in real estate.
The second change is pricing. Historically, there has been over par pricing on non-primary residential mortgages. A borrower could pay approimately 3/8 of a percentage higher rate with no points, or they could pay approximately 1 1/2 points to get the conforming rate. A point is 1% of the mortgage amount. For example, if a loan was $300,000, a point is 1% or $3,000. (ie. If the conforming rate was 6%, they could either get this rate on investment properties by paying 1 1/2 points, or they could increase the rate to 6 3/8%, and not pay any points). Today, the choice of paying the difference in the rate does not make sense, and a borrower is faced with paying approximately 3 points with a 20% down payment, or as low as 1 3/4 points with much higher down payments.
These changes make it more difficult for some investors, but again, on a positive note, the interest rates are at their lowest rates in decades, so the monthly mortgage amounts are lower. Most importantly, investors need to be aware of the need to pay points as part of the loan.
This article has been inspired by J.R. Spies of The Mortgage Link. He is a mortgage broker with years of experience, and he is widely regarded as one of the top mortgage lenders in the Durango area. Before you make any decisions on purchasing or choosing a mortgage, please speak to a competent mortgage lender, who will provide you with the education and choices available. Please also note that your individual credit history, and credit ratings will have a big impact on your choices, and the cost of your loans. If you want to reach J.R. Spies, you can contact him at 970-259-8600, or jr@linkdurango.com.
If you would like to have further conversations on Durango Colorado real estate, please contact me, Don Ricedorff at The Wells Group 970-375-7014, don@frontier.net, or at my website at durangorealproperty.com.
Don Ricedorff is a licensed real estate broker in the State of Colorado, with 16 years of experience, and he resides in Durango Colorado. He has numerous real estate designations, which have provided him with an unparalleled education to assist his clients. The designations include:
CRS, Certified Residential Specialist
CRB, Certified Residential Broker
CCIM, Certified Commercial Investment Member
ABR, Accredited Buyer Representative
GRI, Graduate of Realtor Institute
RSPS, Resort and Second Home Property Specialist
CIPS, Certified International Property Specialist
SRES, Senior Real Estate Specialist
He is also an active volunteer in the community and his church. His personal interests include spending time with his family, playing tennis, fly fishing, hiking, boating, and water skiing.
Monday, December 22, 2008
Call Me Crazy! Durango Colorado Real Estate Forecast For 2009
Dear Friends,
Most of us are great at looking back on historic data and "explaining" how the events affected the market. I am going on record with my 2009 forecast. Of course, all of the economic indicators for the world, nation, state, and the Durango Area are quite clear for 2009, so making a forecast should be easy (kidding).
Preliminary 2008 Market Statistics:
These statistics are from the Colorado Real Estate Network multiple listing service from January 1, 2008 thru December 22, 2008 for La Plata County:
Total of 846 Properties Sold...$323,264,214 Market Volume...$382,109 Average Price...95% Sold vs List Price, and 193 Days On Market.
Residential: 681 Properties Sold...$263,395,137...$386,777 Average Price...96% Sold Vs List Price, and 176 Day On Market.
Other sold properties include: 127 Land listings, 32 commercial properties, and 6 multi-family.
These are not final numbers for 2008, and the totals will be higher as sold properties are recorded for the last days of December. Also, please understand that other properties outside of the Multiple Listing Service are not in this review or forecast.
How do these numbers compare to the highest year of transactions ever?
In 2005, the total properties sold was 1,917 as recorded by our MLS service, and of those, 1,257 were residential, 480 land, 71 commercial, 8 multi-family, and 1 farm and ranch. In total, 56% fewer properties have sold, and of those, there were 50% fewer residential listings!
MARKET FORECAST FOR 2009...DRUM ROLL...!!!
ALL PROPERTIES: 950 SOLD (APPROXIMATELY A 10% INCREASE)
MARKET VOLUME: $332,500,000 (APPROXIMATELY EVEN)
AVERAGE PRICE: $350,000 (APPROXIMATELY AN 8% DECREASE)
RESIDENTIAL: 770 SOLD (APPROXIMATELY A 10% INCREASE)
MARKET VOLUME: $277,200,000 (APPROXIMATELY EVEN)
AVERAGE PRICE: $355,000 (SAME 8% DECREASE)
AVERAGE DAYS ON MARKET UP FROM AN AVERAGE OF 176 DAYS TO 190 DAYS
SOLD VERSUS LIST PRICE DOWN FROM 96% TO 94%
Commercial will have additional vacancy rates, more properties on the market, increased days on the market, and greater price pressure, as businesses are further stretched for revenue, and consumers continue to tighten their belts.
Land sales will continue to be slow, but they will quickly rebound in 2010. In 2009, we will start to work off some of the current residential inventory, and in 2010, we will return to builders providing new inventory, thus increasing their demand for vacant land parcels.
For residential, we will see demand increase, but prices will continue to be under pressure thoughout 2009. The demand change will provide the stimulous for an exciting 2010, because the increased transactions of 2009 will reduce the number of homes on the market. By 2010, the demand should outpace supply.
November and December of 2008 have some of the lowest market transactions that we have seen in 20 years, even though the population has increased by 40% in these two decades. These low transactions are a result of the October economic turmoil, and following the difficulties of the entire year of 2008. The beginning of 2009 will continue to be slow, because the contract activity has not increased through December, and that has a direct impact on the number of sold properties in the months following. If my forecast is correct, hang in there as we will start to see things improve, and hopefully by mid-year, we will all be more enthusiastic. We will look back at October 2008 as our emotional low, and in fact, the consumer confidence index was at an all time low in that month.
If you would like to have futher conversations on Durango Colorado real estate, please contact me, Don Ricedorff at The Wells Group 970-375-7014, don@frontier.net, or at my website at durangorealproperty.com.
Don Ricedorff is a licensed real estate broker in the State of Colorado, with 16 years of experience, and he resides in Durango Colorado. He has numerous real estate designations, which have provided him with an unparalleled education to assist his clients. The designations include:
CRS, Certified Residential Specialist
CRB, Certified Residential Broker
CCIM, Certified Commercial Investment Member
ABR, Accredited Buyer Representation
GRI, Graduate of Realtor Institute
RSPS, Resort and Second Home Property Specialist
CIPS, Certified International Property Specialist
SRES, Senior Real Estate Specialist
He is also an active volunteer in the community and his church. His highest aspiration is spending time with his wife, Janet, and his three children Kelly, Katie, and Kyle. His other interests include playing tennis, fly fishing, hiking, boating, and water skiing.
Most of us are great at looking back on historic data and "explaining" how the events affected the market. I am going on record with my 2009 forecast. Of course, all of the economic indicators for the world, nation, state, and the Durango Area are quite clear for 2009, so making a forecast should be easy (kidding).
Preliminary 2008 Market Statistics:
These statistics are from the Colorado Real Estate Network multiple listing service from January 1, 2008 thru December 22, 2008 for La Plata County:
Total of 846 Properties Sold...$323,264,214 Market Volume...$382,109 Average Price...95% Sold vs List Price, and 193 Days On Market.
Residential: 681 Properties Sold...$263,395,137...$386,777 Average Price...96% Sold Vs List Price, and 176 Day On Market.
Other sold properties include: 127 Land listings, 32 commercial properties, and 6 multi-family.
These are not final numbers for 2008, and the totals will be higher as sold properties are recorded for the last days of December. Also, please understand that other properties outside of the Multiple Listing Service are not in this review or forecast.
How do these numbers compare to the highest year of transactions ever?
In 2005, the total properties sold was 1,917 as recorded by our MLS service, and of those, 1,257 were residential, 480 land, 71 commercial, 8 multi-family, and 1 farm and ranch. In total, 56% fewer properties have sold, and of those, there were 50% fewer residential listings!
MARKET FORECAST FOR 2009...DRUM ROLL...!!!
ALL PROPERTIES: 950 SOLD (APPROXIMATELY A 10% INCREASE)
MARKET VOLUME: $332,500,000 (APPROXIMATELY EVEN)
AVERAGE PRICE: $350,000 (APPROXIMATELY AN 8% DECREASE)
RESIDENTIAL: 770 SOLD (APPROXIMATELY A 10% INCREASE)
MARKET VOLUME: $277,200,000 (APPROXIMATELY EVEN)
AVERAGE PRICE: $355,000 (SAME 8% DECREASE)
AVERAGE DAYS ON MARKET UP FROM AN AVERAGE OF 176 DAYS TO 190 DAYS
SOLD VERSUS LIST PRICE DOWN FROM 96% TO 94%
Commercial will have additional vacancy rates, more properties on the market, increased days on the market, and greater price pressure, as businesses are further stretched for revenue, and consumers continue to tighten their belts.
Land sales will continue to be slow, but they will quickly rebound in 2010. In 2009, we will start to work off some of the current residential inventory, and in 2010, we will return to builders providing new inventory, thus increasing their demand for vacant land parcels.
For residential, we will see demand increase, but prices will continue to be under pressure thoughout 2009. The demand change will provide the stimulous for an exciting 2010, because the increased transactions of 2009 will reduce the number of homes on the market. By 2010, the demand should outpace supply.
November and December of 2008 have some of the lowest market transactions that we have seen in 20 years, even though the population has increased by 40% in these two decades. These low transactions are a result of the October economic turmoil, and following the difficulties of the entire year of 2008. The beginning of 2009 will continue to be slow, because the contract activity has not increased through December, and that has a direct impact on the number of sold properties in the months following. If my forecast is correct, hang in there as we will start to see things improve, and hopefully by mid-year, we will all be more enthusiastic. We will look back at October 2008 as our emotional low, and in fact, the consumer confidence index was at an all time low in that month.
If you would like to have futher conversations on Durango Colorado real estate, please contact me, Don Ricedorff at The Wells Group 970-375-7014, don@frontier.net, or at my website at durangorealproperty.com.
Don Ricedorff is a licensed real estate broker in the State of Colorado, with 16 years of experience, and he resides in Durango Colorado. He has numerous real estate designations, which have provided him with an unparalleled education to assist his clients. The designations include:
CRS, Certified Residential Specialist
CRB, Certified Residential Broker
CCIM, Certified Commercial Investment Member
ABR, Accredited Buyer Representation
GRI, Graduate of Realtor Institute
RSPS, Resort and Second Home Property Specialist
CIPS, Certified International Property Specialist
SRES, Senior Real Estate Specialist
He is also an active volunteer in the community and his church. His highest aspiration is spending time with his wife, Janet, and his three children Kelly, Katie, and Kyle. His other interests include playing tennis, fly fishing, hiking, boating, and water skiing.
Thursday, December 4, 2008
How Do You Know When You Are At The Bottom Of The Real Estate Market? This Is Your Source For Durango Colorado Real Estate News.
The quick answer is that you don't know, and I don't know if there has been a bottom to the real estate market, or when there will be a bottom to the real estate market. Perhaps the bottom was 30 days ago, or it is now or six months from now. We will only be confident after we look back. Markets are not easy to predict, but the experts generally look for the length of the downturn as compared to past recessions, and the prospects for economic recovery. Some investers choose the contrarian investment method. A contrarian believes that the conventional wisdom of the moment, and the herd mentality leads to pendulum swings beyond the current risks, which leads to overly optimistic or pessimistic behavior. This certainly was the case in the optimism of 2005, at the very height of the market, and millions of investors, speculators, builders, and developers have paid dearly for that mistake, and it may be true in the pessimism of the moment. For most people in the United States, real estate has been their single biggest and best investment. Most Americans who have owned real estate for more than five years still have appreciation in their property, and some have huge appreciation. A high percentage of the senior population count on their home as their single biggest nest egg.
The market will begin its upward swing when consumer confidence is regained. Consumer confidence affects their purchasing patterns, as discretionary spending is impacted by how consumers "feel" about their jobs, life, and security. Major purchases such as automobiles and homes are greatly impacted by consumer confidence. The Consumer Confidence Index bottomed in October 2008, an all time low, with a 38.8 index rating (1985=100), and improved moderately in November to 44.9. Perhaps the 41 year low in October will be the bottom of consumer confidence. This low level of consumer confidence suggests the real estate market will not rebound in the short term, so we are unlikely to see a major shift in the real estate market in the next six months, and perhaps longer.
From a contrarian point of view, here are the positive considerations for purchasing in the near future:
a) Interest rates are at nearly an all time low. Yesterday, Wells Fargo offered 30 year financing with no points or origination fee at 5.5% in Durango. Low interest rates spur the purchasing of real estate as low rates directly improve purchasing power.
b) Prices have fallen nationally, regionally, and locally. Astute investors and home buyers are taking this opportunity to purchase at discounted prices.
c) There is a large supply of homes on the market, which means selection is greater, and it improves the purchaser's negotiation position.
d) The national news is doom & gloom.
e) A December 2, 2008 article in The Wall Street Journal quoted an economics professor at Massachussetts Institute of Technology that he predicts house prices to increase an average of one percentage point higher than inflation over the long term, and in the same article, a survey completed by Realogy Corp. found that 91% thought that owning a home was the best long-term investment they could make.
f) The huge bail out program, and other stimulus programs should begin to improve the economic vitality in the first quarter of 2009, which may help to improve consumer confidence.
g) The real estate market has fallen for three straight years. This is longer than previous downturns.
A contrarian investor would choose a time like now to purchase real estate. There are others that will want to take a wait and see approach. How about you? What best describes you?
If you would like to have further conversations on Durango Colorado real estate, please contact me, Don Ricedorff at The Wells Group 970-375-7014, don@frontier.net, or at my website at durangorealproperty.com.
Don Ricedorff is a licensed real estate broker in the State of Colorado, with 16 years of experience, and he resides in Durango Colorado. He has numerous real estate designations, which have provided him with an unparalleled education to assist his clients. The designations include:
CRS, Certified Residential Specialist
CRB, Certified Residential Broker
CCIM, Certified Commercial Investment Member
ABR, Accredited Buyer Representation
GRI, Graduate of Realtor Institute
RSPS, Resort and Second Home Property Specialist
CIPS, Certified International Property Specialist
SRES, Senior Real Estate Specialist
He is also an active volunteer in the community and his church. His personal interests include spending time with his wife and three children, playing tennis, fly fishing, hiking, boating, and water skiing.
The market will begin its upward swing when consumer confidence is regained. Consumer confidence affects their purchasing patterns, as discretionary spending is impacted by how consumers "feel" about their jobs, life, and security. Major purchases such as automobiles and homes are greatly impacted by consumer confidence. The Consumer Confidence Index bottomed in October 2008, an all time low, with a 38.8 index rating (1985=100), and improved moderately in November to 44.9. Perhaps the 41 year low in October will be the bottom of consumer confidence. This low level of consumer confidence suggests the real estate market will not rebound in the short term, so we are unlikely to see a major shift in the real estate market in the next six months, and perhaps longer.
From a contrarian point of view, here are the positive considerations for purchasing in the near future:
a) Interest rates are at nearly an all time low. Yesterday, Wells Fargo offered 30 year financing with no points or origination fee at 5.5% in Durango. Low interest rates spur the purchasing of real estate as low rates directly improve purchasing power.
b) Prices have fallen nationally, regionally, and locally. Astute investors and home buyers are taking this opportunity to purchase at discounted prices.
c) There is a large supply of homes on the market, which means selection is greater, and it improves the purchaser's negotiation position.
d) The national news is doom & gloom.
e) A December 2, 2008 article in The Wall Street Journal quoted an economics professor at Massachussetts Institute of Technology that he predicts house prices to increase an average of one percentage point higher than inflation over the long term, and in the same article, a survey completed by Realogy Corp. found that 91% thought that owning a home was the best long-term investment they could make.
f) The huge bail out program, and other stimulus programs should begin to improve the economic vitality in the first quarter of 2009, which may help to improve consumer confidence.
g) The real estate market has fallen for three straight years. This is longer than previous downturns.
A contrarian investor would choose a time like now to purchase real estate. There are others that will want to take a wait and see approach. How about you? What best describes you?
If you would like to have further conversations on Durango Colorado real estate, please contact me, Don Ricedorff at The Wells Group 970-375-7014, don@frontier.net, or at my website at durangorealproperty.com.
Don Ricedorff is a licensed real estate broker in the State of Colorado, with 16 years of experience, and he resides in Durango Colorado. He has numerous real estate designations, which have provided him with an unparalleled education to assist his clients. The designations include:
CRS, Certified Residential Specialist
CRB, Certified Residential Broker
CCIM, Certified Commercial Investment Member
ABR, Accredited Buyer Representation
GRI, Graduate of Realtor Institute
RSPS, Resort and Second Home Property Specialist
CIPS, Certified International Property Specialist
SRES, Senior Real Estate Specialist
He is also an active volunteer in the community and his church. His personal interests include spending time with his wife and three children, playing tennis, fly fishing, hiking, boating, and water skiing.
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