Four Big Questions

With the elections behind us, I wanted to share the following article that offers some topics that will be of interest in the months and years to come.

Four big questions about real estate market

Philadelphia Business Journal by Natalie Kostelni, Reporter

With the election over, several real estate issues continue to face the national and local economy. It will take the next year to two years to see how things ultimately shake out and much of that depends on how politicians handle them.
Here are some of topics to track:
• One: The housing recovery and whether it will continue. Recent national and local data indicate that sales are up, prices steady, inventory down and the number of days a house is staying on the market before selling is on the decline. A new poll by FindLaw.com shows that Americans are feeling better about the housing market and the percentage of those who are more likely to buy a house has risen 11 percent from 8 percent.
• Two: Will the construction industry continue its sluggish but steady recovery and what, if any impact, will Hurricane Sandy have on the sector and economy? A Hanley Wood survey of 3,000 builders, architects, building supply distributors and others in the industry revealed that three in 10 expect a “strong economy” by the end of 2013, and over half feel the economy will be “vastly improved” by 2015.
• Three: The Housing Alliance of Pennsylvania is keenly watching what will happen to federal funding for affordable homes, community development and homelessness. The Department of Housing and Urban Development funnels much of its money to local agencies. In 2010, HUD awarded Pennsylvania $1.8 billion, according to the Housing Alliance of Pennsylvania. Both public and private property owners benefited from that money, which supports such programs as Community Development Block Grants.
• Four: Will multifamily continue to be a leading area for commercial real estate activity and what will ultimately happen with Fannie Mae and Freddie Mac? Lawmakers on both sides of the aisle, as well as the president, want to unwind and replace them.

La Plata County Residential Statistics Thru October 31

Good morning.
Below are the latest statistics for the La Plata County real estate market through October 31, 2012.

Please contact my office with any questions you may have or assistance we may provide.

Statewide Numbers & Home Price Increases

The Colorado Association of Realtors released the 3rd Quarter statistics for the state this week.  The Colorado Real Estate market showed a 14.5% increase in home sales compared to the 3rd Quarter last year (23,987/20,943) and an increase in the median price of 12% ($224,000/$200,000).  The year-to-date comparisons statewide show similar numbers with home sales showing an increase of 14.6% (64,993/56,718) and median price increasing 10.1% ($218,000/$198,000) over last year.

In La Plata County, the statistics show a 21% increase in home sales compared to the 3rd Quarter last year (253/209) and an increase in the median price of 0.6% ($310,000/$308,000).  In the year-to-date comparison, the numbers are a bit different with sales showing a 15.3% increase (609/528) but the median price showing a decrease of 2.6% ($308,000/$300,000).  The 3rd Quarter statistics show that the median price has begun to recover, similar to other areas of the state.  Source: Colorado Real Estate Network

Home prices rise for fifth month in a row

@CNNMoney October 30, 2012: 10:50 AM ET

NEW YORK (CNNMoney) -- The housing market picked up more momentum in August, as the average home price for 20 major cities jumped 0.9%, according to the S&P/Case-Shiller home price index
The increase marked the fifth consecutive month of gains for the index with all but one city, Seattle, recording month-over-month price increases.
"The sustained good news in home prices over the past five months makes us optimistic for continued recovery in the housing market," said David Blitzer, spokesman for S&P.
The Case-Shiller report is one of many gauges of housing market health that has turned upbeat in recent months. New and existing home sales have been stronger, inventory of homes for sale has fallen and developers have stepped up building activity.
Slow improvement in the national economy has also boosted the housing market, as have record low mortgage rates. The rates for a 30-year loan have stayed below 3.7% since May. Combined with home prices that are still about a third less than they were when they hit their peak, these record-low rates have made homebuying very affordable.
Of the cities S&P's index covers, Phoenix has roared back the fastest, with a whopping 18.8% year-over-year gain in August. That marks the fourth month in a row of double-digit price hikes. Detroit prices rose 7.6% over the past 12 months and Miami's grew 6.7%.
Mike Larson, a financial analyst with Weiss Research, remains cautious about the outsized gains in Phoenix and some Florida markets. Much of the return represents "a resurgence in investor demand," he said. Investors now represent about 27% of the home purchases in the market, according to data from the National Association of Realtors.
Most of these buyers are looking to take advantage of beaten down prices so they can rent out the properties at a healthy profit, he said.
"The fly in the ointment is that these buyers lack emotional attachment," said Larson. So unlike regular homeowners, they will likely not stick with the homes should the market head South again.
Among the three cities to have year-over-year losses, Atlanta recorded the biggest decrease in home values, with prices down 6.1%. New York was down 2.3% and Chicago fell 1.6%.
Rising prices are expected to continue, leading some economists to predict the housing market has finally turned a corner.
"Looking forward, price increases will continue," said Jed Kolko, chief economist for Trulia. His company has more recent data, for September and October, that shows asking prices on homes have risen.
"Prices on Election Day will be almost the same as when Obama took office, probably just 1.7% below where they were in January 2009," he said.

Hope you have a wonderful weekend in store.

Don Ricedorff, Broker Associate, GRI, CRS, CCIM, ABR, RSPS, CDPE

E-Mail:  don@durangorealproperty.com

Direct:  970-375-7014

Fax:  970-259-5007

Web:  www.DurangoRealProperty.com

Member of Rocky Mountain Commercial Brokers
http://www.rockymtncommercial.com/

A New Housing Boom

So far, 2012 has been a solid year for real estate in the Durango area.  While we have seen transactions up, we have yet to see a turnaround in prices.  However, as we head toward 2013, the trends seem to show that prices should start increasing. 

A new housing boom

By Chris Isidore @CNNMoney
NEW YORK (CNNMoney) -- The long-battered housing market is finally starting to get back on its feet. But some experts believe it could soon become another housing boom.
Signs of recovery have been evident in the recent pick ups in home prices, home sales and construction. Foreclosures are also down and the Federal Reserve has acted to push mortgage rates near record lows.
But while many economists believe this emerging housing recovery will produce only slow and modest improvement in home prices, construction and jobs, others believe the rebound will be much stronger.
Barclays Capital put out a report recently forecasting that home prices, which fell by more than a third after the housing bubble burst in 2007, could be back to peak levels as soon as 2015.
"In our view, the housing market had undergone a dramatic over-correction during the prior five years, resulting in pent-up demand for housing purchases that would spark a rapid rise in housing starts," said Stephen Kim, an analyst with Barclays, in a note to clients.
In addition to what Kim sees as a big rebound in building, he's bullish on home prices, expecting rises of 5% to 7.5% a year.
Construction is expected to be even stronger, with numerous experts forecasting home construction to grow by at least 20% a year for each of the next two years. Some believe building could be back near the pre-bubble average of about 1.5 million new homes a year by 2016, about double the 750,000 homes expected this year.
"We think the recovery is for real this time around," said Rick Palacios, senior analyst with John Burns Real Estate Consulting. "If you look across the U.S. economy right now, there are only a handful of industries looking at 20-30% growth over the next 4-5 years, and housing is one of those."
Home builder stocks are up 162% in the last 12 months, led by a 250% jump at PulteGroup (PHM). Other leading builders including DR Horton (DHI), Toll Brothers (TOL), KB Home (KBH) and Lennar (LEN) have all seen their stocks more than double over that time. New orders at publicly-traded builders are up 30% since January, according to Kim.
Palacios said stocks in other sectors, from manufacturers of drywall to flooring to kitchen and bath fixtures, have all more than doubled as well this year.
The housing rebound can have a ripple effect that could help get the entire economy growing at a much stronger pace, which will add to more demand for housing.
"That turn in the [housing] market is occurring now and it should become a boom by 2015. It will be powerful enough ... to lift the entire U.S. economy," said Roger Altman, chairman of Evercore Partners and former deputy Treasury secretary, in a column for the Financial Times.
Altman said he expects housing will add 4 million jobs to the economy over the next five years, as pent-up demand for home purchases drives building and and home prices higher.

Presentation By Dr. Lawrence Yun

 The Wells Group recently had the opportunity to have Dr. Lawrence Yun, the National Association of Realtors' chief economist, speak at our annual broker retreat.  I wanted to pass along the information from his presentation to you. 

 http://donricedorff.com/Dr-Yun-RealEstate-Economic.pdf


As always, if I can be of any help or answer any questions, please feel free to contact my office.

Top Ten Things To Know About The 3.8% Tax

There has been a lot of talk recently about the 3.8% tax that is part of the Affordable Health Care Act and how it will affect real estate transactions when it goes into effect in 2013.

The tax itself is complicated and will not affect all real estate transactions.  Rather, when the legislation becomes effective, it may impose a 3.8% tax on some (but not all) income from interest, dividends, rents (less expenses), and capital gains (less capital losses).  Below is a publication from the National Association of Realtors with a breakdown of the top ten things you'll need to know about the new tax.

Of course, each situation will be unique.  Below is a link to a more comprehensive look at the tax which includes some examples of how it may be applied.

http://www.ksefocus.com/billdatabase/clientfiles/172/8/1437.pdf

As always, please feel free to contact my office with any questions you may have.

Don Ricedorff, Broker Associate, GRI, CRS, CCIM, ABR, RSPS, CDPE

E-Mail:  don@durangorealproperty.com

Direct:  970-375-7014

Fax:  970-259-5007

Web:  www.DurangoRealProperty.com
Member of Rocky Mountain Commercial Brokers
http://www.rockymtncommercial.com/

Durango Colorado Homes Appreciation Is 3% Per Year For Past 10 Years

It is beneficial to look at long term results when we are confused with the short term data we receive.  The following graph shows the median price by year, with the percentage increase or decrease of appreciation by year.  This information is specifically for Durango Colorado single family in-town homes.  It is easy to see the real estate "bubble" in 2004-2006, and the low level of appreciation and depreciation in subsequent years.

The overall appreciation for the Durango homes has been 3% per year, and it is my opinion that we will begin to see steady appreciation in the next few years for the in-town homes.  This opinion is based on the significant drop in availability of homes on the market, and the continued vibrancy and desirability for living in Durango.

In the news today, it was announced that the Blackstone Group LP is the biggest investor of rental homes in the United States, and they have purchased 6,500 homes in eight markets, and they have spent more than $1 Billion in 2012!

Buyers should consider purchasing now, whether it is for their primary home or for an investment home.  I am following this same advice; I have recommended to my daughter and her husband to buy a home in 2012, and they have since purchased one.  I have given the same advice to our second oldest, and they have not yet completed a purchase.  My wife and I recently purchased a duplex in our self-directed IRA's, and we have made another offer on an investment home this week that was not accepted.