Despite Choppy Economy, Wall Street Journal

Makes the Case for Buying a Home Now

Reading business headlines these days is not for the faint of heart. I’m beginning to think that my morning paper should come with the same kind of legal disclaimers and health warnings that accompany some wonder drugs: Could cause shortness of breath, heart palpitations, sleepless nights and irritability.

Recent financial articles have noted that hiring has slowed, the stock market could be in a correction, and the nation’s economic recovery may be hitting a “soft patch.” It’s no wonder that the housing market, at least nationally, has struggled to gain traction after last year’s boost from the federal tax credit.

Against this backdrop of gloomy financial and housing news, it was interesting to open the Wall Street Journal last week and see in big, bold headlines: Why It’s Time to Buy. As the Journal put it, “The clouds haven’t quite parted, but the long-term case for home ownership is looking stronger.”

Journal reporters Ruth Simon and Jessica Silver-Greenberg researched and wrote one of the most thorough and rationally analyzed articles I’ve read on the market in quite some time. Far from being Pollyannaish, they acknowledged the economic headwinds facing the market and the clouds overhead. But they also spent a great deal of time arguing the positives for buyers today as well as the long-term investment opportunities.

“Despite all the gloom…there are growing indications that it is a good time to buy,” the Journal reporters noted. “Mortgage rates, which fell to 4.55%…are near 50-year lows. Homes have become more affordable than they have been in years. According to Moody’s Analytics, the ratio of home prices to income is now 20.9% lower than the 15-year average through 2010, and 12.5% lower than the 1989-2004 average. A historic glut of homes, meanwhile, has created a buyer’s market. There were about 15 million vacant homes in the U.S. last year—some 3.1 million more than normal.”

Simon and Silver-Greenberg then said what Realtors have been telling clients: “Such conditions might not last long,” they warned. “Moody’s Analytics predicts that the number of distressed sales will begin to fall in 2013, and that prices will begin to edge upward then. Home building is at a virtual standstill, so the supply overhang isn’t likely to get much worse. Meanwhile, demographic indicators such as “household formation”—the number of new households each year—are on the rise, and promise to take a bite out of the glut in coming years.”

In their analysis, the Journal reporters looked at several financial and psychological aspects of the market and determined that the winds are shifting:

• Lending: “As rates hover near historic lows, experts expect banks to ease borrowing standards over time;
• Psychology: If prices stabilize, it could tip the balance away from fear and pull more buyers back into the market;
• Affordability: In several markets, it’s becoming cheaper to own than to rent;
• Demographics: The rate of “household formation” is expected to climb in coming years;
• Employment: The strength of the housing recovery depends on job growth. Despite some hiccups, the job market is improving in most parts of the country;

For more detail on the current market and the opportunities for buyers right now, I encourage you to read the Journal article at http://online.wsj.com/Why Now’s the Time to Buy.html

Below is a market-by-market report from our local offices:

Boulder – The reduction in new listings reflects an agent focus on closings over the last two weeks of the month as well as a continued slowdown in listings when compared to listing volumes experienced over each of the last ten years.  Homes under contract, pending and sold continue to increase with seasonal summer volumes.  However, sales in Boulder County have increased by 9.5% for the first five months of 2011 when compared to the same period in 2009.  This comparison is valid because 2010 & 2009 ended with almost identical sales and unit volumes for the entire year. 

Colorado Springs – Our showings have slowly declined over the past week, with only fifteen on the weekend.  Sales have been steady but again this past weekend was slow as we had only two sales (we usually have four to seven on any given weekend).  Listings have remained steady and since the school year is over, we expect listings to pick up throughout the summer months.

Devonshire – I believe that our figures may be weighed by the “end of month” factor on closings.  The number of showings and activity seem to be increasing around the office.

Denver Central – We’ve had some agents with multiple offers on their listings when the listings are priced correctly.  Most of those with multiple offers are priced under $300,000.  The number of under contracts slowed down the last couple of weeks.  It’s difficult to tell what the market is doing these days.

Evergreen – Our listing inventory has stabilized as the number of new listings and properties going under contract is in balance.  We had thirteen new listings for the month totaling $4,900,000.  Our showing activity declined 3% compared to April with a total of 270 showings in the month but continues across all price ranges and property types.  We had a total of seven listings that have gone under contract during the month with six buyers put under contract.

Larimer County – The Heat is On!  The Summer selling season is upon us!  Now that school is out, the 90 day countdown to getting into a new home before the beginning of the next school year has begun.  More homes are coming on the market yet multiple offers remain a prominent challenge for buyers in competitive price ranges.  Showings have rebounded from the end of the school year hiatus and our beautiful city is in full bloom.  Take advantage of all the great outdoor activities Fort Collins has to offer and enjoy this gorgeous late Spring!

Longmont - Showing activity has leveled off at a seasonal norm.  Inventory in the Longmont marketplace has increased by 10% year over year.  The average sales price is hovering right around $243,000.  This is a 7.6% increase year over year.  Attached dwellings are tracking much stronger than Single Family homes right now, their average sales price is up 14% to $185,000.  We are selling fewer homes at increased prices.  Whatever happened to supply and demand?  Homes priced well and in great condition are seeing multiple offers, some for more than the asking price.  Interest rates are low, showings are steady.  Now is the time to buy!

North Metro – The North Metro office put 76 homes on the market in May, which is up from last month but down considerably from this time last year.  The agents and their clients closed on 108 homes in May.  This figure is up from the same time last year.  We saw a slight decline in the showing activity of our listings in May but this perhaps is due to school getting out, graduations & the Memorial Day holiday.  We are busy and optimistic that the market could be changing for the better.  Many of the agents are sponsoring large garage sales in several neighborhoods throughout the North Metro area.  Look for the signs and stop by!

Parker – We have experienced a temporary slowdown after the spike two weeks ago, but activity is still high and we are taking new listings.  Looking at the developments in the Douglas County market, it is still too early to tell if the bottom of values has been reached.  Based on the interest rates, inventory and prices, this is still the best time to buy in decades!

Southeast Metro – Now that Memorial Day is behind us, it seems that there are some serious buyers ready to get into their new homes. Showings are increasing as well as offers on properties.  We’re seeing a shortage of inventory in many areas, so homes that are on the market , showing well & priced correctly are going under contract fairly quickly, often with multiple offers.  Sellers need to be aware that if they are having a lot of showings & no offers, perhaps a price adjustment is necessary.  This will help buyers get that offer in so that they don’t miss out on the home.  Open houses have seen a surge in activity so we know that the buyers are now serious & are looking with their agents or ion their own.  It’s time for sellers to get off the fence & to get their homes on the market.  With interest rates still good, buyers ready, willing and able to perform and less available inventory, let’s get homes on the market as soon as possible.  The summer season should be active for both buyers and sellers.

Southwest Metro - We are seeing a steady number of Buyers not only receiving lender approvals but also writing offers on homes.  Our listings have been consistent however we are not seeing as many listings as this time last year.  Open houses and Floor have still been a very good source of business for our agents.  Our showings have been steady with a slight increase now that graduations are done.  Our mortgage rep is still very busy with clients ready to get approved & to move forward.  We are seeing most of our activity within the $250,000 to $450,000 range.  June should be very active.

Conifer – Our listing activity has increased significantly with eleven new listings this month.  Showing activity improved with 93 showings for the month.  We had four listings go under contract and seven buyers put under contract during the month.

Loveland - Showing activity has taken another jump upwards, up 20% period over period.  Homes priced well are indeed getting showings & offers.  Multiple offers are to be expected on homes in good shape and that are priced right.  Short sales and bank owned properties are still an important part of the Loveland market.  Investors are finding good values, both for “flipping” and for rental opportunities.  Foreclosure notices (Elections of Demand) are on the decrease in the Loveland area.  The shadow inventory is still anyone’s guess.  With interest rates under 5%, this is the time to buy!

That’s it for now. Have a good week!

Chris

Despite encouraging economic and consumer reports, nation’s housing market remains a mixed bag cbwesternregion | June 1, 2011 at 10:38 pm | Categories: Uncategorized | URL: http://wp.me/pKanM-4L

It was a busy week for economic news, much of it encouraging. Perhaps the most positive data came out on Friday, showing that U.S. consumers grew more confident in May than a month earlier as declining gasoline prices helped lift Americans’ spirits.

The Thomson Reuters/University of Michigan final index of consumer sentiment increased faster than expected to a three-month high of 74.3 from 69.8 in April. Economists had forecast a reading of 72.4, the same as the preliminary figure issued earlier this month, according to the median estimate in a Bloomberg News survey.

The upward trend is encouraging for those of us in the housing market. As real estate people know all too well, consumer confidence plays a critical role in the housing market. If buyers are positive about their job prospects and the overall economy, they’re more likely to take the leap into buying a home or trading up to a larger one.

Also encouraging: U.S. corporate earnings continue to improve. In a new report, Deutsche Bank said that earnings for the first quarter beat analyst median forecast by a full 50%. Earnings for the three-month period surged 18 percent year-over-year, far exceeding the 12 percent expectation at the beginning of the quarter.

This marked the ninth consecutive quarter of sequential earnings growth. Earnings were driven by cyclical sectors such as Materials (up 55 percent), Energy (up 40 percent) and Industrials (34 percent). Altogether, revenues rose by a healthy 9 percent for the quarter, an indication that earnings were not solely driven by cost cutting, a very good sign.

But despite the overall improvement in the economy and the financial markets, the nation’s housing market overall continues to struggle to gain momentum. Pending sales of existing U.S. homes dropped more than expected in April to touch a seven-month low, the National Association of Realtors reported on Friday.

NAR’s Pending Home Sales Index dropped 11.6 percent to 81.9 in April, the lowest since September. Pending home sales lead existing home sales by a month or two. Economists, who had expected pending home sales to fall 1.0 percent last month, said bad weather in some parts of the country might have affected home shopping.

So what to make of the mixed bag? Overall, the nation’s economic recovery is moving forward, albeit at a modest pace. Nationally, the housing market is fighting to work through the overhang of foreclosed and distressed properties. It’s not easy, and will take time. But it will happen.

However, more than ever, we’re reminded of how much real estate is about location, location, location. Things are far better here in Colorado. The overall market is much more stable than elsewhere in the nation, and in some pockets, actually fairly robust.

To learn more specifically, take a look at our latest market-by-market report from our local offices:

Colorado Springs—Our market has been steady the last few weeks.  Showings have remained steady during the week but slow on the weekends.  Sales have improved over the past weeks by about 20% as buyers are taking advantage of very low interest rates.  This has caused a decrease in listings, but we expect that to change in the upcoming weeks.

Devonshire—Our showing and overall activity seem to be increasing in and around the office.  Brokers seem to be very busy with listing preparation and contract preparation. It is a little harder to gauge actual broker activity as our office construction has quite a few of our brokers working from home.

Denver Central—We seem to be steady in the downtown Denver area.  However, with FHA mortgage insurance going up on April 18th, it is affecting some of the lower end buyers and what they qualify for.  New listings are slowing down because parts of the foreclosure market are slowing down possibly because some of the banks are holding back some inventory.

Larimer County—If Pomp & Circumstance is ringing in your ears – it is certainly drowning out some of the activity here in Fort Collins.  Showings dropped quite a bit in the last two weeks as high schools & colleges captured most of the public’s attention.  While our office is taking more and more listings, the inventory at large is still substantially lower than in previous years creating pressure and limited availability in some price points. Interest rates have remained surprisingly stable in spite of the projected end of the Fed’s Quantitative Easing.  One recent development that Buyers should take advantage of is Coldwell Banker Home Loan’s single premium mortgage insurance option.  On a $210,000 loan using this program, buyers can save in upwards of $100 a month on their mortgage payments as compared to conventional PMI.  That kind of savings can really add up to more buying power!  Contact your local CB branch to get more details!

Longmont—The summer busy season has hit the Longmont area.  Buyers are attending graduations, weddings and end of school events.  Our showings have taken a dip this last reporting period.  Investors are in the market to purchase.  They are looking at bank owned properties & HUD listings for the most part.  They are shying away from short sales due to the uncertainty of timing associated with those properties.  Appraisals are once again becoming an issue in getting deals done.  It is so true that real estate is local…very local…from one subdivision to another subdivision it can make a world of difference in values.

North Metro—Many sellers are preparing their homes to put them on the market now that it is becoming the height of the buying season.  The agents in our office have already listed 60 properties this month.  Due to the competition and number of homes on the market it is so important that sellers ensure their home is staged, the yard pristine & priced correctly for the market.  Open house activity has increased as well. This month we have already placed 114 homes under contract.  This is a large increase from this time last year.  We’ve had several agents that put on Neighborhood Garage Sales.  You don’t want to miss these as many homes participate in this great event.  Visit us at the Denver Century Ride on June 11th & 12th at INVESCO Field.

Parker—The steady activity and the number of listings over the past few weeks have caused the prices in most neighborhoods to stabilize.  Although we are not at a point yet where we can declare a balanced market, it is visible.  The decline has slowed down and even come to a halt in many areas.  The continuous inclement weather has caused showings to decline slightly.

SE Metro—Here we are in the full swing of spring.  What we are seeing is that if you are out looking for homes & you see something that you like & that meets your needs, you had better get an offer in to the sellers.  Houses that are in good areas & in nice shape are selling very quickly, often with multiple offers. Now is the perfect time to get homes onto the market.  When we have a new listing in the office, we usually see more than five showings in the first week.  The consumers are really realizing that with interest rates at historic lows, now is the time to move forward.  No one can say what interest rates will do going forward.  In the upper end of the market, we are seeing houses going under contract faster than we have seen in some time.  Once again, sellers need to get their homes on the market as soon as possible.  The pent up demand is leading to a shortage of homes available for buyers so we will see prices begin to escalate.  Now is the time!

SW Metro—May started out a little slower than April however we are back on track.  Our agents have been very busy with buyers and sellers.  We are still seeing buyers actively seeking to buy homes. Our mortgage rep has been very busy these past two weeks, he is seeing a steady flow of buyers ready to buy.  Open houses have been very busy & have provided good leads.  Floor continues to be active. We’re seeing homes in the $300,000 to $450,000 range doing very well in  our market.  Interest rates are great and we are getting our message out there that a mortgage is sometimes cheaper than renting.  Our market at this time has been good & we look forward to a good spring/summer.

Denver West—We attribute fewer showings to high school activities, graduations, Mother’s Day and other events in May.  Denver West agents are still very busy listing and selling properties.  We believe that buyer’s now believe the information they received about historically low interest rates, great inventory and low home prices.  Sellers that are priced right are experiencing an offer within a week and two or three times a week we see multiple offers on properties.

Loveland—It was great to have our showing activity return to normal.  Sellers are realizing this is the time to put their homes on the market.  Potential sellers are asking for full service realtors.  They know that marketing their property is best done by a professional.  New home activity is picking up.  Builders are once again selling from model homes & offering quick build times.  We are seeing activity in Loveland by businesses ready to service the companies that will be associated with the ACE project.  It is an exciting time in Loveland and Northern Colorado.

That’s it for now. Have a good week!
Chris

Coldwell Banker Real Estate Survey Finds Spike in Gas Prices is Impacting Where Homebuyers Choose to Live cbwesternregion | May 23, 2011 at 1:43 pm | Categories: Uncategorized | URL: http://wp.me/pLh36-fU

The high cost of gasoline is not just emptying wallets, it is also impacting where consumers choose to buy a home.  According to a new Coldwell Banker survey of its network of real estate professionals, 75 percent said that the recent spike in gas prices has influenced their clients’ decisions on where to live and 93 percent said if gas prices continue to rise, more homebuyers will choose to live somewhere that allows for a closer commute to their work.

Out of those who said gas prices affect where consumers want to live, being closer to work was the leading consideration.  Drive time and racking up miles en-route to the office caused 89 percent to say buyers look for homes closer to work.  Forty-five percent are seeing buyers choose homes closer to shops and services as a result of increasing gas prices.

Some buyers are skipping the commute altogether.  More than three quarters of the real estate professionals surveyed (77 percent) said more buyers today are interested in having a home office compared to five years ago, and 68 percent of those respondents said that they believe the high cost of gas contributes to this new work-from-home trend.  Currently, there are more than 25,000 homes available on coldwellbanker.com that include “office” as part of the listing description.

“The decision to buy a home has always been tailored around the personal, multi-faceted lifestyle needs of each buyer,” said Chris Mygatt, president of Coldwell Banker Residential Brokerage.  “Today, rising fuel costs and a person’s decision to commute, or perhaps work remotely, are additional factors of the decision home buyers must consider.”

One trend continuing to rise in popularity, partly because of the gas price phenomenon, is the interest in urban living. Fifty-six percent of the real estate professionals surveyed said that they are seeing more homebuyers interested in urban living compared to five years ago. Of the subset that recognized this trend, 93 percent strongly agreed or agreed that one reason is an increased interest in shorter commutes. Eighty-one percent of these respondents also strongly agreed or agreed that the desire to reduce spending on gas is a factor.

According to those who have seen an increased interest in urban living, other reasons behind this trend are:

• Having everything at your fingertips (91 percent strongly agreed or agreed)
• Being able to walk to places (76 percent strongly agreed or agreed)
• Being near public transportation (52 percent strongly agreed or agreed)

Methodology: Coldwell Banker Real Estate conducted an online survey among 1,188 Coldwell Banker real estate professionals across the United States about the impact of gas prices on home buying decisions and trends surrounding urban living. Some answer percentages in the above may not total 100 percent, if only the most popular responses are listed.  In other cases, respondents had the option to check all that apply, which may mean that percentages total more than 100 percent.

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As we head into the heart of this year’s spring season, I thought it would be helpful to share what we are seeing from a national perspective in the housing market and point out a few reasons for optimism in the months ahead.

Bruce Zipf, president and CEO of NRT, our national parent company, said this week that despite trailing last year’s pace, our overall business results have managed to exceed expectations, thanks in large part to a surprisingly resilient high-end market.

Our company’s agents across the country closed 32 homes over $10 million in March, up from 10 last year and just six in March 2009. The total number of homes sold over $2 million is up 12%. There was particular strength in the luxury segment of the market in the Northeast, Florida and in California.

Normally, we judge the strength of the housing market by looking at current sales volume against the same time last year to gain a sense of how things are improving. But we couldn’t properly compare data from this March and April due to the artificial stimulus effects of last year’s Home Buyer Tax Credit. In May, these effects should lessen and give us our first true glimpse of the market’s strength.

Nonetheless, I’m optimistic that we’ll continue to see improvement in the market as we head into the heart of the spring buying season, especially right here in Colorado. Many of our local offices report seeing growing momentum from buyers looking to take advantage of mortgage rates while they’re still low, as well as prices that remain affordable.

In a number of our markets, we continue to have more qualified buyers than listings. This situation is resulting in multiple offers for many attractive homes, often bidding up the sale price over the asking price. Buyers are coming in with a lot of cash or all cash to win out the competition. My how things have changed since the depths of the recession!

This is not to say that every market around Colorado is experiencing the same strong buyer demand. Certainly a number of communities and even neighborhoods within those communities have more balanced markets, and some homes continue to sit while others sell briskly. But in general, we’re seeing well-presented, well-priced homes selling much better today than they did a couple of years ago.

Another reason for my optimism is that mortgage rates are likely to remain affordable for some time to come. I know a lot of market-watchers were concerned that the Fed could ratchet up interest rates soon in response to inflation fears and the end of the government’s bond-buying program. But Fed Chairman Ben Bernanke largely put those fears to rest in his first-ever press conference last week.

Although Bernanke signaled the end of its $600 billion bond-buying program, as expected, he made it very clear that he isn’t inclined to raise interest rates for a long time unless the inflation outlook worsens.  More than anyone, the Fed chairman is very aware that the economy continues to face headwinds in the form of high unemployment levels and a tepid housing market in many parts of the country. While things are certainly getting better, Bernanke isn’t likely to do anything to douse the nascent recovery.

So as we look to May and the summer season before long, there are many reasons to be encouraged that our housing recovery will continue to gain traction – especially here Colorado.

Below is a market-by-market report from our local offices:

• Boulder—Listings are down over the two week period & we are getting comments from agents that there is not enough selection in the upper end of the price range.  The number of contracts remained steady over the two week period while the number of showings increased by 15% over the past two weeks.  All three indicators add up to indicate continued cyclical growth as we move into the busiest months of the year.
• Colorado Springs—Our showings were up 25% even with the holiday as a lot of showings were set for Saturday.  Our listing inventory has remained the same because many of our buyers do not want to purchase a short sale (mortgage holder must approve the contract & that can take from 5 to 10 weeks).  Because of that our sales were down 20% from past weeks. This coming week is jam-packed with economic reports that can have a big impact on the markets & home loan rates which still remain at an all time low.
• Southeast Metro—Well, here we are at the end of April and real estate activity is in full swing.  We have seen consistent increases in showings on all of our listings, even those in the higher price points.  Buyers are finding that if they find a property that meets their criteria, they had better get an offer in or they have a very good chance of losing that home to another buyer as listing inventory has dropped somewhat.  In the upper end of the market, we also see consumers making buying decisions.  Days on the market has dropped slightly.  We encourage sellers in all price points  to get their homes ready by doing the cosmetic fixups that will make their homes stand out from the others on the market – fresh mulch and flowers for great curb appeal as well as updates of paint colors, decluttering and staging the interior of their homes.  Interest rates are still very appealing so now is the time for both sellers and buyers.  We’re looking forward to a much improved real estate season as we move into spring and summer.
• Denver Central—At our downtown, Denver Central office we have been pretty steady for the last couple of months.  However, these last two weeks our under contracts have almost doubled.  We think a lot of buyers are getting off the fence right now.  Our listings are beginning to drop off some. Our agents have a good positive attitude about the market.
• Larimer County—Activity is still brisk with our office showing data increasing week over week.  There are numerous reports of multiple offers on well-priced homes & while the sales pace has slowed somewhat, it appears to be more Easter/Passover/Graduation related than anything on the economic front.  The business news for Northern Colorado remains on the positive side as local companies have shown positive quarterly earnings & slow but steady signs of growth.  Housing inventory levels remain at 10 year lows which will certainly help minimize the downward pressure on prices – but serious Sellers must be aggressive & take a hard look at the market to ensure that when their home goes on the market, it is priced to get the attention of the Buyers that are ready to buy right now.  Interest rates are relatively steady but creeping upward which can begin to limit a Buyer’s purchasing power.  The best bet is to contact a Coldwell Banker Home Loan mortgage advisor & get locked in on a great rate right now!
• Longmont—Activity is happening in the Longmont market!  Showings are up to usual Spring levels.  The agents holding Open Houses are seeing good traffic.  Educated buyers realize this is the time to purchase.  Short sales and foreclosures are still a part of this market and they are impacting some neighborhoods in a large way.  Financing for the marginal buyer continues to be a challenge, however the well qualified purchaser has some great financing options.  First time buyers are finding great values here in Longmont.
• 

  Parker—The last couple of weeks have been very active again.  Our listing inventory is decreasing and our agents are writing more contracts every week.  Forecasts tell us that the interest rates are expected to go up by a full percent by the end of the year which makes now the time to buy and to invest!  Also, if the inventory continues to decrease, prices will be more stable and begin to go back up!

• Devonshire—I believe that market activity seems to be improving based on the number of showings and contracts written.
• Southwest Metro—There is great activity in our office.  We are seeing buyers & sellers and they are ready to make their move.  Interest rates at this time are still very good and I feel that buyers are realizing that they need to get moving before rates begin to creep up.  The majority of sellers are pricing their homes to sell in this market.  Showings have been steady and open houses have been great.  We had three clients walk in looking to buy & our floor agents have been successful in converting these to actual deals.  We’re looking forward to a good Spring season.
• Denver West—We have properties that have been on the market for sale for a year that are now receiving offers. Although the price has been adjusted down, it is clear that more buyers are in the market place.  Even though there is substantial inventory, oftentimes there is not “good” inventory.  Many homes in the 30+ age bracket desperately need new kitchens and bathrooms in order to help them to sell.  Typically, buyers want to move into a home that is “move in ready” or they want a real bargain if they need to do the updating.
• Loveland—The Loveland news that ACE (the NASA spinoff) is still huge news for Northern Colorado, Loveland in particular.  We are seeing more new home builder activity.  The price of these homes is mostly at the entry level for housing.  The builders are delivering a great product for the price!  Showing activity is inching up slowly but it is going in the right direction.  The general mood is that Loveland is poised to make a great recovery by the end of 2011.  If you are a buyer, looking for a bargain now is the time to be shopping!

That’s it for now. Have a good week!

Chris Mygatt

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Home Sweet Homeowner Tax Benefits cbwesternregion | March 14, 2011 at 3:15 pm | Categories: Uncategorized | URL: http://wp.me/pLh36-cX

So you’ve taken the plunge and bought a new home, capitalizing on today’s low interest rates and attractive home prices. Your new house or condo will undoubtedly bring you and your family much happiness in the years ahead – especially when it comes time to pay your taxes.

As the April 15 federal and state tax deadline rapidly approaches, homeowners shouldn’t forget the many tax benefits that are available to them. The good news is that you can deduct many home-related expenses, and the savings on your taxes can easily add up to thousands or even tens of thousands of dollars.

Filing your tax return may become a little more complicated. Instead of filling out the simple IRS form 1040EZ you’ll need to file the 1040 long form and Schedule A, on which you will list all your deductable homeownership expenses. But the extra time will pay off in valuable savings.

Because the tax rules for homeowners are more complicated, I recommend you consult with a tax professional before deciding what you can and cannot deduct. But in general, you can figure on a number of significant tax breaks associated with homeownership, including:

• Mortgage interest. The biggest tax break is reflected in the house payment you make each month since, for most homeowners, the bulk of that check goes toward interest. In most cases, the interest homeowners pay is deductible. This may mean a reduced tax bill overall and a bigger refund.
• Property taxes. As a homeowner, you are entitled to deduct payments of real estate tax on your property if you claimed itemized deductions on your tax return. The IRS allows you to deduct real estate taxes on your primary residence and any other homes you own.  There are no limits on the dollar amount of real estate taxes you can deduct.
• Loan deductions.  When homeowners borrow against the equity of their home to finance other investments, the interest they pay on the new loan is also tax deductible, within IRS guidelines. Generally, equity debts of $100,000 or less are fully deductible.
• Vacation homes. Tax breaks aren’t just limited to your primary residence. If you’re fortunate enough to have a vacation home, you can the mortgage interest on that property is fully deductible, too, within IRS guidelines. You can even rent out your second property for a short period of time and still take advantage of the deduction. But be careful – renting it out too much could turn it into a rental property with different tax rules.

• Homeowner exemptions.  Depending on where you live, certain real estate property tax exemptions apply. Homeowners should check with local tax consultants to see if they, or their home, are eligible for any additional exemptions.
• Improvements on your residence: While you generally cannot deduct improvements to your home on your taxes, such items can lower your tax bite down the road. Improvements such as a family room addition, a kitchen makeover, or a pool increase the “basis” of your home – i.e., the purchase price plus improvements. When you go to sell, the higher your basis is, the less you will have to pay in capital gains taxes if you pay at all.
• Tax-free profits.  The government allows homeowners to keep tax-free profits from the sale of a home that has been their primary residence for at least two years.  Single taxpayers don’t owe taxes on the first $250,000 of profit from the sale of a principal residence, while married homeowners get $500,000 when filing jointly.

These tax savings can add up quickly. On a $500,000, 30-year mortgage loan at 5 percent, for example, a homeowner would end up paying nearly $25,000 in the first year in interest alone. At a 33 percent federal and state income tax rate, the mortgage interest deduction alone would save more than $8,200 in that tax year! But again, tax laws are complicated and everyone’s tax situation is different. Consult your tax professional to see how the rules apply to your situation.

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The Oracle of Omaha is bullish on housing – and he may not be alone cbwesternregion | March 4, 2011 at 9:41 pm | Categories: Uncategorized | URL: http://wp.me/pKanM-47

When Warren Buffett talks, people listen. In particular, the Oracle of Omaha gets investors’ attention when he issues his annual Berkshire Hathaway shareowner letter, a frank and enlightening assessment of the economy and investment outlook. What jumped out in this year’s letter released last week: Buffett is bullish on housing again, and he’s putting his money where his mouth is.

In his letter, Buffett notes that, “a housing recovery will probably begin in a year or so. In any event, it is certain to occur at some point.” He said that “home ownership makes sense for most Americans, particularly at today’s lower prices and bargain interest rates,” adding, as an aside, that “the third best investment I ever made was the purchase of my home.” The first two, he says, were wedding rings.

Consequently, Buffett told shareowners, he has made several strategic investments in the housing sector in recent months. Among these are five corporate acquisitions in the building components field, a $50 million acquisition of a brick manufacturer, a new $55 million roofing plant for Johns Manville, and $200 million capital expansion of his Shaw Industries carpet company.

“Buffett doesn’t spend money unless he thinks he’s going to make money,” Jeff Matthews, hedge fund manager and author of Pilgrimage to Warren Buffett’s Omaha, said in a recent interview. Matthews said Buffett’s housing bullishness is “interesting because that didn’t happen last year and didn’t happen the year before that.”

The legendary chairman of Berkshire Hathaway isn’t the only one suggesting a turnaround in housing may be at hand. The Wall Street Journal ran an article recently headlined, “Why 2011 May be the End of the Housing Crash.” The Journal gives a number of reasons as to why we may have seen the bottom, including the fact that housing is the most affordable it has been in decades.

Nationally, the cost of a house is the equivalent of about 19 months of total pay for an average family, the lowest level in 35 years, Moody’s Analytics says. Prices usually average close to two years’ pay, although that varies nationally.  At the peak, midway through the last decade, a home in Los Angeles, the Journal said, cost the equivalent of 4.5 years’ pay. The average price has since fallen to just over two years’ income now. That’s well below its pre-bubble average of 2.6 years.

“Pricing is down so much in some markets that when you analyze renting versus owning it makes much more sense to own,” says Michael Larson, a real-estate analyst at Weiss Research in Jupiter, Fla.  Such analyses are “definitely bullish,” the Journal said. “Housing prices will probably bottom in 2011,” agreed Scott Simon, a managing director at money-management firm Pimco in Newport Beach. His views are important because Simon foresaw the housing crash, helping his firm dodge losses that plagued Wall Street.

The Journal also points out that investors are stepping up to buy real estate, which is usually another sign that the market has bottomed out or is near a bottom. In some instances, they’re paying entirely in cash. “That’s a far cry from the heady bubble days when borrowed money seemed the key to riches,” the paper reported.  “It’s a sign that these investors are betting on a rebound.”

What to make of all this? It gives me reason for optimism that the real estate market in general – and the Colorado market in particular – may see much brighter days in 2011. As the economy continues to mend, it’s reasonable to expect some of the greatest economic gains will be seen locally thanks to our diverse economic makeup. That bodes well for our local housing market.

Below is a market-by-market report from our local offices:

Boulder—While new listings are down for the two week period by 12%, the Boulder office saw an increase in listing inventory.  Active backups and pendings saw a very slight decrease over the two week period.  Closings saw the largest decrease, however the first two weeks of February close 66% of the transaction closed during the heavy closing period of the month ending two weeks previous period.  This indicates more closing volume in February 2011 when compared to the previous month.

Colorado Springs—Our market has been slow the past few weeks.  Showings have dropped 20% with very few showings on the weekend.  This is a surprise because our showings were strong throughout January.  Sales have also slowed down with most buyers not wanting to go under contract with a house that is listed as a short sale.  Listings have also decreased as most sellers are waiting until spring to put their homes on the market.

Denver Central—Our activity is still doing very well.  The number of contracts written has nearly doubled from the two weeks previous.  Listing inventory has picked up however, and has tripled from two weeks before.  The number of buyers is increasing but so is the inventory.

Evergreen—We had two new listings that went on the market so far in February.  Our listing inventory has started to increase as both new sellers as well as past sellers are beginning to put homes on the market.  Four listings went under contract and six buyers have been put under contract for the month to date.  Showing activity has been impacted by severe cold & snowy weather during the first two weeks of the month with only 70 showings for the month to date.  Activity has been in all price ranges, including two buyers under contract on properties in excess of $500,000 and on all property types; single family homes, condos & vacant land.

Longmont—Don’t you just wish you had a magic crystal ball to tell the future?  Now, more than ever the housing market is local, local, local.  We are seeing price increases in one subdivision and price decreases in another subdivision.  Short sales continue to make the market stats move dramatically in a short period of time.  Most short sales and bank owned properties are subject to multiple offers.  If being one in a number of competing offers and waiting for the “bank” to reply is not in your home buying strategy, look at the well priced & usually well maintained homes that are also on the market.  Great deals are out there.  Now is the time to put your home on the market & beat the Spring rush!

North Metro—We saw slightly decreased activity in the month of January but it is picking up in February.  Could be due to the frigid cold weather?  Our Agents continue to list around 30-80 homes per month with a slight decrease in the number that are in a short sale situation.  Activity at open houses is picking up as is the number of floor calls coming into our office.  Our average sales price is $261,000 at this time, however we are beginning to see an increase in the number of Luxury homes ($500,000+) beginning to sell.

Southeast Metro—Here we are nearing the end of February and things are very busy here at the SE Metro office.  Not only have showings increased, but open houses have had more visitors & sellers are realizing that it is time to get their homes onto the market before they have more competition with other homes.  With the little bump in interest rates that we saw last week, it has prompted some buyers to get out there & look at homes sooner rather than later.  Thus the surge in activity, we believe.  Now is the time for sellers to be doing all of the maintenance items & sprucing up of their homes in anticipation of a quick sale once they get their homes listed.  This spring promises to be a busy time for all of us & we are anticipating it to be better than last year.

Denver West—Denver West agents are still listing and selling many short sale properties.  The odds of closing has increased tremendously with the use of a short sale negotiating company.  Nice weather increased attendance at open houses.  Many buyers are taking every relevant step towards a successful purchase.

Conifer—We’ve had three new listings so far during the month of February.  Our inventory has stabilized as fewer homes are being withdrawn and both new and past sellers are beginning to put homes back on the market.  Showing activity continues to increase with 51 showings this month despite several periods of cold and snow.

Loveland—The winter deep freeze that we experienced did not help home showings or sales BUT the good news is that the usual Colorado winter weather has returned.  It is safe to go house hunting again!  We have buyers who are looking and looking and looking & are not finding what they want right now.  They are looking for well maintained homes priced competitively.  Now is the time to list your home.  Short sales and bank owned properties are still having an impact on our market in certain locations.  Investors are buying in the market…a good sign for all of us.