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October 27, 2009

October 2009 Summit County Real Estate.Net Notices

"I DO NOT THINK MUCH OF A MAN WHO IS NOT WISER TODAY THAN HE WAS YESTERDAY." Abraham Lincoln. Now more than ever, it's important for our country's leaders to heed yesterday's lessons and make wise choices today for our banking system and the economy. There were several key developments that happened on this front last week - here are some highlights.

On Thursday, the Securities and Exchange Commission's (SEC) Chief Accountant, the Financial Accounting Standards Board's (FASB)

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Forecast for the Week


There are only a few economic reports due out this week, but that doesn't mean it won't be an exciting week. The action kicks off with the ISM Services Index on Monday morning. This report is typically less of a market mover than the ISM Manufacturing Index that came out last week, but with so few reports due out this week, the markets may be watching it closely.

Thursday will bring another weekly Initial Jobless Claims report. This weekly report continues to be important to watch as the job market plays a key role in our economic recovery. In last week's report, Initial Jobless Claims increased by 17,000 to 551,000-which was higher than the 535,000 expected. Such huge numbers underscore the weakness in the labor market.

Finally, on Friday the Balance of Trade for August will be reported. Expectations are that the trade deficit will be reported at -32.9 Billion. Remember, a negative balance of trade-or a trade deficit-occurs when imports surpass exports.

Despite the small number of economic reports, the markets may see some volatility as the Treasury Department auctions off longer-term maturities this week, which are competitive with Mortgage Backed Securities. With the Fed scaling back their purchases of Mortgage Backed Securities, there may be less support for Mortgage Bond prices, so this week's auction could result in more of a wild ride than previous auctions.

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And those aren't just the words from Paul McCartney's hit song of the same title...they're also words of advice for anyone who's considering buying a home or refinancing. Last week, Federal Reserve Chairman Ben Bernanke said that as the economy heals, the Fed will be very vigilant to protect against inflation. While inflation is not a problem at present...it will most certainly become a problem down the road. So why does this matter if you are considering purchasing or refinancing? Because inflation is the arch-enemy of Bonds and home loan rates, and just the knowledge of it coming has been causing both Bonds and home loan rates to worsen in recent days. Along with the fear of inflation, the Fed's purchasing program of Mortgage Backed Securities is already slowing down, with the end of their buying in sight - and the reduced demand for these Bonds is also driving home loan rates higher.

Bottom line: home loan rates are already on the rise, and we won't likely see these low historic levels again.

Interest rates are still very near historic lows - George Washington couldn't have gotten a better interest rate - and the opportunity these low rates present is huge for homebuyers or people looking to refinance. If we haven't talked recently about your own home loan situation - or if you have a friend, family member, neighbor or coworker who needs advice - please call or send me an email. There's no time to waste.

On the topic of inflation


Gold has been on a tear higher of late, reaching a record high of $1048 an ounce. Remember that Gold is seen as a "safe harbor" or hedge against a falling Dollar and inflation - as Gold is not likely to lose much value in periods of rising prices. Again, fears of future inflation are pervasive, particularly in light of the massive economic stimulus that has been injected into the US economy...and inflation will drive home loan rates higher. The latest spike in Gold is more likely attributable to the Dollar's recent decline, but both factors are somewhat at play.

Also last week, the Initial Jobless Claims Report came in better than expected. According to the report, 521,000 new applications for unemployment benefits were received. That number was lower than the 540,000 that were expected, and marked the fewest number of new claims since the first week in January. However, that good news must be tempered by a look at the big picture...the reality is that despite a better-than-expected number, more than half a million people per week are still applying for new unemployment benefits. That's a sign that the labor market is still very weak. In fact, just last week former Fed Chairman Alan Greenspan also commented that he sees unemployment rising beyond 10%.

IN LIGHT OF THE ONGOING WEAK LABOR MARKET, NOW MAY BE A GOOD TIME TO MAKE SURE YOU'RE DOING EVERYTHING YOU CAN TO BE AS PROFICIENT - AND EFFICIENT - AT YOUR JOB AS POSSIBLE. TAKE A LOOK AT THIE MORTGAGE MARKET GUIDE VIEW ARTICLE FOR HELPFUL INFORMATION ABOUT A BETTER WAY TO EVALUATE YOURSELF AND MAKE IMPROVEMENTS WHERE NECESSARY.

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The Fed's recent decision means that their remaining purchases will all be lower in quantity, as the remaining allotment for purchases will be spread over a longer period of time - and additionally, will not necessarily be spread out as evenly as their past purchases - which could lead to more volatility for rates in the near term. In other news, Existing Home Sales and New Home Sales were reported slightly less than expected, but both reports continue to show signs of an improving housing market. The inventory of unsold existing homes fell to its lowest inventory level since April 2007, while the inventory of unsold new homes dropped to its lowest level since January 2007. While some of the decline in new home inventory may be due to builders constructing fewer homes - these reports indicate that the housing market is indeed showing signs of life. Remember, with home loan rates still low - but slated to increase with the Fed's recent decision - as well as a juicy tax credit for First Time Home Buyers that is going to expire on November 30th, it makes sense to get off the fence if your clients have been considering a purchase or refinance. Or do you have a family member, neighbor, friend or coworker who might benefit from getting some good home loan advice? We are always glad to get your referrals, so simply let us know who we might be able to help.

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PV systems are clean, quiet, and produce energy with no emissions into our environment.

Innovative Energy, a solar and wind power company based in Breckenridge, Colorado, explains that the semiconducting materials used in solar cells are similar to those used in computer chips.  When sunlight is absorbed by these materials, electrons are knocked loose from their atoms, which allows the electrons to flow through the material to produce electricity.

PV arrays (the configuration of solar panels used) are most effective facing south in an unshaded area and pitched at a 30-45 degree angle here in Colorado.  Because they have few moving parts, PV systems are very reliable.  To withstand our high country weather, components are available rated for 125 mph winds and 100 lbs. per square foot snow load capacities.

Right now, residential property owners can take advantage of Xcel Energy's rebate of $3.50/watt of installed DC power, cutting the cost of a solar panel system in half.  Federal tax credits are also available for 30% of the system cost after rebates.

Finally, here's an interesting fact:  Equity increases $20 for every $1 saved in annual utility expenses (according to The Appraisal Journal).

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There are some changes to how lenders represent costs to the buyers/borrowers that take effect today.  Because of the disclosure requirements now imposed upon lenders, the fastest we can possibly close a loan is 7 BUSINESS DAYS.

The newest regulations require the buyer/borrower to have time to review and absorb the Truth In Lending and Good Faith Estimate charges.   While a closing of 7 business days is certainly not the norm for purchases or refinances, you will no longer be able to call up your local lender and ask them to take over a transaction a few days before closing with the intent to get it done quickly. 

Additionally, if there are changes to the rate/points/costs that cause the APR to change by more than .125%, then re-disclosure is necessary and the minimum time for review by the client is 3 business days.   If the change must be re-disclosed via snail mail or email, there is a potential 3 business day ‘delivery’ time PLUS the 3 business day right of review.   So we will be advising clients of this well before closing and no longer allowing change of rate or costs within 10 days prior to closing.

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"Painting the Landscape" Art Show to continue through Saturday, August 1st at Buffalo Mountain Gallery

More below on the Wildflower Hike with Marty Richardson

Painting the Landscape, Preserving the Land:

We were pleased to host so many talented artists at the Plein Air art paint-out, "Painting the Landscape, Preserving the Land" on July 18 & 19. The show will continue at Buffalo Mountain Gallery through Saturday, August 1, 2009.

Fine art captures the timeless beauty and emotional impact of a beautiful landscape. Images from your favorite Frisco area views have been captured on canvas and are now on display at Buffalo Mountain Gallery. It is FREE to browse. Please stop in and see these amazing works.

A significant portion of the proceeds from the sale of the art benefits Continental Divide Land Trust.

Buffalo Mountain Gallery is located at 711 Granite Avenue, behind the Backcountry Brewery and Abbey's Coffee in Frisco.

Start your fine art collection or add to it with an image of one of your favorite Frisco area views. Many of the images in the show are available for under $400. It's a great way to get started in fine art collecting.

For more information on the artists and links to their websites, please go to our home page by clicking here.

Wildflower Hike with Marty Richardson, Friday, July 24th, 8:30 a.m. to 1:30 p.m.

Local wildflower expert and instructor at Colorado Mountain College, Marty Richardson, will lead a wildflower hike to benefit CDLT. The recent rains have made the wildflowers grow bigger and more prolific than many have seen in years. Marty has a knack for finding rare and unusual flowers. You won't want to miss this one!

We will hike to Black Powder Pass which is accessed from the top of Boreas Pass east of Breckenridge. The hike is described as "moderate-strenuous." A picnic lunch at the Section House is included. This hike is FREE for Land Trust members or a donation of $15/person. Further details will be provided upon reservation. Advance reservation is required so we have enough assistant guides and lunches.

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Congressman John Salazar (D-C02), whose district includes Routt (Steamboat) & Garfield (Glenwood Springs) counties, has chosen not to hold town hall meetings on health care, because he feels they are "unproductive". Because of his stance he is receiving a lot of flack from constituents for "hiding" because he is towing the democratic party line on health care reform.

While legislators are busy holding town hall meetings on health care, the truth is, there are still 6 bills under consideration in Washington. NAR Chief Deputy Lobbyist Jamie Gregory visited the mountain boards last week and talked about the process and where it really stands. He said the President would like to see a bill completed by December. If the debate goes any later than March or April, the chances of approval of a health care bill this session will not happen. His reasoning is that most legislators won't want to vote on such a a controversial bill well into an election year..

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Financial Benefits of Home Ownership

There are a number of personal and emotional reasons to buy a home. But there are also some strong financial reasons to make the investment. In addition to exceptional home affordability and near historic interest rates, here are some important financial benefits of owning a home:

Increased Net Worth: Few things have a greater impact on net worth than owning a home. In a comparison of renters versus homeowners, the Federal Reserve Board of Consumer Finance found that the average net worth of renters was just $4,000 compared to homeowners at $184,400.

 

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$8,000 Tax Credit: Don't forget, the government is offering an $8,000 tax credit for first time homebuyers - or for folks that haven't owned a home during the past three years. However, the program is scheduled to end soon. In fact, the Internal Revenue Service recently reminded potential buyers that they must complete their first-time home purchases before December 1, 2009 to qualify for the special credit, which means the last day to close on a home and qualify for the credit is November 30, 2009. If you, any of your clients, family, friends, neighbors or co-workers are considering purchasing a home or refinancing, this is an ideal time. Call or email us today to discuss the specific situation and how that person can benefit from today's market.

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Also in the news, Durable Goods Orders for August unexpectedly fell 2.4% for the largest decline since January. The weaker than expected economic data helped fuel a rally in the Bond market and a late week improvement in home loan rates...while on the other hand, Stocks struggled, particularly with the increasing concerns of Iran's construction of nuclear sites. This kind of geopolitical unrest is troubling on many fronts, and if the situation continues to escalate, it could have a big impact on both the Stock and Bond markets. THE DECISION TO BUY A HOME IS ONE OF THE MOST IMPORTANT FINANCIAL DECISIONS YOU CAN MAKE...AND OFFERS GREAT FINANCIAL BENEFITS AS WELL. WITH HOME LOAN RATES LOOKING TO MOVE HIGHER, CHECK OUT THIS WEEK'S INDUSTRY ESSENTIALS TO LEARN MORE ABOUT WHY HOMEOWNERSHIP MAKES SENSE.

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I’ve had quite a number of questions concerning what we can/cannot do to help homebuyers or refinancing of properties.  The following are some ‘above and beyond’ areas that we can handle!

USDA Rural Development loans – These are 100% loan to value opportunities for primary home buyers.  They must meet county limits for income (which are pretty aggressive).  Like VA, the home can be bought for truly no money.  Like VA, there is a guarantee fee that is added on to the loan.  Like VA, there is no monthly mortgage insurance!   We use FHA guidelines to underwrite the buyer.  We use FNMA guidelines to underwrite the property.  You CAN buy a condo with this program.  We are a guaranteed lender and underwrite the loans.  This is NOT a subprime loan!

FHA loans – We have been doing FHA loans around the country for 18 years.  We are a direct endorsed lender and underwrite these in house.  The FHA limit varies per county, ask about your situation.  No income limitations.  The properties must be safe, secure, and no health hazards.  The property rules are MUCH more lenient than in the past.   Intended for primary homeowners only. 

VA loans – Again, been doing them for 18 years!   Here’s a little known fact – The Village at Breckenridge is a recently VA approved project!  Primary homeowner only.  Active military, retired military, active Guard and Reservists are eligible.  100% financing with add-on guarantee fee.  No monthly MI.

Condos – primary, second home, resort property – we have an investor that we can offer

Condotels – Yes we have an investor that does not care about front desks, hotel amenities etc.  

Second homes – We are privileged to be able to do 90% loan-to-value with mortgage insurance.  Many lenders are limited to 85%. 

Residential/commercial buildings – Most products are limited to 20% commercial space in a building.  We have an investor that will go significantly higher.

Our office has over 45 years of combined lending experience.  We’ll tell it to you straight – good and bad.  We return calls in the evenings and on the weekends.  Let us help you grow your business and assist your clients!

 

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Budgeting for the Holidays...It's Never Too Early to Start

It's hard to believe, but Thanksgiving is just two months away. And while that may seem like a lot of time, you'll be diving into that turkey dinner sooner than you think...and right around the corner will come the Christmas holidays. That's why now is the perfect time to start planning for your holiday budget. By formulating a plan now, you'll achieve more than just the happiest of holidays. You'll ensure that the New Year will begin without worries of too little cash flow or too much debt. Here's how.

Learn from the Past

The best place to begin when it comes to planning for this year's holiday spending is to examine what you did last year. Dig up the credit card receipts and checkbook registers, and add up how much money you spent. You'll also want to take notes regarding where you spent it. Don't forget to include money used to purchase gift wrapping supplies, cards, postage, food while shopping, entertainment costs, and special-occasion clothing.

Now that the numbers are in front of you, it's time to form an opinion. How do you feel about last year's spending? Did you spend a realistic and appropriate amount, or did you go overboard? Try to be objective. This analysis will serve as the backbone of your plan.

 

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Also on tap this Friday is the Durable Goods Orders report. Durable Goods Orders are considered a leading indicator of manufacturing activity, and the market often moves on this report. However, the volatility and large revisions that are sometimes made to past reports make this a less-than-perfect indicator.

Finally, we'll see the Consumer Sentiment Index for September this Friday. Although consumer sentiment does not correlate strongly with consumer spending, the markets will be watching to see if this month's reading hits expectations of 70.0.

Mixed in with these reports will be another round of 2-year, 5-year, and 7-year Note auctions. Recent auctions have been fairly well received and have helped support Bond prices, so I'll be watching closely to see if this trend can continue this week, or if Bond prices and home loan rates will worsen in response to the enormous supply hitting the market.

 

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Remember, inflation is the archenemy of Bonds and home loan rates, and it is said that "rates are the boat that floats on the sea of inflation", meaning when inflation rises, home loan rates will move higher as well. With the recession appearing to be bottoming out and with an unprecedented amount of government spending over the past year, there are fears that inflation - and therefore home loan rates - may be on the rise soon. If you are in the market to purchase or refinance, this is an important aspect to keep an eye on. Call me if you want to discuss presently low rates, and how they might fit into your plans.

The $8,000 tax credit for First Time Home Buyers was also in the news again last week. White House Spokesman Robert Gibbs said that the administration is evaluating the program and the effect it has had on home sales and will soon make a recommendation to the President. Although there's been talk and speculation regarding the expansion of this program, as of now, potential buyers must complete their first-time home purchases before December 1 to qualify for the special credit.

Overall, Bonds and home loan rates saw some nice gains early last week, but finished just slightly worse than they began, as Stocks closed at highs for 2009 and pulled some money away from Bonds. Whether Bonds can climb back up this week will depend not only on the economic reports due out, but also on how well the markets receive the incoming round of 2-year, 5-year, and 7-year Note auctions.

 

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This week is chock full of economic news for the market to digest. First, we'll hear from the Fed with the Federal Open Market Committee (FOMC) policy statement and interest rate decision to be released after their upcoming meeting ends on Wednesday. Although the Fed hasn't made any policy changes as of late, the Fed's statements are still closely watched by the markets for any comments or concerns on matters such as inflation.

Considering last week's news that Housing Starts for August came in better than expected and at the highest level since last November, we'll gain more insight on the health of the housing industry when reports on Existing Home Sales and New Home Sales for August are released on Thursday and Friday respectively.

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"I'M ON MY WAY...JUST SET ME FREE...HOME SWEET HOME." The lyrics from Mötley Crüe's Home Sweet Home sound a lot like something the housing industry might have sang last week, after the Commerce Department reported that the number of Housing Starts in August came in better than expected.

As you can see in the chart below, Housing Starts have fallen significantly since June 2008, but in last week's report, they broke free to come in at their highest level since last November. Building Permits were a bit lower than expectations, but the overall report suggests that while we're not entirely out of the woods yet, the worst in the housing market may have passed and that the industry may be on its way to stabilizing.

Inflation was also in the news last week. On Tuesday, the Producer Price Index came in more than double expectations, prompting fears of wholesale inflation. However, since wholesale inflation isn't always passed on to consumers, the markets anxiously awaited the Consumer Price Index (CPI). CPI is an important measurement of inflation because it actually measures the average prices paid by consumers for goods and services, which is where the real inflation concerns come in. According to last week's report, CPI came in just slightly higher than expectations.

 

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LOCAL UPDATE

Amid Pressure From Local REALTORS, Avon Approves Ordinance on Short-Term Rentals It Voted Down 2 Weeks Ago.

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The 2009 Summit County Parade of Homes will be held the last 2 weekends of September. The REALOR Day is reserved for Friday September 18th, following with the Awards Reception, sponsored by the Summit Association of REALTORS. Your office should be receiving a packet in the mail with cards for all agents in the office. The event will be held at the Silverthorne Pavilion beginning at 5:00 p.m. on the 18th. Dinner buffet catered by All Seasons Catering.

The 3rd Annual “REALTORS Choice Award” will be presented to the overall best home voted on by you, the SAR Member! Enclosed, please find a punch card available for each agent in your office to vote on the back after the Friday Tour of the Homes. The completed cards must be brought to the Awards Reception that begins at 5:00pm at the

Silverthorne Pavilion. The votes will be tallied up and the winner will receive the award at the end of the evening. If you turn in your card with 12 or more punches you receive by visiting at least 12 separate houses on the Parade of Homes tour, you will be eligible to vote!

Additional cards are available @ the SAR Board Office located at 352 Lake Dillon Drive, Dillon. Also, the SAR Board Office has the Parade of Homes Magazines/Programs available for pick up. We encourage you to have fun with this event as this is a great opportunity to get a birds’ eye look on new products, materials, and construction throughout the county!

 

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If you are in, or plan on visiting the western slope of Colorado this fall, here is a class that may be of interest to you. Oliver is pleased to be an approved instructor of the Certified Negotiation Expert (CNE) class. The Grand Junction Area REALTORS Association is offering this class in conjunction with The Real Estate School on October 15 and 16, in lovely Grand Junction, Colorado. You may have heard of the CNE designation class. It is a two-day, highly interactive class. Our world class negotiation training is designed to give you professional negotiation techniques, approaches, and skills to achieve the best possible outcomes given the market situation and your client's personal situation. The training is tailored to address real estate negotiation situations and includes hands-on practice in role plays and case studies. For more information on this designation go to www.negotiationexpertise.com.

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The 2009 Annual Installation Banquet will be held October 9th from 6pm-10pm at the Silverthorne Pavilion.  This event is sure to be a fun and positive experience with cocktails, dinner, and live music as a bonus feature!  Please come celebrate with your fellow SAR Members, Incoming Board Leadership, and Staff as we kick off the start of something great!

Any moment now, you should be receiving your invite in the mail.  The RSVP deadline is Friday Oct 2nd, so please respond by this date.  If you just can’t wait to get your invite in the mail, you can view and/or print the invitation by clicking on the link below!  You can also access this link by visiting the SAR website.  You can find the invitation on the upper left side of the home page.  The link is titled “BOD Installation”.

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