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Last Updated:
August 30, 2010

August 2010 Summit County Real Estate.Net Notices

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THE ECONOMY

Relapse into recession isn’t likely. Odds are worries about Europe’s woes infecting the U.S. will recede by year-end as policymakers there do whatever it takes to prevent a meltdown. For most U.S. industries and businesses, however… Regaining the robust economic health of a few years ago is still far off.

This week’s Letter is a special look at the state of the economy as a whole and at key American industries. We’ll assess how much further there is to go before recovery is complete and how much longer it’ll take to get there.

Start with GDP growth of about 3.5% this year. And the same next…a decent gain and better than the U.S. saw in the last two recoveries, in 1991 and 2002. Still, it’s far from the 6.3% average growth racked up in post-recession periods since World War II.

Helping to drive the growth: Lean inventories, as businesses, which underestimated the rebound, are forced to restock factory bins and store shelves. Business spending on equipment & software…fueled by rising profit margins, technology innovations, easing credit and business’s huge cash reserves.

Continued federal stimulus this year, though it scales back sharply in 2011. A pickup in employment and income. Extraordinary productivity gains over the past year have let firms expand output with minimal hiring. But that path will peter out, and employers will have to add to payrolls to lift production even more. Meanwhile, workers who have jobs are bringing home paychecks that stretch farther. Real hourly wages…measured after wringing out the effect of a big energy price drop…have climbed 3.5% since Aug. 2007. With inflation likely to remain tame, the erosion in real wages that usually comes with high unemployment will continue to be offset.

And rock-bottom interest rates. With the Federal Reserve more worried about deflation than the opposite, it will keep interest rates at record lows into next year.

Also playing roles: Rising consumer confidence. The Univ. of Michigan’s monthly reading is inching up, nearing the halfway point between the prerecession mark of 97 and the dismal 55 it hit during the financial crisis. And  consumers’ recovering sense of wealth. Even after accounting for recent market corrections, the S&P 500 is up about 60% from its early 2009 low. And Americans’ household net worth is up $3.5 trillion from a year ago and $5.8 trillion from its recession low.

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Local Board Presidents & Chairs Send Letters On USDA Guaranteed Rural Housing

Last week, our local Board Presidents & Chairs sent letters to our Colorado Senators and Representatives asking for additional funding for the USDA section 502 Guaranteed Rural Housing Loan program. The National Association of REALTORS? followed with a call to action to all REALTORS? nationwide. The USDA Guaranteed Rural Housing Loan Program (section 502) is nearly depleted of funding approved by Congress for FY 2010. In fact, Congress appropriated $13.5 billion for loans this year, and as of 3/15, $9.5 has been used. That leaves $4 billion for loans and refinances for the remainder of the year. USDA Rural Development expects the funds will be gone by the end of April. This has been a very important source of home loans for low to moderate income families nationwide. Without access to these funds, mortgage lending will further decrease in an already difficult lending environment. Colorado Representative John Salazar sits on the House Appropriations Committee which has the authority to release additional funding. If you have not participated in the call to action, please go to www.realtoractioncenter.com and make your opinion know!

On Friday, we voted to endorse these individuals because of their dedication to protecting private property rights, while striving for the betterment of the communities they live in. A healthy real estate market is an important component of our towns? economic recovery, and as our local economies come back we know these candidates will work hard to improve the economic vitality and business competitiveness of our communities in Summit County. A vibrant economy creates jobs, expands the tax base, and enhances and revitalizes our communities, making them better places to live. REALTORS? are held to a strong code of ethics, which includes social responsibility and a patriotic duty to which REALTORS? dedicate themselves.

We urge you to vote for Rodney Allen and Ben Brewer in Breckenridge, Jason Smith in Dillon, & Russ Camp in Silverthorne.

The Board of Directors of the Summit Association of REALTORS?.

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Do You Know The New Open House Sign Policy? No Balloons In Breck, Glenwood, Steamboat & Vail!

This weekend, April 10th and 11th, marks National Open House Weekend. Breckenridge, Glenwood Springs, Steamboat Springs, and Vail all have new open house sign policies within the last year or so. Before you place your open house signs, be sure you know the current open house sign policy. In addition, none of the new policies allow balloons on signs. Your local boards worked hard to get favorable open house sign language enacted. Don't be the one who gets the policy overturned! If you have questions about the policy, contact your local police department or Sarah Thorsteinson, the Mountain REALTOR

Public Meetings This Week On Garfield County Comprehensive Plan

As you may know, Garfield County is in the process of updating its Comprehensive Plan and has a third series of public meetings now scheduled. I would like to invite you to attend one of our upcoming meetings at which discussion will be held in regards to the emerging preferred alternative for future growth. Discussion will also take place surrounding the initial direction that has been received that indicates the County should:

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Tomorrow Is Election Day, Make Politics Your Business!

Tuesday, April 6th, 2010, is election day in Breckenridge, Carbondale, Dillon, Eagle, Frisco, Minturn, New Castle, Silt, and Silverthorne. Be sure to take the time to get out and vote. You can effect the outcome of local elections, and future issues by voting for candidates who support protecting private property rights, and economic vitality. As a REALTOR, you are upheld to a code of ethics which includes language on patriotic duty. Please make an effort to vote tomorrow!

Summit REALTORS? Endorse Local REALTORS? Running For Town Councils

The Summit Association of REALTORS? Board of Directors has endorsed REALTORS? running for office in Breckenridge, Dillon, & Silverthorne in tomorrow?s town council elections. Below is the letter of endorsement that was published in the Summit Daily News on Saturday April, 3rd:

On behalf of the Board of Directors of the Summit Association of REALTORS?, we are writing to endorse the Four REALTOR? candidates who are running for election to the local Town Councils. In Breckenridge, REALTORS? Rodney Allen and Ben Brewer are running for Town Council and in Silverthorne, REALTOR? Russ Camp is running for Town Council. In Dillon, REALTOR? Jason Smith is running unopposed. There are many qualified candidates running for office in Breckenridge and Silverthorne. This level of civic participation should be commended because so rarely does the public get to choose from so many qualified candidates who will serve their communities well.

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UNUSED RESOURCES

So if GDP is recovering, why does the economy still feel so lousy? In a nutshell, because there are still loads of idled resources: Assembly lines operating at less than full speed. Vacant warehouses, factories and storefronts. Mines, utilities and other operations churning out less than before the recession hit. In mid-2009, slightly more than two-thirds of total U.S. industrial capacity was in use. Today, utilization is about 74%, about five percentage points lower than the usual rate when the economy’s thriving, and well below the even higher prerecession rate.

Service industries have plenty of spare capacity, too: Empty washers at commercial laundries. Lawyers taking on pro bono cases to fill their time. And so on.

Moreover, millions of people remain out of work. The 980,000 net increase in jobs so far this year only begins to chip away at the 8.4 million jobs lost during the 2008-2009 rout. Until more employers are confident the economic recovery is on solid ground, they’ll resist committing to permanent hires. As a result…It will take until late 2012 to recover the lost jobs. Worse, because the labor force is always growing… with young people seeking first jobs plus immigrants…The jobless rate won’t sink to a more normal 5.5% again until 2014 or so.

TIGHT CREDIT

Credit availability also remains far from normal, crimping the ability of private businesses…especially small firms, which typically account for half of all jobs in the U.S…to grow. Under normal conditions, the difference between the share of small companies that say loans are becoming harder to get and the share that say the opposite is no more than about nine points.

Tightfisted lenders will eventually loosen up, probably easing standards in the second half of 2010. But for now, huge losses during the Great Recession, uncertainty about financial reform legislation and doubts about the durability of the recovery will restrict credit.

HOUSING WOES

Another hindrance…at least psychologically: Housing. Prices color consumers’ perceptions of their financial well-being, affecting their willingness to spend. And because housing and related industries typically account for 7% of the economy, making headway is tough when they stall.

The sad fact is, it will take a decade to regain the prerecession highs in construction and sales of new homes. Ditto, home prices, at least in regions that were the hardest hit, such as Calif., Fla. and Ariz. That’s mostly because those peaks were artificially high, pumped up by unsound mortgages destined to crumble. It would take three years of annual increases of 3%, followed by three more years of 5% annual gains, for the median home price to match the Oct. 2005 peak.

Even a return to pre-bubble levels will take years. At 650,000 this year and an expected 900,000 in 2011, housing starts are a long way from 2001’s 1.6 million. New-home sales won’t top half a million ’til next year and won’t hit 800,000…the high end of the normal band in the 1980s and 1990s…’til 2014 or 2015. A slightly less dismal outlook for sales of existing homes: 5.3 million this year and 5.5 million next…near pre-bubble levels.

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"NOBODY CAN GO BACK AND START A NEW BEGINNING...BUT ANYONE CAN START TODAY AND MAKE A NEW ENDING."

Those words by the poet Maria Robinson should hold a special meaning - and warning - for anyone thinking about buying a home or refinancing, especially in light of the article by Former Fed Chairman Alan Greenspan which hit the wires last week.

In his Wall Street Journal op-ed piece, Mr. Greenspan stated: "Don't be fooled by today's low rates. The government could very quickly discover the limits of its borrowing capacity." He also added that the present low inflation and low long-term rate environment has fostered a "sense of complacency (within the government) that can have dire consequences."

What Mr. Greenspan is saying is that the government, rather than cutting budget deficits and showing fiscal restraint is taking advantage of this low rate and low inflation environment to accumulate more debt - and the consequences can be very bad...just look at Greece.

Mr. Greenspan also said Treasury yields could spike, and in a hurry...

Greenspan said, "Long-term rate increases can emerge with unexpected suddenness. Between early October 1979 and late February 1980, for example, the yield on the 10-year note rose almost four percentage points."

Mr. Greenspan's sobering comments should not be taken lightly. The fact is, there are no fundamental reasons why rates - including home loan rates - should be as low as they presently are. The confluence of factors all coming together at the same time have made for an incredible low rate opportunity, but it won't last long and can change very quickly.

And, like Maria Robinson's words of wisdom, once rates begin to change, there's no way to go back to take advantage of them. The time for that is today!

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"UNCERTAINTY AND MYSTERY ARE THE ENERGIES OF LIFE."

And while the Bond market may agree with R.I. Fitzhenry's words about uncertainty, most investors in the Stock market don't... just ask Fed Chairman Ben Bernanke. Last week, Mr. Bernanke testified before the Senate and House Banking Committees, making several cautious comments on the state of the labor market and inflation, as well as stating that the Fed would be ready to take action should economic conditions worsen. But the comment that spooked Stocks and helped Bonds was when Mr. Bernanke said the economic outlook is "unusually uncertain." Stocks hate uncertainty but Bonds usually perform well as a safe haven, so Bonds and home loan rates improved upon the utterance of these words.

Mr. Bernanke also stated that one way to normalize the size and composition of the Federal Reserve's securities portfolio would be to sell some holdings of agency debt and Mortgage Backed Securities. And an article in the New York Times concurred, stating that the Fed’s MBS holdings are already problematic and put the Fed in a tough position where it may find itself having a conflict of interest - and here’s why.

While inflation is subdued for now, it’s only a matter of time before the Fed will need to hikes rates in order to keep inflation controlled. But any hike in rates would cause the Fed to lose significant value on their Mortgage Backed Security holdings. So the tough question is... how will the Fed act, in light of this conflict?

Remember, the Fed purchased $1.25 Trillion worth of Mortgage Bonds, as well as several hundred Billion in Treasuries. Those purchases helped drive rates down towards historic low levels - and yet the housing market is still not entirely healthy. So this also begs the question, what would cause a different result? One perspective is that the Fed - like many in Washington - missed the point. The problem is not that rates need to be lower. Many individuals already want to purchase or refinance at today’s low rates, but are unable to do so because of tighter underwriting guidelines, as well as low valuations. A perfect example is the "no income verification" loan - which has been cast in a negative spotlight as a "liar loan" and virtually eliminated. But there has been a good track record for those loans in the past when underwritten properly. If the government were to direct some resources towards reestablishing some of these more reasonable lending tools, the results m ight be better.

Instead - the sweeping Financial Reform Bill was signed into law last week, and the implications of this 2,300-page legislation are sure to be broad. Former Fed Chairman Alan Greenspan himself said that every page appeared to be loaded with unintended consequences... so as this legislation is analyzed and dissected, you can be assured I’ll be keeping a close eye on the impacts it may have and will keep you informed.

But the Federal Reserve and Financial Reform are only part of the picture. Mortgage Bonds and home loan rates are also impacted by global financial news.

In fact, just last week the Bank of Canada raised rates by .25%, up to .75%... and this could have a major implication on our Bonds. Part of the reason home loan rates have dropped so much has been the currency trade, where the Euro has weakened against the Dollar. Europeans have been taking advantage of the currency trade, and parking money in the US - much of which is in our Bonds. But now, with Canada’s improving economy and slightly higher rate environment, their yields might not only be more attractive for Europeans, but their currency may provide a more lucrative option as well. And the sell-off in our Bonds early last week could have been somewhat due to traders anticipating this move by the Bank of Canada.

Another story of uncertainty is developing in China. China's reserves, which are held mostly in US Treasuries as well as Mortgage Backed Securities, stand at $2.5 Trillion. But last quarter marked the first time in a long time that these holdings did not increase. Does this mean that China is slowing their US debt purchases? I will be keeping close tabs on this because a slowdown in US debt purchases from China could adversely impact the Bond market, as their purchases have also contributed to the low rate environment in the US.

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On Wednesday the Fed will release their rate decision and Policy Statement at the conclusion of their Federal Open Market Committee meeting. There is speculation that the Fed may lower their 2010 and 2011 growth targets for GDP...and lowering the target may give the Fed enough ammunition amongst its members to maintain their "extended period" language, although the concerns amongst Fed members about this language staying in place has been on the rise. In any case, it is all making for a very interesting and important Fed Meeting next week, as it could have an important bearing on the direction of rates.

We'll also see news on the production and consumption of goods and services this week, beginning with Durable Goods Orders on Thursday and followed by the Gross Domestic Product on Friday.

In employment news, we'll get another weekly read on Initial Jobless Claims on Thursday. Last week, Initial Jobless Claims rose by 12,000 in the latest week to 472,000 and above the 450,000 that was expected, signaling that the job market remains weak. Finally, we'll see how consumers feel about the economy in the Consumer Sentiment Index on Friday.

In addition to those reports, the Treasury Department will auction $108 Billion in 2-, 5- and 7-Year Treasury Notes. This seemingly endless supply of Treasury auctions is one reason why Mr. Greenspan expressed concern about a spike higher in yields.

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Using credit cards wisely is important for people of all ages...

Especially for young people just starting out. In fact, a 2009 study by student loan provider Sallie Mae found that 84% of college undergraduates had at least one credit card and half of college students had four or more cards. What's more, the average (mean) balance grew to $3,173, which was higher than the findings in previous studies. Check out this video from Kiplinger.com for some important information to consider about kids and credit cards.

Around The Mountains

With Engelken’s Resignation, Steamboat City Council Needs Another Council Member. How about you?

Last week Steamboat City Council member Jim Engelken announced his resignation from the Steamboat Springs City Council due to his family’s upcoming move to the Denver Area. His resignation leaves an open seat on the City Council. Engelken’s last day on the Council will be July 6th, so the City Council will have 30 days to elect a new Council member by majority vote. The elected official will fill out the remainder of Engelken’s term, until November 2011. Steamboat REALTORS®, this is the perfect opportunity to increase REALTOR® input on the City Council! If you are interested in the position, please contact the Steamboat City Clerk’s office for more information.

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Rafters, Landowners Reach Compromise

Gov. Bill Ritter announced last week an agreement has been reached between commercial rafting outfitters and private property owners along the Taylor River. The conflict between the 2 groups caused the introduction of HB 1188, a bill that would have allowed river rafters to portage rafts onto private property. The compromise clears the way for sponsors of 24 competing ballot measures to withdraw their respective proposals from the November ballot, averting an expensive and divisive election fight. The Governor had asked two outfitters, Three Rivers and Scenic River Tours, and the owners of the Jackson-Shaw property, in May to find a mutually agreeable solution to their dispute. Gov. Ritter also will convene a task force of stakeholders to develop a proposal for resolving conflicts among landowners, anglers and the boating public. The task force will be charged with developing a framework for resolving disputes on Colorado rivers on a stretch-by-stretch basis as those disputes arise. This approach is intended to recognize that disputes vary from place to place and that a one-size-fits-all strategy is unlikely to succeed. The task force will be led by the Department of Natural Resources and the Governor’s Office. The task force will include representatives from landowners, commercial and recreational river users, local government officials and law enforcement, which has historically been tasked with intervening in such disputes. The task force will be asked to deliver a report outlining its proposal to the Governor by Dec. 31.

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There will be plenty happening this week, ahead of the Independence Day holiday. The week may start with a bang, as Monday’s Personal Income and Personal Spending Reports arrive, giving us a look at the Core Personal Consumption Expenditure (PCE) Index as well...which just happens to be the Fed's favorite gauge of inflation. Rest assured the Fed will be watching this report very closely. Any hint that inflation is heating up could definitely impact the Fed’s decision on rates and the “extended period” language at future Fed meetings.

Thursday brings another Initial Jobless Claims Report. Initial Jobless Claims came in at 457,000 last week and Continuing Claims at 4.55 Million. In addition, an additional 4.73M people are claiming EUC (Emergency Unemployment Compensation) benefits. The continuing high level of unemployment claims is disturbing, but things will improve. Remember, job losses come in the thousands as companies endure sweeping layoffs, but individuals are hired back one at a time. And remember – since the Jobs Bill has not been passed, more people will start to drop off extended unemployment benefits – and rejoin the workforce as formally unemployed.

And there could be some real fireworks on Friday, as the Labor Department releases the Jobs Report for June. Last month’s Jobs Report showed 431,000 jobs created in May. While on the surface this seems positive, the number was below expectations and also was primarily made up of temporary census workers…who will once again join the ranks of the unemployed when the 2010 Census has been completed. The Unemployment Rate did drop from 9.9% to 9.7%, but overall May’s Jobs Report was disappointing.

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In general, I expect that only about 1 out of 10 lots currently on the market in the Breckenridge area will sell before the end of the year and that prices will continue to decline as a result, at least in the short term.

There have not been any land sales at Summit Estates since the ones I sent you details on over a year ago.

The Breckenridge area currently has 24 lots on the market in the $300K-$375K price range, none under contract, and none sold so far this year in this price range.

The listings that you find on my site do include ALL of those in the Summit Association of Realtors MLS and it is updated daily. The only exception would be if a Seller requested that their Property not be marketed on the internet. While Sellers do have this right, I have never encountered an actual example of this myself. Not all sites are updated daily and I have seen examples of listings on other sites still posted well after a sale.

The MLS includes both Summit and Park County and uses the same data fields for both. In Park County, using city as the primary search field would be the logical choice. In Summit County, it is area. There are many reasons for this and I will briefly offer two examples:

1) South of Breckenridge is the township of Blue River. But most new Buyers would not know this so Blue River listings are included in the area of Breckenridge.

2) Keystone is in fact part of the city of Dillon. But Keystone and Dillon would each appeal to different types of Buyers so they have each been given their own area designation.

Since the majority of sales within the Summit Association of Realtors is in Summit County, the decision was made over a decade ago to use the "area" data field as the primary one and to allow only this one to be used on publicly accessible websites.

However, as a member of the MLS, I have access to another service which does include the "city" data field. And I can enter the criteria for the property that would meet your needs, including specific city or cities in Park County, and arrange to have new listings emailed to you automatically the day they come on the market. Let me know if this would be of interest.

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CALL TO ACTION! REGISTER TO VOTE!

July 12 is deadline to register for August primaries! As you prepare to celebrate this 4th of July weekend, remember that one of the most patriotic things you can do is register to vote, and then vote in the August 10th primary, and the November general elections. An astoundingly small number of Summit REALTORS are registered to vote- only 29% of you can really make a difference. SAR encourages all REALTORS to register to vote and vote in the August 10 primary.

By voting, you have the ability to help elect representatives at the local, state and federal levels who will work to advocate the interests of the real estate industry- and your wallet!

There are several contentious primaries, including the U.S. Senate race, currently held by Michael Bennet (D) wo was appointed to fill out the term vacated by Ken Salazar. In the democratic primary, Bennet is trying to fend off Andrew Romanoff, former Colorado Speaker of the House. In the republican primary, Jane Norton, former Lieutenant Governor, and Ken Buck, a tea party activist are battling for the chance to run against the winner of the democratic primary in November. This Senate race is being closely watched across the nation as a race that may affect the balance of the United States Senate- and whether it stays democratically controlled, or whether the republicans take back control.

The gubernatorial race is also HOT. John Hickenlooper, Denver Mayor, is running unopposed as the democratic candidate. On the republican side, former House Representative Scott McInnis is running against businessman Dan Maes for the republican nomination.

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"Over there... over there..."

The old patriotic song hit it on the head, in terms of what has been driving market action lately... news from overseas. In the absence of US economic reports last week, Stocks received some help from headlines "over there." Late last week, the European Central Bank (ECB) left interest rates at a record low - which wasn’t really a surprise, given the sharp economic slowdown and uncertainty in Europe.

But in a separate briefing, ECB Executive Board member Juergen Stark stated that "the worst of the sovereign debt crisis seems to be over." He went on to say that tensions within the financial markets have "calmed down" as the enormous $442 Billion collection of one-year loans by the ECB went without any problems. Although the Stock market may benefit from such calming commentary, the reality is the worst may not be over yet. In fact, rumors are surfacing that Italy may be the next country to reveal debt problems - making this a story to continue watching.

There was also a lot of talk overseas last week about bank stress tests - and the positive buzz helped Stocks around the globe move higher. Similar to what took place in the US a couple of years ago, these stress tests may provide some transparency and help differentiate which financial institutions are strong - so they're not lumped in with some of the more troubled ones.

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On Wednesday, we’ll see the Retail Sales figures for June, as well as the Meeting Minutes from the past Fed meeting. Although the Fed hasn't made any major policy changes as of late, the meeting minutes are still closely watched by the markets for any stray comments or discussion on matters such as inflation or the "extended period" language regarding rates.

Things heat up on Thursday with a number of reports on manufacturing and inflation. The Philadelphia Fed Index and the Empire State Index will both be released Thursday morning - giving us a detailed look at the manufacturing sector. We'll also see the latest reports on Capacity Utilization and Industrial Production, as well as the Producer Price Index (PPI), which measures inflation at the wholesale level. The day after the PPI is reported, we’ll see the Consumer Price Index (CPI), which measures inflation at the consumer level. Remember, inflation is the archenemy of Bonds and home loan rates, so it will be important to see what these reports reveal.

We'll also see the weekly Initial Jobless Claims report on Thursday morning. Last week's number came in better than expected and showed an improvement over the previous report, which gave the financial markets a glimmer of hope. It also gave Bond investors an excuse to take a little profit off the table - since Bonds have been priced for perfection, and any blip in the economic data is providing reason to preserve profits.

In addition to those reports, the Treasury Department will auction $69 Billion this week. The auctions will consist of $35 Billion in 3-year Notes on Monday, $21 Billion in 10-year Notes on Tuesday and $13 Billion in 30-Years on Wednesday. The good news is, the $69 Billion total represents the lowest offering in a year - and when this "low" figure was announced last week, it helped Bond prices improve.

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Around The Mountains

Today Is The Last Day To Register To Vote For August Primaries; Register Online NOW!

REALTORS® across the mountain region are encouraged to register to vote so that you can vote in the highly contested August primaries. You must be registered as a Republican, Democrat or Libertarian to participate in the primaries. Today is the last day to register to vote in those primaries. You can easily register online.. all you need is a couple of minutes and your drivers license.

Garfield County Planning & Zoning Commission, County Commissioners Set To Meet on 2030 Comp Plan Tomorrow; GSAR Weighs In

Tomorrow the Garfield County Planning and Zoning Commission will hold a joint meeting with the Board of County Commissioners to discuss the progress of the 2030 Comprehensive Plan. This will be an important meeting in the progression of the Comprehensive plan. GSAR and several planning commissioners are concerned that the process is moving much too quickly, and that the process should be slowed down to allow for more public input. In a letter dated June 29tho to the Garfield County Planning & Zoning Commission, GSAR addressed concerns with the comp plan. Specifically, GSAR is concerned that the Comp Plan is being drafted as a mandatory document. GSAR feels the document should serve as a flexible guideline that can address each project individually. In addition, GSAR is very concerned about about development "clustering" around towns that would reduce development density in rural areas of the county.The lack of commercial zoning is an issue GSAR argues needs to be addressed. Without commercial and industrial zoning in the county, there are few places for businesses to proliferate in the county. Business is important to jobs and the local economy. GSAR also addressed affordable housing, noting the need to developers to be provided with the right tools to provide affordable housing in Garfield COunty. The meeting tomorrow will be at from 4-6:30 pm at The Garfield County Building on 8th street. REALTORS are encouraged to attend.

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Steamboat Takes On Vacation Home Rentals, Again

A City Council that just 3 years ago placed a temporary moratorium on vacation home rentals in Steamboat is now poised to actually relax home rental fees and loosen parking regulations for vacation rentals in Steamboat. The City Council says it has no interest in taking up the more contentious issue of whether to allow or disallow rentals. They say they understand the importance of home rentals for the local Steamboat economy. The Council would like to support the nearly 75 vacation rentals by reducing the permit fees from $50 for each bedroom to a flat $50 annual fee. Qualified property managers could also be allocated up to 6 outdoor parking permits. The issue of vacation home rentals continues to be contentious. Many locals opposing the rentals showed up at the Council meeting asking for the City to again consider banning rentals in Steamboat. City staff will draft an ordinance for the Council to consider in the coming weeks.

Avon, Eagle County To Review Medical Marijuana Rules Tuesday

The Eagle County Board of County Commissioners is seeking input on medical marijuana dispensaries at its work session Tuesday, at 1:30 pm. A state law that went into effect allows local municipalities to put additional regulations on the dispensaries. Eagle County currently allows medical marijuana dispensaries in commercial and industrial zoning areas of the county, but does not allow them near schools or residences. Because of county zoning, there are very few locations where a dispensary can be located in the county. The County Commissioners are looking for input for citizens as to whether they should continue the temporary regulations and allow dispensaries in the county, or whether they should be banned completely. The town of Avon has an ordinance on its Council agenda for Tuesday that would ban medical marijuana businesses in Avon. The town has a moratorium on dispensaries that expires this month.

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Forecast for the Week

There's a double dose of housing news this week. Tuesday's Housing Starts and Building Permits Reports will give us an update on the health of the new construction sector of the housing market, while Thursday we will get a read on Existing Home Sales.

Thursday also brings another Initial Jobless Claims Report, and any changes for the better in this area will be welcome! In fact, last week, the National Federation of Independent Businesses (NFIB) reported that its monthly "Small Business Optimism" index turned weaker in June. This is important to follow, because small businesses represent an important job creation engine - and the NFIB said the decrease was "a very disappointing outcome."

In addition, earnings season continues this week and some reports to look for include IBM after the markets close Monday, Goldman Sachs before the markets open on Tuesday, and Coca Cola and Morgan Stanley before the markets open on Wednesday.

Bonds and rates ended the week on an improving trend though they were unable to improve beyond a tough ceiling reflective of their best levels. I'll be watching closely to see what happens this week.

Rate Review

In Freddie Mac Primary Mortgage Mkt Survey (for the week ending July 16th) in which the 30-yr fixed-rate mortgage (FRM) avg. 4.57%. Last year at this time, the 30-yr FRM avg 5.14%.

The 15-year FRM this week avg 4.06%. A year ago at this time, the 15-year FRM avg 4.63%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) avg 3.85%. A year ago, the 5-year ARM avg 4.83%.

The one-year Treasury-indexed ARM avg 3.74%. At this time last year, the 1-year ARM avg 4.76%.

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They say the only constant is change...

And more change is coming, as the sweeping Financial Regulation Bill was passed by the Senate last week and will be signed by President Obama in short order to become law. So what does this change mean... and how will it impact home loan rates? Here's what you need to know.

The Bill calls for a new consumer protection agency and prohibits Banks from taking risky bets. While those things are important, it's also important to realize that this legislation... over 2,000 pages worth... amazingly does nothing to address the core reasons for the financial collapse. Fannie Mae and Freddie Mac are completely left out of this legislation. The credit rating agencies, who may have played the largest role in the financial collapse, also go unmentioned.

In fact, when former Fed Chairman Alan Greenspan was asked about the Financial Regulation Bill, he noted that this was the first time the Fed was not asked to write a regulation of this kind. He also said that there are "unintended consequences" in every page of this bill.

And one consequence we've seen already is that corporations are hoarding cash, and are somewhat stuck like a deer in the headlights due to the uncertainty that this and other pending legislation is creating. And when corporations hoard cash, they don't typically hire workers, and job creation is crucial to our recovery.

What all this will mean for our economy and home loan rates remains to be seen... which is why now is the perfect time to act, while home loan rates continue to be some of the best they have ever been!

In other news...

There hasn't been much change on the inflation front, which is good news for Bonds and home loan rates. Remember: inflation erodes the return of an asset like a Bond... so inflation is the arch enemy of Bonds and home loan rates. Both the Producer Price Index - which measures inflation at the wholesale level - and the Consumer Price Index for June showed that inflation continues to remain tame.

However, two changes that would be welcome are in the retail sales and manufacturing areas. Retail Sales for June came in lower than expected for the second month in a row. Although details of the report were mixed, the overall indication is that consumers and businesses remain cautious on purchasing big-ticket items. In addition, the Empire State Manufacturing Index and Philly Fed Index showed that factories and manufacturing still look very sluggish overall. Changes for the better in both of these areas will be reflective of our economy growing stronger, and these are things to watch for moving forward.

All in all, the news from last week helped Bonds and home loan rates reach record levels again, and they ended the week about .125 percent better than where they began.

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Forecast for the Week

The Goldman Sachs story will continue to unfold...and it will be very interesting to follow, as well as monitor the market reactions as more details and information become made known.

More housing news follows this week, with Thursday's Existing Home Sales Report followed by New Home Sales on Friday...and hopefully both of these reports will bring positive news on the real estate market. Less than two weeks remain for homebuyers to get in on the Tax Credit - purchase contracts need to be signed by April 30th to qualify!

There will also be more inflation news this week with Thursday's Producer Price Index (PPI), which measures inflation at the wholesale level. Last week it was reported that the Consumer Price Index for March met expectations, and while the report might give the Fed more ammunition to jawbone about inflation being low; there are many reasons to question whether inflation is really as low as being reported. The Feds will try to continue to make this case - as it helps keep borrowing costs for the US low, in the face of pumping out massive amounts of new debt.

Also on Thursday, we'll have another Initial Jobless Claims Report, and these days it's important to review every report about the labor market. Rounding out the week is Friday's Durable Goods Report, which gives us an update on consumer and business buying behavior on big ticket items that last for an extended period of time.

Along with the Goldman Sachs story potentially continuing to shake up Stocks, remember this rule of thumb: weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

As you can see in the chart below, it's been a volatile few weeks for Bonds and home loan rates since the Fed buying support ended. While Bonds and home loan rates ended last week on an improving note...with earnings season continuing, the Goldman Sachs drama ensuing, and a full slate of economic reports ahead...the volatility is likely to continue! If you have any questions about what all this means for your situation, don't hesitate to give me a call or email.

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REALTORS® Correct Imbalance between Commercial Brokers and Property Owners (from CAR’s Capitol Connection)

Governor Bill Ritter signed House Bill10-1288 - Commercial Real Estate Brokers Commission Security Act -Thursday after eight months of research, meetings, and negotiations with stakeholders and legislators. It is anticipated to go into effect August 11, 2010. "We are pleased the Governor signed this bill and feel not only will this law correct the imbalance between commercial brokers and commercial property owners, but our hope is that it will also encourage a more positive working relationship between both parties," said George Harvey, president of CAR. HB10-1288 provides a broker with the ability to record a lien for an unpaid commission against a commercial property which has been enhanced by a lease with a tenant produced by the broker. This much needed Broker Lien Law would not have been possible without the support of our bill sponsors –– Rep. B.J. Nikkel (R-Loveland) and Sen. Suzanne Williams (D-Aurora).

Eagle County Housing Staff person Running for County Commissioner Has To Quit Job

Claudia Alexander, a republican from Gypsum, announced late last year she was running for county commissioner. She is an employee of the Eagle County Housing Department. Last week she was sent a letter informing her that she had violated Hatch Act laws that say a local, state, or federal government employee cannot run for elected office and hold their job. So Alexander chose to quit her job. She says she’s running to help make changes she couldn’t make as a county employee. She is running against incumbent Democrat Sara Fischer, who announced her run for re-election in March. Alexander’s last day at the County is May 7th.

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REALTORS Elected To Town Councils, Boards

Municipal elections were held in Breckenridge, Carbondale, Dillon, Eagle, Minturn, Red Cliff, New Castle, Silt, and Silverthorne on April 6th. Frisco, Gypsum, & Parachute canceled their elections because all candidates were running unopposed. In the Town of Eagle, REALTOR? Scot Webster was elected to the Town Board in a tight race. In Dillon, REALTOR? Jason Smith ran unopposed and was elected. Many of the local races were hotly contested, but the general feeling is that most of the town councils and boards are in more favorable positions towards the real estate and development communities after these elections. Many of the incoming Council/Board members are local business owners, architects, REALTORS?, builders and other business friendly individuals.

Work Continues on Condo Financing Issues

The Western Mountain Resort Alliance is working on a position paper that will urge NAR to take action on condo financing legislation. The paper will be presented to the NAR Resort & Second Home Committee at NAR?s mid-year meetings in Washington, D.C. during the second week of May. The Steamboat Springs, Vail & Summit Boards have already been working with Congressman Jared Polis, who represents Summit and Vail, to introduce legislation that will exempt resort markets from Fannie and Freddie guidelines. NAR is also planning a meeting with the FHFA Commissioner, and REALTORS? from several affected states during NAR?s mid-year meetings to address condo financing concerns.

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Congress Expected To Address Rural Housing Loans This Week

Federal legislation has been introduced in the House by Reps. Paul Kanjorski (D-PA) and Shelley Capito (R-WV) to restore the rural housing Section 502 single family mortgage insurance. The legislation will increase the upfront guarantee for the program, which will allow the loan program to be self-sustaining. Borrowers will continue to be able to finance the upfront fee. This legislation will prevent further disruptions to the program this year. The House Appropriations Committee is expected to mark-up the legislation this week, with House passage shortly thereafter. The Senate is also working on a similar bill. The USDA used nearly all of its federal appropriations for the rural housing loan program this year by last week.

Routt County Commissioners and Steamboat City Council To Discuss TDRs, Density Tuesday

On Tuesday, the Routt County Commissioners and the Steamboat Springs City Council will hold a joint meeting to discuss a new county plan for transferable development rights (TDR?s). The County?s plan is intended to provide guidelines for conserving outlying rural parcels, including those with working agricultural operations, valuable wildlife and scenic beauty by shifting development to designated areas close to the city limits. The plan would also would allow owners of receiving parcels to petition the county for development permits to build rural subdivisions consisting of 5-acre lots. According to county requirements, 5 acres is the minimum lot size for individual septic systems. The plan was created by the County without input by the City, under the belief that the city would not be interested. However, the plan does reach, and extend, the City?s urban growth boundary with the intent of creating a buffer between areas west of the City and rural areas further out. Public comment on the proposal has been consistently concerned about the level of density, and how much density would be allowed in the areas west of Steamboat. With citizens recently voting down the Steamboat 700 project partially over density concerns, the City may find itself actively involved in drafting the regulations with the County. If so, it may require the County to start from scratch with the City involvement. The meeting will begin at 5pm on Tuesday, April 20th at Centennial Hall.

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CALL TO ACTION! REGISTER TO VOTE!

July 12 is deadline to register for August primaries! As an American, remember that one of the most patriotic things you can do is register to vote, and then vote in the August 10th primary, and the November general elections. An astoundingly small number of Summit REALTORS? are registered to vote- only 29% of you can really make a difference. SAR encourages all REALTORS? to register to vote and vote in the August 10 primary.

By voting, you have the ability to help elect representatives at the local, state and federal levels who will work to advocate the interests of the real estate industry- and your wallet!

There are several contentious primaries, including the U.S. Senate race, currently held by Michael Bennet (D) wo was appointed to fill out the term vacated by Ken Salazar. In the democratic primary, Bennet is trying to fend off Andrew Romanoff, former Colorado Speaker of the House. In the republican primary, Jane Norton, former Lieutenant Governor, and Ken Buck, a tea party activist are battling for the chance to run against the winner of the democratic primary in November. This Senate race is being closely watched across the nation as a race that may affect the balance of the United States Senate- and whether it stays democratically controlled, or whether the republicans take back control.

The gubernatorial race is also HOT. John Hickenlooper, Denver Mayor, is running unopposed as the democratic candidate. On the republican side, former House Representative Scott McInnis is running against businessman Dan Maes for the republican nomination.

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Here’s what’s really going on…

In May 2009, the Federal Reserve's purchases of MBS peaked at an average of $25 Billion per week. As of November, the average weekly purchases dropped down to $14 Billion. At the end of November, the Fed had already used over 80% of the allocated funds for MBS, meaning less than 20% remained to be used over four months.

Making the problem worse is that the Fed now has less money available to purchase MBS while at the same time, the supply of these securities has increased as a result of refinance and purchase activity that was triggered by lower rates.

In short, while rates are still very good, they may not be for long.  What should you do to protect yourself?

First and foremost, work with a knowledgeable mortgage originator who studies and monitors the market.

Second, don’t be fooled by media stories that only report the headlines and don’t understand the underlying implications of the Fed’s actions. If you ever hear something in the news but aren’t sure what it means to your situation, feel free to call or email us. Should we not know the answer, we will find it for you.

Finally, if you haven't yet explored how the current rate environment might benefit you or someone you know, let’s arrange a time to discuss your unique situation as well as your short- and long-term goals. Remember, rates are still very good, but they may not be for long.

Excerpts from The Kiplinger Letter

What’s ahead for the U.S. economy? A year ago, it pulled out of a tailspin. But upward propulsion has been modest, with tentative employment growth. Now, with Europe teetering on the edge of a financial abyss, worries about contagion are driving down stock prices and sending investors scurrying to U.S. Treasuries.

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With the goal of achieving liquidity in our condo markets, WMRA strongly urges NAR to pursue public policy, whether through federal legislation or regulatory changes, that would exempt resort areas nationwide from the current GSE condo guidelines.

In January, Fannie Mae undertook a “Special Approval” designation that exempts established condo projects in Florida to help stabilize the states condo market. We believe resort markets in all areas of the United States should be exempted from rules that prevent sales of condominiums in our areas.

The Impact In Resort Markets

Below is a sampling of issues REALTORS® and local lenders are seeing in condo transactions:

“As lending practices continue to tighten, it has become exceedingly apparent how this affects our economy in Summit County. Current Fannie Mae Guidelines indicate perfectly sound and warrantable condominium projects in Summit County may be denied any financing possibilities simply because they are located in a "resort" area or because individual unit owners may rent their units on a nightly basis. Furthermore large banks are adding additional cumbersome barriers restricting financing because many condominiums do not have individual meters for gas and electric services or because the word "lodge" is in the name. These are examples of unreasonable and unfounded restrictions that are severely hindering buyers trying to purchase condos in our area.

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Forecast for the Week

A number of reports which have the potential to move the markets are coming this week, and we’ll start off with a dose of housing news right away Monday morning with the New Home Sales report. This report comes after last week’s worse-than-expected report on Housing Starts, so the markets will be paying close attention to this report.

The manufacturing sector of the economy will also be in the spotlight this week. On Wednesday, Durable Goods Orders will be released. Then Friday brings the Chicago PMI, which surveys more than 200 Chicago purchasing managers about the manufacturing industry and is a good indicator of overall economic activity.

On Thursday, we’ll see another weekly read on Initial Jobless Claims. Last week, Initial Jobless Claims rose by 37,000 to 464,000, which was above the 445,000 that was expected. Overall, unemployment is still disappointingly high.

The news heats up on Friday when we get a look at the Gross Domestic Product (GDP) and GDP Chain Deflator for the second quarter. The Chain Deflator is a key inflation measure included in the GDP Report. And since inflation is the archenemy of Bonds and home loan rates, this report could be a market mover.

Finally, there are two reports on tap this week regarding how consumers feel about the economy with the Consumer Confidence report on Tuesday and the Consumer Sentiment Index on Friday. In addition, the Treasury Department will auction $38 Billion in 2-Year Notes on Tuesday, $37 Billion in 5-Year Notes on Wednesday, and $29 Billion in 7-Year Notes on Thursday.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As stated above, uncertainty in the US and abroad has been impacting the markets, which has helped Mortgage Bond prices climb steadily higher since April, as you can see in the chart below. And this means that home loan rates have moved steadily lower.

This presents an unbelievable opportunity for people looking to purchase or refinance a home. It only takes a few minutes to see how you or someone you know can benefit from today’s low rates. Even if you’re not sure you can refinance, it doesn’t hurt to conduct a quick review.

The Colorado Association of REALTORS is pleased to announce they will be hosting a gubernatorial candidate forum on Thursday, July 22nd, at the Denver West Marriott in Golden. The event, which will include Democrat John Hickenlooper, and Republicans Scott McInnis and Dan Maes will begin at 1:30pm, and is free to CAR members. There will be a VIP reception with the candidates at 1 pm. That reception is open to REALTORS who have contributed $1000 or more to PSF.

Candidates Lining Up to Fill Engelkin's Seat on Steamboat City Council

Jim Engelkin's last day on the Steamboat Springs City Council was last Tuesday, and the citizens have started to express their interest in filling out his term. Planning Commissioner members Rich Levy, Cedar Beauregard, and Kathi Meyer have applied for the seat. Kyle Pietras, who ran for Council last fall; Kevin Kaminski, and John Palmer have also applied for the seat. The City Council has until August 3rd to fill the seat. REALTORS are encourage to apply for the seat to ensure the real estate industry is well represented on the Council.

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