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January 04, 2010

January 2010 Summit County Real Estate.Net Notices

The highly anticipated Jobs Report arrived last Friday morning, showing 85,000 jobs lost during December...and while this was a bit worse than expected, the report also carried some good news, in that the prior month's revisions showed that November actually had a final tabulation of job gains for the month, for the first time since December 2007. Additionally, the Unemployment Rate remained stable at 10%. While this all seems to indicate some level of improvement in the labor market - you do have to look beneath the surface to clearly understand the present realities for the labor market.

Let's start with the headline number of 85,000 jobs lost. This comes from what is called the "business survey", which uses many estimation tools, including the birth-death ratio of businesses, i.e. how many businesses were created or closed. The mechanics in coming up with the business survey allow the information to be gathered rapidly, but it also makes the information far less than accurate. On the other hand, there is also a "household survey", where a sampling of households receive actual phone calls. Although the household number is not used by the Labor Department for their headline numbers of job losses or creations, some deem it to be a bit more accurate. The household survey paints a bit of a darker - but perhaps more realistic - picture, showing a whopping 589,000 jobs lost. But let's dig deeper still.

The Labor Department does use the household survey to calculate the Unemployment Rate - and remember, it stayed stable at 10% - but the calculation is determined by how many people are presently in the workforce. And the household survey indicated that last month, 661,000 people left the workforce.

Overall - the job picture is still weak, at best. Census hiring in the next few months - although temporary - should boost job creations, which in turn may lead to upside Job Report surprises. This could lead to some tough days ahead for Bonds and home loan rates - count on us to be watching closely, and standing by to advise.

Rate Review

In Freddie Mac Primary Mortgage Mkt Survey (for the week ending January 8th) in which the 30-yr fixed-rate mortgage (FRM) avg. 5.09%.  Last year at this time, the 30-yr FRM avg 5.01%.

The 15-year FRM this week avg 4.50%. A year ago at this time, the 15-year FRM avg 4.62%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) avg 4.44%. A year ago, the 5-year ARM avg 5.49%.

The one-year Treasury-indexed ARM avg 4.31%. At this time last year, the 1-year ARM avg 4.95%.

FORECAST FOR THE WEEK AHEAD

The major reports for this week start in earnest on Thursday when the Retail Sales Report arrives, being the most-timely indicator of broad consumer spending patterns. Initial Jobless Claims will also be released on Thursday, and will likely be a hot topic after last week's weaker-than-expected Jobs Report. Friday will bring another healthy round of economic news when we get a look at the Consumer Price Index, Industrial Production, and the Consumer Sentiment Index.

We may also see some volatility depending on how the markets receive more supply...via the Treasury Department auctions of $10 Billion in 10-yr Treasury Inflation-Protected Securities on Monday, $40 Billion in 3-year Notes on Tuesday, $21 Billion in 10-year Notes on Wednesday, and $13 Billion in 30-year Notes on Thursday.

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FEDERAL UPDATE (from the National Association of REALTORS?)

August Health Insurance Reform Deadline Passes Without Floor Votes

On Friday, the House Energy and Commerce Committee passed HR 3200, the House healthcare bill by a vote of 31-28 with all Republicans and 5 Democrats on the committee voting no. The markup ended a long couple of weeks of negotiations, but there was still an agreement to revisit the bill and pending amendments when the House returns to Washington in September.

Concerned with the cost of the bill and provisions that would create an optional public insurance program, the committee's moderate Blue Dog members had earlier indicated their plans to oppose the bill unless amended to address their concerns. Changes sought included cutting the cost of the bill by $100 billion by restructuring the bill's tax credits for individuals, increasing the threshold for small businesses that would be exempted from the bill's employer mandate requirements and postponing any floor consideration of the bill until after the August recess.

In the Senate, while progress was made, the Senate Finance Committee failed to consider a bill . Despite pressure from Senate leadership and the White House to move a bill prior to recessing on August 7th, Finance Committee leaders, Chairman Max Baucus and Ranking Minority Member Charles Grassley, continued to work methodically with a bipartisan group of four other Senate Finance Committee members on efforts to create a compromise bill that could successfully make it's way through the Senate. Unless unforeseen developments occur, the group of six and committee staff will continue to work through the August recess with a committee markup planned for September.

NAR continues to meet with House and Senate offices and committee staff on the various components of the reform proposals. Staff continue to analyze the mammoth bills and consult with the members of NAR's Business Issues Committee and Federal Tax Policy Committee for specific policy input. NAR has not taken a position on any of the health reform bills at this time.

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Breckenridge to Again Consider Home Size Limitations

Tomorrow night, the Breckenridge Planning Commission will revisit whether to limit home sizes in specific Breckenridge subdivisions. The town is concerned about maintaing community character in specific single family neighborhoods. Last spring, the town proposed limiting home sizes based on a specific formula to each subdivision. After holding a number of public work sessions, and hearing out cry from residents, the town appointed a neighborhood preservation task force made up of residents of some of the affected subdivisions to develop a compromise proposal to present to the Planning Commission and Town Council. A number of REALTORS? were appointed to the task force. The Planning Commission will meet at 7 p.m. in the Council Chambers at 150 Ski Hill Road, Breckenridge. SAR encourages REALTORS? to attend the meeting on Tuesday.

The proposed policy would apply to those properties in Town which do not have a platted building or disturbance envelope and lie within one of the following subdivisions:

Brooks Hill, Breck South, Christie Heights, Gold Flake, Highland Filings 1-4 (only those which do not have platted envelopes), Peaks, Penn Lode, Snowflake, Sunbeam Estates, Sunrise Point, Trafalgar, Trappers Glen, Warriors Mark, Warriors Mark West, Weisshorn, and Yingling and Mickles.

Policy Details: ? Floor Area Ratio based on individual subdivision characteristics. ? Applies to above ground square footage only. ? Does not count above ground square footage for garages up to 900 square feet (typical 3 car garage). ? Unlimited below ground square footage. ? Maximum square footage allowance for larger lots.

A Floor Area Ratio (F.A.R.) was selected by the Task Force to relate a home size to the lot size. In this case, the F.A.R. would dictate the amount of square footage that can be built, depending on the size of the lot.

Floor Area Ratio (F.A.R.) = Lot Size Square Footage Home Square Footage

For instance, if a lot is 0.50 acres (21,780 square feet) in the Weisshorn subdivision, the F.A.R. for that particular subdivision is a 1:4 F.A.R. With this proposal, the square footage would apply only to above ground square footage and a 900 square foot garage is exempt. Ultimately, with the proposed policy direction, the property owner would be permitted 5,445 SF above grade home+ 900 SF garage= 6,345 total above ground and unlimited below ground square footage.

Assumptions Established by the Task Force In drafting this policy, the Task Force has made several assumptions for above ground square footage including: ? Utilizing a Floor Area Ratio allows for home sizes that are appropriate in relation to their actual lot size. Larger lots can generally absorb the impacts of a larger home while still keeping in character with the neighborhood. ? Notwithstanding the above statement, at some point homes can reach a size that is out of character with the neighborhood. For that reason, a maximum size was established. ? Subdivisions do not have the same F.A.R. spread or proposed maximum square footages due to subdivision site constraints such as lot sizes and topography. For example, where subdivisions contain some very large lots, extra square footage has been built into the maximum size. ? A 900 square foot garage exemption has been proposed in the policy, which can accommodate a three car garage.

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Thompson Divide Creek Gas Leases To Be Discussed at GSAR Memebership Luncheon

Oil and gas issues in Garfield County are always of interest to REALTORS in the community. At this month's membership meeting on November 11th at 12:00 at the Ramada in Glenwood, gas leases in the Thompson Divide Creek Area will be discussed by Jock Jacobener, president of the Thompson Creek Divide Coalition and Stephen Bershenyi, an affected land owner, and Glenwood City Council member. If you haven't already RSVP'd, do so now! The last oil and gas panel was left with standing room only!

A Brief History of Thanksgiving

Thanksgiving Day is now a favorite American holiday...but did you know it took awhile to catch on as an annual tradition?

According to scholars, the first known Thanksgiving took place on September 8, 1565 in Saint Augustine, Florida when Spanish settlers held a Mass of Thanksgiving after arriving safely in the New World. English settlers in the Virginia Colony held a similar day of thanks in 1619. Two years after that, the colonists at Plymouth Plantation celebrated the most famous Thanksgiving, during 1621.

It wasn't until October 3, 1789, that it actually became a holiday, when then President George Washington proclaimed a day of Thanksgiving...but just for that year. In 1795, Washington again proclaimed a day of Thanksgiving, and President John Adams also declared Thanksgivings in 1798 and 1799.

After a decade and a half without the celebration taking place at all, President James Madison renewed the tradition in 1814, and even went so far as to declare the holiday twice in 1815!

In 1863, President Abraham Lincoln finally proclaimed the last Thursday of November as a national day of Thanksgiving that should take place every year. Years later, President Franklin Roosevelt stated that Thanksgiving should always be celebrated on the fourth Thursday of the month - as opposed to landing on the occasional fifth Thursday.

In observance of the holiday, both the Stock and Bond markets will be closed on Thursday, November 26th, and on Friday the 27th, the Bond market will close early at 2:00 pm ET, while the Stock market will close at 1:00 pm ET.

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Just a reminder that all Managing Brokers will need to sign up for List Hub by Friday as this is the target date to switch Realtor.com over to List Hub exclusively.

Please give us a call if you need any assistance with this.

In an effort to allow control of our membership's listing data to be with the broker, as of July 31, 2009 the Summit MLS will no longer be sending your listing data to Realtor.com.  We have made arrangements with our listing syndication company, ListHub, to provide this service to you directly. 

In order for your listings to be posted on Realtor.com, your Managing Broker will need to sign up with ListHub and if they choose, click the Realtor.com button.   In order for ListHub to work for associate brokers, the Managing Broker of the office must first enable ListHub. 

Danielle Parent from Listhub has sent a letter to all Managing Brokers with a detailed explanation of how to sign up for Listhub and what to do if you have already signed up.  In addition, the SAR office can provide help along with the Listhub help desk.    

Once the Realtor.com button is selected in ListHub, you will never need to select it again for your listings to be submitted to Realtor.com, if at some point to choose not to send to realtor.com or other sites in the listhub family just unselect them. 

ListHub also offers a service where you can get detailed reporting on the hits from the websites where your listings have been submitted.  This service is valuable for determining which websites are giving your listings the best exposure.

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While cooler temperatures are beginning to descend on many parts of the country, Bonds and home loan rates are feeling the heat and pressure from several fronts. Here are some details...along with why it's important to act soon to take advantage of current home loan rates, as they may never be seen again.

Last week, the Core Consumer Price Index (CPI) was reported higher than expected, indicating that inflationary forces may already be underway. Remember, inflation erodes the value of the fixed return that a Bond provides - therefore, inflation is harmful to Bonds and home loan rates. Just the hint of inflation can cause home loan rates to worsen, which is what we saw last week.

And here's a very interesting and important note - when looking at the CPI numbers, it is important to understand the effect that the "Cash for Clunkers" program had on this index. The Cash for Clunkers program was very "creatively" accounted for as a reduction in the sales price of automobiles, which had to have a dramatic effect on lowering the CPI that was reported. Imagine how much higher CPI would have been had this "creativity" not been used. As even more inflationary fears creep into the economy, home loan rates will continue to rise.

Also adding pressure to Bonds and home loan rates is the Fed's plan to ration out their remaining purchases of Mortgage Backed Securities. The Fed has purchased around $950B year-to-date out of the $1.25T allotted for the program, which is now set to expire March 31, 2010. This means the Fed will be averaging about $14B a week in purchases, a lot less than $25B or so they had been doing up until recently. And anytime demand for an item slows down...including Mortgage Backed Securities...the price goes down. And in this case, it means that home loan rates will move higher.

The bottom line is that the heat is on...and home loan rates are starting to rise already. While home loan rates are still incredibly low, it is clear this won't last much longer - and we may not see rates at these levels again in our lifetimes. Give us a call if you want to discuss your own situation, or if you have a client, friend, family member, neighbor or coworker who might benefit from some information.

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Building on Upslope and Downslope Lots - What's the Difference?

Obviously, from the primary accessway, one type of lot slopes uphill and one slopes downhill.  But what does this mean for your clients when they're searching for a homesite?

The first thing your clients will need to understand is that each lot is unique and will require special design treatment.  Unlike urban developments with relatively flat lots, our mountainous terrain makes it difficult, if not impossible, to use standard home plans found online or in books.  Additionally, due to snow load and foundation requirements here in the high country, standard home plans just don't "fit the bill" for mountain homes.

By referring your clients to a qualified architect near the beginning of their property search, you'll be helping them streamline the process of designing and building their new home.

Let's take a look at a few considerations for building on sloped lots:

The "approach" aesthetic for upslope or downslope lots can be a major factor, with pros and cons for each.  A home built on an upslope lot is approached from below, with a focus on the front exterior facade.  This approach can give the home a more impressive appearance from the street.  In contrast, a downslope lot is approached from above, giving the roofline more emphasis.  This type of home, however, can present spectacular views upon entering the home.

Design considerations to be taken into account include tucking living spaces into the hillside and ensuring adequate egress for the home.  Overall, with creative design, these homes can be laid out to add drama, both exterior and interior. Since both types of homes require stairs, owners may want to consider aligning closets or other space to allow for a future elevator.

Access is generally more difficult on steeply sloped lots.  Downslope lots usually require a parking area and garage above the main level of the home.

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YOU DID IT! $8,000 Tax Credit Extended and Expanded By Congress

As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed new legislation that:

Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010. Expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.

REALTORS across the country sent nearly 500,000 letters to Congress through NAR's call to action. REALTORS in Colorado had a 20% participation rate!

GSE Loan Limits Increased for another year in High Cost Areas

On October 30th, President Obama signed into law a continuing resolution that will extend the present loan limits for FHA, Fannie and Freddie through the 2010 calendar year at 125 percent of local median home sales prices, up to a maximum of $729,750 in high-cost areas. The floor for FHA is $271,050; the floor for Fannie Mae and Freddie Mac conforming loan limits is $417,000.

Home sales have shown significant movement upwards in the past six months and reduced inventory in some segments of the housing market, but not in all. Home purchases in the middle-income and higher brackets have not moved much, and those markets must improve before we can experience a fully sustained housing recovery. These higher loan limits will help motivate qualified home buyers to purchase in those markets, McMillan said.

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Summit REALTORS? To Take on Breckenridge Town Council in Short Term Rental Issue

Tuesday night, the Summit Association of REALTORS? will ask the Breckenridge Town Council to take action and consider an ordinance that would prohibit HOA's from prohibiting short term rentals, unless already specified in the HOA's original documents. According to the town attorney, the town has the authority to weigh in on HOA's actions. The REALTORS? will bring the issue to Council because it appears a trend is bringing with small HOA's to amend their HOA documents to disallow short term rentals in the HOA, and impose severe fines for homeowners who do so. The result of these HOA' changes is that investment buyers are left with huge losses in yearly income, and these homes are sitting on the market with significant price reductions, unable to sell because no investment buyer to Breckenridge will consider a property that does not allow short term rentals. SAR is concerned the issue is a takings of private property rights, and that because 2/3 of homes owned in Summit County are vacation and investment properties, the Breckenridge Town Council should weigh in on the issue.

Glenwood REALTORS? Seeking to Increase FHA Loan Limits for Garfield County

Two years ago, when FHA loan limits across the nation in high cost areas were first increased from $417,000 to $729,750, Garfield County was left out of the mix, and loan limits were left at $417,000. Today, home prices in Carbondale in the $500,000-600,000 range are dropping artificially to get closer to the FHA loan limit of $417,000. The issue is bigger than that. The Roaring Fork Valley, from Aspen to Glenwood Springs, includes 3 counties: Eagle, Pitkin, and Garfield County. Eagle and Pitkin Counties had their loan limits increased, but Garfield County did not. At the confluence of these 3 counties is Carbondale, in Garfield County, El Jebel, in Eagle County, and Basalt, in Pitkin County. These three towns have similar markets with similar pricing. However, shoppers who want to buy in Carbondale, must put a higher down payment down to get an FHA conforming loan of $417,000. Or these same buyers could go across the highway to El Jebel or Basalt, and buy a similar home with a much smaller down payment because the conforming loan limit is $729,750. They could also buy a bigger home in the $729,750 conforming loan limit range. This has put Carbondale, and Glenwood Springs, at a competitive disadvantage. Over the past several weeks GSAR has been working diligently to educate legislators on the issue, and get Garfield County's loan limits increased. GSAR has garnered the support of U.S. Senator Michael Bennet to champion the issue at the federal level. On Saturday, Congressman John Salazar voiced his support for the increases in Garfield County. GSAR has also received support from State Representative Kathleen Curry, and the Carbondale Town Trustees are expected to do a resolution in support this week.

However, the loan limits nationally were just increased for another year. The National Association of REALTORS? is working to determine whether there will be an appeals process for GSAR to make a request for an increase for Garfield County. The reports are mixed. It appears that there may not be an appeals process, but NAR has indicated that the FHA has the authority to automatically increase numbers for counties across the country who warrant the increase. GSAR will continue to make every effort to get the loan limits increased for Garfield County.

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Rate Review

In Freddie Mac Primary Mortgage Mkt Survey (for the week ending November 6) in which the 30-yr fixed-rate mortgage (FRM) avg. 4.98%.  Last year at this time, the 30-year FRM avg 6.20%.

The 15-year FRM this week avg 4.40%. A year ago at this time, the 15-year FRM avg 5.88%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) avg 4.35%. A year ago, the 5-year ARM avg 6.19%.

The one-year Treasury-indexed ARM avg 4.47%. At this time last year, the 1-year ARM avg 5.25%.

Homebuyer Tax Credit Extended and Expanded!

Last week, a new Homebuyers Tax Credit bill was signed into law. The bill extends the tax credit for first-time homebuyers (FTHBs), as well as opens it up to current homeowners who are looking to buy. And even if you aren't looking to purchase - pass on this article to anyone you think might be in the market to do so. This is information that might benefit them greatly, and we'll be happy to be of service to them.

Here is a brief overview of the Homebuyers Tax Credit - and its benefits - based on the new bill.

Tax Credit for First-Time Homebuyers

FTHBs (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Tax Credit for Current Homeowners

The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010. Those in the military do have some special extensions on the timelines available.

What's So Great About a "Tax Credit"?

The benefit of a tax credit is that it's a dollar-for-dollar benefit, rather than a "tax deduction", or reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a first-time homebuyer who qualified for the entire benefit were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little or no income tax liability. For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!

Higher Income Caps

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible.

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price

Qualifying buyers may purchase a property with a maximum sales price of $800,000.

Remember, the new tax credit program includes a number of details and qualifications. Call or email today if you have questions or would like to see if you can benefit from the tax credit...and email this article along to anyone else you feel it might benefit as well! 

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Home buyers and folks receiving unemployment benefits both got the word that a bit more money and time is coming their way.

Just on Friday, President Obama signed into law a bill that extends unemployment benefits and the First Time Home Buyers tax credit, which is also being expanded to include benefits for homebuyers who aren't on the first time around buying a home. If purchasing a home is in the cards for you or anyone you know, you can get all the details of the homebuyer's tax credit in this week's Industry Essentials article below. But first, here are a few additional highlights from last week...including important job market news.

Last week's official Jobs Report showed that there were 190,000 jobs lost in October, higher than the 175,000 job losses that were widely expected. In addition, the Unemployment Rate rose to 10.2%, quite a bit higher than the 9.9% expected, and the highest Unemployment level since 1983.

While this number is bad, what is even more concerning is the "real" unemployment rate being closer to 17.5%. This includes those who have not searched for a job for at least four weeks, known as "discouraged or detached" workers, as well as those desiring full time work but having to settle for part time, the "underemployed". The only ray of sunshine within this anemic report were the upward revisions for August and September, showing 91,000 fewer jobs lost than previously reported.

Let's remember, in order to just keep up with population growth - or to keep the ranks of the unemployed from rising - there must be 125,000 jobs created each month. So the latest report of 190,000 jobs lost, really means we have fallen behind by 315,000 jobs, just last month.

In other news, Pending Home Sales for October were reported up 6.1%, mostly attributable to First Time Home Buyers rushing to get into contract before the original November 30, 2009 expiration date for the $8,000 tax credit - again, see below for details on the tax credit extension and expansion. Also last week, the Fed issued its latest Policy Statement without any big changes or surprises.

Remember, weak economic news typically causes money to flow from Stocks into Bonds, helping Bonds and home loan rates improve. Bonds struggled through the middle part of the week but were able to rally Friday on the heels of the poor Jobs Report. As a result, Bond prices and home loan rates ended the week slightly better than where they began.

TAKING THE TIME TO REALLY UNDERSTAND WHETHER YOU OR SOMEONE YOU KNOW MIGHT QUALIFY FOR THE EXTENDED AND EXPANDED HOMEBUYER TAX CREDIT COULD MAKE A BIG DIFFERENCE...  AND MANY PEOPLE ARE STILL UNAWARE THAT THIS CREDIT IS AVAILABLE! TAKE A MINUTE TO CHECK OUT THIS WEEK'S INDUSTRY ESSENTIALS FOR MORE DETAILS, AND PASS THEM ON TO ANYONE YOU KNOW WHO MIGHT BENEFIT.

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Regarding deed restrictions on short term rentals, send this to your HOA:

Dear [decision maker name automatically inserted here],

Breckenridge is a resort community that relies heavily on tourism and guests to our community. In order to sustain our town's economic viability, short term rentals must be supported and protected by the town to ensure private property rights may flourish in our town. There appears to be a trend brewing to limit short term rentals in Breckenridge and around the county. Without investment opportunities for homebuyers, the real estate market will fade, tourism will erode, and the livelihood of Breckenridge could be in peril. In addition, jobs in the property management, real estate, and construction trades industries will be hurt as short term rentals go away.

Please consider an ordinance that would prohibit the prohibition of short term rentals unless otherwise specified in the original HOA documents. By doing so, the town is ensuring the protection of private property rights for homeowners who want to rent their property, but also ensure Breckenridge is a premier resort destination with all types of lodging available to visitors.

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IT'S THE THOUGHT THAT COUNTS...OR IS IT? As we look back at last week, think about this for starters - the housing industry received some welcome good news, as Existing Home Sales came in better than anticipated, and marking the third straight month that Existing Home Sales have increased. And perhaps even better, the supply of unsold homes on the market dropped from the prior reading of 9.8 months down to 9.4 months - which is the best level seen in over a year. With home loan rates still at low levels and homes priced to sell - this is a great time for potential homebuyers to stop thinking, and go ahead and take some action.

Despite that bright spot of news, last week's Consumer Sentiment report - which measures consumers' attitudes and expectations concerning both present and future economic conditions - showed that consumers still think the economy has a ways to go, as the report did come in a bit weaker than anticipated. According to the report last week, Consumer Sentiment came in at 66 for the month of July, down from June's reading of 70.8. Take a look at the chart below for an interesting historical perspective on this report.

And one of the major reasons for the decline in Consumer Sentiment was ongoing concern over unemployment - and last week, Initial Jobless Claims reportedly rose by 554,000. While this number was high, it was essentially in-line with expectations of 557,000.

The big news that many headlines featured was the number of Continuing Claims, which fell from 6.31 million the prior week to 6.22 million. And although this drop was reported as positive news, we need to remember that a large number of people are still unable to find jobs, but are no longer being counted in Continuing Claims because their unemployment benefits have expired. The bottom line is that it will be hard for the economy to really turn higher with momentum until the labor market starts to turn around.

Stocks had a good week, with the Dow closing above 9,000 on Thursday for the first time since January 6th, as well as finishing the week with its strongest two-week span for blue chips since 2000. Since Stocks moving higher can drain money away from Bonds, the rally in Stocks - combined with the announcement of next week's Treasury's auction of $115 Billion in Notes - put selling pressure on Bonds toward the end of the week. Despite some volatile mid-week action, home loan rates closed out the week near the level where they had begun the week.

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"WORK, WORK, WORK...IT'S A LABOR OF LOVE." The words to Sammy Kershaw's country song sound pretty good right now to a number of Americans...much better, in fact, than the recent employment numbers do.

Last week, the Labor Department's Jobs Report didn't show much love for US workers. As you can see in the chart below, the Labor Department reported 263,000 jobs lost in September, which was quite a bit worse than expectations. Compounding the bad news was an up-tick in the unemployment rate to 9.8% as well as downward revisions to prior Jobs Reports, showing an additional 13,000 jobs lost in July and August.

Also within the Jobs Report were declines in the Average Workweek and in Average Hourly Earnings, both of which came in below expectations. The shortening of the Average Workweek may be telling us that the amount of people forced to accept part time work is growing. The decline in the Average Hourly Earnings underscores the weakness in the labor market, as it indicates that companies have no pressure to raise wages...particularly with unemployment near 10%. An improvement in Hourly Earnings will likely give us the first sign of labor recovery, so this will be important to watch in upcoming Jobs Reports.

Personal Spending was also reported last week, indicating that spending rose in August at its fastest monthly pace in almost 8 years! And while the news appears to be good for the economy, we have to take it with a grain of salt, since a large part of that spending was the result of the "Cash for Clunkers" vehicle purchasing incentive program, which is no longer in effect.

Finally, the housing industry received some good news last week, as Pending Home Sales were up significantly at 6.4%, which was far above expectations. Some of the increase is likely due to folks working fast to take advantage of the $8,000 First-Time Homebuyer Tax Credit, which is currently set to expire on November 30th...and be sure to ask me about this, if you or any of your friends, family members, neighbors or coworkers could benefit from this great incentive. The Case-Shiller Home Price Index also came out last week with news that home prices fell less than expected. The report, which looks at the 20 largest cities, also showed that only 2 cities (Las Vegas and Seattle) experienced price declines when compared to the previous month. Overall, the numbers appear to indicate that the worst of the housing price declines may be behind us.

SPEAKING OF THE HOME, IF YOU HAVE AN EXTRA ROOM THAT YOU'VE BEEN CONSIDERING TURNING INTO A HOME OFFICE, TAKE A LOOK AT THE MORTGAGE MARKET GUIDE VIEW ARTICLE BELOW. YOU'LL FIND TIPS TO MAKE SURE YOU GET THE MOST OUT OF YOUR SPACE AND CREATE AN OFFICE THAT'S COMFORTABLE AND EFFICIENT.

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Despite the Bond market being closed on Monday in observance of Columbus Day, the Stock market will be open, and the week ahead has plenty of market-moving economic reports on tap.

On Wednesday, the Retail Sales Report will be released. This is the most-timely indicator of broad consumer spending patterns, so the markets will be watching to see if it comes in near expectations. Thursday brings us inflation news when the Consumer Price Index (CPI) is reported. After Bernanke's comment last week about the Fed protecting against inflation, the markets will be watching this report closely.

On Friday, the Preliminary Consumer Sentiment Index will be reported. This survey is conducted by the University of Michigan and measures consumer attitudes regarding present and future economic conditions. The index rose at the end of September, so the markets will be watching to see if that boost in confidence continued into this month's preliminary report.

In addition to the important economic reports described above, industry experts and traders will be paying close attention to the release of the Meeting Minutes from the Fed's most recent Open Market Committee meeting. Once again, any talks about future inflation could move the markets - particularly after Bernanke's comments last week.

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 you can see from the chart below, Mortgage Bonds were unable to close above a tough technical ceiling of resistance last week and were ultimately pushed lower, causing home loan rates to rise.

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Special thanks go out to Jim Hansen, SSBR Government Affairs Committee Chair, who coordinated the effort with the other organizations. The event was paid for using Issues Mobilization dollars from the Colorado Association of REALTORS?.

The election will be an entirely mail-in ballot, with the final today to submit completed ballots will be on Tuesday, November 3rd. The city council candidates are:

District 1 (four years): Cari Hermacinski (at-large incumbent, council president pro tem), Kevin Bennett (former council president) District 2 (four years): Kenny Reisman, Ken Solomon District 3 (four years): Walter Magill (District 3 incumbent) At-large (two years): Jim Engelken (former councilman), Kyle Pietras Not up for election: Scott Myller (District 1), Meg Bentley (District 2), Jon Quinn (District 3) Leaving council: Loui Antonucci (District 2, council president, term-limited), Steve Ivancie (District 1, term-limited) Eagle-Vail Ballot Initative 5A Would Impose Property Tax Increase To Pay For Community Pool; Other Facilities

On Tuesday, November 3rd, Eagle-Vail voters will decide whether to increase property taxes in the community to pay for capital improvements for the swimming pool, parks, trails, and golf course. The Eagle-Vail Metro District Board has determined that with decreases in property values, and Eaglebend becoming a part of Avon, the District's revenue stream has deteriorated and new revenue sources must be determined to pay for these capital improvements. The property tax increase would equate to $40 a month per $100,000 of home value. For a home valued at $500,000, the property tax would be about $200 a year for the capital improvements.

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STEWART TITLE is excited to announce that Dr. Ted C.Jones is coming to Summit County October 5th to provide a presentationon Real Estate and the Economic Outlook. An accomplised speaker, he has given more than 200 presentations on real estate and the economic outlook during the past three years. Representative real estate groups addressed include: National Association of Realtors*, National Association of Corporate Real Estate Executives, Fannie Mae, The Housing Round Table, Association of University Real Estate Associates, the Institute of Professionals in Taxation and the National Conference on Unit Value Standards. He serves as a member of board of directors of the Houston Association of Realtors, the largest individual Realtor organization in the country.

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Many Beaver Run owners are also wondering about the status of the commercial building and conference center purchase. According to Lou Herman, the loan is very close to being finalized but as is typical with a complicated transaction, there are a few more details to iron out. It should be any day now but there always seems to be "one more thing". No one is more anxious to put this to bed, than Lou.

The financial position of Beaver Run is in good shape. Obviously the lack of top line has affected us all but the cash position and profits of both the rental program and the HOA are better than last year. The cash position is better by $2,000,000. The staff has done a remarkable job of controlling expenses.

We will begin our 2010 budgeting process in a couple of weeks. The group sales and individual reservations are starting to show a small trend upward. Hopefully this trend will continue and we can then plan on an increase in revenue for 2010.

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U.S. Senate Did NOT Vote on Whether To Extend And EXPAND $8,000 Home buyer Tax Credit Last Night; Deal Still In The Works The tax credit agreement of yesterday has changed. The Senate is still negotiating terms of the credit and how to proceed. A new agreement on extending and expanding the tax credit has been introduced as a separate bill. The voting procedure on this bill is undecided. It could be voted upon separately from the Unemployment Insurance bill, or not. The timing is still up in the air, too. According to NAR, the tax credit is still very much in the mix.

We will provide you updates as they become available. This is a very important issue to keeping the real estate industry back on track. Many financial analysts are saying that if the tax credit goes away, home sales will dramatically fall off again. It appears this tax credit is driving home sales in the country right now, and NAR is working very hard to ensure it continues.

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"ACTION IS THE REAL MEASURE OF INTELLIGENCE." Napoleon Hill. Last week was definitely action packed, though only time will tell how intelligent each action was - here are the highlights.

On Wednesday, the Fed announced that it decided to keep the Fed Funds Rate steady at the current 0 - .25% range, the lowest ever. They also indicated that "economic conditions are likely to warrant exceptionally low levels of the Federal Funds Rate for some time" and that "inflation pressures will remain subdued in coming quarters".

Also last week, the Federal Deposit Insurance Corp (FDIC) announced that it may set up a "bad bank" as a vehicle to buy toxic or illiquid assets from banks. What does a "bad bank" do? No, it doesn't talk back to you, give you attitude and treat you with disrespect. Lenders and the entire financial sector are struggling with "mark-to-market" accounting issues, and in the absence of a repair of the mark-to-market system, lenders are forced to sell assets in a market where there are few buyers. Hence the bad bank plan, to create an entity that will purchase the assets that no one else will buy, which is yet another very creative way for the government to breathe life back into the financial sector. This action is not finalized, so we'll keep watching closely to see how it plays out in the days ahead.

In other news, the House of Representatives passed President Obama's $819B stimulus package, by a vote of 244-188, being split fairly cleanly by party lines. Existing Home Sales did surprisingly come in a bit better than expected, but 4th Quarter Gross Domestic Product (GDP) numbers showed the economy contracted in the 4th quarter, as you can see in the chart below. While the numbers were better than estimates, the economy was still at its slowest pace in 26 years.

Last week was indeed action packed, and Bonds and home loan rates felt the effect, with rates ending the week about .25% worse than where they began.

TAKING ACTION TO MAKE SURE YOUR BUDGET IS IN ORDER IS CERTAINLY AN INTELLIGENT MOVE DURING THESE CHALLENGING ECONOMIC TIMES. CHECK OUT THIS WEEK'S SPECIAL MORTGAGE MARKET VIDEO VIEW FOR FIVE GREAT TIPS!

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In other news, there was mixed inflation data last week, as the Producer Price Index (which measures wholesale inflation) came in significantly higher than expected. However, the Consumer Price Index was reported in line with expectations, signaling that inflation remains low - at least for now. Inflation will ultimately creep back into the economy - and as the arch-enemy of Bonds and MBS - will also contribute to rising interest rates.

Housing Starts for November were in line with estimates and, as you can see in the chart below, the housing sector seems to have stabilized after bottoming out at 458,000 Housing Starts in April.

Bonds and rates were able to improve in the middle of the week and as a result, Bonds and rates ended the week about where they began.

Rate Review

In Freddie Mac Primary Mortgage Mkt Survey (for the week ending December 18th) in which the 30-yr fixed-rate mortgage (FRM) avg. 4.94%.  The 30 yr has not been this low since the week ending April 30, 2009 when it avg 5.19%

The 15-year FRM this week avg 4.38%. A year ago at this time, the 15-year FRM avg 4.92%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) avg 4.37%. A year ago, the 5-year ARM avg 5.60%.

The one-year Treasury-indexed ARM avg 4.34%. At this time last year, the 1-year ARM avg 4.94%.

Meanwhile Building Permits, which are a leading indicator of housing construction, reached the highest level seen in the past year. This is encouraging, and the extension of the Home Buyer Tax Credit should provide an added boost for home sales over the next few months.

Bonds and rates were able to improve in the middle of the week and as a result, Bonds and rates ended the week about where they began.

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