June 29, 2010
June 2010 Summit County Real Estate.Net Notices
Garfield County Comp Plan Public Meetings Set For Remainder of Process; GSAR To Meet With County Staff
The County has announced its schedule for the remaining public meetings on the 2030 Garfield County Comprehensive Plan prior to the County's approval of the plan. GSAR is concerned about possible violations of private property rights and will be meeting with County staff this week to extract possible landowner issues. GSAR highly encourages REALTORS to participate in the public meetings. Below is the remaining public meeting schedule:
May 17, 2010 at 6:00 p.m.- Citizens Advisory Committee Meeting- Glenwood Springs, CO- We anticipate that the CAC will complete their work and will forward their recommendation to the Planning Commission at this meeting.
June 2, 2010 at 6:30 p.m.- Planning Commission Public Work Session- Board of County Commissioners Meeting Room- Glenwood Springs, CO- Review the recommendation from the CAC. Jeff Winston- Winston Associates will attend this session.
June 9, 2010 at 6:30 p.m.- Planning Commission Public Work Session- Board of County Commissioners Meeting Room- Glenwood Springs, CO
June 16, 2010 at 6:30 p.m.- Planning Commission Public Work Session- Board of County Commissioners Meeting Room- Glenwood Springs, CO- Comprehensive Plan completion by the Planning Commission.
July 13, 2010 from Noon to 2 p.m.- Garfield County Courthouse- 4th Floor Jury Room Glenwood Springs, CO- Joint Board of County Commissioners/Planning Commission public meeting to discuss the Comprehensive Plan document completed by the Planning Commission. Jeff Winston- Winston Associates will attend this meeting.
July 13, 2010 at 6:30 p.m.- Board of County Commissioners Meeting Room- Glenwood Springs, CO- Joint Planning Commission/CAC meeting to discuss the Comprehensive Plan document completed by the Planning Commission. Jeff
Winston- Winston Associates will attend this meeting.
August 16, 2010 at 6:30 p.m.- Board of County Commissioners Meeting Room- Glenwood Springs, CO- Comprehensive Plan Public Hearing conducted by the Planning Commission. Jeff Winston- Winston Associates will attend this hearing.
August 17, 2010 at 6:30 p.m.- Garfield County Human Services Building Rifle,
CO- Comprehensive Plan Public Hearing conducted by the Planning Commission.
Jeff Winston- Winston Associates will attend this hearing.
August 18, 2010 at 6:30 p.m.- Board of County Commissioners Meeting Room- Glenwood Springs, CO- Comprehensive Plan Public Hearing and Final Plan Adoption conducted by the Planning Commission. Jeff Winston- Winston Associates will attend this hearing.
September 8, 2010- Time to be determined - Board of County Commissioners Meeting Room- Glenwood Springs, CO Presentation by Planning Commission of adopted Comprehensive Plan to the Board of County Commissioners
Frisco Feeling Good About New Construction In Town
With 11 new construction projects in town a "go", and transfer fee's up, the town of Frisco is encouraged that the construction industry may be moving past the recession, at least in the town of Frisco. The new ventures include affordable housing, condos and mixed-used buildings, and a new recreation area that will have a tubing hill and a day lodge. The developers have to get a certain amount of pre-sales to get financing, and they are working hard to get that done. The sounds of saws and drills may actually be a pleasant sound this summer in Frisco.
Vail Updates Fee-In Lieu Program Under Inclusionary Zoning And Commercial Linkage Laws
At a recent meeting, the Vail Town Council modified requirements for the Fee-in-Lieu program that allows developers to pay a fee, instead of developing actual affordable housing units. The new rates for 2010 have been reduced, based on an average over the past 2 years. For 2010, the inclusionary zoning fee in-lieu will be $236.65 per square foot, down from $398.65 per square foot the previous year. Commercial linkage payments will be $189,990 per employee to be housed, down from the $329,209 rate used in 2009. According to town staff, the rate is calculated by determining the gap between a two-person household earning 120 percent of the 2009 area median income and the 2009 median cost per unit plus an administrative fee of $3,000 per employee, or $3.65 per square foot. The two-person area median income in Vail increased $2,700 from 2008 to 2009 and the Vail median price per square foot decreased to $394. Since the law was first approved in 2007, the program has received nearly $600,000 in fee-in-lieu payments. Those dollars are used to “buy-down” existing condo or townhome stock in the town of Vail to be used for affordable housing.
Two important reports bookend the week ahead, and hopefully both will show changes in a good economic direction.
Monday's Personal Income and Personal Spending Reports will give us a look at the Core Personal Consumption Expenditure (PCE), which is the Fed's favorite gauge of inflation. Rest assured the Fed will be watching this report very closely, as it could impact their decisions on rates and Policy Statement verbiage, as we discussed.
Thursday will bring another Initial Jobless Claims Report. At this stage in the economic recovery, the weekly Initial Jobless Claims readings we are seeing are still pretty high, which suggests that businesses are both reluctant to hire and are looking to trim overhead.
WMRA URGES NAR TO ADDRESS CONDO FINANCING ISSUES
The Western Mountain Resort Alliance (WMRA) is composed of boards of REALTORS® of destination ski resorts in the Mountain West including: Park City, Utah; Sun Valley and McCall in Idaho; Jackson Hole, Wyoming; Crested Butte, Steamboat Springs, Summit County, Vail, Winter Park and Telluride in Colorado; Tahoe, California; Big Sky, Montana; and Whistler/ Blackcomb in British Columbia, Canada. We are committed to the marketing and selling of resort real estate and protecting the benefits our owners of vacation real estate enjoy. The Issue Our membership is becoming increasingly concerned about the difficulty of obtaining financing in condominium transactions in our resort areas due to strict Fannie Mae & Freddie Mac condo guidelines. The condo markets in our areas have been particularly hard hit by the housing downturn. The current guidelines have made it almost impossible for condo transactions to be completed, even for buyers with strong credit and healthy down payments.
It’s a self-fulfilling prophecy: The GSE’s don’t want to lend for fear of foreclosure, but if they don’t lend, and sellers in these condos can’t sell their properties, they will foreclose.
Last week experienced a dramatic push and pull of wildly erratic markets. And we could be set up for an encore performance in the week ahead as anxiety persists in the European financial system.
The drama began on Monday when news of a pending bailout package for Greece sent Bonds lower, as investors pulled out of this "safe haven" and started looking toward stocks.
The very next day Stocks were back down, and Bonds were pushed up and out of their trading range, as 40,000 Greeks took to the streets to protest details of the bailout plan.
Capping off the week of volatility was Thursday afternoon's Stock Market freefall scare, during which the Dow plummeted 998 points then recouped more than 600 points - all in the span of 15 minutes.
In addition to adversely affecting a host of public projects, the bill would have applied to all construction and maintenance contracts, including home remodeling. Given that contractors already receive adequate payment protections, we believe that the proposed change was unnecessary and would have increased the borrowing costs to owners.
HB 1162 died on the House Floor on Tuesday, April 20. CAR was opposed to the legislation.
NAR Update on Recent Calls for Action Flood Insurance: On April 15, 2010 Congress passed, and President Obama signed, legislation to renew the National Flood Insurance Program (NFIP) through May 31, 2010. Congress allowed the NFIP to expire on March 28, 2010. By law, flood insurance is required for the purchase of real estate in a 100-year floodplain. The lapse in flood insurance resulted in many delayed, and even cancelled, transactions. During the lapse period NAR worked with Federal agencies, GSEs and bank regulators to clarify what lenders and insurers may and may not do to help work through the program's expiration. NAR will work closely with our congressional allies to help ensure a lasting reauthorization and extension prior to the May 31 deadline. NAR Homepage on Natural Disaster/Flood Insurance
Rural Housing: Legislation has been introduced in the House by Reps. Kanjorski (D-PA) and 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 change should prevent future disruptions to the program of the type that were just experienced. Passage is expected in the House soon. The Senate is now working on a similar bill.
In other news, Consumer Confidence rose sharply in April, to its highest reading since September 2008. This number is important because the more confident that consumers feel...the more likely it is that they will help fuel the economy. Also, the Commerce Department's Gross Domestic Product Report indicated that the economy grew for the third straight quarter, despite the report coming in slightly below estimates. Inflation readings within the report remained tame, giving the Fed cover to keep interest rates low, with inflation appearing to be subdued. But inflation concerns can arise quickly, and although the Fed is not acting just now...we can be sure they are watching very carefully.
Greece was still the word last week, as Standard & Poor's Bond rating agency downgraded the debt of Greece to "junk" status. The lack of confidence in Greece's ability to repay their debt has pushed yields on their 2-Year Notes up to a whopping 18% - and by way of comparison, our own US 2-Year Notes are yielding just over 1%! This is why credit downgrades are such a concern, and why the warnings from Moody's about the US overspending must be taken very seriously.
There has been much greater volatility in the Bond market lately, with large price swings in both directions. It's no coincidence that the volatility increased just after the Fed exited their buying program. While concerns about Greece have caused some investors to lose some confidence in European debt instruments, and move their holdings over to US securities, which are viewed as a safer bet, the situation is fluid and there's no telling how much and for how long Bonds and home loan rates will benefit from the situation. Overall - the mix of news and market activity benefitted Bonds and home loan rates last week, improving to better levels over the week prior.
Legislative Session Comes to a Close
The final gavel at the State Capitol dropped on Wednesday, May 12, bringing the 2010 session to a close. In total, 649 bills were introduced into the legislature; the CAR Legislative Policy Committee reviewed 56 and took an active position on 32 of them. The real estate industry once again fought numerous efforts to modify local land use processes and curb growth and property investment. REALTORS? also successfully introduced and passed legislation that made positive changes to the Colorado Foreclosure Protection Act, as well as legislation that enables commercial brokers to secure and protect hard-earned commissions. In the coming weeks, CAR will provide a full recap detailing the final outcome of our legislative efforts.
Controversial Rafting Bill Dies; Tentative Compromise Reached between Gunnison Property Owners and Rafting Outfitters
Despite the fact that the infamous rafting bill, HB 1188, died on the vine last week in the state legislature, both sides of the issue, have filed numerous state ballot initiatives, potentially to go to the voters in November. And while both sides continue to argue, the issue has gone back to where it began, on the Taylor River in Gunnison County. Local property owners, who last year made rafting impossible on the section of the Taylor river that ran through his property, has now reached a tentative agreement with rafting outfitters so that the rafters can begin their rafting season in full. The agreement will allow rafters to make 4 runs a day, so that fisherman can enjoy the river as well. Rafters will also be allowed on the private property to carry rafts across a bridge. The bridge had been the crux of the issue all along. The property owner had built a low lying bridge across the Taylor River, which made the waters unnavigable, unless the rafters portaged their rafts onto private property to circumvent the bridge. The river outfitters association thinks the agreement by the property owner is a nice gesture, but that rafters should not have to enter into an agreement to begin with, believing the property owners permission was not necessary for them to raft the waters. Private property rights advocates believe they will win in public opinion, because private property rights are being violated by rafters across the state.
Garfield County P & Z Holding Public Worksessions on Comp Plan; REALTORS® Encouraged to Attend
Garfield County is continuing its work to update the County's 2030 comprehensive plan. The plan came out of discontent by the Planning and Zoning Commission because the current comp plan does not sync with the zoning code. The new comp plan is intended to ensure both documents work together. The two crux issues are 1. Structural and 2. Ensuring the County Comp Plan works with community comp plans. GSAR has retained premier land use attorneys to review the comprehensive plan and identify any proposals that conflict wiht private property rights. The attorneys will have a memo on the plan on Tuesday June 8th. On Wednesday, June 9th, the Garfield County Planning and Zoning Commission will hold its second in a series of public meetings on the comprehensive plan. The next meeting will be on Wednesday, June 16th. In early discussions, GSAR is very concerned about plans in the proposal that would change density in the county,and down zone some properties. The current plan allows 1 unit per 6-10 acres in the Roaring Fork Valley, and 1 unit per 2 acres in the Colorado River Valley. The new plan, would allow 1 unit per 2-6 acres countywide. Public input has been minimal at these meetings, and REALTORS® are STRONGLY encouraged to attend the meetings and provide input.
Yampa Valley Electric Association Requiring Electric Meter Covers Be Removed
In a final letter dated June 2nd, the Yampa Valley Electric Association (YVEA) gave final notice to Steamboat residents that they must remove any covers on electric meters and sockets within the next 30 days. If the covers are not removed, YVEA will be "forced" to disconnect service or remove equipment from a home. In the past few months, the local Building Department informed YVEA that covering electric equipment is a violation of the National Electric Code. The covering of the meter socket is also against the Associations rules. Many residents in Steamboat have covered, or enclosed, the unsightly gray meters. YVEA recognizes that the meters are not attractive, and are allowing the meters and meter sockets to be painted the color of the house. If a homeowner cannot remove any covers by July 2, residents are asked to contact YVEA. If YVEA is forced to remove their meters, approval of the Building Department will be required before meters can be reinstalled, and service restored. The Yampa Valley Trades Construction Association (YVTCA) has tried to work with the YVEA for months to prevent the dismantling of meter covers, but the Association has not budged at all. If you have questions about the policy, please contact the electric association.
US NEWS & WORLD REPORT Lists Colorado Senate Race as one of 11 Hottest Races This Election Year
Republicans will gain seats in Congress in November. They only need to win 40 seats to take over the majority, and it's a real possibility. In the Senate, Republicans need to win 10 seats to take over the majority. While that's unlikely, it's not entirely out of the question. In a recent article in US NEWS & World Report, the magazine outlined the 11 hottest races in the House and Senate that could make all the difference in the World. The outcome of the Colorado Senate Race for a seat currently held by Democrat Michael Bennet is one of those races. Here is the excerpt from the article that outlines the Colorado Race:
Colorado 2008 Presidential elections: Obama 54% | McCain 45%
Independent voters have long found fertile ground in Colorado, where they call the shots. It's a state that can swing quickly, too. Bill Clinton captured Colorado in his first run, then lost it in his re-election bid. Likewise, while former Vice President Al Gore lost it in 2000, Obama won the state comfortably in 2008.Now Democratic incumbent Michael Bennet, who was appointed by the governor last year to fill the seat vacated by current Interior Secretary Ken Salazar-is facing a crowded field of contenders.
First he must survive a liberal primary challenge from former state House Speaker Andrew Romanoff. If Bennet triumphs, he will square off against the winner of the Republican primary between the GOP establis hment favorite, former Lt. Gov. Jane Norton, and Tea Party darling Ken Buck. The district attorney in Weld County, Buck has won the endorsement of activists on the right, including Sen. Jim DeMint, the South Carolina conservative, for supporting the repeal of healthcare legislation, term limits for elected federal officials, and a constitutional amendment mandating a balanced budget. The GOP primary will be a key test of the conservative movement's electoral clout."
Steve Ivancie Announces Campaign Against Baumgardner for House District 57
Former Steamboat Council member and Democrat Steve Ivancie has announced his bid for the State House District 57 seat currently held by Republican Randy Baumgardner of Hot Sulpher Springs. The seat has long been a republican stronghold and Ivancie hopes to make his stake as a democrat in the seat.
Ivancie served on the Steamboat City Council for 8 years. House District 57 includes Garfield, Grand, Moffat, Rio Grande, and Routt Counties. All but Routt are republican strongholds. Routt has had a strong democratic vote for the last several elections.
Legislative Session Comes to a Close
The final gavel dropped on Wednesday, bringing the 2010 session to a close. In total, 649 bills were introduced into the legislature; the CAR Legislative Policy Committee reviewed 56 and took an active position on 32 of them. The real estate industry once again fought numerous efforts to modify local land use processes and curb growth and property investment. REALTORS® also successfully introduced and passed legislation that made positive changes to the Colorado Foreclosure Protection Act, as well as legislation that enables commercial brokers to secure and protect hard-earned commissions. In the coming weeks, we will provide a full recap detailing the final outcome of our legislative efforts.
Right-to-Float Bill fails to emerge from Conference Committee The legislative debate on HB 1188 by Rep. Kathleen Curry (I-Gunnison) finally came to an end on Wednesday. As previously reported, the "right-to-float" bill – which sought to expand the traditional use of waterways by commercial rafters – was effectively nullified when the Senate amended it into a study last month. Weeks later, Rep. Curry asked the House to reject the amendment, and the bill was referred to a conference committee for further debate.
The last-minute effort proved to be unsuccessful as the committee was unable to reach a compromise. HB 1188 died on the calendar when the legislature came to a close. CAR opposed the bill over concerns with regard to the imposition of private property rights without just compensation.
Homebuyer's Tax Credit Expires This Week!
Thousands of Dollars Could Slip Through Your Fingers!
The heat is on for those who are out shopping for homes right now - as the Homebuyers Tax Credit is about to come to an end.
Last November, the government expanded and extended the new Homebuyers Tax Credit. According to the program, first-time homebuyers are eligible for a tax credit of up to 10% of the purchase price of the home, with a maximum credit of $8,000. And current homeowners are eligible for up to $6,500.
Although military personnel may qualify for a special extension, the vast majority of homeowners must have contracts in effect no later than April 30, 2010 and must close no later than June 30, 2010 to qualify for the credit.
This means that homebuyers now have less than one week to get their paperwork going to qualify for this credit, before it goes away!
Here are some important details about this 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 tax liability that would only reduce $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.
Even Better... It's Refundable!
Remember, because it's a tax credit, it's refundable! That means a 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!
What are the Income Caps?
Single tax filers with incomes 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 with incomes of $145,000 and above are ineligible.
Joint filers with incomes 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 with incomes of $245,000 and above are ineligible.
What's the Maximum Purchase Price?
Qualifying buyers may purchase a property with a maximum sales price of $800,000.
If you or someone you know is in the process of purchasing a home, this is an important week to take action - feel free to forward this article to anyone who it might benefit. And give us a call with any questions - the clock is ticking and the deadline is Friday!!
Colorado REALTORS® take to the Hill in Washington, D.C.
CAR Leadership and well over 100 Colorado REALTORS® ascended upon our nation's Capitol this week to meet with members of our Congressional Delegation and to discuss important issues facing the real estate industry. Several topics were addressed, including the need to protect affordable and safe financing for American families and reform of Fannie Mae and Freddie Mac. More on the Federal Legislative Agenda
NAR to Issue Call for Action on Sunday
On Sunday, May 16, NAR will be launching an all member Call for Action to urge the House and Senate prevent new tax burdens on Real Estate.
Congress is considering changes to the tax code in order to pay for a number of tax provisions expiring in 2010. Two of these provisions would impact real estate. First, Congress is proposing that all owners of rental properties be required to file IRS 1099 forms on service providers such as electricians, plumbers and landscapers. This onerous provision would apply to even the smallest landlord.
In addition, Congress is considering taxing "carried interest" at ordinary income rates instead of capital gains. Carried interest rules govern how general partners in real estate investments pay taxes when the investment is sold.
Last week's meeting of the Federal Open Market Committee ended without any major changes...no change to the Fed Funds Rate, and no change to the now-famous verbiage in their Policy Statement, stating that rates will remain low for an "extended period" of time. While the Fed does not control home loan rates, what does all this mean for those seeking home financing in the months ahead? Read on for details.
There are two important things to note about last week's Fed meeting. First, despite strong earnings, a stronger Stock market, and better consumer confidence and housing numbers, St. Louis Fed President Thomas Hoenig remains the lone dissenter to the verbiage in the Policy Statement on keeping rates low for an "extended period." He feels that there is a strong risk of inflation ahead...and that the Fed needs to prepare the markets for the eventual hikes that will be coming to the Fed Funds Rate. When the Fed does indeed change this language, it will signal that the Fed has a consensus on inflation being a threat...and since inflation is the arch-enemy of home loan rates, the change in verbiage will cause rates to move higher.
In addition, the Fed made no mention in their Policy Statement about selling any of their Mortgage Backed Security (MBS) holdings - and the added supply coming into the market will also cause home loan rates to rise. That said, the Fed may have discussed the topic during the meeting, and it could come up when the Meeting Minutes are released. There is growing concern that if the Fed doesn't begin selling some of these MBS holdings by 2011 that additional asset bubbles may arise. It's likely that the Fed will look to sell a meaningful chunk by year end, and this will be yet another headwind for home loan rates during the coming year.
If you want to see if you can benefit from the current low-rate environment before these items adversely impact home loan rates, please give us a call or send us an email...and as always, please feel free to pass along this newsletter to a friend, coworker or family member that might benefit.
Commercial Real Estate Broker's Commission Security Act Introduced in House
As reported last week, CAR has been actively involved in drafting a bill which would permit a broker involved in a lease transaction to place a lien on commercial property where there is a written agreement between the broker and property owner or owner?s agent. Brokers, who often work for months and even years on a deal to earn a commission, deserve a mechanism in place that protects them.
We are pleased to report that HB 1288 was introduced in the House this week and has been assigned to the House Judiciary Committee. In addition to the bill?s primary sponsors, Rep. B.J. Nikkel (R-Loveland) and Sen. Suzanne Williams (D-Aurora), it has received bipartisan support from a group of 15 co-sponsors. HB 1288 is scheduled for its first hearing on March 1st.
Amendments to the Foreclosure Protection Act Moves Forward
HB-1133, by Rep. Tom Massey (R-Poncha Springs), jumped its first hurdle this week after being voted unanimously out of the House Judiciary Committee.
The bill seeks to make several positive changes to the Colorado Foreclosure Protection Act: clarifying the definition of ?Equity Purchaser;? exempting transactions that use the Short Sale Addendum; modifying the definition of a ?Residence in Foreclosure? as it pertains to the Equity Purchaser provisions of the Act; and modifying the requirement to use the native language of non-English speaking home owners in the Foreclosure Contract to Buy and Sell.
These amendments are a result of collaboration between the Colorado Association of REALTORS?, the Attorney General?s office, Division of Real Estate, Public Trustees, and various real estate attorneys.
CAR believes these changes will provide sellers the protections they need, while eliminating the chilling effect the Act has had on many potential transactions of distressed properties. The next step is a vote on the House floor.
Mortgage Industry Town Hall Meeting featuring FHA Commissioner David Stevens
The American Southwest Mortgage Corporation and the Colorado Association of Mortgage Brokers will host a town hall meeting on Friday, February 19th from 1:00 ? 4:30 pm. at the University of Denver Campus.
The forum, moderated by CBS 4 News Anchor Jim Benemann, will focus on the newest developments in FHA Lending Practices featuring Assistant Secretary for Housing and FHA Commissioner David Stevens and Colorado DRE Director Erin Toll. We are honored to have CAR President George Harvey participate in the panel as well. Cost of the event is $35/person. Click here to register.
Forecast for the week of June 7th
There will be plenty of inflation news for the Fed to gather this week, ahead of its meeting later this month. First, there's Wednesday's Producer Price Index, which measures inflation at the wholesale level, which will be followed by Thursday's Consumer Price Index. As mentioned above, inflation is the arch enemy of Bonds and home loan rates, so it will be important to see what these reports reveal.
Housing, manufacturing, and job news are also in store this week, with Wednesday's Housing Starts and Building Permits Reports (which give us an update on the health of the new construction sector of the housing market) and Thursday's Philadelphia Fed Report (which gives us an update on the manufacturing sector).
We'll also have another weekly Initial Jobless Claims Report. Initial Jobless Claims numbers have remained stubbornly high. The most troubling numbers in last week's report are the additional 5.13M people claiming EUC (Emergency Unemployment Compensation), which are benefits lasting longer than 26 weeks, up to 99 weeks in total.
Bonds and home loan rates have rallied in the last few months, helped by the uncertainties in Europe. But remember, traders are fickle, and stabilization in Europe could bring an end to this rally. We'll be watching closely to see what happens this week.
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In Colorado, it's an epic election season. Colorado is being played by the top political pundits as one of the most pivotal states in determining whether the democrats or republicans hold control of Congress. Freshman Senator Michael Bennet(D) is fighting to hold his seat against fellow Democrat Andrew Romanoff in the primaries. Once that battle is fought, the winner will compete in November against Republican and former Lt. Governor Jane Norton who is trying to fend off Ken Buck in the Republican primaries.
Congressman John Salazar (D-) who represents Steamboat Springs in Congress is considered vulnerable this election season. Republican Scott Tipton is running against him. And who could forget the race for Governor? Dem John Hickenlooper is running against either Republican Scott McInnis or Dan Maes. In addition, the contentious ballot initiatives have started to pile up. So, REALTORS®, are you registered to vote so you can have a say in this year's elections? Do you take action on calls to action from your local board, CAR and NAR on issues important to the real estate industry? And do you invest in PSF? Our Political Action Committee works to ensure candidates who best represent the real estate industry are elected at all levels of government.
Condo Financing Paper Moves Ahead at NAR with Support; NAR Warns Not To Expect Legislation
A position paper drafted by the Western Mountain Resort Alliance (WMRA) urging NAR to take action to address the difficulties of obtaining condo financing in resort areas made its way to Washington last week. Two NAR committees, including the Resort and Second Home Committee, approved the request and agreed to move the issue forward at NAR. However, while the issue was moved ahead, WMRA was warned by NAR that condo financing legislation will not likely happen. Despite a difficult political climate, the Summit, Steamboat and Vail Boards are pushing ahead with Congressman Jared Polis, who has expressed interest in pursuing legislation to make obtaining condo financing easier.
The FHA and FHFA have the authority to unilaterally make individual exceptions, but never have. Commissioner Stevens said he would not make "arbitrary manipulations" that might further depress outlying markets. GSAR argued back, saying the current policy has already created an unlevel playing field and is depressing the Carbondale market between $425,000 and $730,000. GSAR also indicated that if loan limits in Carbondale were increased to $729,750, it would not negatively affect the market in Rifle, as an example. She argued that towns in Garfield County are Job-centric, and a worker in the oil and gas fields in western Garfield County are not likely to move 30 miles to Carbondale to buy a home because there is a higher loan limit. The FHFA Counsel and economists understood the issues in Garfield County, as did the the FHA COmmissioner, who actually lived in El Jebel in a double-wide in the 1970's. Based on Friday's meetings, GSAR is not encouraged that action will be taken quickly, if at all, to address loan limits in Garfield County.
VBR To Meet With Polis Staff on Hidden Gems Proposal
Tomorrow, representatives from The Vail Board of REALTORS will meet with Rep. Jared Polis staff in Frisco to learn more about the Hidden Gems proposal, and how it may affect the real estate industry. The proposal, which has been significantly narrowed over the past year, would add a number of new Forest Service areas to the National Wilderness Preservation System. According to Congressman Polis, Wilderness areas ensure important lands remain undeveloped for generations to come. Wilderness areas prohibit things like oil and gas leasing, permanent structures and new roads, and are a refuge for activities our economy relies on like fishing, hunting, hiking and camping. Other popular activities like mountain biking and motorized recreation are restricted in wilderness, but the specific boundaries should leave most mountain biking trails and motorized recreation areas unaffected and more compromises are being developed as well.
Routt County Building Department Looking At Staff Cuts
The continuing lag in the construction industry in Steamboat is forcing the Routt County Building Department to consider additional staff cuts. The department cut 4 positions in 2009, with 9 positions remaining. Last year, the Yampa Valley Construction Trades Association (YVCTA), supported the Building Department's plan to increase fees to maintain a strong level of service in the building department, and avoiding staff cuts. The new fees took effect January 1st, but they were not enough to mitigate the decrease in work in the department. The County Commissioners will make its decision on how to reduce staff at the May 25th meeting.
Pink Flamingos Flock To Garfield County In Support Of GSAR "Fair share" Fundraiser
Last week pink flamingos stumped wildlife officials in Garfield County as they were seen flocking local real estate offices around the county. It was revealed at the Glenwood Springs Association of REALTORS membership lunch last week that the flamingos have arrived to help GSAR meet its PSF goal this year. It will be a summer of flamingos in the county! Each real estate office is being asked to raise its fair share- $25 per broker, to go to PSF, Political Survival Fund. Flamingos will be placed in front of offices and will remain there for 2 weeks, or until the office meets its fair share goal. If you have not already contributed to PSF this year, now is the time to do it!! At last weeks kickoff, several offices made their fair share goal, raising nearly $500 on the first day!
NAR Launches Call For Action on Real Estate Tax Burdens
Yesterday NAR launched an all member Call for Action (CFA) to urge the House and Senate prevent new tax burdens on Real Estate. Congress is considering changes to the tax code in order to pay for a number of tax provisions expiring in 2010. Two of these provisions would impact real estate. First, Congress is proposing that all owners of rental properties be required to file IRS 1099 forms on service providers such as electricians, plumbers and landscapers. This onerous provision would apply to even the smallest landlord. In addition, Congress is considering taxing "carried interest" at ordinary income rates instead of capital gains. Carried interest rules govern how general partners in real estate investments pay taxes when the investment is sold. If you have not already participated in the call for action, please do so. It only takes a minute of your time, and can make a difference in our our representatives vote!
GSAR Speaks Directly To FHA Commissioner, FHFA Counsel On Garfield County Loan Limits
On Friday, REALTORS from 7 states met with FHA Commissioner and HUD Assistant Secretary David Stevens, and General Counsel Alfred Pollard, and several Economists from the Federal Housing Finance Authority(FHFA), which oversees Fannie Mae and Freddie Mac to discuss low loan limit levels in counties where sub-areas far exceed the median home price. GSAR could not be at the meeting in Person, so NAR made it possible for the GSAR Government Affairs Director to be conferenced in to the meeting via telephone. The group all gave examples of how the counties in their area had low FHA loan limits, despite specific towns in the county having a much higher median home sales price. These counties were further affected by having bordering counties with the maximum $729,750 loan limit. GSAR had appealed its loan limit of $425,000 last December, arguing that home prices in Carbondale and to some extent, Glenwood Springs,both in Garfield County, were being pressured downward to compete with homes in Basalt and El Jebel, where loan limits are $729,750. GSAR also explained the makeup of the Roaring Fork Valley, and the confluence of the 3 counties, including Eagle, Pitkin and Garfield. Both the FHA Commissioner and the FHFA General Counsel agreed the issue is a real challenge. Everyone at the meeting agreed a single nationwide loan limit would be the best solution, but Commissioner Stevens felt it was an unlikely outcome because legislators would argue over what that level should be. Many legislators don't believe the federal government should be in the home financing business, others believe the FHA should only be for low income families, so it will be a difficult battle in Congress. Commissioner Stevens also said he is worried the current loan limits may not even be extended this year.
The Dow Jones Industrial Average traded as high as 11,258 in mid-April - but May wasn't quite so good for Stocks, as the Dow lost 8% in May, suffering its worst one-month decline in 70 years.
In the end, May was quite a slippery month all the way around, dominated by headlines of Greece and Oil...and so far in the first week of June, it hasn't been much different.
But one important economic report that managed to break through the news from across the globe was the official Jobs Report, which came in far worse than most estimates. The bad news pressured Stocks lower on Friday - and with the money flowing out of Stocks and into Bonds - helped home loan rates see a bit of unexpected improvement on Friday.
The headline number in the Jobs Report showed 431,000 jobs created in May. On the surface, this would seem like a very good thing, but that number was not only well below the 500,000 that were expected, but also was primarily made up of temporary census workers hired by the government. In fact, 411,000 of the 431,000 hires were exactly this - temporary census workers who are certainly glad to have a job, but who will join the ranks of the unemployed once again when the 2010 Census has been completed.
The headline job creations number that you hear about in the media comes from the business or Establishment Report, also known as Current Employment Statistics...and it can be misleading, as it includes something called the "birth-death ratio," which is a model or estimate of businesses created or closed within a given month, and based on historical data, supposedly foretells how many jobs were created or lost as a result. And this estimating method can be very highly inaccurate, particularly during times of changes in business cycles and the economy, such as we are going through presently.
But even the Household Survey - which previously showed 1.1 Million jobs created over the past three months - showed 35,000 jobs lost during May. This is important because the Household Survey or Current Population Survey (CPS) may be a more accurate reading, since actual households are contacted. Additionally, this is the survey that gives us the Unemployment Rate.
Overall, the Jobs Report was disappointing, but at least there still were some modest job creations. Additionally, average hours worked did improve, which is a good sign. And the Unemployment Rate did drop from 9.9% to 9.7%. So a bit of good news was found in the Report.
In Freddie Mac Primary Mortgage Mkt Survey (for the week ending June 4th) in which the 30-yr fixed-rate mortgage (FRM) avg. 4.79. Last year at this time, the 30-yr FRM avg 5.29%.
The 15-year FRM this week avg 4.20%. A year ago at this time, the 15-year FRM avg 4.79%.
The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) avg 3.94%. A year ago, the 5-year ARM avg 4.85%.
The one-year Treasury-indexed ARM avg 3.95%. At this time last year, the 1-year ARM avg 4.81%.
The Colorado Division of Insurance has recently finalized rules under Regulation 3-5-1 that will affect the issuance of O&E reports and TBD commitments from title companies. Effective May 1, title companies will no longer be able to provide these documents for free.
Title companies will be required to file their charges for O&Es and TBDs with the Division to ensure that the charges accurately reflect the cost of production. Additionally, the Division will allow the fees to be applied to the final costs of the transaction when they result in title work and a closing with the title company issuing the reports.
When the new changes were proposed, CAR reiterated the value the documents have in providing a public service which help consumers understand and avoid title problems at the outset and enables the proper structuring of transactions. CAR also submitted multiple comments and participated in a public rulemaking hearing to express concern over the requirement to charge for the documents; however, we are pleased that the Division has taken steps to ensure that the charges reflect only the cost of production and will allow them to be applied to the final cost of the transaction.
There are also new rules regarding classes that title companies may provide and when they must charge for those classes.
Errors and Omissions Insurance
Finally, don’t forget you must have a current errors and omissions insurance policy or your license may be subject to deactivation. If your license is deactivated, in addition to renewing your E & O policy, you will need to complete the Real Estate Commission Reinstatement Form to provide proof of insurance and pay $50. Remember also to double-check the renewal date on your license, which is no longer based on a calendar year, but its anniversary date.
The current version of the bill:
Does not create a federal energy audit requirement for real property; Exempts existing homes and buildings from any federal guidelines for new construction energy efficiency information labels. Prohibits the implementation of any labeling during a sales transaction. Leaves the decision to states as to whether to require energy audits, disclosures, etc. Provides property owners with significant financial incentives, matching grants and tools to make property improvements and reduce their energy bills; Prohibits the Environmental Protection Agency from regulating residential and commercial buildings under the Clean Air Act; Eliminated an earlier proposal to allow citizens to sue over minor climate risks under the Clean Air Act; and Establishes green building incentives for HUD housing, including a loan program for renewable energy, block grants and credit for upgrades in mortgage underwriting.
Rule on Lead Safety Set to Take Effect April 22nd
The EPA has new Renovation, Repair and Painting Rules on homes built prior to 1978. The new rules will require contractors to be certified renovators and work for a certified renovator firm. They also specify safety practices to minimize the spread of lead-based dust and other harmful materials. Although the rules were approved in 2008, they will go into effect on April 22, 2010.
NAR has put together a guide that describes the new lead-based paint safety practices established by the rule, and what steps real estate agents, brokers, and property managers need to take to comply with the new procedures.
Forecast for the week of May 17th
We'll get a double dose of inflation news this week, with Tuesday's Producer Price Index, which measures inflation at the wholesale level, and Wednesday's Consumer Price Index. As mentioned above, inflation is the arch enemy of Bonds and home loan rates, and any hint of inflation in these reports could impact the markets.
Housing, manufacturing, and job news are also in store this week, with Tuesday's Housing Starts and Building Permits Reports (which give us an update on the health of the new construction sector of the housing market) and Thursday's Philadelphia Fed Report (which gives us an update on the manufacturing sector) and the weekly Initial Jobless Claims Report.
Initial Jobless Claims numbers have remained stubbornly high and somewhat contradict the recent positive tone of the past couple of Jobs Reports. The most troubling numbers in the report are the additional 5.13M people claiming EUC (Emergency Unemployment Compensation), which are benefits lasting longer than 26 weeks, up to 99 weeks in total. This is an enormous drain on the economy.
New rules for classes for Realtors
A title entity may teach classes on any subject they feel qualified to teach. The new rules, however, focus on which classes may be provided free of charge. If a class is primarily related to the business of title insurance (e.g., commitments, policies, closings, etc.), it may be conducted without charge to the attendees. This includes reasonable expenses for food and beverage and room fees. If a class does not relate to title insurance (e.g., real estate marketing, real estate forms, etc.), then any costs associated with the class must be passed back to the attendees. Here is an example of how costs must be passed back to attendees: Assume a title insurance company sponsors a class on Internet marketing for real estate brokers. The company spends $200 on lunch, $50 on room rental, $10 on printed materials, and $40 on speaker fees, for a total cost of $300. If there are 50 people taking the class, then each attendee must be charged at least $6 for the class. If it costs a title company anything to perform or sponsor the class—even if the costs are minimal—the title company must pass back those costs. If the same costs were associated with a class on how to read a title commitment, or what to expect at the closing table, there is no requirement to pass back any costs to the attendees.
New rules for open houses
A title entity may not give money or any other thing of value to a real estate broker or other settlement producer in exchange for an advertising benefit at an event. Title entities may participate in events if they maintain a physical presence throughout the event. For example, a title entity may have a table at an open house with refreshments and the title company’s marketing materials if an employee of the title entity is present and engaging in the promotion of the entity’s services.
Reasonable title search and exam
All title insurance underwriters are required to create written standards for search and examination for use by title entities (underwriters and agencies). These standards must comply with sound underwriting practices. This is actually not a new practice. Underwriters have routinely provided standards to their agents and direct insurers; the new rule simply codifies the practice.
Changes to regulations will affect title insurance services across the state
New 3-5-1 Regulations take effect May 1, 2010
Title insurance is already a highly regulated industry, but it will become even more so once the new version of Colorado Division of Insurance Regulation 3-5-1 takes effect on May 1, 2010. The revised regulation will further clarify the rules for title insurance products and services, specifically as they affect items of value provided to real estate professionals. Consumers often have little understanding of title insurance and frequently rely on the advice provided by their Realtor or lender. The goal of the regulation is to ensure that real estate professionals who direct title business do so based on the service levels, ethics, reputation, and financial stability of the title entity—not inducements or other remuneration.
New rules for Ownership and Encumbrance Reports
One change that real estate professionals will notice immediately is that all Colorado title insurance companies will begin charging for Ownership and Encumbrance (O&E) reports, a product previously provided free of charge in many markets. The O&E charge must be properly filed with the Division of Insurance the same way that rates are filed.
New rules for To Be Determined (TBD) Commitments
Realtors occasionally request a TBD (To Be Determined) Commitment while they are marketing a property. TBDs can help a Realtor better understand the status of title and eliminate any surprises that might compromise the transaction. Beginning May 1, 2010, title entities must charge for TBD at the time the commitment is provided. The charge paid for a TBD may be credited back to the appropriate party at closing.
Free products allowed
Title entities may provide, without charge, a single copy of the last recorded vesting deed on a property. When issuing a commitment for title insurance, a title entity may give, without charge, copies of the supporting title documents for the property.
The problems in Europe continue to dominate the headlines and influence market direction around the globe. So what exactly is going on...and what does all of this mean for our economy and for home loan rates?
Due to financial instability in several countries in Europe - including Portugal, Ireland, Spain, and most notably, Greece - the European Central Bank along with the International Monetary Fund unveiled a $955 Billion loan package. Additionally, in a plan similar to our TARP plan in the US, the European Central Bank will purchase Bonds and private debt from the countries facing instability.
However, it seems that nearly a Trillion dollars doesn't go very far these days, as the announcement didn't lead to the confidence that was hoped for. There is concern about how these already financially strapped countries will pay for all this additional debt, along with skepticism over whether Greek austerity measures will take root...and many wonder if the European bailout plan is just a temporary band-aid rather than a solution.
The result continues to be a weaker Euro. At $1.24 per each Euro, the price is well off where it was a few months ago, when it cost nearly $1.60 for each Euro.
Why is this important? When the Dollar was weaker, it made our imports more costly and travel to Europe more expensive. But it also made our exports far more attractive to foreign purchasers, and that has helped many of the large multi-national US corporations. As this situation is now reversing, it will likely have an adverse effect on those same multi-national corporations - which has contributed to some of the decline in Stocks we have seen.
And remember: When Stocks decline, Bonds and home loan rates are typically the beneficiary. As long as the global viewpoint that the US is a safe and stable place for Bond investments continues, Bonds and home loan rates could benefit.
However, with many factors influencing markets, a factor that could hinder this benefit is growing inflation in China. Inflation in China could spill into the US, as the increased cost of their goods could translate into higher import prices we will pay for their products. And inflation is the arch enemy of Bonds and home loan rates, so this will be important to watch as well.
As if that weren't enough activity from around the world to keep up with, the massive added supply of debt coming into our markets from our own Treasury auctions...which can also adversely impact Bonds and home loan rates...can't be ignored, either.
After all the news of the week and much volatility, Bond prices and home loan rates ended the week about the same as where they began. Remember that with the news coming in fast and furious from around the globe - you can always count on us to keep you informed, and we look forward to talking with you or hearing from you anytime.
In Freddie Mac Primary Mortgage Mkt Survey (for the week ending May 14th) in which the 30-yr fixed-rate mortgage (FRM) avg. 4.93. Last year at this time, the 30-yr FRM avg 4.86%.
The 15-year FRM this week avg 4.30%. A year ago at this time, the 15-year FRM avg 4.52%.
The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) avg 3.95%. A year ago, the 5-year ARM avg 4.82%.
The one-year Treasury-indexed ARM avg 4.02%. At this time last year, the 1-year ARM avg 4.71%.