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Last Updated:
July 20, 2011

July 2011 Summit County Real Estate.Net Notices

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Carbondale Begins Comprehensive Plan Update Process

Over 100 Carbondale residents showed up at a town meeting to begin the discussion of how to update the Carbondale Comprehensive Plan, which serves as a guiding document for growth and development. The meeting began the process by asking residents to help create a vision for the town. Residents,in breakout groups,talked about what they liked about Carbondale, what they didn't like, and what they would like to see in the future. The next event on Wednesday, April 6th, will be a presentation of the community vision based on input from the community at the March 24th meeting.

Eagle County Economic Development Meeting Thursday

After holding a series of economic development meetings in each town in Eagle County during the month of March, the Economic Council of Eagle County will hold a panel discussion on Thursday, March 31st, to get input from residents on what the county needs to encourage economic development. Governor Hickenlooper has asked ever community in Colorado to develop an economic development plan, that will be rolled up into a county economic development plan. The county plans will be rolled up into 14 regional economic plans,and finally a state economic development plan.That plan will be introduced to the public by May 15th.The event will be held from 5-7:30 pm at the Eagle County Government Building in Eagle. REALTORS are highly encouraged to attend! 

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CAR Continues Work on Title Company Choice

While it is now too late in the state legislative session to address the fact that many buyers purchasing REO properties, CAR will continue to work on the issue after the legislative session in May. The Mountain REALTOR Boards worked with CAR during the last year to ensure buyer choice in an REO deal. While RESPA requires that buyers be allowed to choose their own title company, and pay for that title company's services, many banks add an addendum onto a contract that does not give buyer a choice. The end result is that banks choose out of area title companies that are not familiar with local transfer taxes, rights of first refusal, and other local issues that happen in everyday transactions. In addition, the title company will not appear at the closing, often charging $300-500 for a document presentation. They also often hire local title companies to do the courtesy closing. These title companies are finding the bulk of the problems.  CAR's Legislative Policy Committee(LPC) has chosen to not take action on the issue this session, believing that this is not a widespread problem, and that it occurs in primarily rural areas. While LPC has not taken action, CAR is continuing to working on the issue, at the request of the Glenwood, Steamboat, Summit and Vail Boards. In May, CAR will undertake a statewide survey of the membership to determine how widespread the issue is, and also the magnanimity of the issue. Many thanks to the REALTORS® who have already provided examples of problems with out of area title companies.

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NAR Homeownership Matters Bus Tour & Town Hall Hits Denver

On Friday, March 19th, NAR President Ron Phipps arrived in Denver in a massive tour bus to host a Town Hall meeting with REALTORS on Friday. The event was truly a question & answer session, where Phipps fielded many questions from political issues, dues increases, and the importance of home ownership. While Phipps focused on the Mortgage Interest Deduction, Colorado REALTORS® asked questions about the short sale process, NAR advertising and PSF dues increases. Brokers also talked candidly to Phipps about the fact that nearly 40% of NAR members are brokers in resort areas and that NAR needed to focus more on resort issues such as condo financing. Other non-resort based REALTORS chimed in on the condo financing discussion, saying many of the condo rules were slowing real estate sales. Phipps agreed it was a real problem, and that NAR has been slow to get the issue addressed. His solution was for REALTORS to "keep bugging NAR" about the issue. Denver was the second stop on the bus tour, with President Phipps and the NAR team headed for Portland, Oregon, and Boise, Idaho.

SAR Hosting Economic & Community Dialogue With Elected Officials Wednesday

The Summit Association of REALTORS is hosting an economic and community dialogue on Wednesday at the Frisco Senior center from 8:15 am-10:30 am. The event will include the Mayors from each town, Summit County Manager and County Commissioner, as well as Vail Resorts as the largest employer in the county. The officials will discuss economic development and all of the hottest issues in the county. Be sure to come with your questions!

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With the nuclear crisis continuing to unfold in Japan, and the turmoil in the Middle East, world events may continue to surprise our markets. Otherwise, it’s a quiet week when it comes to economic reports, but be sure to look for:

The minutes from the Fed's March 15 meeting of the Federal Open Market Committee will be released on Tuesday. These always have the potential to move the markets, especially if inflation (which is the arch enemy of Bonds and home loan rates) is discussed.

Thursday’s weekly Initial and Continuing Jobless Claims Report. Last week’s Initial Jobless Claims were reported at 388,000, just above expectations, but below that important 400,000 marker which shows that the labor market continues to improve.

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Defining Agricultural Land for Property Taxes by Rep. Tom Massey (R-Poncha Springs) passed out of the House on 3rd Reading this week.  This bill amends the definition of "agricultural land" to exclude up to two acres of land associated with residential improvements located on the land unless the residence is "integral to an agricultural operation" conducted on the land. The bill will affect property taxes starting in property tax year 2012.

The bill originally authorized the Division of Property Taxation to define the term "integral to an agricultural operation".  However, CAR has worked successfully with other stakeholders to secure a legislative definition of "integral to and agricultural operation" so there is a clear statutory definition by which assessor's must abide. The bill's next stop is the Senate, where CAR will continue to monitor it to make sure the changes made in the House are maintained.

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People say that "life is full of surprises." And last week’s Jobs Report offered a few surprises of its own. But were those surprises positive, and what do they mean for home loan rates overall? Read on for details.

The headline Jobs Report number showed that 216,000 jobs were created in March, which was a positive surprise as this was above expectations. In addition, 230,000 jobs were created in the private sector, which was also better than expectations and offset a decline in government jobs. A small 2,000 upwards revision to February's prior release added some more jobs as well.

In addition, the Unemployment Rate surprisingly dropped to 8.8%, which is the lowest unemployment rate since March of 2009. Remember, the Unemployment Rate is derived from the Household Survey (exactly as it sounds, from calls made to households), and is considered to be more accurate than the Current Employment Statistics or Business Survey (again as it sounds, from calls made to businesses), which is used to determine the headline jobs number.

The one negative within the report is Hourly Earnings coming in at 0.0%. This is the second month in a row where earnings growth is 0.0%. Why is this significant? If earnings don't grow, people have less to spend and as a forward looking indicator on job growth, it shows that businesses are presently not under any pressure to raise wages. This means they may not have to hire new people as quickly because they may have room to raise wages for present workers down the road.

Overall, the Jobs Report was a good report and reminds us that the trend in the labor market is improving. But keep in mind, while lowering unemployment is good for our economy overall – as are the other two goals (creating inflation and boosting Stock prices) of the Fed’s current Quantitative Easing (QE2) program – these goals can also lead to higher home loan rates over time.

In fact, inflation continues to be a growing concern both around the world and here in the U.S., as several members of the Fed, including St. Louis Fed President James Bullard, have expressed concern that if the Fed waits "too long (to remove accommodative monetary policy) we will get a lot of inflation in the United States and around the world."

What does this mean in the long run? Like the Treasury Department, at some point the Fed will start selling some of its massive holdings and unwind their QE1 and QE2 purchases. And when it does, not only will the Bond market lose a buyer in the Fed, but they will gain a seller and this will make it hard for Mortgage Backed Securities and home loan rates, which are tied to these types of Bonds, to meaningfully improve.

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Appeal of a Valuation of Commercial Real Property by Sen. Lucia Guzman (D-Denver) passed 3rd Reading in the House this week.

This bill requires any petitioner appealing a valuation of income-producing non-residential real property to the Board of Assessment Appeals (BAA) to provide to the County Board of Equalization (CBE), or the Board of County Commissioners (BCC) in the case of abatement for the following information: Actual annual real estate income; tenant reimbursement; itemized expenses; rent roll data as specified. The bill also requires the petitioner to provide this information to the CBE or the BCC within 90 days after the appeal has been filed with the BAA. The bill ends the accrual of interest on the underlying property tax obligation if the petitioner fails to provide this information by the 90-day deadline.

CAR's commercial members have a huge stake in the property valuation process. Many of them are small companies or single-person entities that do not have attorneys on retainer and handle most appeals on their own.  Some commercial members have found that certain assessors have not used proper comparables in the past when using the income approach to valuation on their properties. CAR took all of this under consideration and worked with other industry partners to amend the legislation.

REALTORS® understand that the Counties are requesting that they share certain information to help ease congestion of the appeals process, but in the spirit of information exchange taxpayers ask that the exchange be a two-way street. CAR secured language that requires the Counties to share with taxpayers all of the underlying data that was used, as well as the capitalization rate, by Assessors to value their property.  The commercial REALTORS® also believe that by receiving this information from the Counties, it will put them in a better position to understand how an assessor valued their property and should encourage settlements, which is the underlying premise of SB-119.

Additionally, since the taxpayer is required to provide the County with its data within a certain timeframe (90 days) after they appeal a case to the BAA, the County should also provide to the taxpayer their requested information in a reasonable amount of time so that the taxpayer has enough time ahead of any appeal to fully scrutinize that information. To that end, CAR also successfully included language that requires the Counties to comply with disclosing their information to taxpayers within 90 days.

NAR: Mortgage Interest Deduction Call for Action

NAR has launched a Call for Action to "Preserve, Protect, and Defend Mortgage Interest Deduction."

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There’s a Chinese proverb, which is sometimes referred to as a curse, that says, "May you live in interesting times." And last week was certainly an interesting one, as much of the week was spent wondering whether there would be a government shutdown. Read on to learn what happened... and what the impact was on home loan rates.

A partial shutdown of the federal government was avoided late Friday night, when Democrats and Republicans agreed on a budget deal and a short-term funding extension little more than an hour before the deadline. The extension cuts spending by $2 billion and will last through next Friday, April 15.

But all the uncertainty leading up to this decision was just one factor that caused Bonds and home loan rates to worsen through the week. On Thursday, as expected the European Central Bank (ECB) raised their benchmark rate in an effort to curtail rising inflation, meaning the Euro now trades at its highest level against the US Dollar since January 2010.

Despite the weakness in the Dollar, the disparity between the two is somewhat surprising, given the economic headwinds and problems that Europe has been facing. But as the saying goes, "Markets can remain irrational longer than we can remain solvent." At some point, we should expect weakness in the Euro and a rebound in the US Dollar. The passing of the US Budget agreement should help.

So the question remains: Why does this matter when it comes to home loan rates?

A weak US Dollar typically helps Stocks, as it makes our goods and services relatively cheaper for foreigners, thus helping our export business and GDP. And when Stocks are boosted, investors typically move their money from safe-haven investments like Bonds into Stocks to take advantage of gains there. And since home loan rates are tied to Mortgage Backed Securities (MBS), which are a type of Bond, when these Bonds worsen, home loan rates worsen, too.

That said, home loan rates are still relatively incredible, but keep in mind that before long, the Fed and the Treasury will both be selling off their MBS holdings accumulated through their first round of Quantitative Easing (QE1), and it will be tough to see Bonds and home loan rates make meaningful ground once that selling starts.

If you have been thinking about purchasing or refinancing a home, call or email me to learn more about how you can benefit from today’s historically low rates. Or forward this newsletter on to someone you know who may benefit.

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Federal Government Shutdown: What it Means

NAR has put together the Federal Government Shutdown briefing which highlights the housing related impact of a federal government shutdown.  The current continuing resolution (CR) providing funding for government operations is set to expire today, April 8, 2011. If legislation providing for funding is not signed into law to extend funding after April 8, the federal government could shut down. This means many government programs that impact federal housing and mortgage programs could grind to a halt as early as April 9, 2011. Click here to read the complete briefing.

REALTORS Committed to Fair Housing

NAR joins Americans across the country as they honor Fair Housing Month this April. As the leading advocate for home ownership, NAR strongly supports the Fair Housing Act and believes that anyone who is able and willing to assume the responsibilities of owning a home should have the opportunity to pursue that dream. Read more about REALTORS commitment to fair housing throughout the year.

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SB 234 Residential Real Property Transfer Fee Covenants CAR SUPPORTS SB 234

Residential Real Property Transfer Fee Covenants by Sen. Cheri Jahn (D-Wheatridge) and Rep. Tom Massey (R-Poncha Springs). This legislation benefits consumers by banning the enforcement of private transfer fees.

CAR has been concerned about private transfer fees paid to a third party upon the transfer of real property. The fee is usually paid by the seller and can either be a fixed amount or a percentage of the sales price. In a typical situation, a property owner records a covenant subjecting the property to a private transfer fee (often, the first sale is exempted). For as long as the covenant is in place, which can be up to 99 years or longer, every time the property is sold the private transfer fee must be paid to the original owner and/or third party.

Problems with private transfer fees:

Legislation:  Senate Bill 234 bans the enforcement of a private transfer fee covenant recorded after the effective date of the bill and requires all such covenants in place prior to enactment to be recorded. The bill would become effective July 1, 2011. SB 234 is scheduled to be heard on April 12th in the Senate Local Government Committee.

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"YOU’RE HOT THEN YOU’RE COLD..." Katy Perry’s hit song "Hot N Cold" is all about contradictions. And each week the markets receive their share of news that seems contradictory... but may not be. The inflation reports from last week provide an excellent example - so let’s see what they really said and why it matters!

Last week, two inflation reports came in. The Core Producer Price Index (PPI) reported that inflation was slightly hotter than the expected. However, the Core Consumer Price Index (CPI), which measures inflation at the consumer level, came in slightly cooler than expected.

So why the contradiction between the two indices? What does this mean?

Although the reports seem contradictory, they’re not really. They actually focus on different aspects of inflation. The PPI shows us what’s going on at the wholesale or production level, while the CPI focuses on what’s happening with people like you and me who consume products.

So, looking back at the reports, we see that the PPI indicates inflation is on the rise at the wholesale level. But the CPI report indicates that the inflation isn’t being passed on to consumers - like you and me - at least not yet. The bottom line is that inflation is most certainly on the rise, but it remains somewhat tame for the moment in terms of what consumers are experiencing.

Speaking of production, last week we saw that manufacturing in the New York State region rose for the fifth consecutive time and came in at the best level in a year. Similarly, Industrial Production came in better than expected. Higher productivity keeps operating costs lower, lessens the need for hiring, and helps keep prices down. Also last week, Capacity Utilization - which simply means how much of a factory’s production capacity is being used - was reported at the highest reading since mid-2008, which means it is on the rise. However, until this reading climbs a little higher, the available slack within the production cycle will inhibit some hiring and also inflation growth.

Overall, the reports indicated that business conditions and production continue to improve. However, we’re not quite where we want to be, and more growth is needed to really help boost the labor market.

In terms of how the news impacted Bonds and home loan rates, last week’s reports were friendly to Bonds and home loan rates in a couple of ways. First, they promoted low inflation for the time being - and inflation is the archenemy of Bonds and home loan rates. Second, the slack in production and slowed pace of hiring is Bond friendly.

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In the early days of this week, the news will shift to the health of the housing industry, and then end with more labor and manufacturing news. Here are some of the reports to watch:

We’ll start out Tuesday morning with new reports on Housing Starts and Building Permits in March.

Those reports will be followed on Wednesday by a report on Existing Home Sales in March. So by mid-week, we’ll have a good look at the health of the housing industry. Feel free to call or email me to discuss how these reports came in and what impact they may have.

Thursday we’ll see the weekly Initial Jobless Claims Report. In the report released last week, Initial Jobless Claims climbed higher to 412,000, and above the psychologically significant 400,000 mark for the first time since March 5th. Funny how those round numbers work with our brains - it's the same logic as why something at the store costs $7.99, instead of $8.00. Overall, the report indicated that employment growth continues to muddle along.

Also on Thursday, we’ll see more manufacturing news - this time in the form of the Philadelphia Fed Index, which is considered an important indicator of the manufacturing industry and, therefore, has the potential to move the markets depending on how it comes in.

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Residential Real Property Transfer Fee Covenants by Sen. Cheri Jahn (D-Wheatridge) and Rep. Tom Massey (R-Poncha Springs) passed out of the Senate Local Government Committee this week. Senate Bill 234 bans the enforcement of a non-exempted private transfer fee covenants recorded after the effective date of the bill and requires all non-exempted covenants in place prior to enactment be recorded. The bill is effective upon the Governor's signature.

CAR has been concerned about private transfer fees paid to a third party upon the transfer of real property. The fee is usually paid by the seller and can either be a fixed amount or a percentage of the sales price. In a typical situation, a property owner records a covenant subjecting the property to a private transfer fee (often, the first sale is exempted). For as long as the covenant is in place, which can be up to 99 years or longer, every time the property is sold the private transfer fee must be paid to the original owner and/or third party. And at least one out-of-state company that markets private transfer fees to property owners takes part of the private transfer fee payments that result from its marketing efforts. SB 234's next stop is 2nd Reading in the Senate. 

Problems with private transfer fees:

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"YOU’RE HOT THEN YOU’RE COLD..." Katy Perry’s hit song "Hot N Cold" is all about contradictions. And each week the markets receive their share of news that seems contradictory... but may not be. The inflation reports from last week provide an excellent example - so let’s see what they really said and why it matters!

Last week, two inflation reports came in. The Core Producer Price Index (PPI) reported that inflation was slightly hotter than the expected. However, the Core Consumer Price Index (CPI), which measures inflation at the consumer level, came in slightly cooler than expected.

So why the contradiction between the two indices? What does this mean?

Although the reports seem contradictory, they’re not really. They actually focus on different aspects of inflation. The PPI shows us what’s going on at the wholesale or production level, while the CPI focuses on what’s happening with people like you and me who consume products.

So, looking back at the reports, we see that the PPI indicates inflation is on the rise at the wholesale level. But the CPI report indicates that the inflation isn’t being passed on to consumers - like you and me - at least not yet. The bottom line is that inflation is most certainly on the rise, but it remains somewhat tame for the moment in terms of what consumers are experiencing.

Speaking of production, last week we saw that manufacturing in the New York State region rose for the fifth consecutive time and came in at the best level in a year. Similarly, Industrial Production came in better than expected. Higher productivity keeps operating costs lower, lessens the need for hiring, and helps keep prices down. Also last week, Capacity Utilization - which simply means how much of a factory’s production capacity is being used - was reported at the highest reading since mid-2008, which means it is on the rise. However, until this reading climbs a little higher, the available slack within the production cycle will inhibit some hiring and also inflation growth.

Overall, the reports indicated that business conditions and production continue to improve. However, we’re not quite where we want to be, and more growth is needed to really help boost the labor market.

In terms of how the news impacted Bonds and home loan rates, last week’s reports were friendly to Bonds and home loan rates in a couple of ways. First, they promoted low inflation for the time being - and inflation is the archenemy of Bonds and home loan rates. Second, the slack in production and slowed pace of hiring is Bond friendly. Remember, Bonds actually like negative economic news because it normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve.

All of this means that home loan rates are still very attractive.

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In the early days of this week, the news will shift to the health of the housing industry, and then end with more labor and manufacturing news. Here are some of the reports to watch:

We’ll start out Tuesday morning with new reports on Housing Starts and Building Permits in March.

Those reports will be followed on Wednesday by a report on Existing Home Sales in March. So by mid-week, we’ll have a good look at the health of the housing industry. Feel free to call or email me to discuss how these reports came in and what impact they may have.

Thursday we’ll see the weekly Initial Jobless Claims Report. In the report released last week, Initial Jobless Claims climbed higher to 412,000, and above the psychologically significant 400,000 mark for the first time since March 5th. Funny how those round numbers work with our brains - it's the same logic as why something at the store costs $7.99, instead of $8.00. Overall, the report indicated that employment growth continues to muddle along.

Also on Thursday, we’ll see more manufacturing news - this time in the form of the Philadelphia Fed Index, which is considered an important indicator of the manufacturing industry and, therefore, has the potential to move the markets depending on how it comes in.

Bonds climbed at the end of last week, due in large part to the report that inflation remained contained for now.

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Joint Upper Blue Master Plan Update Takes a Look at Affordable Housing Density & Cost

The 14-year old Joint Upper Blue Master Plan got a fresh look by the public last week in Breckenridge, as an Advisroy Committee tackles an update to the plan. The Master Plan serves as a guiding document for the county and towns of Breckenridge and Blue River for development. Density is a key focus of the update. The county believes there could be a realistic target build-out of 14,000 residential structures in the basin, and bases that figure on maintaining community character,not infrastructure capacity.  Based on this number, the Basin is already 70% built out, with 4566 units left to be built. While the plan is mostly receiving small "tweaks", the issue of density for affordable housing is expected to be controversial.  The plan continues to incorporate language based on a 2006 study that indicated a goal of 914 deed-restricted workforce housing units. Many real estate professionals would argue that in today's housing market, there are many many market rates homes priced similarly to affordable housing units, thus eliminating current need for more deed restricted properties.  Perhaps most controversial,  is the Committee's density reduction strategy. Under the 1997 plan, affordable housing projects received free density as an exception to the basin-wide density cap. The committee is concernced that creating "new" density to achieve affordable housing numbers could increase activity in the Basin, and become inconsistent with the plan for community character. Based on this concern, there is a proposal to retire density at a rate of 1:2- retire 1 development right for every 2 affordable workforce housing units permitted to be built, effectively making affordable housing density no longer free. This proposal was at the center of discussion at the Open House last week. County staff beleive support for this proposal could go either way.  If you are interested in the update, the Upper Blue Planning Commission will hold a public hearing on April 28th and May 26th at 5:30 in the County Courthouse on Lincoln Ave.The Breck Town Council will review on May 10th at the Town Hall. Blue River will also hold a hearing in May.

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Steamboat Set To Lift Deed-Restrictions on Affordable Housing Unit So Owner Can Sell Property

It's a sign of the times when the City of Steamboat is preparing to remove some deed-restrictions on workforce housing so that a local can sell her home to move away for a job. Just a few years ago Steamboat implemented a strict and controversial inclusionary zoning policy to ensure development of more affordable housing. In today's housing market in Steamboat- and across the mountains, market rate home prices are often falling below affordable housing prices.  To help the local sell her workforce housing unit, the City will consider on May 3rd a proposal to remove two key deed restrictions on the property-an income requirement and a net worth capon potential buyers. The proposal would leave in place deed restrictions that buyers must work in Routt County and live in the home as a primary residence. The local will have to pay $2300 as a compensatory payment for the removal of the deed-restrictions. While this proposal  is being considered for one local trying to sell her home, if approved, it could be used as a template for future sellers of deed-restricted property in Steamboat.

 

Polis To Re-Introduce Hidden Gems Bill Targeted in Summit & Eagle Counties

Representative Jared Polis (D-Boulder) has reintroduced federal legislation to provide wilderness designation to areas in Summit and Eagle Counties. The original bill included areas in Garfield and Pitkin Counties, but those areas have been removed  because they were more political in nature. Polis' staff told SAR staff last year that most of the concerns in Summit and Eagle Counties can be worked out. However, many outdoor sports activists groups, and fire departments in the two counties continue to be opposed to the measure. Snowmobilers are concerned their access to the wilderness areas will go away and leave few areas to enjoy the backcountry on snowmobile. Fire Districts have also voiced concerns over road access if wildfires occur.

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Classification of Residential Land When Residential Improvement is Removed by Rep Claire Levy (D-Boulder) and Sen. Jeanne Nicholson (D-Black Hawk) passed out of the Senate on 3rd Reading this week. Under current law, assessors have some discretion to determine if and when residential properties are reclassified as vacant when a residential improvement (home) is destroyed, demolished, or relocated. The current Division of Property Taxation's administrative and assessment procedures manual provides county assessors guidance on when residential land should be reclassified based on partial or complete demolition of a residential improvement and a landowner's intent to rebuild.

As amended, HB 1042 specifies land as residential where a residential improvement is destroyed, demolished, or relocated as a result of a "natural cause" in the year in which destruction, demolition, or relocation occurred plus two subsequent property tax years. Under HB 1042, land may maintain the residential classification for up to five additional property tax years if the county assessor determines that there is evidence that the owner intends to rebuild or locate a residential improvement on the land. This bill is effective for residential improvements destroyed, demolished, or relocated by a natural cause on or after January 1, 2010.

A "natural cause" includes fire, explosion, flood, tornado, and action of the elements, act of terror, or a similar cause beyond the control of and not caused by the homeowner.   When determining an owner's intent to rebuild or relocate, the assessor may consider, but is not limited to considering, the following for the property:

For those members either in wildfire prone areas, or in areas already devastated by wildfires this year, this is important information to share with your clients and contacts. CAR supports this legislation because we do not believe homeowners already affected by a fire or other natural disaster should be doubly victimized by incurring an increased tax liability due to the destruction of their residence.

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Congressional Re-Districting Battles Have Begun in Colorado

It's only been a week since several proposals for Colorado's congressional districts have emerged,and the politics have already started heating up.  Every 10 years,after census data is released, bi-partisan state committees are put together to rework congressional districts based on population changes in districts. And the debate is so heated that for nearly 40 years, the courts have had to decide district lines because state committee could not come to agreement. In Summit and Eagle Counties, which until 10 years ago had been in CD-3, a Western Slope focused district. But in 2000, the two counties were moved to CD-2,and lumped with Boulder and Clear Creek County, a much more urban district. Now, in 2011, Eagle and Summit County Republicans want the counties to be re-districted back into CD-3, citing common interests and demographics. In reality, CD-3, which includes Garfield, Routt, and Mesa counties, along with others, is a much more conservative district, with the GOP having a strong, conservative ranching base. Likewise, Democrats would like to see Summit and Eagle Counties stick with CD-2, which is lumped with the more urban, liberal vote. County Dem's say they are more concerned that Summit County doesn't get split into 2 congressional districts. Of the proposals released last week, none of them put Summit and Eagle into the 3rd Congressional District, but one plan proposes a district that covers Boulder all the way to the Utah border, including much of the Western Slope,and northwest Colorado. The proposals released are only the beginning.

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WHEN IT RAINS, IT POOR’S... With the US already facing tough decisions over its national debt, the credit rating firm Standard and Poor's last week cut its credit outlook on the US from stable to negative. Standard & Poor’s also said the US’s AAA credit rating could be cut within two years, if headway isn't made in closing the budget gap. This is important because countries have credit ratings, just like individuals.

But what does all this mean? Let's break it down...

First of all, it’s important to note that the downgrade to the credit outlook was a long time coming, and Traders in the pits even joked that S&P is late to the party with this call. For more information about different countries credit ratings - as well as your own state’s credit ratings.

All joking aside, this is a serious issue, as the last thing the US wants to endure is an outright credit downgrade. That would make the interest expense on the US debt even more burdensome - and, remember, we are all on the hook for this debt and the carrying costs.

But if this was a long time coming, what sparked the change in outlook? The S&P cited the wide political divide amongst Congress as a major hurdle to meaningfully lower the federal budget deficit. Both parties want to lower the deficit but there is stark disagreement on how to get there. Hopefully, the S&P's actions will spark a fire in Congress to get serious and get something done.

How does this issue impact Bonds and home loan rates?

The national debt concerns won’t be addressed easily, especially when you remember that the country is approaching the debt-ceiling limit on May 16th. So in the immediate future, this will make for more volatility in the markets as headlines gyrate both Stocks and Bonds. Bonds are in an even tougher spot in the long term - and here's why:

First... if the US government is successful in taking action to lower the budget deficit and avoid an outright credit downgrade, then we should expect a longer duration of accommodative Fed monetary policy, as the Fed doesn't want an economic slowdown to recreate a "deflationary" environment. If things do slowdown significantly, we may start hearing debate for a QE3 (or a third round of Quantitative Easing), which would not be good for Bonds and home loan rates.

Second... if the US debt received an outright downgrade, it would be really bad for Bonds. As it stands now, this doesn’t seem likely and you shouldn’t be overly alarmed. But, it’s important to understand what is at stake here. The bottom line is that with some extra belt tightening as a result of this issue, we could expect to see slower economic growth in the future, as government spending would have to slow immensely to help close the budget gap.

That said... home loan rates remain historically low right now. However, there are a lot of headwinds for Bonds down the road and last week’s credit outlook downgrade was just another one.

Now’s the time to learn more about these issues and see how you can take advantage of the current low home loan rates and affordable home prices. It only takes a few minutes to look at your specific situation.

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