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Last Updated:
June 08, 2011

June 2011 Summit County Real Estate.Net Notices


This week will be busy from start to finish... but the biggest news will hit on Friday!

Right away Monday morning we’ll see the Personal Consumption Expenditures (PCE) Index, which is the Fed's favorite gauge of inflation. And as stated above, inflation is the archenemy of Bonds - which means it’s also bad for home loan rates.

We’ll also see a new report Monday morning on Pending Home Sales, which comes after last week’s disappointing reports on Existing Home Sales and New Home Sales.

This week, we’ll gain new insight on consumers - with the Personal Spending and Personal Income reports on Monday as well as the Consumer Confidence report on Tuesday.

Manufacturing will also be in the news with Thursday’s release of the Chicago PMI, which reports on manufacturing in Chicago and is a good indicator of overall economic activity.

But the big news to watch this week relates to employment, which kicks off Wednesday with the ADP National Employment Report on non-farm private employment.

Next up is another round of Initial Jobless Claims on Thursday. Last week’s report indicated that Jobless Claims are improving on a weekly basis, but at a snail's pace and not enough to make a meaningful dent in our stubbornly high unemployment rate.

Finally, the busy week culminates with the highly anticipated Jobs Report on Friday. This report features new data regarding job growth and the unemployment rate - needless to say, this report can be a big market mover!


House Speaker Says Protecting Second Home MID Getting Harder To Do; Participate in Call to Action TODAY!

The mortgage interested deduction (MID) is again at risk as the 112th Congress struggles to balance the budget. Everything is potentially on the chopping block, including both the primary and second home mortgage interest deductions. House Speaker John Boehner (R-OH) recently stated that MID is becoming harder and harder to justify in these difficult times.He also indicated the MID may be at risk for primary homes greater than $500,000. NAR has launched a call for action that should be in your in box now. PLEASE take one minute to click on the button and send the email to our Congressman. The Call To Action asks them to not touch the MID in any legislative proposal and urges them to sign on to H.R.25, a Sense of the Congress that the current federal income tax deduction on interest paid on debt secured by a first or second home should not be further restricted. The call to action is as simple as clicking on a button, with the letter written for you. You can also add language about what losing the MID will do for your clients!

Breckenridge Approves Use of Open House Signs For Additional 3 years

The town of Breckenridge has been pleased with the efforts by the real estate community to self-police open house signs in violation and ensure the town doesnot become cluttered with open house signs. Because of this effort, the town has agreed to extend the open house sign policy until April 1st, 2014. About half of the Council had been prepared to make the policy permanent, but Council member Eric Mamula felt that the policy had been so successful because there was a "hook" to get REALTORS to comply, and he suggested the three year extension to keep that "hook". SAR will send out FAQ's on the policy as a reminder this week. 


Glenwood Springs Approves Comprehensive Plan; Includes Much of GSAR's Input

The Glenwood Springs City Council unanimously approved the City's Comprehensive Plan Update last week with little fanfare. Despite the importance of the document, very few citizens provided input on the update. GSAR, after review from NAR's land Use attorneys, provided feedback early in the approval process. According to NAR attorneys, this Comprehensive Plan has been one of the better Comp Plans in the country because of the document is advisory in nature,and encourages growth,while maintaining the character of the city.

Steamboat & County Begin Work On Area Community Plan Update

Last week, the Steamboat Springs and Routt County Planning Commissions took at first look at what will be the framework for the Steamboat Springs Area Community Plan Update- the schedule of nearly 30 meetings during April and May to get input from residents on what long term goals and priorities matter most to county residents. Topics will include transportation, affordable housing, historic preservation,public services, diversity,environmental issues, and more.  April 5th the County commissioner's and Steamboat City Council will review the schedule.Once it is made available to the public,SSBR will get it out to members. This will be an important discussion to future development in Steamboat and REALTORS will be encouraged to attend meetings.




"I’ve got just what the doctor ordered...." And last week, the Jobs Report certainly had just what the doctor ordered for our economy. What did the report say, and what are the implications for home loan rates? Read on to learn more.

The Jobs Report showed that 192,000 jobs were created in February, with a gain of 222,000 jobs in the private sector offsetting job losses in the public sector. As expected, there were also upward revisions to the prior two months, which added 58,000 more jobs than were previously reported: another positive!

What’s more, unemployment lines were a little shorter last month as the Unemployment Rate fell to 8.9%, down from the prior month's reading of 9.0%. This represents the best reading on the Unemployment Rate in nearly two years! 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 sour note within the report was the Hourly Earnings component, which showed that earnings remained flat and didn't grow. If wages don't increase, it suggests that wage based inflation is under control, but in light of the recent price increases in commodities and oil, there is a concern that people will start to demand higher wages.

So what does all of this mean for the housing market and home loan rates? In terms of the housing market, the continued improving trend for the job market is good news, as people tend to avoid purchases when they’re concerned about their job stability or prospects.

In terms of rates, February’s Jobs Report suggests that the Fed’s Quantitative Easing 2 Program (or QE2, which is their plan to purchase $600 Billion in Treasuries through mid-2011) will continue through the end of June as originally planned. This is because the report was good, but not a blowout reading... and Fed Chairman Ben Bernanke said earlier last week that we need to see a long stretch of sustained job growth in order to remove the present accommodative monetary policy.

Remember: The Fed’s three goals for QE2 are to boost Stock prices, lower unemployment, and create inflation. While these goals are designed to improve our economy, they can also cause home loan rates to rise, something we’ve seen since the program began. And while continued unrest around the world could help our Bonds and home loan rates, as Traders seek a safe haven for their money, in the long-term continued improvement in unemployment and achievement of the other goals of QE2 may cause home loan rates to rise.


Denver is Next Stop for Home Ownership Matters Bus Tour

Do not forget, Denver is one of the cities visited this month as part of an NAR bus tour organized to promote the benefits of homeownership. The stop will include two separate events: a town-hall forum with REALTOR Leadership, hosted by 2011 NAR President Ron Phipps, and a consumer-oriented event designed to educate the public on current housing issues, such as preserving the mortgage interest deduction and continuing federal support for home ownership.

On-bill Financing for Energy Efficiency Improvements Dies in House

HB1132 introduced by Rep. Pete Lee (D-Colorado Springs) has been postponed indefinitely by the House Transportation Committee. This bill would have allowed a public utility to finance the up-front costs of making one or more energy efficiency improvements to real property and to have the property owner repay the financing over time through direct charges on the owner's utility bills.

REALTORS expressed opposition to the legislation for a number of reasons: the financing creates a lien on the property; the absence of credit risk protection; and the uncertainty surrounding FHFA's evolving stance on additional encumbrances. Lastly, any unpaid energy efficiency improvement costs would be automatically assumed by a subsequent homebuyer.


SB 68 Increase Consumer Protection Enforcement

SB 68 introduced by Sen. Morgan Carroll (D-Aurora) and Rep. Judy Solano (D-Brighton) comes to a halt in the House Committee on State, Veterans, and Military Affairs. The bill stated that a person shall not engage in a deceptive or unfair trade practice. The bill also created a rebuttable presumption that a significant public impact has occurred when a plaintiff offers evidence that a defendant engaged in a deceptive trade practice. The Colorado State Judicial Branch believed the decreased burden of proof for a complainant to show public harm could lead to additional court filings, thereby increasing case load to the courts. Alternatively, it is likely that the bill would have also led to an increase in dismissals from judicial rulings stating that no public harm was caused.

REALTORS support that judicial precedence has traditionally required plaintiffs to establish that a defendant's actions have caused a significant public impact. SB 68 claimed to eliminate additional burdens on consumers bringing complaints, but it did not provide any added protections for consumers that bring legitimate claims concerning deceptive trade practices. Additionally, REALTORS® opposed shifting the burden of proof on to defendants, thus inducing plaintiffs to bring unsupported claims.

SB 15 Protection for Homeowner's Insurance Passes through Senate, on to the House

SB 15 introduced by Sen. Joyce Foster (D-Denver) and Rep. Joe Miklosi (D-Denver) passed Third Reading in the Senate on Monday. It has been assigned to the House Economic and Business Development Committee. This bill seeks to prohibit an insurance company from cancelling or refusing to renew a homeowner's insurance policy if the homeowner has filed two claims or fewer in the previous 5 years. SB 15 also excludes claims for which an insurance company paid nothing from an insurance claim account and lengthens the notice of cancellation or refusal to renew period from 30-45 days. 


Take Action: Tell The Governor Economic Development Needs in Summit County

Governor Hickenlooper realizes that the number one priority of Coloradoans is to rebuild the economy and create jobs. To do this, the Governor's Office and the Colorado Office of Economic Development & International Trade are engaging Coloradoans in a statewide conversation about Economic Development. Governor Hickenlooper is asking for residents across the State to share their stories, challenges, and strengths. Then, using this data, develop a strategic economic development plan for their county. These county plans will then be rolled up into 14 regional economic development plans by April 15th, which collectively will be rolled up into a statewide economic development plan, "the citizen's plan", by May 15th.

Town of Breckenridge To Extend Open House Sign Policy Additional 3 years

Two years ago, the Breckenridge Town Council, and the request of the real estate industry, began allowing open house signs in Breckenridge, in a very restricted way. Signs are not allowed in the historic district, signs must be burgundy in color, and only 2 directional signs allowed at any given corner. And, the policy expired after one year. At the expiration last year, the Council again extended the policy for one more year, stating they would consider making it permanent this year.  A few weeks ago, planning staff prepared an ordinance saying the policy would be made permanent with no additional sunsets. But at last week's Council work session, Council member Eric Mamula stated that he felt the policy was successful because there was a "hook" to ensure REALTOR compliance. Mamula suggested the policy be made to be a 3-year ordinance so it would not need to be addressed every year, but would still have a hook for the real estate community. Mayor John Warner, and Council members Jeffrey Bergeron and Peter Joyce had been prepared to support an ordinance that would have made the policy permanent, but agreed to the 3-year extension.   The ordinance will be approved at the Town Council meeting on March 22nd. SAR will send members a reminder of open house sign requirements once the policy is approved.


Experiences With Out Of Area Title Companies!

It is increasingly coming to our attention that there are difficulties with foreclosure sales when the bank (seller) chooses an out-of-area title company. 

Examples we have heard include, but are not limited to: 

These are just a few examples. We are also hearing that some local title companies are being hired to do the closing in person, and are finding many problems with the title work, and are embarrassed, because it makes them look bad, even though they didn't do it. Now some local title companies are refusing to do this type of closing.

SAR is working with CAR to help address the issue. RESPA requires that buyers be given a choice of title company. We have recently learned that banks may not required to comply with RESPA when they are the seller of an REO. CAR is considering hiring attorneys to review the legality of this. In a recent stakeholder meeting with the banks, title companies, CAR, and SAR, the banks made it clear they would not like any legislation that would require them to provide simple notice to buyers that they have a choice of title company.

While CAR is working on a solution, SAR and the other mountain boards are gathering as much information as possible.


Denver is Next Stop for NAR Home Ownership Matters Bus Tour 

Don't forget, Denver is one of the cities visited this month as part of an NAR bus tour organized to promote the benefits of homeownership. The stop will include two separate events: a town-hall forum with REALTOR® Leadership, hosted by 2011 NAR President Ron Phipps, and a consumer-oriented event designed to educate the public on current housing issues, such as preserving the mortgage interest deduction and continuing federal support for home ownership. 

Make Plans To Attend SAR " Summit Community Economic Dialogue"

On Wedneday, March 30th,  from 8:15-10:30 am, at the Senior Center in Frisco, SAR will host an event for the entire businees community entitled "Summit Community Economic Dialogue". Panelists will include mayors, town managers, County Manager, Assessor, and Vail Resorts Development Company to discuss where the towns and county stand financially, with current budgets, and what they are doing to drive jobs and the economy as we recover from the recession. As the largest employer in the county, Vail Resorts will also be on hand to provide updates on their activities. Kathy Neel, COunty Clerk, will also be present to allow citizens to register to vote. Please tell your friends and RSVP to SAR!


"And now... the rest of the story" - Paul Harvey. With his famous line, Paul Harvey pointed out for years that there’s more to every story - and often those hidden details influence what happened. With that in mind, let’s look at the “rest of the story” behind last week’s news items, which had alternating impacts on Bond prices and home loan rates.

First, let us start by sending our thoughts and prayers to the families affected by last week’s earthquake and tsunami in Japan. The earthquake was a magnitude of 8.9 - the strongest in 140 years. The earthquake in Japan and its damage created some counterintuitive market reactions.

One would think that US Treasuries and Mortgage Bonds would have traded much higher, as often is the case with devastating natural events that drive money into "safe haven" trades. But that wasn't the case. Why? The answer is that buying of Treasuries and Mortgage Bonds as a safe haven trade was offset by the Japanese selling some of their own massive holdings of Treasuries and Mortgage Bonds, in order to repatriate money back to their country during the time of emergency. Considering that Japan is the second largest holder of U.S. debt at $877 Billion, selling just a tiny position of their holdings has an impact on Bond prices.

In addition, Bond prices traded in very volatile fashion last week after getting jockeyed around on news out of Saudi Arabia that police had opened fire on protesters with rubber bullets. Let’s look at how this influenced the markets in a different way than one might at first imagine.

Like other recent uprisings in the Middle East, Saudi protesters are looking for more democracy, the right to elect public officials, greater civil rights, freedom of expression, more women's rights and a higher minimum wage. Interestingly, however, oil fell last week, despite the news. Why? Shouldn't unrest in Saudi Arabia - the world's largest oil producer, push prices higher? Yes, but that news was offset by the earthquake in Japan. That’s because Japan is a huge importer of oil... and the market senses that the earthquake and subsequent tsunami may create an economic slowdown and diminish the demand for oil.

Seeing that Mortgage Bonds are lower - even in the face of weak Stocks and enormous uncertain global news - tells us that the gains in Bonds are not coming with a lot of conviction and Traders are selling into this strength. This is because a lot of headwinds remain for Bonds - like inflation abroad, rising government debt and continued QE2 purchases.

This is a good example of why it is important to work with a mortgage professional that understands not only what was reported in the news, but also how the many cross currents may have alternating effects on everything from Bonds, Stocks, Oil to the US Dollar.


"Double dose!" is the phrase of the week, as we’ll see multiple reports this week focusing on the same segments of the economy:

We’ll start off with some big news Tuesday, when the Federal Reserve holds its FOMC meeting and releases its Policy Statement later that afternoon. As always, what the Fed says about the economy, inflation, and its Quantitative Easing program could have an impact on home loan rates.

There’s a double dose of real estate news with Wednesday’s release of data on Housing Starts and Building Permits in February. Check back with me on Wednesday to get the breakdown of how the news actually arrived!

There’s also a double dose of manufacturing news. Tuesday’s Empire State Index looks at New York State’s manufacturing sector and is a good gauge of manufacturing overall, while on Thursday we’ll also see another important manufacturing report in the Philadelphia Fed Index.

A double dose of inflation news also comes our way this week with Wednesday’s Producer Price Index Report, which highlights inflation at the wholesale level, and Thursday’s Consumer Price Index Report, measuring inflation for consumers like you and me! Remember: The Fed is intent on creating inflation, which is unfriendly to home loan rates, and signs of inflation from these reports could be unfavorable for rates.

Thursday we’ll get a read on employment with the weekly Initial Jobless Claims Report. Initial Jobless claims rose 26,000 in the latest week to 397,000, which was above expectations but still below that psychological barrier of 400,000.

Finally, on Thursday we’ll see a double dose of manufacturing data with the release of reports on Capacity Utilization and Industrial Production in February. The capacity utilization rate provides an estimate of how much factory capacity is in use. If the utilization rate climbs too high it can lead to inflationary bottlenecks in production. The Federal Reserve watches this report closely and decides how to set interest rates on the basis of whether production constraints are threatening to cause inflation.

So what should you do if you or someone you know is in the market for a new home?

The bottom line is that even if housing were to drop a little further in some areas, the affordability coming from today's rates serves as a backstop against any moderate price reduction. Remember, housing will likely be in a much better position in the second half of the year and at that time rates could be a bit higher. Now’s the time to take advantage of the combination of low rates and affordable housing.


Looking at the second quarter "BRECKENRIDGE STATS" of residential property (no land) of 2011 here are some interesting facts:

These stats are based on sales from April 3, 2011 to July 3, 2011.   I wanted to make sure the stats covered properties that closed in the last days in June.   Sales volume doubled in the second quarter.  30 vs 69.

1. Market Analysis Report shows one of the LARGEST differences between list price and sales price for "average" properties sold.  91.82% with 226 days on market.  Historically we have been closer to 96% of list price.

2. Inventory Report shows the median price is $665K.  There were 69 residential properties in Breckenridge sold in the second quarter.

3. Price analysis Report:  9 solds between $300K and $399K, and 8 solds between $500K and $600K, 8 solds between $200k and $300K, lastly 7 solds occurred between $1.1M and $1.3M.  These are the 4 hottest price points in the market right now.  

4.  Days on Market Report: Shows the properties with the LEAST days on the market sold closer to list price.  97.1%   This goes with the saying: "Price them low and watch them go."   People are shopping MORE for properties and know when they see a good deal.


If you have not RSVP"d  there is time left.  I have vacancies open for Ted Jones's seminar.  Let me know if you are interested in attending.

STEWART TITLE is excited to announce that Dr. Ted C.Jones is coming to Summit County October 5th to provide a presentation on 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.


"It’s a small world after all..." That notion was especially evident last week, with both the news in Japan and the Middle East impacting our markets. Here’s what happened, and what the impact was on home loan rates.

The first thing to understand is the concept of "safe haven trading." At times of global unrest and uncertainty, like with last week’s nuclear crisis in Japan and the ongoing fighting in Libya, Traders will park their money in "safe" investments like our Bonds. And since Bonds such as Mortgage Backed Securities (MBS) are tied to home loan rates, when Bond pricing improves, our home loan rates can improve... which is what we saw last week.

But it’s also important to understand how incredibly volatile this situation is. A "safe haven trade" is just that... a trade, which is short-term. Should events around the world become more stable, this safe haven trade can unwind very quickly... with Bond prices and home loan rates worsening as a result. This is similar to how the market reacted at the end of last week, when Libya declared a cease fire to fighting after the United Nations declared a no-fly zone.

Another thing to note is that Bonds and home loan rates are facing some additional headwinds that could hamper their improvement. First, if Japan sells some of their Treasury holdings to help finance the recovery and reconstruction, like they did in 1995 after the Kobe earthquake, this could spur a sell-off in Bonds overall, which would cause Bonds and home loan rates to worsen.

Second, we cannot overlook the impact of inflation... which is the arch enemy of Bonds and home loan rates... both here and overseas. Not only is China struggling with inflation even though they have raised rates and tightened lending requirements multiple times over the past few months, but last week both our Producer Price Index (which measures inflation at the wholesale level) and our Consumer Price Index were hotter than expected.

The bottom line: If inflation is allowed to grow, it can be very difficult to rein in and control... and this will hinder improvement in home loan rates. And, if the situations in Japan and the Middle East stabilize or improve, we could see further unwinding of the "safe-haven" buying of US Bonds... which will also hinder improvement in home loan rates.


Continuing developments in world events are sure to impact the markets this week, but there are some important US economic reports to look for, too, including:

Monday’s Existing Home Sales Report and Wednesday’s New Home Sales Report for February - will they show improvement in the housing market?

We’ll get a read on the economic recovery with the Durable Goods Report on Thursday, which gives us an update on consumer and business buying behavior on big-ticket items that are designed to last for an extended period of time (i.e. televisions, appliances, vehicles, etc). It’s an interesting report, as people tend to hold back on these types of purchases when they are feeling a need to be extra conservative with their finances or feel insecure about their employment.

We’ll also get a read on the labor market with Thursday’s weekly Initial and Continuing Jobless Claims Report. Last week’s Initial Jobless Claims were reported at 385,000, right smack at expectations, and show that the labor market is continuing to improve.

Friday will bring two additional reads on our economic recovery: The Consumer Sentiment Index and the Gross Domestic Product Report, which is the broadest measure of economic activity.

Bonds and home loan rates improved due to the turmoil around the world, but they were unable to improve above a key technical level.


"It’s not a matter of IF, but WHEN!" That old adage proved true last week as the fiscal problems in Europe came back to roost as predicted - even after being overshadowed recently by news from Japan and the Middle East.

Despite all the focus on government debt in Europe, it’s important to note that the problems are more than just financial; there is also a ton of political capital at risk. The stronger and more fiscally conservative Euro member countries like Germany and France do not want to pick up the tab for poor performing countries like Ireland, Greece, Portugal and many others standing in line behind them. And as news flows out of Europe - either good or bad - Mortgage Bonds and home loan rates here in the US will move in sympathy.

One news item that pressured Bonds lower last week was word that inflation in the United Kingdom (UK) jumped to the highest level in two years in February. Remember, inflation is the archenemy of Bonds, and inflation around the globe seeps into the US.

In fact, we’re already seeing it as Producer Prices (which look at wholesale inflation) are running at very hot levels... with prices up 3.3% in just the last three months. If pricing pressures don't recede for producers of goods and services, companies will have one of two choices:

  1. Either: Absorb the higher cost of goods - and, thereby, hurt earnings growth
  2. Or: Pass those increased costs onto consumers - thereby, creating consumer inflation

Both of those scenarios would be bad for Stocks and Bonds. And since home loan rates are tied to Mortgage Backed Securities - which are a type of Bond - those scenarios would also be bad for home loan rates.

Speaking of Mortgage Backed Securities, last week the Treasury Department announced it is going to begin selling some of its massive Mortgage Backed Securities holdings. This is important to anyone looking to purchase or refinance a home. That’s because this announcement immediately pushed Bond prices significantly lower, as Traders tried to get their own positions sold. Think of it as a financial game of musical chairs... in which no one wants to be the last one standing with a mitt full of Mortgage Backed Securities. This isn’t the last we’ll hear about this - and since home loan rates are tied to Mortgage Backed Securities, this creates the potential for home loan rates to rise in the near future.

Fortunately, home loan rates are still at very attractive levels for now, despite the Bond market taking a hit for most of last week. So if you’ve been thinking about purchasing or refinancing a home, this is the time to see how you can benefit before rates possibly move higher. Because as bad as it was to lose some Bond pricing in the last few days, prices could move significantly worse depending on how they hold on to technical support.