Colorado Life Style Real Estate

Buying a home won’t get much cheaper

Tom Harris — Tue, 08 May 2012 15:54:21 +0000

Several housing experts are predicting that this year will be the last chance for homebuyers to cash in on the weak housing market.

With home prices down 34% nationally since 2006 and mortgage rates at historic lows, homes have never been more affordable — but it won’t stay this way for much longer.

Stuart Hoffman, chief economist for PNC Financial Service, said he expects home prices to flatten out by the third quarter and start climbing by next year.

A number of factors will help bolster the housing market, he said, including a decline in the number of foreclosures and continued job growth. In addition, homebuyers will have better access to mortgages as they get their finances in order and improve their credit scores.

Some economists, like Trulia’s Jed Kolko, expect home prices to pick up even more quickly. Trulia’s data shows that the national average for asking prices already increased 1.4% in the first quarter of 2012, compared with the last three months of 2011.

“This is a strong indicator that we will start seeing home price indexes, like the S&P/Case-Shiller, start to report home price increases this summer,” he said.

Prospective homebuyers who’ve been sitting on the fence shouldn’t worry if they aren’t quite ready to make the leap. Analysts are predicting that the initial price gains will be modest, at least, in most markets.

Hoffman, for example, is forecasting a 2% increase in 2013 compared with 2012. Meanwhile David Stiff, chief economist for Fiserv, predicts that prices will turn in the last quarter of 2012 and will rise 4.2% for the 12 months through September 2013.

One major factor that will drive the trend is the cooling of the foreclosure crisis. Stan Humphries, chief economist for Zillow, said that the percentage of mortgage loans 90 days or more late, a good predictor of future foreclosures, is “falling fast.”

That percentage dropped 15% year-over-year to 3.1% through the end of 2011, according to the Mortgage Bankers Association. And the decline is accelerating: More than 70% of the decline came in the last three months of the year.

Many of the bank-owned properties currently coming out of the foreclosure pipeline are being snapped up by investors who are fixing them up and renting them out — often to those who were displaced by the foreclosure of their own home. That has helped to lift prices on foreclosed properties

In some markets hit hard by foreclosures, the turnaround in prices is already underway. Phoenix recorded an 8.4% jump in home prices during the three months ended April 30, compared with the three months ended January 31, according to Clear Capital.

In addition to home prices, mortgages could also move higher.

Mortgage rates have been at or near historic lows for much of the past six months. The average interest rate for a 30-year, fixed-rate mortgage has not topped 4.5% since July 2011 and this week, it hit 3.84%, a new low.

But rates aren’t expected to remain at these record-low levels much longer. As the economy continues to recover, rates will move higher, said Doug Lebda, CEO of LendingTree, the online lending site. Although, he said, they will “stay very reasonable.”

The Mortgage Bankers Association is forecasting that the 30-year fixed will hit 4.5% by the end of the year.

Greater demand for loans will help fuel the increase, according to Lebda.

Even though mortgage rates have been cheap, borrowing for home purchases has been sluggish. The Mortgage Bankers Association estimates that homebuyers will take out mortgage loans totaling about $415 billion this year, an increase of less than 3% compared with 2011. Next year, however, it forecasts that amount will almost double to $706 billion.

As housing markets stabilize and prices stop falling, homebuyers will be even more confident about buying, said Humphries.

“People can now see the light at the end of the tunnel,” he said. “And that can be enough to get them off the fence.”

By Les Christie @CNNMoney May 3, 2012

Colorado Second Homes Sales are Up

Tom Harris — Fri, 04 May 2012 16:13:51 +0000

Colorado second home sales are up but fewer people are buying them with a mortgage.

Roughly 42% of vacation-home buyers paid all cash in 2011, according to the latest data from the National Association of Realtors. That’s up from 36% a year prior. And while that means more than half of purchasers still take out mortgages, a combination of tighter lending standards and pickier sellers continues to chip away at the figure. In fact, real estate experts say buyers who need to finance vacation homes increasingly get shut out altogether. “

Median sales prices for vacation homes fell 19% in 2011 due in part to the oversupply of vacation homes on the market. As homeowners become more anxious to sell, they’re passing on offers from buyers with mortgages if all-cash offers are made as well. With cash buyers, there’s more certainty for the seller: the sales transaction tends to happen faster and isn’t dependent on a bank coming through with a mortgage.

Also, lending standards for second homes have grown far more strict than requirements for primary residences, and show no signs of easing. Banks demand higher down payments and place strict limits on how much debt these buyers can incur. A growing number of vacation-home buyers are already feeling the heat: About 55% of borrowers in 2011 said getting a mortgage was harder than they expected, up slightly from 51% the year prior, according to the NAR.

Lenders may require as much as 30% down and say bigger down payments are needed to minimize the chances of the home going into foreclosure. A vacation home’s location can also influence whether the lender approves the buyer.

Lenders typically want a vacation home to be at least 50 miles away from the primary residence and near a resort area like beaches, lakes, or ski towns – otherwise they suspect that the individual is actually trying to buy an investment property to rent out. While mortgage rates for vacation homes are the same as primary residences, they’re higher on investment properties. In 2011, just 21% of vacation-home purchasers bought properties 50 miles or less from their primary residence, according to the NAR, while the median distance was 305 miles away from the primary residence.

Real Estate’s Dark Secret; Shadow Inventory

Tom Harris — Fri, 27 Apr 2012 13:13:49 +0000

In a state with judicial foreclosure, the lender usually takes far longer to foreclose. This means the number of recorded foreclosures in a given period will be much lower than in a similar state with non-judicial foreclosure. So the number of foreclosures in a month is NOT a good measure of how badly a state is affected by the housing crisis. A much better measure is to determine what percentage of home loans are in some state of delinquency. [...] This data tells us a lot about the true “shadow inventory” – loans that in some sort of trouble but have not yet resulted in a public record to confirm that (e.g. Notice of Default, Notice of Trustee Sale, Lis Pendens, etc.). Here are a few of the most recent numbers issued by LPS for the month of February 2012, showing the percentage of first home loans that are delinquent but have NOT received a foreclosure notice.”

1. Mississippi – 13.5%
2. Georgia – 10.8%
3. Nevada – 10.5%
4. Alabama – 10.1%
5. Louisiana – 9.7%
6. Tennessee -9.7%
7. Maryland – 9.5%
8. Arkansas – 9.2%
9. West Virginia – 8.9%
10. Rhode Island – 8.7%
11. Ohio – 8.7%
12. Indiana – 8.5%
13. Michigan – 8.4%
14. New Jersey – 8.4%
15. Florida – 8.0%
16. North Carolina – 8.0%
17. Delaware – 8.0%
18. Washington – 7.9%
19. South Carolina – 7.9%
20. Pennsylvania – 7.8%
21. Texas – 7.8%
22. Missouri – 7.6%
23. Kentucky – 7.5%
24. Massachusetts – 7.4%
25. New York – 7.4%
26. Illinois – 7.2%
27. Oklahoma – 7.0%
28. Maine – 6.9%
29. Connecticut – 6.9%
30. California – 6.9%
31. District of Columbia – 6.6%
32. New Hampshire – 6.6%
33. Arizona – 6.6%

Voodoo Housing Numbers

Tom Harris — Mon, 23 Apr 2012 17:31:02 +0000

The latest housing numbers are stating 654,000 new units were started in March, 5.8 percent below the revised February numbers. Economists surveyed by Bloomberg were thinking something considerably higher. The median estimate of the 82 who ventured a guess was 705,000. Even the lowball forecast, 670,000, was too high. It’s the rare economic survey where the biggest bear isn’t bearish enough.

But wait; there’s more! These 654,000 were NOT the number of units started in March. The real number is 88,000. The 654k is the ‘seasonally adjusted’ then annualized number.

Actually, it’s even worse (or better, as I will explain below) than that. A lot of the recent housing build over the last few months has been driven by multi-family units: apartment buildings, condos, duplexes—all of which were underbuilt during the housing boom. Buildings with five units or more fell by 20 percent. Reading too much into that isn’t worth the exercise, especially when the percent change for the whole data set has a margin of error of plus or minus 15.6 percentage points.

It seems strange that, despite a historic glut of distressed housing inventory, we’re still not building enough new ones. Wait, what?

It also seems that we just can’t wait to build another real estate bubble. I think it’s great that single family residential building is down 20%. It’s the only way we can restore housing values.

“If you find yourself in a hole and want to get out….the first thing you need to do is quit digging.”

Home prices close to bottoming, to rise in 2013

Tom Harris — Tue, 17 Apr 2012 18:20:58 +0000

The relentless decline in home prices is nearing an end and prices should rise for the first time in seven years in 2013, but a possible new wave of foreclosures could threaten the recovery, according a Reuters poll of economists.

The median forecast of 24 economists polled by Reuters was for the S&P/Case-Shiller 20-city home price index to end the year unchanged. That was the same finding back in January for this house price gauge, which covers 20 cities.

The survey forecast the S&P/Case-Shiller home price index rising 2.0 percent next year, up from 1.5 percent in the January survey.

The housing market’s collapse pushed the economy into its longest and deepest recession since the 1930s. Historically, housing has led the economy out of recession, but it has been the weakest link in the recovery that started in mid-2009.

House prices have so far fallen about 32 percent from their peak at the end of 2005, and an estimated 11 million Americans now owe more on their homes than they are worth.

A resulting tide of foreclosures has held back the housing market’s recovery.

The survey predicted about 1.5 million foreclosed properties will come on to the market this year. While there is no comparison for this figure, most analysts believe the foreclosure wave has either peaked or is close to topping out.

Given that foreclosures and the accompanying fear of further price declines are the main obstacles to any housing market recovery, few analysts say that further purchases of mortgage backed securities by the Federal Reserve will help.

By Lucia Mutikani | Reuters – Thu, Apr 12, 2012

Full article at:

http://news.yahoo.com/home-prices-close-bottoming-rise-2013-135728513.html

Colorado ahead of most on job growth

Tom Harris — Fri, 13 Apr 2012 19:12:39 +0000

Date: Friday, April 13, 2012, 4:00am MDT

Colorado’s economy is among the strongest in the country and is doing better at adding jobs than the nation overall, according to several reports that have come out in recent weeks.

Even local economists, who are known to hedge their bets when it comes to forecasts, say the state’s economy is on more solid ground than it’s been since the Great Recession began in 2008.

“We still have not recovered all the jobs we lost [in the recession], and we’re still in recovery mode,” said economist Patty Silverstein, president of Littleton-based Development Research Partners. “But our recovery in Colorado and in metro Denver is on more sure footing than we thought we’d been on. Indeed, our expectation is that we’ll continue to outperform the national average [in jobs growth].”

U.S. Department of Labordata released April 10 showed that only five states outpaced Colorado’s payroll job growth from February 2011 to February 2012.Colorado’s nonfarm payroll jobs rose 2.2 percent in February from a year earlier. The state added 48,200 payroll positions between February 2011 and February 2012, reaching a total of 2,261,600, according to the Labor Department’s Bureau of Labor Statistics (BLS).

The only states to top Colorado’s job growth rate in that period were North Dakota (up 6.9 percent), Oklahoma (up 2.9 percent), Texas (up 2.6 percent), Utah and Louisiana (both up 2.5 percent). Kentucky and the District of Columbia both tied Colorado’s 2.2 percent job growth rate.

“Our surveys have been showing a Colorado economy that is pointing to better growth than the national economy,” said Ernie Goss, director of the Denver-based Goss Institute for Economic Research. “The readings have been stronger than the nation’s, and that’s been happening for some time.”

Goss’ monthly Business Conditions Index reading for the state, based on a survey of business supply managers, in March hit its highest level since May 2011. The index was 61.4 in March on a scale of 1 to 100, up from 59.1 in February and 57.5 in January. It was the 30th straight month that Colorado’s index was in growth-positive territory.

An index reading greater than 50 indicates expectations of an expanding economy in the next three to six months; 50 is “growth neutral.”

An April 2 report released by Intuit Inc., a Mountain View, Calif.-based financial software company, showed that employment by its Colorado small-business customers grew 0.6 percent in March from the previous month, exceeding the national increase of 0.3 percent last month.

Another report on April 2 showed growth in online job ads in Colorado. The state’s online job ads rose by a net 4,400 in March, following a gain of 3,600 in February and 2,100 in January, according to The Conference Board’s monthly Help Wanted OnLine Data Series.

In Colorado, there were 95,700 unduplicated online ads for Colorado jobs in March, up from 91,300 in February. Colorado online job ads have been trending upward since August 2011, the report said.

The Conference Board is a nonprofit business research association best known for issuing the Leading Economic Indicators and Consumer Confidence Index.

But the report that really got local economists excited was the annual revised BLS data in March that showed that metro Denver job growth was three times higher in 2011 than preliminary data showed.

Based on preliminary numbers, economists believed the Denver area had created 7,700 new jobs last year. The revised numbers showed that metro Denver added more than 21,400 new jobs in 2011.

It meant that Colorado’s job growth in 2011 went from about 0.6 percent to 1.5 percent.

“So now our vision of reality has changed to one that here in metro Denver and in Colorado, we’re back to growing faster than the nation,” Silverstein said. “Truly, that was one of the largest revisions we’ve seen to Colorado data in a long, long time.”

Alexandra Hall, chief economist for the Colorado Department of Labor, said the revised annual BLS numbers for 2011 and the first-quarter 2012 jobs reports show that Colorado has recovered more than half the jobs it lost in the recession.

“That doesn’t sound that amazing, until you compare it to the national job recovery,” Hall said. “The nation has recovered only about a third of the jobs lost in the recession.”

Local economists added a caveat to all the good economic news, however. High gasoline prices and uncertainty in the Middle East could derail U.S. economic momentum, which would hurt Colorado’s growth.

“If gasoline prices bounce up much higher, moving into tourism season, that would not bode well for an important part of Colorado’s economy,” Goss said.

Heather Draper covers banking, finance, law and the economy for the Denver Business Journal and writes for the “Finance Etc.” blog.

Colorado Brokerage Relationships

Tom Harris — Fri, 06 Apr 2012 15:51:34 +0000

A Brokerage relationship is a working relationship, between a licensed real estate broker and a buyer or seller, to engage the services of the licensed broker on behalf of the buyer or seller in acquiring or marketing real property. This relationship may be limited agency or non-agency according to the agreement of the parties. In the absence of a signed agreement regarding the brokerage relationship, the default position under Colorado License Law is “transaction-brokerage”.

Prior to enactment of The Brokerage Relationships Act in January of 1994, every licensed real estate broker or salesperson in Colorado working to sell a listed property was assumed to be an agent of the seller. As agents of the seller, licensees working with a seller or a buyer owed the same duties of loyalty and fidelity to the seller.

The current law recognizes and defines different types of relationships between licensees and buyers and sellers such as single agency (buyer agency or seller agency), and the transaction-broker relationship.

Colorado real estate licensees are required by law to disclose, in writing, the nature of the working relationship to buyers and sellers and the level of service they will provide. A buyer or seller has the right to choose what type of representation best meets their needs just as they have the right to choose a broker to represent them in a real estate transaction.

When buying or selling real estate, you may decide to hire a real estate broker to assist you. At the time you begin a serious discussion of your real estate needs with a Colorado real estate broker, the broker should discuss brokerage services with you. The broker is required to advise you of the type of services the brokerage is going to provide. Colorado Law recognizes these services as the brokerage relationship.
There are two primary types of brokerage relationships: Agency and Transaction Brokerage.

Agency

Agency is a legal relationship resulting from an agreement that one person, called the agent (broker), shall act for and be subject to the control of another person, called the principal (buyer or seller). The fact that a real estate broker performs some acts for a purchaser or seller in a transaction does not itself create the agency relationship. In Colorado, the agency relationship can only be established through a written contract which constitutes the employment agreement between the principal and agent.

Both buyers and sellers can hire agents to represent their interests in a real estate transaction. Agency relationships include Buyer Agency and Seller Agency. The agency contract commonly binds you to a working relationship with that broker for a specified period of time. A broker engaged by a buyer or seller in an agency capacity has specific duties and obligations.

Buyers often use the services of the seller’s broker to prepare and submit an offer on property. In this instance, the broker is still responsible for making a disclosure to the buyer concerning their working relationship. If the broker assisting the buyer is representing the interests of the seller only, the broker must give the buyer a written disclosure to this effect.

Transaction Brokerage (Non-Agency)

If you do not choose to hire a broker to represent you in an agency capacity, a broker may assist you as a transaction broker. A transaction broker is one who assists a buyer, seller, or both throughout a real estate transaction without being an agent or advocate for the interests of either the buyer or seller.

Unlike Agency, Transaction Brokerage does not have to be established through a written contract. Transaction brokerage can be established through written disclosure. The disclosure defines the broker’s duties and responsibilities and is not a contract. The transaction broker disclosure does not limit you to the services of any one broker. If done through a written contract, the contract is an employment agreement which binds you to the broker for a specified period of time.

BROKERAGE RELATIONSHIPS LAW

Effective January 1, 1994, SB 223, entitled Brokerage Relationships, codified much of the law of agency, as it relates to real estate, and established the laws concerning the working and legal relationships between the public and real estate brokers. This law enumerates and defines the working relationships with brokers, including agency and transaction brokerage, and sets forth the general duties, obligations, and responsibilities of a real estate broker in any particular real estate transaction.

In June 2002, the Colorado Legislature passed SB-196 which amended the current statute for Brokerage Relationships to implement Designated Brokerage. This law went into effect on January 1, 2003, and is mandatory for brokerage firms consisting of more than one licensee. A designated broker is defined as a broker “who is designated by an employing broker to serve as single agent or transaction broker for a seller, landlord, buyer, or tenant in a real estate transaction.” The Employing broker shall make this designation in writing. The brokerage relationship between the designated broker and the public shall not extend to the employing broker, other licensees, or the brokerage firm.

Designated brokerage abolishes sub-agency and dual agency and reduces the vicarious liability of the public for the acts and omissions of their designated broker. Designated brokerage does not reduce the vicarious liability of the brokerage firm for the acts of its licensees, the duty of the employing broker to supervise and manage licensees, or the public’s right to choose the type of brokerage relationship, agency or transaction brokerage.

Denver Real Estate Market in Positive Territory

Tom Harris — Mon, 02 Apr 2012 19:50:54 +0000

The Denver-area housing market is in positive territory for the first time in a year and a half, according to the closely watched Case-Shiller index.

Although the overall Denver-area housing market was up only 0.2 percent in January from January 2011, it is an important milestone, according to local real estate experts. It also was good enough for third place of the cities tracked by the S&P/Case-Shiller Price Indices.

The overall year-over-year change for 19 market tracked by Case-Shiller in January was a negative 3.8 percent. Only Detroit and Phoenix did better than Denver, with a 1.7 percent and 1.3 percent gain, respectively. Las Vegas had worst showing, falling by 9 percent on a year-over-year basis.

Overall, the national market is not nearly as healthy as in Denver.

“Despite some positive economic signs, home prices continued to drop. The 10- and 20- City Composites and eight cities – Atlanta, Chicago, Cleveland, Las Vegas, New York, Portland, Seattle and Tampa – made new lows,” said David M. Blitzer, Chairman of the Index Committee at S&P Indices. “The 10-City Composite was down 3.9 percent and the 20-City was down 3.8 percent compared to January 2011. Seven of the cities were down by 1.0 percent or more over the month. With the new lows, both composites are now 34.4 percent off their relative 2006 peaks.”

Time to Buy a Home?

Tom Harris — Thu, 29 Mar 2012 20:24:46 +0000

A report Monday by the National Association of Realtors showed the index of pending home sales, reflecting deals that have gone into contract but haven’t yet closed, rose 9.2% last month from a year earlier, continuing a rise largely fueled by investors’ purchases of foreclosed properties. The index fell by 0.5% from January.

While buyers are starting to step forward, however, home builders and real-estate agents report an elevated level of contracts falling apart, as buyers run into trouble qualifying for mortgages amid tough lending standards.

Another common complaint: low appraisals that come in below a negotiated value, requiring sellers to cut their price or buyers to put more money down in order to keep a deal from collapsing. As a result, the pending sales figures could be overstating actual sales as buyers sign multiple contracts over the course of several months.

Still, analysts say that housing demand appears to be stronger than at any point in the past year. Low prices are luring investors who can convert properties into rental units and make double-digit returns. More first-time buyers could face added urgency to move as landlords begin to raise rents and mortgage rates rise from record lows.

Real-estate agents in many parts of the country say inventories of homes for sale are declining, leaving more buyers competing for less supply. Shrinking inventories could be a consequence of the decline in home prices, which has left more sellers unable or unwilling to sell their homes at a loss.

Colorado adds 19,500 jobs as unemployment rate falls

Tom Harris — Fri, 16 Mar 2012 19:52:17 +0000

Colorado employers added 19,500 workers in January, including 5,100 in the troubled construction industry, according to state figures released Tuesday. The gains brought Colorado nonfarm employment to its highest level in three years. The state also reported a one-tenth percentage-point drop in unemployment to 7.8 percent, the rate’s fifth consecutive monthly decline.

Colorado has added almost half of the jobs it lost during the downturn. The state lost 151,600 jobs from April 2008 to January 2010 but has since recouped 75,600 jobs, she said.

The construction industry was hit particularly hard during the downturn and has been slow to rebound.

Leisure and hospitality gained 3,900 jobs in January.

Tuesday’s report said the number of people actively participating in the labor force decreased by 3,900 to 2.73 million. Total employment, from the labor-force survey, decreased 1,900 to 2.52 million, causing the number of unemployed to decline by 2,000.

The state’s unemployment numbers are based on a survey of the labor force. Employment figures come from a survey of employers in the private and public sectors.
Read more: Colorado adds 19,500 jobs as unemployment rate falls – The Denver Post http://www.denverpost.com/breakingnews/ci_20167911/colorado-adds-19-500-jobs-unemployment-rate-falls#ixzz1pJKqL7Qf