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Tuesday, January 31, 2012

Scupltor John DeAndrea Created "Linda" in This Home's Studio

My listing at 1235 Pierce Street was previously owned by the well-known sculptor John DeAndrea, whose famous work, Linda, was created in the studio located behind the 3,322-sq.-ft. home and its 4-car garage. The person who bought this home from DeAndrea and is now selling it keeps a framed Denver Art Museum poster of the work above the studio door. DeAndrea’s overspray can still be seen on one of the posts in the converted pole barn. The house itself is special, combining the retention of its 1928 style with modern conveniences such as a Sub Zero fridge, soapstone countertops, steam shower, hardwood floors and original light fixtures. It’s a short walk to the Lakewood Country Club and the coming light rail line. You can take a narrated video tour of the home on its website, Open this Saturday, Feb. 4, 2012, 1-4 p.m.

National press reports continue to mislead & confuse local buyers & sellers

[Published Feb. 2, 2012 in the Denver Post]

You can’t blame would-be buyers and sellers from being confused by the conflicting housing reports which they read in the press and see on TV.  One such would-be seller sent me a frantic email last week, saying, “See article link below.  Worst year EVER for home sales.  And now that Bernanke has told everyone that rates will stay low until 2015, all incentive to buy a home has evaporated.”

This was a classic example of being misled by a national report.  The article which he sent me was about national statistics on new home sales.  Indeed, the headline read, “New home purchases fall, 2011 worst ever for sales.”

Within the article was buried good news for existing home sales, but it was hard for the reader to take in once the misunderstanding was instilled.  Here is the sixth paragraph: “Sales of previously occupied homes rose in December for a third straight month. Mortgage rates have never been lower. Homebuilders are slightly more hopeful because more people are saying they might consider buying this year. And home construction picked up in the final quarter of last year.”

That was Thursday’s national news.  On Friday, the following story appeared in the Denver Post: “Home builders in Colorado pulled more permits during the first 11 months of 2011 than they did during all of the previous year.”

Then, on Monday, Realty Times, an online real estate news service, reported, “The National Association of Realtors (NAR) latest existing home sales survey shows that sales are on the rise again. This is the third straight month of increases as well as rising above year ago levels.” (Emphasis added.)

The lesson here is two-fold. First, the existing home market is different than the new home market, and, second, the Colorado market is different than the national market.  I’ve pointed that out in this column several times a year over the past decade!

NAR is good about consistently reminding everyone in their TV commercials that “all real estate is local” and that’s why it’s important to consult a local Realtor about your local market. Yet, every time they issue a national report on home sales, I don’t see that caveat included.

The market here in Colorado, and especially in this part of Jefferson County, remains hot. Buyers are snapping up the available listings, and we can’t list more homes quickly enough.

Tuesday, January 24, 2012

Sen. Bennet’s SAVE Act Will Bring Sense to Valuing Solar-Powered Homes

[Published Jan. 26, 2012, in the Denver Post]

I had the privilege of representing the Realtor community last week at a press conference promoting the SAVE Act, an important (and rare) bi-partisan bill co-sponsored by Sen. Michael Bennet, (D-Colorado) and Sen. Johnny Isakson (R-Georgia).

SAVE” is an acronym for “Sensible Accounting to Value Energy.”  The act is long overdue, and let’s hope it does not become a victim of the partisan gridlock in Congress. Besides its bi-partisan sponsorship in the Senate, it costs nothing, merely instructs underwriters to modify appraisal guidelines.

On the one hand the Act will improve the underwriting of mortgages by requiring energy costs to be considered alongside property taxes and insurance.  It makes no sense that lenders don’t factor in the cost of operating a house when determining whether a borrower can afford it.  After all, the average energy costs of American homes today is greater than the average cost of property taxes.

The flip side, which is dear to me as the owner of a solar-powered home, is that appraisers will be empowered to assign extra value to homes which consume less energy, whether through extra insulation or on-site power generation.

As I’ve written in the past, appraisers — and the underwriters who must accept their appraisals — are not allowed under current guidelines to give value to such efficiency unless there are comparable sales proving that homes with these features have sold for more than homes without them.

Personally, I have sold two listings which had photovoltaic (PV) systems resulting in near-zero electrical bills.  Both sold for no more than homes which lacked such systems, because there were no comps to support extra value.  The result of those sales merely reinforced the problem, since they created comps which proved such systems have no value! It’s a catch-22 situation which the SAVE Act  and a “greener” MLS can address.

Sen. Isakson, himself a 30-year practitioner of residential real estate in Georgia, points out that in addition to improving underwriting guidelines (which could reduce foreclosures), the bill could actually create jobs by improving the return on investment for energy efficiency and renewable energy improvement made by homeowners.  Currently, you can expect far less (or zero) return from such investments than, say, for redoing a kitchen or bathroom.

Monday, January 23, 2012

Here's a story to remind us of when we were much "greener"

My sister Janet, who lives in Sweden, forwarded this story to me, which she received from an 80-year-old Venezuelan friend of hers:

The Green Thing
In the line at the store, the cashier told an older woman that she should bring her own grocery bags because plastic bags weren't good for the environment.

The woman apologized to her and explained, "We didn't have the green thing back in my day."

The clerk responded, "That's our problem today. Your generation did not care enough to save our environment."

He was right -- our generation didn't have the green thing in its day.

Back then, we returned milk bottles, soda bottles and beer bottles to the store. The store sent them back to the plant to be washed and sterilized and refilled, so it could use the same bottles over and over. So they really were recycled.

But we didn't have the green thing back in our day.

We walked up stairs, because we didn't have an escalator in every store and office building. We walked to the grocery store and didn't climb into a 300-horsepower machine every time we had to go two blocks.

But she was right. We didn't have the green thing in our day.

Back then, we washed the baby's diapers because we didn't have the throw-away kind. We dried clothes on a line, not in an energy gobbling machine burning up 220 volts -- wind and solar power really did dry the clothes. Kids got hand-me-down clothes from their brothers or sisters, not always brand-new clothing. But that old lady is right; we didn't have the green thing back in our day.

Back then, we had one TV, or radio, in the house -- not a TV in every room. And the TV had a small screen the size of a handkerchief (remember them?), not a screen the size of the state of Montana.

In the kitchen, we blended and stirred by hand because we didn't have electric machines to do everything for us.

When we packaged a fragile item to send in the mail, we used a wadded up old newspaper to cushion it, not Styrofoam or plastic bubble wrap.

Back then, we didn't fire up an engine and burn gasoline just to cut the lawn. We used a push mower that ran on human power. We exercised by working so we didn't need to go to a health club to run on treadmills that operate on electricity.

But she's right; we didn't have the green thing back then.

We drank from a fountain when we were thirsty instead of using a cup or a plastic bottle every time we had a drink of water.

We refilled writing pens with ink instead of buying a new pen, and we replaced the razor blades in a razor instead of throwing away the whole razor just because the blade got dull.

But we didn't have the green thing back then.

Back then, people took the streetcar or a bus and kids rode their bikes to school or walked instead of turning their moms into a 24-hour taxi service.

We had one electrical outlet in a room, not an entire bank of sockets to power a dozen appliances. And we didn't need a computerized gadget to receive a signal beamed from satellites 2,000 miles out in space in order to find the nearest pizza joint.

We didn't have the green thing back then?

Tuesday, January 17, 2012

Supply of Homes for Sale Is Being Depleted; We Need More Homes on Market

[As published on Jan. 19, 2012, in the Denver Post]

The statistics speak for themselves. Right now there are 31% fewer homes for sale on the Denver MLS than there were at this time last year.  In the non-foothills portion of Jefferson County, the inventory of homes for sale is down 39% from a year ago. 

Despite fewer homes to choose from, the number of homes under contract is up by 13% from last year.  Thus, the percentage of inventory that is under contract is 27.5% vs. 18.8% a year ago.  In Jeffco, that percentage is even higher.

The bottom line message could not be clearer.  If you are thinking of selling your home, there is no better time than now to put it on the market.  We need inventory!

Buyers are buying right now, and for a very good reason.  The interest rates are at record lows. Look at these rates offered by a lender with whom I do business:  30-Yr Fixed—3.75% (Jumbo* 3.875%)  15-Yr Fixed—3.0% (Jumbo—3.125%)  5/1 ARM—2.125% (Jumbo—same rate)  FHA 30-Yr Fixed—3.75% (no points)

The above rates all include one point, except for FHA. If you want to pay no points on the non-FHA loans, the rate is 0.25% to 0.375% higher. 

As a guide, each 1% change in rate on a $250,000 loan saves or costs the borrower about $50,000 in interest over a 30-year term.

Not only should sellers consider putting their home on the market at this time, but buyers should get off the fence and buy before rates go up. Remember, you can buy a home with as little as $1,000 down in Colorado, thanks to the Colorado Housing and Finance Authority (CHFA). If you don’t have a good lender, I’d be happy to refer you to one.  Call me at 303-525-1851.

*A “jumbo” loan is a loan over the conventional loan limit of $417,000. 

Hiring an Interior Designer Can Pay for Itself

[As published Jan. 19, 2012, with my column in the Denver Post]

Recently I dropped in on a client who had purchased a home last year.   She was eager to show me the changes she had made, and they were stunning.

She told me that she had hired a great interior designer, and I said, “That must have been expensive,” but she replied, “No, actually it saved me money.”

Why? Because the interior designer she hired gave her access to her vendor discounts without any mark-up.  My client literally saved more in discounts on the purchases which the designer recommended than she paid the designer for her professional advice.

I was convinced.  I’m going to hire that interior designer the next time I make a move!

Arvadans Mobilize Against the Beltway - Public Meeting Jan. 19th

[As published in the Denver Post on Jan. 19, 2012]

It continues to amaze me that Arvadans accept their political leaders’ pro-development, pro-beltway stance, since they’re the ones who will pay for it in so many ways — increased congestion, more pollution, and even the specter of air-borne plutonium from disturbing the contaminated soil in and around Rocky Flats.

Most current Arvadans weren’t here and wouldn’t remember the 1969 fire at Rocky Flats — at the height of its production of plutonium triggers for nuclear weapons. Because of that fire, people learned that plutonium had been spewed downwind toward Arvada.

Below is a map showing where soil was contaminated by plutonium releases. Disturbing the dirt on the eastern edge of Rocky Flats with its plutonium-rich soil poses health risks for all Arvadans.

A public meeting on this subject is being held  Jan. 19th, at 7 pm at the Jaycee Building, 5640 Yukon St. in Old Towne Arvada.  I’m one of the featured speakers.

Wednesday, January 11, 2012

Mortgage Cost Increase to Pay for 2-Month Extension of Payroll Tax ‘Holiday’

[Published in the Denver Post on Jan. 12, 2012]

It was big news in December that the House Republicans caved in and agreed to extend the federal payroll tax “holiday” for two months, as agreed by Senate Republicans.

But what didn’t make the news was where the money would come from to pay for that tax reduction.  It’s going to come out of the pockets of homebuyers in the form of increased loan costs.

I was first made aware of this by a Jan. 5 email from a respected mortgage consultant. I confirmed it this past Sunday in a conversation with Rep. Ed Perlmutter in Golden.

The mortgage consultant wrote: “For conforming products, it has been determined that something known as a Guaranty Fee that all lenders pay to the Government Sponsored Entities [Fannie Mae & Freddie Mac] will increase by 10 basis points in yield. Effectively, that means all conforming loans will increase almost .125% in rate. [Fannie and Freddie] are requiring this increase for loans delivered to them beginning in the second quarter of 2012. You will see the increase effective on Wednesday, Jan. 11, 2012. In some cases, the actual rate impact will be as little as 27 basis points. In other cases, the impact will be as high as 77 basis points. And the impacts will vary day-to-day, depending on the rates and the market’s attitude.” (A basis point = 1/100th of 1%.)  

FHA loan costs will go up by an equivalent amount.

According to Rep. Perlmutter, you can thank the Republicans for this development.  The Democrats wanted to pay for it with a tax on those earning over $1 million per year, but the Republicans would not allow it and, to honor their no-tax-increase pledge, came up with this non-tax approach to providing the required offsetting revenue. According to the email I received, it will take 10 years for this mortgage cost increase to offset that two-month payroll tax reduction.

I’m amazed that Republican leaders continue to think they can attract votes from the general population by doing whatever it takes to keep taxes low for the top 1% of the population.  I suspect they are only providing ammunition that will cost them in the 2012 elections.

I lived in Washington, DC, when I was a reporter for the Washington Post in 1968. I’m keenly aware that the 550,000 residents (mostly Democrats) of our nation’s capital do not have voting representation in Congress.  DC’s license plates declare “Taxation Without Representation.”  Wasn’t that the rallying cry at the Boston Tea Party?   Why isn’t today’s Tea Party working to right that injustice?

Jeffco Planning Commission Promotes Blight

[Published with my column in the Denver Post, on Jan. 12, 2012]

What is “smart growth”?

In November, the Jeffco Planning Commission approved a revision to the North Plains Area Plan, designating over 1,000 acres of open land west of Highway 93 as a new “Urban Activity Center.”  Although this didn’t constitute a rezoning of what is currently agricultural land, it means that a future request for urban-style rezoning would be justified as complying with the revised plan for that area.

I testified against the redesignation, and pointed out that promoting that kind of sprawl — the kind which has transformed the areas through which C-470 and E-470 pass — actually promotes blight in the older developed areas.

Creating more and more suburban opportunities for overbuilding merely promotes sprawl, but it also promotes continued abandonment of older areas.  A “smart growth” strategy, in my opinion, would only open outer agricultural areas to development as a shortage of developable land is perceived in the inner urban areas.

By contract, the building of transit lines, such as TREX and FasTracks, promotes smart growth. I recently learned, for example, that there has been $6 billion of economic development along the TREX corridor since that transit line opened.

Friday, January 6, 2012

Fox News report promotes Denver as THE best place to buy real estate

I don't watch Fox News, but I thank the Corrigan Group for sending me this link to a fascinating report about Denver that appeared recently on Fox.

Here's the link:

Wednesday, January 4, 2012

Yes, You CAN Buy a Home With Less Than a 20% Down Payment!

[Published on Jan. 5, 2012, in the Denver Post]

One of the most prevalent misconceptions among home buyers is that you need a 20% down payment to get a mortgage. In fact, the majority of loans being written today are FHA-insured loans requiring only 3.5% down payment.  The VA still offers 100% financing to qualified veterans, and one can buy a home with only $1,000 down through the Colorado Housing and Finance Authority.

Another misconception is that mortgages are less available. That, however, is only true if the borrower has a credit score under 620.  That’s the big change from the “bad old days” of toxic loans — banks now make you prove that you can pay back the loan. Underwriters require so much documentation to prove you’re qualified that I’m glad I’m a Realtor, not a mortgage broker!

The FHA loan limit in our area is currently $406,250. You can buy a home for more than that amount, but that’s all the FHA will allow you to borrow.  Although FHA loans are most typically used by the middle or lower middle income buyer, there is no income limitation to qualify for an FHA loan.  FHA loans also carry no pre-payment penalties, and, best of all, they are assumable by qualified buyers.

The assumability of FHA loans is especially valuable now that a buyer can obtain an FHA loan for about 3.75%, which is below the rate on a non-assumable conventional loan.  When you sell your home 5, 10, or 20 years from now when rates are much higher, wouldn’t it be great to advertise that you have an “assumable 3.75% loan”?

FHA also offers 3-, 5-, 7- and 10-year Adjustable Rate Mortgages. ARMs are currently being offered at rates under 3%, which is incredible!  As someone who tends to move every five years or so, I’d jump at a 5-year ARM. Even with a maximum adjustment in years 6 and 7, it would take at least that long for a buyer to pay more than he would over the same period on a 30-year fixed-rate loan.

If everyone knew that they could buy a home with as little as $1,000 down payment — or, at worst, 3.5% — we would see a lot more buyers than we do in the market taking advantage of these incredibly low interest rates.  And, indeed, there are already enough buyers in the market now to deem it “hot.”  My end-of-year index [posted on this blog on Jan. 1st] shows that 26.8% of Front Range MLS listings are under contract. In Jeffco (minus foothills areas), 32.3% of the inventory is under contract.  In Denver it is 34.2% and in Aurora it’s 48.9%.  Now, that is what I call a hot market!

Sunday, January 1, 2012

Our Real Estate Market Remains Hot - Over 1/3 of Denver Listings Are Under Contract

My monthly analysis of Metrolist data shows that the market hardly skipped a beat during the holiday season, and at year's end over a quarter of MLS inventory was under contract.  The region's two major cities came in much higher, with 34.2% of Denver listings under contract (up from 32.4% after Thanksgiving) and 48.9% of Aurora listings under contract (down from 52.6% on Nov. 30th).  Here in Jefferson county, 32.3% of non-foothills listings were under contract at year's end, but only 15.6% of foothills listings were under contract.  Here's a chart showing the figures for the entire metro area: