As a general rule, it has always been highly recommended for homebuyers to avoid doing anything that will affect thier credit during the home-buying process. Now, however, the rule is even more important as Fannie Mae has enacted the Loan Quality Initiative (LQI), effective June 1,2010. One of the initiatives of LQI requires mortage companies to ensure no additional debt has occurred prior to closing. Changes in finances could cause mortgage loans to be delayed or even denied, despite earlier approvals.
There are four main things you must avoid before closing on your new home.
1. Don't apply for new credit. Do not obtain new credit cards, a car loan or any other form of credit. New credit inquiries and new debt will appear on your credit reports. If the amounts of your monthly debts increase, your mortgage could be delayed or denied.
2. Don't charge up existing credit. It is common to want to purchase large items such as new furniture on credit or borrow money to help pay for repairs or improvements on your existing house if you are trying to sell. Regardless of the reason, new debt could result in a higher debt-to-income ratio.
3. Don't change jobs. A change in job status or income will require a mortgage company to re-verify job status and income, which could cause delays. Also, loss of income before closing will raise your debt to income possibly causing the loan to be denied.
4. Don't miss payments or incur excessive debt. Be sure to keep on top of your credit card bills, car loans and other bills. Keep your existing accounts well below your limits.
Avoiding these mistakes will help you prevent delays or disappointment and ensure a successful closing.
Thursday, July 29, 2010
Monday, July 5, 2010
Lower Prices Have Put Steamboat Within Reach For New Buyers!
There has been an increase in activity in the Steamboat Springs market. Vacation properties in our world class ski resort are now in reach for new buyers. The lower prices are luring buyers to take the plunge on ski properties despite economic worries. Although some sellers have not lowered their list prices to meet buyers expectations. We estimate that the prices have fallen at least 20 to 30 percent since its peak in 2007 and land prices have dropped as much as 50 percent.
Many buyers are looking for a bargain and many sellers have some sort of distress element. The distress element is often divorce, death or debt, but two years into a grim economy the motivating factor for a price reduction can simply be time.
If buying a vacation home is part of your long term plan, it might be wise to accelerate your timetable to take advantage of low prices and historical low interest rates. Many buyers are now offered a chance to fulfil a dream.
Many buyers are looking for a bargain and many sellers have some sort of distress element. The distress element is often divorce, death or debt, but two years into a grim economy the motivating factor for a price reduction can simply be time.
If buying a vacation home is part of your long term plan, it might be wise to accelerate your timetable to take advantage of low prices and historical low interest rates. Many buyers are now offered a chance to fulfil a dream.
Wednesday, June 23, 2010
United States Most Expensive Home Sells
On June 4, 2010, Le Belvedere, a 48,000 square foot French chateau on 2.2 acres in Bel Air, California sold to an unidentified European family, for as much as $72 million. The sale secures the highest price this year for a American residence. This exceeds the previous 2010 record of more that $46.5 million for a home sold in Aspen, Colorado last April.
Although seller, Mohamed Hadid wouldn't release the official sale price, he confirmed that it was between $50 million and the asking price of $72 million. In Los Angeles County, sale prices can take more than a month to appear on the public record.
Although seller, Mohamed Hadid wouldn't release the official sale price, he confirmed that it was between $50 million and the asking price of $72 million. In Los Angeles County, sale prices can take more than a month to appear on the public record.
The home was designed and built by developer Mohamed Hadid, former owner of Ritz Carlton Hotels, for his personal use.
For more photos and details of the home click on the link below.
Thursday, June 17, 2010
Rent Versus Buy?
The question whether to buy versus rent is a great topic of debate. However, by asking yourself a few important questions the answer should come easy.
First of all, let's consider the total costs of home ownership...these costs include mortgage principal and interest, property taxes, hazard insurance, closing costs at time of purchase and ongoing HOA dues and private mortgage insurance, where applicable. Total costs of home ownership include an offset for the tax advantages of home ownership, including mortgage interest, property tax and closing cost deductions.
The total costs of renting include rent and renter’s insurance.
Now, let's consider how long you will live in the home. Buying a home and selling after 1 year, probably would make renting seem like a more reasonable choice. But after 3-5 years, buying becomes the less expensive solution. Also, it is wise to consider home value rising over a period of time and renting rates rising over time as well.
Keep in mind that paying rent is ultimately helping the landlord and not yourself. With a rent payment all the equity is going to the landlord. But, if you are only going to live somewhere for a year or less, renting could be better because of flexibility and lack of liability.
Another good question to ask yourself is not just a question of money. There is pride and pleasure in home ownership with the ability to make it your own. For example, paint the colors you want, remove a wall, remodel the kitchen, etc. You do not need to ask your landlord for permission. Owning a home can be more of a lifestyle decision and less of a financial decision.
First of all, let's consider the total costs of home ownership...these costs include mortgage principal and interest, property taxes, hazard insurance, closing costs at time of purchase and ongoing HOA dues and private mortgage insurance, where applicable. Total costs of home ownership include an offset for the tax advantages of home ownership, including mortgage interest, property tax and closing cost deductions.
The total costs of renting include rent and renter’s insurance.
Now, let's consider how long you will live in the home. Buying a home and selling after 1 year, probably would make renting seem like a more reasonable choice. But after 3-5 years, buying becomes the less expensive solution. Also, it is wise to consider home value rising over a period of time and renting rates rising over time as well.
Keep in mind that paying rent is ultimately helping the landlord and not yourself. With a rent payment all the equity is going to the landlord. But, if you are only going to live somewhere for a year or less, renting could be better because of flexibility and lack of liability.
Another good question to ask yourself is not just a question of money. There is pride and pleasure in home ownership with the ability to make it your own. For example, paint the colors you want, remove a wall, remodel the kitchen, etc. You do not need to ask your landlord for permission. Owning a home can be more of a lifestyle decision and less of a financial decision.
Monday, June 14, 2010
More Closings at Emerald Lodge, Steamboat Springs
Three condos have sold in Emerald Lodge in the last 2 months. Plus, another condo has recently gone under contract. This is impressive news for Trappeur's Resort which has been one of the hottest condo complexes at the base area for the last couple years. Some of the property's highlights include:1) Great Location. The resort is within walking distance to the base area where you can enjoy restaurants, shops and activities. It's also very quiet and free from any construction. 2) Awarded the Expedia Insiders' Select list and is the only property in Steamboat to receive this prestigious accolade. 3) The new Day Spa and Fitness Center has been operating for over a year now and has been a huge success with owners and guests. 4) The 6 buildings at Trappeur's offer a variety of floor plans and price ranges to fit the needs of most buyers. If you would like more information or would like to schedule a tour of Trappeur's Resort please give us a call or send us an email.
Friday, June 11, 2010
100% Financing Just Made Easier
If you are considering buying a home and need 100% financing the USDA program recently increased their qualifying income limits. In Routt County the limit for families between 1 and 4 people is now $92,600. In Moffat County the limit is $74,050. This is good news for buyers interested in purchasing a home but do not have the a down payment available. If you need more information about this program give a call or send us an email.
Monday, June 7, 2010
A Day At Marabou
We had a company outing at Marabou recently. Marabou is a unique ranch preservation community with 62 custom homesteads on nearly 1,800 acres of active ranch land. More than 1,325 acres will remain common open space. It it a beautiful property bordering two miles of frontage along the Elk river and renowned for its fly fishing waters.
It was a bit overcast but a perfect day for enjoying the Marabou lifestyle. Many of my colleagues chose to go fly fishing with the master guides and had a great time. I decided to go horseback riding with World Champion Steer Wrestler, master guide, Chad Bedell. We had a wonderful ride with gorgeous scenery and even crossed water up to the horses belly! Above is a photo of the Elk River, me with "my horse" Appy at the horse barn and one of the owner's cabins.
After the activities, the staff of Marabou had a delicious appetizer and cocktail party for us at the Owner's lodge overlooking the river. I toured the spa, fitness facility, movie theater and one of the owner's cabins. The facilities are impressive.
Marabou is truly a special property providing first class amenities, blue ribbon fishing, hiking, mountain biking, horseback riding, ranching, etc. For more information about Marabou or if you are interested in going for a tour to experience this picturesque property please give us a call or send a email. Amy 970.846.2114, amybrown@mybrokers.com or Chris 970.819.1432, chris@mybrokers.com
Monday, May 24, 2010
SECOND HOME SALES EDGE UP
As I was doing my weekend reading, I came across the following article in Businessweek:From Hamptons to Tahoe, Summer Home Sales Edge Up
Here in Steamboat Springs, we are seeing activity in the Real Estate market increase significantly over the same time last year. Clients and friends are consistently asking me, "Has the real estate market bottomed yet". Not a yes or no answer and it depending on what your position is in the market. Are you an owner of a property you purchased in 2007, or are you sitting on cash waiting to buy? Overall, if every property was repriced, every day to where buyers would buy, we would be seeing an increase in price for many properties. Unfortunately, this is unrealistic and the pricing of real estate involves a great deal of emotion.
One method for identifying where the market is bottoming, is to watch where actual transactions are occurring. For the past two years, in Steamboat Springs, we have not had enough sales activity to make reasonable assumptions. Finally, after a long wait, in many areas (single family homes, condos and town homes) we are getting transactions to analyze. Here is a link to a recent newsletter we sent, giving some indications here locally that indicate potential bottoms in property values: May 2010 Newsletter from The Paoli Group
In a surprise change to the downside, mortgage rates have actually gone down in the past few weeks. Mortgage Rates Drop . Locking in long term rates may be a great idea, considering the potential for exaggerated inflation over the long term. Combining great prices on incredible real estate with the low rates, this could be an interesting opportunity.
If you have any questions about the information provided above, contact Chris at 970.819.1432 or chris@mybrokers.com
Monday, April 26, 2010
Fannie Mae Can Help Distressed Borrowers
In a recent article in the Washington Post, Kenneth Farney reports Fannie Mae wants to help some troubled borrowers get back into the home market...
Here's some good news for people who had to give the deed on their house back to the bank because of financial problems, or who have done a short sale to avoid foreclosure: You may not have to wait the typical four or five years to re-qualify for financing to buy another home.
Instead, it could be as little as two years. In a bulletin to lenders April 14, mortgage giant Fannie Mae said it is relaxing rules that prevented loan applicants who have participated in short sales or deeds in lieu of foreclosure from obtaining a new mortgage for extended periods of time. The new rules are scheduled to take effect July 1.
Homeowners who have done short sales -- such as under the Obama administration's new Home Affordable Foreclosure Alternatives program -- will also be able to qualify for a mortgage in as little as two years. Although Fannie Mae officials declined to discuss the reasoning behind the changes, the bulletin to lenders said the company hopes to encourage troubled borrowers to work out solutions that avoid the heavy costs of foreclosure.
To read the full article Click Here For Article
Here's some good news for people who had to give the deed on their house back to the bank because of financial problems, or who have done a short sale to avoid foreclosure: You may not have to wait the typical four or five years to re-qualify for financing to buy another home.
Instead, it could be as little as two years. In a bulletin to lenders April 14, mortgage giant Fannie Mae said it is relaxing rules that prevented loan applicants who have participated in short sales or deeds in lieu of foreclosure from obtaining a new mortgage for extended periods of time. The new rules are scheduled to take effect July 1.
Homeowners who have done short sales -- such as under the Obama administration's new Home Affordable Foreclosure Alternatives program -- will also be able to qualify for a mortgage in as little as two years. Although Fannie Mae officials declined to discuss the reasoning behind the changes, the bulletin to lenders said the company hopes to encourage troubled borrowers to work out solutions that avoid the heavy costs of foreclosure.
To read the full article Click Here For Article
Saturday, March 27, 2010
STEAMBOAT SPRINGS CONDO AT 2005 PRICING
Check out this Steamboat Springs 2 br, 1 bath condo for sale at 2005 pricing. Link to Condo details
For more information on this property and other great deals in Steamboat call Chris at 970.846.1432
For more information on this property and other great deals in Steamboat call Chris at 970.846.1432
Thursday, March 11, 2010
IS RESORT REAL ESTATE AN INVESTMENT
Many times I have heard the comment, "I plan to own this place for a long time, so it's not really an investment". Unfortunately life does not always follow the plan we originally lay out. Too often, life changes cause you to re-evaluate your situation and what assets are important. This can be the result of job changes, marital status, illness or even worse, death. There are countless reasons why we may need to rethink where we are in our lives.
For this reason, I tell every client, your home purchase in Steamboat Springs, or any other town for that matter, is an investment. What does that statement mean?
1. Buy what you feel your family will really enjoy. Odds are, other people will feel the same way. If you focus on purchasing a property that will live well and feels great when you are inside, your probably not alone. Too many times I see people purchase property just because it feels like a cheap price, not a great home. Odds are when you end up selling, potential buyers will not feel it's that great a home either. Some times you can get lucky, but what this economy is showing us, is that only good homes get offers in tough markets, even if they are low.
2. Focus on the best homes or condos within the best neighborhoods. Buy the end unit, with extra windows, or buy the home on the best lot with views. This is your opportunity to be picky, so focus on buying the best.
3. Get as close to the beach as possible. Beach? What if we are looking in the mountains. In the mountains, this means as close to the Ski Base or the center of downtown as possible. When markets turn, the majority of buyers want to be near the Beach or Ski area. Property in the closest locations will be the first to see a turn to the upside. Also, this will increase your ability to generate rental income should the market be difficult to sell in (such as now).
Hopefully these thoughts reinforce what you were already thinking as you consider making a real estate purchase. If you have any questions about Steamboat Springs contact me at chris@mybrokers.com. Good luck buying!
Tuesday, March 9, 2010
STEAMBOAT 700 DENIED BY VOTERS
WOW! It's official, the Steamboat 700 annexation has been denied by the voters of Steamboat Springs, Colorado. This is a major turn of events for the future of Steamboat's growth. All future expansion of the Steamboat Springs city boundaries was planned for property west of the city, in a plan called the "West of Steamboat Springs Area Plan".
Today's vote was not an easy one for residents. There were many variables supporting both sides. Only time will tell how this decision will effect our communities future. To read the full article from the Steamboat Pilot, click here.
Monday, March 8, 2010
TWO WEEKS IN A ROW WITH POSITIVE NEWS ABOUT HOUSING!
Last week we had Warren Buffett state - the U.S. residential real estate slump will end by about 2011, predicting that’s how long it will take demand for homes to catch up with the supply.
“Within a year or so, residential housing problems should largely be behind us,” Buffett wrote Feb. 27 in his annual letter to shareholders of his Berkshire Hathaway Inc. “Prices will remain far below ‘bubble’ levels, of course, but for every seller or lender hurt by this there will be a buyer who benefits.” Read the full article
This week in Barrons we an article about Luxury Real Estate, which states - Prices for primary residences, which plunged at least 20% from the peak in 2007, appear to have bottomed. In some of the snappiest locations, scattered bidding wars are breaking out and prices are turning upward. Read the full article
Living in Steamboat Springs, Colorado where the average home price is near $700,000, this is encouraging news. As a Realtor I can attest to the fact that we are seeing a significant increase in the number of showings at high end properties. We are also seeing deals get done at fairly high dollar values ($2.8 million dollar closing, $5.4 million dollar home goes under contract). I wouldn't say we are back to normal yet, but at least the process of inventory reduction for multi-million dollar properties has begun.
Thursday, March 4, 2010
Steamboat Locals Win Gold and Silver!
It was another unbelievable accomplishment for the United States Nordic combined teammates as they won a gold and silver medal in the large hill individual event at the winter Olympics. The event consists of ski jumping followed by a cross-country ski race. In the above photo, Steamboat locals Johnny Spillane and Billy Demong proudly show off their medals. The competition was marred by harsh weather but Demong was able to win the 10 km cross-country race in 25 minutes and 32.9 seconds and Spillane won his third silver of the games, finishing only four seconds behind his teammate.
U.S. Nordic Combined Team Wins a Silver!
Once again, history was made in the Olympic sport of Nordic Combined skiing! The United States Nordic combined team won a silver medal. The squad included Billy Demong, Johnny Spillane, Todd Lodwick and Brett Camerota. Billy, Johnny and Todd live and train in Steamboat Springs. Their incredible dedication and hard work has earned them America's best showing at an Olympics in this relentless sport typically dominated by the Europeans. Another proud day for Steamboat!
Tuesday, February 16, 2010
Steamboat Local Becomes First American To Earn Nordic Combined Olympic Medal
Johnny Spillane a local resident of Steamboat Springs raced to second place at the cross country venue in Whistler Olympic Park. Johnny became the first American to earn a medal in the sport of Nordic Combined. This historic feat has made him the subject of national headlines. Americans have waited 86 years for a medal in this grueling sport! Check out the article from the New York Daily News highlighting the awesome accomplishments of Steamboat Springs Nordic Combined teammates Johnny Spillane, Billy Demong and Todd Lodwick. Link to article
Walking around town you can't help notice that Steamboat has caught Olympic Fever!
Walking around town you can't help notice that Steamboat has caught Olympic Fever!
Saturday, February 13, 2010
WHY WE LOVE STEAMBOAT
Here is a link to a nice video of some Steamboat Springs locals talking about why they love Steamboat so much:
In a town with so many great natural resources and fun things to do, it's amazing that everyone who lives here says the same thing, "The best part about Steamboat is the community!"
Sunday, February 7, 2010
STEAMBOAT SPRINGS WINTER CARNIVAL - A PICTURE IS WORTH 1,000 WORDS!
What makes Steamboat Springs such a special town? Along with the great natural amenities (World class ski resort, mountains, rivers, etc.), Steamboat has a one of a kind community. This weekend we began another Winter Carnival with a very special Olympian send off, followed up by two days of fun street events. How many towns shut down main street, fill it with snow and let the entire community come down and watch kids and adults participate in a multitude of fun activities. Since nothing I can write will do it justice, here are a number of videos that I hope convey a small taste of what we experienced this weekend:
Kids skiing behind horses
Men being pulled behind horses on shovels
Three leg race with skis on
Dog Dash - Kids in sleds being pulled by the family dog
Kids skiing behind horses
Men being pulled behind horses on shovels
Three leg race with skis on
Dog Dash - Kids in sleds being pulled by the family dog
Saturday, February 6, 2010
Tuesday, February 2, 2010
INTRAWEST, STEAMBOAT SKI AREA PARENT, PLANS TO SELL PANORAMA SKI RESORT
Intrawest, the current owner of the Steamboat Springs Ski Area is currently in very serious negotiations with lenders regarding a missed loan payment. As it stands now, lenders plan to auction the assets of Intrawest on February 19th. In an effort to stave off this foreclosure, Intrawest plans to sell the Panorama ski resort to a group of locals and business owners led by a former mayor. To read more, click here .
Monday, February 1, 2010
Winter Carnival Schedule
The annual 2010 Winter Carnival begins this Wednesday, February 3rd. Below is a schedule of all the fun events!
Wednesday, Feb. 3
■ 5:30 p.m. Opening Ceremonies (Olympian Hall, Howelsen Hill Lodge, downtown off Fifth Street) Sponsored by Steamboat Meat & Seafood Co. and Pepsi Cola. A celebration honoring the Winter Carnival queen and her court of attendants, little princesses and grand marshals.
Thursday, Feb. 4
■ 4:30 p.m. Cross-Country Obstacle Race (Howelsen Hill, downtown off Fifth Street) Sponsored by SportsMed. A fun and entertaining obstacle race for young cross-country skiers ages 5 to 12. Spectators welcome. Pre-registration is not required, but a release form must be signed or already on file with SSWSC in order to participate.
■ 4:30 – 6 p.m. Telemark Challenge (Howelsen Hill) Sponsored by Backdoor Sports. All ages welcome to show their Telemark technique and skills in gates and moguls on Howelsen Hill. Registration in the Fireplace Room from 3:30 to 4 p.m. and inspection from 3:30 to 4:30 p.m. The event starts at 4:30.
■ 6:30 – 8 p.m. Dual Slalom Bicycle Race (Howelsen Hill) Sponsored by Wheels Bike Shop and the SSWSC Cycling Club. An exciting on-snow, mountain bike event down the face of Howelsen Hill complete with thrills and spills. The event includes practice, qualifying and final competition rounds. Register the night of the event at 6 p.m. in the Fireplace Room at Howelsen Hill Lodge. For more information, call Chris Johns with Wheels Bike Shop at 970-846-RIDE.
■ 7 – 8 p.m. 20, 30 & 50 Meter Jumping (Howelsen Hill) An opportunity for those ages 11 and older to take a shot at ski jumping on Howelsen’s famous jumps. Alpine, Telemark or jumping skis only. Register the night of the event from 5:45 to 6:45 p.m. in the Fireplace Room at Howelsen Hill Lodge.
■ 7 – 8 p.m. Snowboarding Jam Session (Howelsen Hill) Sponsored by PowderTools. Located under the lights of the Howelsen Hill Terrain Park, this event is open to anyone looking to have some fun on his or her board. Prizes provided by PowderTools. Pre-registration is not required, but a release form must be signed or already on file with SSWSC in order to participate.
Friday, Feb. 5
■ 10 a.m. Soda Pop Slalom (Mount Werner, Headwall Run) Sponsored by Christy Sports and Coca-Cola. This is a fun race and is open to any skier or snowboarder through fifth grade who is not an age-class racer with the Steamboat Springs Winter Sports Club. Pre-registration required at the Winter Sports Club office. Registration deadline is 6 p.m. Feb. 4.
■ 1:30 – 3 p.m. Bumps, Jumps & K18 Ski Jumping (Howelsen Hill, Downtown off of Fifth Street) An enjoyable time for children ages 4 to 11 to take to the slopes of Howelsen Hill for some “flying fun.” Preregistration required at the Winter Sports Club office. Registration deadline is noon Feb. 4. Check in from 12:30 to 1:15 p.m. on event day.
■ 3 – 6 p.m. Tubing Party (Howelsen Hill) Come experience Howelsen Hill’s Tubing Hill. Tubes are provided, and a waiver must be signed.
■ 4 – 5:30 p.m. Nordic Jumping Jamboree (Howelsen Hill) Nordic combined athletes jumping the Hillside 75, 42, 28 and 20 hills.
■ 6:30 – 7:40 p.m. Olympian Send-off (Courthouse Lawn) Sponsored by Steamboat Ski and Resort Corp. Join the community as Ski Town USA sends its Olympians off to Vancouver, British Columbia. Fireworks, the Steamboat Olympic Torch, big-screen video and close to 15 new Olympians.
Saturday, Feb. 6
■ 8 – 11 a.m. Knights of Columbus Pancake Breakfast (Holy Name Catholic Church, 524 Oak St.) Hosted annually by the Knights of Columbus, this function is the perfect way to fuel up for all of the day’s activities. In addition to a Winter Carnival button, a nominal admission is charged.
■ 8 a.m. 100-Meter Nordic Sprint (Downtown, Lincoln Avenue) The Steamboat Springs Nordic Council is looking for the fastest skate skiers in the ’Boat. To find them, they are hosting a 100-meter Nordic sprint on Lincoln Avenue between Seventh and Eighth streets before the Street Events. The race will have male and female divisions as well as 13 and older and 12 and younger age categories. Anyone interested can register at the Steamboat Touring Center or at the Steamboat Springs Visitor’s Center.
■ 9 a.m. – noon Street Events (Downtown, Lincoln Avenue) Sponsored by Yampa Valley Bank. A wildly popular and entertaining show featuring children on skis and snowboards being pulled behind horses through the snow-covered streets of downtown. Races include street slalom, skijoring, ring and spear, donkey jump and the famous adult shovel race. The horse events are for children ages 6 to 14, and there also are nonhorse events for children 14 and younger. Preregistration required at the Steamboat Springs Chamber Resort Association. Call the Chamber at 970-879-0880 for more information.
■ 9 a.m. – noon Pro Alpine Ski Flying Training (Howelsen Hill, downtown off Fifth Street) Training for Sunday’s event.
■ Noon – 2 p.m. International Muzzle Loading Biathlon (Howelsen Hill) In this unique endurance event, participants clad in fur trapper, frontier vintage attire combine marksmanship, using early Americana black powder firearms, with cross-country skiing on primitive equipment.
■ 1 p.m. Pro Alpine Ski Flying Qualifying (Howelsen Hill) Qualifying for Sunday’s event.
■ 6:30 p.m. Night Extravaganza (Howelsen Hill) Sponsored by Yampa Valley Bank, Native Excavating and Pioneer Ridge. A must-see evening of entertainment at historic Howelsen Hill. The evening features a winter sports exhibition, the Lighted Man, glow necklaces and torchlight parades, fiery hoop jumpers, an elaborate fireworks display and more.
Sunday, Feb. 7
■ 9 – 11 a.m. Street Events (Downtown, Lincoln Avenue) Sponsored by Yampa Valley Bank. See previous description.
■ 11:30 a.m. Diamond Hitch Parade (Downtown, Lincoln Avenue) The diamond hitch consists of at least four skiers. The skiers hold on to points of a rope tied in the shape of one or more diamonds. Animals, people or vehicles may pull the skiers down the snow-filled streets. Anyone is welcome to enter the parade. Preregistration required. Call the Winter Sports Club at 970-879-0695, ext. 100, for a parade entry form.
■ 1 p.m. Pro Alpine Ski Flying Finals (Howelsen Hill, downtown off of Fifth Street) This is a must-see Gelandesprung (a German word that means terrain jump) ski jumping event with participants launching off of the K114 “Big Hill” on Alpine skis and boots, rather than the usual ski jumping equipment. Watch as world records get broken. For more information, call Pat Arnone at 970-879-8141.
■ 1 – 2 p.m. Parent-Child Downhill (Howelsen Hill) Sponsored by Ski Haus and Pepsi Cola. Everyone is a winner in this noncompetitive, fun event. An adult and child ski together through Howelsen Hill’s terrain. Each child is given a participant ribbon and is provided an opportunity to have a professional photograph taken on the podium. Pre-registration is not required, but a release form must be signed or already on file with SSWSC in order to participate.
Don’t forget to purchase a $7 Winter Carnival button to show your support of the Winter Carnival and the Steamboat Springs Winter Sports Club.
For more information, call the Steamboat Springs Winter Sports Club at 970-879-0695, ext. 100.
Wednesday, Feb. 3
■ 5:30 p.m. Opening Ceremonies (Olympian Hall, Howelsen Hill Lodge, downtown off Fifth Street) Sponsored by Steamboat Meat & Seafood Co. and Pepsi Cola. A celebration honoring the Winter Carnival queen and her court of attendants, little princesses and grand marshals.
Thursday, Feb. 4
■ 4:30 p.m. Cross-Country Obstacle Race (Howelsen Hill, downtown off Fifth Street) Sponsored by SportsMed. A fun and entertaining obstacle race for young cross-country skiers ages 5 to 12. Spectators welcome. Pre-registration is not required, but a release form must be signed or already on file with SSWSC in order to participate.
■ 4:30 – 6 p.m. Telemark Challenge (Howelsen Hill) Sponsored by Backdoor Sports. All ages welcome to show their Telemark technique and skills in gates and moguls on Howelsen Hill. Registration in the Fireplace Room from 3:30 to 4 p.m. and inspection from 3:30 to 4:30 p.m. The event starts at 4:30.
■ 6:30 – 8 p.m. Dual Slalom Bicycle Race (Howelsen Hill) Sponsored by Wheels Bike Shop and the SSWSC Cycling Club. An exciting on-snow, mountain bike event down the face of Howelsen Hill complete with thrills and spills. The event includes practice, qualifying and final competition rounds. Register the night of the event at 6 p.m. in the Fireplace Room at Howelsen Hill Lodge. For more information, call Chris Johns with Wheels Bike Shop at 970-846-RIDE.
■ 7 – 8 p.m. 20, 30 & 50 Meter Jumping (Howelsen Hill) An opportunity for those ages 11 and older to take a shot at ski jumping on Howelsen’s famous jumps. Alpine, Telemark or jumping skis only. Register the night of the event from 5:45 to 6:45 p.m. in the Fireplace Room at Howelsen Hill Lodge.
■ 7 – 8 p.m. Snowboarding Jam Session (Howelsen Hill) Sponsored by PowderTools. Located under the lights of the Howelsen Hill Terrain Park, this event is open to anyone looking to have some fun on his or her board. Prizes provided by PowderTools. Pre-registration is not required, but a release form must be signed or already on file with SSWSC in order to participate.
Friday, Feb. 5
■ 10 a.m. Soda Pop Slalom (Mount Werner, Headwall Run) Sponsored by Christy Sports and Coca-Cola. This is a fun race and is open to any skier or snowboarder through fifth grade who is not an age-class racer with the Steamboat Springs Winter Sports Club. Pre-registration required at the Winter Sports Club office. Registration deadline is 6 p.m. Feb. 4.
■ 1:30 – 3 p.m. Bumps, Jumps & K18 Ski Jumping (Howelsen Hill, Downtown off of Fifth Street) An enjoyable time for children ages 4 to 11 to take to the slopes of Howelsen Hill for some “flying fun.” Preregistration required at the Winter Sports Club office. Registration deadline is noon Feb. 4. Check in from 12:30 to 1:15 p.m. on event day.
■ 3 – 6 p.m. Tubing Party (Howelsen Hill) Come experience Howelsen Hill’s Tubing Hill. Tubes are provided, and a waiver must be signed.
■ 4 – 5:30 p.m. Nordic Jumping Jamboree (Howelsen Hill) Nordic combined athletes jumping the Hillside 75, 42, 28 and 20 hills.
■ 6:30 – 7:40 p.m. Olympian Send-off (Courthouse Lawn) Sponsored by Steamboat Ski and Resort Corp. Join the community as Ski Town USA sends its Olympians off to Vancouver, British Columbia. Fireworks, the Steamboat Olympic Torch, big-screen video and close to 15 new Olympians.
Saturday, Feb. 6
■ 8 – 11 a.m. Knights of Columbus Pancake Breakfast (Holy Name Catholic Church, 524 Oak St.) Hosted annually by the Knights of Columbus, this function is the perfect way to fuel up for all of the day’s activities. In addition to a Winter Carnival button, a nominal admission is charged.
■ 8 a.m. 100-Meter Nordic Sprint (Downtown, Lincoln Avenue) The Steamboat Springs Nordic Council is looking for the fastest skate skiers in the ’Boat. To find them, they are hosting a 100-meter Nordic sprint on Lincoln Avenue between Seventh and Eighth streets before the Street Events. The race will have male and female divisions as well as 13 and older and 12 and younger age categories. Anyone interested can register at the Steamboat Touring Center or at the Steamboat Springs Visitor’s Center.
■ 9 a.m. – noon Street Events (Downtown, Lincoln Avenue) Sponsored by Yampa Valley Bank. A wildly popular and entertaining show featuring children on skis and snowboards being pulled behind horses through the snow-covered streets of downtown. Races include street slalom, skijoring, ring and spear, donkey jump and the famous adult shovel race. The horse events are for children ages 6 to 14, and there also are nonhorse events for children 14 and younger. Preregistration required at the Steamboat Springs Chamber Resort Association. Call the Chamber at 970-879-0880 for more information.
■ 9 a.m. – noon Pro Alpine Ski Flying Training (Howelsen Hill, downtown off Fifth Street) Training for Sunday’s event.
■ Noon – 2 p.m. International Muzzle Loading Biathlon (Howelsen Hill) In this unique endurance event, participants clad in fur trapper, frontier vintage attire combine marksmanship, using early Americana black powder firearms, with cross-country skiing on primitive equipment.
■ 1 p.m. Pro Alpine Ski Flying Qualifying (Howelsen Hill) Qualifying for Sunday’s event.
■ 6:30 p.m. Night Extravaganza (Howelsen Hill) Sponsored by Yampa Valley Bank, Native Excavating and Pioneer Ridge. A must-see evening of entertainment at historic Howelsen Hill. The evening features a winter sports exhibition, the Lighted Man, glow necklaces and torchlight parades, fiery hoop jumpers, an elaborate fireworks display and more.
Sunday, Feb. 7
■ 9 – 11 a.m. Street Events (Downtown, Lincoln Avenue) Sponsored by Yampa Valley Bank. See previous description.
■ 11:30 a.m. Diamond Hitch Parade (Downtown, Lincoln Avenue) The diamond hitch consists of at least four skiers. The skiers hold on to points of a rope tied in the shape of one or more diamonds. Animals, people or vehicles may pull the skiers down the snow-filled streets. Anyone is welcome to enter the parade. Preregistration required. Call the Winter Sports Club at 970-879-0695, ext. 100, for a parade entry form.
■ 1 p.m. Pro Alpine Ski Flying Finals (Howelsen Hill, downtown off of Fifth Street) This is a must-see Gelandesprung (a German word that means terrain jump) ski jumping event with participants launching off of the K114 “Big Hill” on Alpine skis and boots, rather than the usual ski jumping equipment. Watch as world records get broken. For more information, call Pat Arnone at 970-879-8141.
■ 1 – 2 p.m. Parent-Child Downhill (Howelsen Hill) Sponsored by Ski Haus and Pepsi Cola. Everyone is a winner in this noncompetitive, fun event. An adult and child ski together through Howelsen Hill’s terrain. Each child is given a participant ribbon and is provided an opportunity to have a professional photograph taken on the podium. Pre-registration is not required, but a release form must be signed or already on file with SSWSC in order to participate.
Don’t forget to purchase a $7 Winter Carnival button to show your support of the Winter Carnival and the Steamboat Springs Winter Sports Club.
For more information, call the Steamboat Springs Winter Sports Club at 970-879-0695, ext. 100.
Friday, January 29, 2010
Significant FHA Loan Changes
The FHA just released some significant FHA loan changes. Currently, the upfront mortgage insurance (MI) premium for FHA loans is 1.75% of the loan amount. Once the new rules go into effect, that will jump to 2.25%. For example if someone is doing a FHA loan for $417,000, the upfront mortgage insurance premium will increase from $7297.50 to $9382.50. Remember that the upfront MI can be financed into the loan.
Also, the allowable seller concessions decrease from 6% of the purchase price to 3% of the purchase price. (This means that the USDA will be one of the few loan programs that allow 6% seller concessions.)
Lastly, the minimum credit score for 3.5% down may increase to 580. If someone has credit below 580 they will have to put down a minimum of 10%.
This information was gathered by Kathryn Pedersen and Holly Rogers at Yampa Valley Bank. They can be reached at 970-875-1609.
Also, the allowable seller concessions decrease from 6% of the purchase price to 3% of the purchase price. (This means that the USDA will be one of the few loan programs that allow 6% seller concessions.)
Lastly, the minimum credit score for 3.5% down may increase to 580. If someone has credit below 580 they will have to put down a minimum of 10%.
This information was gathered by Kathryn Pedersen and Holly Rogers at Yampa Valley Bank. They can be reached at 970-875-1609.
Wednesday, January 27, 2010
STEAMBOAT SPRINGS REAL ESTATE MARKET IN TRANSITION
What does a transitional market (the transition from old Steamboat to new) look like? Here in Steamboat Springs, Colorado, we are getting very mixed signals regarding the state of our real estate market. On one side, the past few weekends saw the largest number of foreclosures in the paper. On the other side, we are seeing property closings at the Steamboat base area for record price per square foot numbers
(Edgemont closings) (One Steamboat Place closings). Prices above $1,100 per square foot! These are incredible numbers for Steamboat Springs.
Personally we feel we are seeing a validation of Steamboat as a viable high end destination resort by the customers of the Vail, Aspen and Telluride type markets who recognize the long term value represented here. These buyers place a high value on the incredible family memories created in resort locations like Steamboat. They understand they are buying a very rare commodity (ski in/out property for the base area projects), and they also see the transition taking place at the base area. The developers of the Edgemont and One Steamboat Place are offering an experience never before available in Steamboat.
While the above paragraph is a great sign for Steamboat’s long term future, it does not change the near term reality for many property owners. The current economy is creating a great deal of pain, which will result in foreclosures and short sales. This trend is most likely far from over in our local market, which is a scary thought for property sellers. The next year may see lower sale prices due to distressed sellers.
Everyone loves a prosperous, fun environment and unfortunately, Steamboat was late to enter the real estate slide and will most likely be late to exit into recovery. A number of local economic fundamentals are aligning to make the next year a very difficult one for property owners. For example, a quick analysis of the daily classified section reveals very few job opportunities, but many properties for rent. This is a complete reversal from 2007.
What do we do? When do I buy? Am I getting in at the bottom? These are all questions we hear on a regular basis. Our answer is, “Find the best value that meets your needs in today’s market and make the best purchase you can”. Timing the bottom is virtually impossible and will only be clear when it is too late. What we know today is that prices have come down significantly from the peak, many sellers are in distress, inventory is high, INTEREST RATES ARE LOW and it’s a buyer’s market. It is not every day that these conditions line up. Check out our recent post on real estate values vs. interest rates from 1975 to 1993. Weighing historical data along with recent economic indicators (see our post on Randy Rowe’s round table discussion, and today may be a truly unique, long term opportunity.
If you have any questions or wish to discuss any of the items mentioned above, email chris@mybrokers.com or call 970.819.1432
(Edgemont closings) (One Steamboat Place closings). Prices above $1,100 per square foot! These are incredible numbers for Steamboat Springs.
Personally we feel we are seeing a validation of Steamboat as a viable high end destination resort by the customers of the Vail, Aspen and Telluride type markets who recognize the long term value represented here. These buyers place a high value on the incredible family memories created in resort locations like Steamboat. They understand they are buying a very rare commodity (ski in/out property for the base area projects), and they also see the transition taking place at the base area. The developers of the Edgemont and One Steamboat Place are offering an experience never before available in Steamboat.
While the above paragraph is a great sign for Steamboat’s long term future, it does not change the near term reality for many property owners. The current economy is creating a great deal of pain, which will result in foreclosures and short sales. This trend is most likely far from over in our local market, which is a scary thought for property sellers. The next year may see lower sale prices due to distressed sellers.
Everyone loves a prosperous, fun environment and unfortunately, Steamboat was late to enter the real estate slide and will most likely be late to exit into recovery. A number of local economic fundamentals are aligning to make the next year a very difficult one for property owners. For example, a quick analysis of the daily classified section reveals very few job opportunities, but many properties for rent. This is a complete reversal from 2007.
What do we do? When do I buy? Am I getting in at the bottom? These are all questions we hear on a regular basis. Our answer is, “Find the best value that meets your needs in today’s market and make the best purchase you can”. Timing the bottom is virtually impossible and will only be clear when it is too late. What we know today is that prices have come down significantly from the peak, many sellers are in distress, inventory is high, INTEREST RATES ARE LOW and it’s a buyer’s market. It is not every day that these conditions line up. Check out our recent post on real estate values vs. interest rates from 1975 to 1993. Weighing historical data along with recent economic indicators (see our post on Randy Rowe’s round table discussion, and today may be a truly unique, long term opportunity.
If you have any questions or wish to discuss any of the items mentioned above, email chris@mybrokers.com or call 970.819.1432
Sunday, January 24, 2010
Highmark Goes To Auction
The Highmark, one of Steamboat's luxurious residences will go to auction on Thursday, March 4th. Fifteen condominiums will go to auction including 1 condo that will sell regardless of price. The rest are 2,3, and 4 bedroom condos that will sell fully furnished. The interior is furnished with top of the line Ralph Lauren inspired furniture, beds, dressers, lamps and accessories, natural slate entryway, gas fireplace with timber mantel and mountain rock surround, 9’4” volume ceilings with crown molding in the foyer, dining room, living room, and bedrooms, 8’ high panel doors,premium brass interior hardware, fluted casings with rosettes around all doors, Berber carpeting throughout living, dining, and bedroom, high-end home theater system in living room and surround sound system throughout, large open balconies with paver-tiled floors, gourmet kitchen with under-counter lighting,custom designed wood raised panel cabinetry with European-style hinges and top-of-the-line kitchen appliances including top of the line GE Monogram® appliances.
The Highmark has upscale amenities and is located only 300 yards from the gondola. Some of the amenities include valet and underground parking, health and fitness club, swim-in and swim-out heated pool and Jacuzzi, ski valet and storage, butler services, private airport transportation, etc.
If you would like to participate in this auction or need additional information please do not hesitate to give us a call or send an email.
chris@mybrokers.com, 970-819-1432 or amybrown@mybrokers.com, 970-846-2114
The Highmark has upscale amenities and is located only 300 yards from the gondola. Some of the amenities include valet and underground parking, health and fitness club, swim-in and swim-out heated pool and Jacuzzi, ski valet and storage, butler services, private airport transportation, etc.
If you would like to participate in this auction or need additional information please do not hesitate to give us a call or send an email.
chris@mybrokers.com, 970-819-1432 or amybrown@mybrokers.com, 970-846-2114
Tuesday, January 19, 2010
STEAMBOAT SPRINGS COMMUNITY INDICATOR TOOL
The Steamboat Pilot & Today, in conjunction with Yampa Valley Partners, is pleased to offer the Community Indicators Tool to Routt County. The goal of this tool is to enhance the use of a wide variety of data so citizens, business leaders and public officials have accurate and current information for public debate and decision making.
Monday, January 18, 2010
TIMBERS RESORTS OPENS ONE STEAMBOAT PLACE
Timbers Resorts opens One Steamboat Place in Colorado
Published: 15-Jan-2010
Timbers Resorts, a US-based developer of small, private, luxury resort properties, has inaugurated One Steamboat Place, a much-anticipated resort development at the base of majestic Mt. Werner in Steamboat Springs, Colorado.
Link to the full article
Published: 15-Jan-2010
Timbers Resorts, a US-based developer of small, private, luxury resort properties, has inaugurated One Steamboat Place, a much-anticipated resort development at the base of majestic Mt. Werner in Steamboat Springs, Colorado.
Link to the full article
Sunday, January 17, 2010
STEAMBOAT KIDS PLAYING IN THE PARK!
Yesterday was one of those great days we parents get to experience. I was skiing with my wife, good friends and our children. All the kids have now crossed the point where they are truly fun to ski with. No more waiting around. Us adults are actually having to catch up. Here is a quick clip of my 7 year old hitting the rails. The best part is, this is normal for most Steamboat seven year olds.
Friday, January 15, 2010
What Happens When Mortgage Rates Rise
As we mentioned in our last post, we are expecting mortgage rates to increase. Also, we know that there are a lot of people waiting for prices to go down before they purchase. Kathryn and Holly at Yampa Valley Bank put together an example of what increasing rates do to the cost of home ownership.
For a loan amount of $240,000 and a purchase price of $300,000 with 20% down
The principal and interest payment at 5% is $1,288.37.
If the rates increase to 5.5% the same payment ($1,288.37) would result in a loan amount of $226,910 or $13,000 less. With 20% down this is a purchase price of $283,635.
If the rates increase to 6% the same payment ($1,288.37) would result in a loan amount of $214,890 or $25,110 less With 20% down this is a purchase price of $268,612.
(This is a purchase price drop of 10%)
Since rising interest rates occurs after inflation has entered the economy, a quick look at our past post - WHAT HAPPENS TO HOME PRICES WHEN INFLATION RISES? - tells us about the historic relationship between prices and interest rates. In summary, history tells us that once inflation enters the economy, it has been good to be a property owner.
For a loan amount of $240,000 and a purchase price of $300,000 with 20% down
The principal and interest payment at 5% is $1,288.37.
If the rates increase to 5.5% the same payment ($1,288.37) would result in a loan amount of $226,910 or $13,000 less. With 20% down this is a purchase price of $283,635.
If the rates increase to 6% the same payment ($1,288.37) would result in a loan amount of $214,890 or $25,110 less With 20% down this is a purchase price of $268,612.
(This is a purchase price drop of 10%)
Since rising interest rates occurs after inflation has entered the economy, a quick look at our past post - WHAT HAPPENS TO HOME PRICES WHEN INFLATION RISES? - tells us about the historic relationship between prices and interest rates. In summary, history tells us that once inflation enters the economy, it has been good to be a property owner.
Wednesday, January 13, 2010
Projections Indicate Rates Will Rise In 2010
Kathryn and Holly at Yampa Valley Bank have been listening to teleconferences about projections for the mortgage market in 2010. Here is the bottom line – rates will be going up. Why?
The Fed has committed to buy mortgage bonds through 3/31/10. They have already slowed their purchasing and we have seen the consequences in the slightly higher long term rates. There is not much hope of an extension of the purchasing program. It is estimated that the Fed is currently purchasing 75% (!!) of the mortgage bonds, so if they are not purchasing bonds, rates will be higher even if other players step up their buying.
With short term rates being so low (Fed Funds rate is ¼%) it is easy for large institutions to borrow low and then invest in mortgage bonds, and make money on the spread. If short term rates start to increase, this will diminish mortgage bonds purchasing even further and push rates higher.
This is one more reason to purchase NOW or sellers might want to reduce their prices now before rates do deteriorate. A higher rate means less purchasing power. Forecasts show that the 30 year fixed rate may be in the mid 6’s by the end of 2010 with a volatile rate market throughout the year.
Kathryn Pedersen and Holly Rogers can be reached at 970-875-1609
The Fed has committed to buy mortgage bonds through 3/31/10. They have already slowed their purchasing and we have seen the consequences in the slightly higher long term rates. There is not much hope of an extension of the purchasing program. It is estimated that the Fed is currently purchasing 75% (!!) of the mortgage bonds, so if they are not purchasing bonds, rates will be higher even if other players step up their buying.
With short term rates being so low (Fed Funds rate is ¼%) it is easy for large institutions to borrow low and then invest in mortgage bonds, and make money on the spread. If short term rates start to increase, this will diminish mortgage bonds purchasing even further and push rates higher.
This is one more reason to purchase NOW or sellers might want to reduce their prices now before rates do deteriorate. A higher rate means less purchasing power. Forecasts show that the 30 year fixed rate may be in the mid 6’s by the end of 2010 with a volatile rate market throughout the year.
Kathryn Pedersen and Holly Rogers can be reached at 970-875-1609
Tuesday, January 12, 2010
One Steamboat Place Opens Its Doors
This Sunday there was a great article about One Steamboat Place hosting it's first guests. Finally the anticipation is over. Robin Craigen of Moving Mountain Chalets had a great quote regarding the One Steamboat Place development, “The clientele at One Steamboat Place is one we’ve been drawing to Steamboat in increasing numbers to Steamboat Springs. It’s like nothing Steamboat has ever had before. We’ve looked at Aspen, Deer Valley and Vail, and we feel it will be perceived as a value for luxury.” This is a comment we have made to clients many times over. While we are going through a very difficult time today, the future for Steamboat is still bright and potentially brighter than most areas. Click here to read the entire article
Tuesday, January 5, 2010
WOW! BIG SNOW ON BUFF PASS NEAR STEAMBOAT
This past weekend I finally got out on the sleds. What a sick day to start the season. Easily 4' of fresh untracked powder in many spots. 6 of us headed out at 10am with high expectations and man were they far exceeded when we got there. The trails were barely visible and the snow was untouched in many areas. Nothing like full on face shots every time you turn the sled!! Here are a few pictures:
Sunday, January 3, 2010
WHAT HAPPENS TO HOME PRICES WHEN INFLATION RISES?
What happens to home prices when Inflation rises?
This has been a question on my mind for a long time. Unfortunately I did not have a great resource for accessing this information until a very good friend of mine invited me to a special presentation by Randy Rowe , President of Green Courte Partners. Mr. Rowe’s presentation to a select group of the Steamboat Springs real estate community was focused on what current economic indicators were telling us vs. the opinions. During this presentation, the main question swirling in my mind was, “If the United States is about to enter an inflationary environment, leading to higher asset values, further leading to higher interest rates, what is the long term effect on residential real estate prices?” Fortunately, Mr. Rowe had access to this data and provided me with the following chart:
This chart compares the OFHEO home price index and the 30-year, fixed-rate mortgage from 1975 (the first year the OHFEO home price index was produced) through 1981 (rising rate environment), and 1981 through December 1995 (declining interest rate environment). WOW, exactly what I was looking for. Take a look at this chart for a moment and there should be a few questions that pop into your head.
1. Rising rates should cause a decrease in a buyer’s purchasing power, therefore capping or cause a decrease in the price index. Why don’t we see this?
2. I thought during the early 90’s we there was a very bad real estate market where home values dropped precipitously. Why is this not shown?
These were my first thoughts, obviously prompting me to ask my curious questions. It appears there must be other economic variables during rising rate environments that offset the lost buying power (of course I want to know what that is and will be a future chart/blog if I can get the information). Also, during the early 90’s, the commercial real estate market took a far greater hit than residential. There most likely were local market retracements in value, but across the broad index residential values remained somewhat stable.
What does this mean for today’s buyers of real estate? No one knows for sure, so all you can do is take action based on the most likely scenario or the scenario that presents the least amount of risk. It is a fact that real estate values have declined significantly from their highs, correcting by as much as 50% in some markets. If it is assumed that going forward we will resume a more normal appreciation, buying real estate that you wish to own for personal use looks like a much better idea than in 2006/2007. Just due to an increasing population, decreased residential construction and depressed values, you can make the case that buying today makes sense. The other big variable is interest rates. Looking at the chart above, it is clear that a 5% 30-year mortgage is way below the historical average. Locking in long term rates today may prove to be a very prudent decision (possibly the best decision of all mentioned above).
If this creates any questions, please email or call me. I’ll enjoy finding the answers.
This has been a question on my mind for a long time. Unfortunately I did not have a great resource for accessing this information until a very good friend of mine invited me to a special presentation by Randy Rowe , President of Green Courte Partners. Mr. Rowe’s presentation to a select group of the Steamboat Springs real estate community was focused on what current economic indicators were telling us vs. the opinions. During this presentation, the main question swirling in my mind was, “If the United States is about to enter an inflationary environment, leading to higher asset values, further leading to higher interest rates, what is the long term effect on residential real estate prices?” Fortunately, Mr. Rowe had access to this data and provided me with the following chart:
This chart compares the OFHEO home price index and the 30-year, fixed-rate mortgage from 1975 (the first year the OHFEO home price index was produced) through 1981 (rising rate environment), and 1981 through December 1995 (declining interest rate environment). WOW, exactly what I was looking for. Take a look at this chart for a moment and there should be a few questions that pop into your head.
1. Rising rates should cause a decrease in a buyer’s purchasing power, therefore capping or cause a decrease in the price index. Why don’t we see this?
2. I thought during the early 90’s we there was a very bad real estate market where home values dropped precipitously. Why is this not shown?
These were my first thoughts, obviously prompting me to ask my curious questions. It appears there must be other economic variables during rising rate environments that offset the lost buying power (of course I want to know what that is and will be a future chart/blog if I can get the information). Also, during the early 90’s, the commercial real estate market took a far greater hit than residential. There most likely were local market retracements in value, but across the broad index residential values remained somewhat stable.
What does this mean for today’s buyers of real estate? No one knows for sure, so all you can do is take action based on the most likely scenario or the scenario that presents the least amount of risk. It is a fact that real estate values have declined significantly from their highs, correcting by as much as 50% in some markets. If it is assumed that going forward we will resume a more normal appreciation, buying real estate that you wish to own for personal use looks like a much better idea than in 2006/2007. Just due to an increasing population, decreased residential construction and depressed values, you can make the case that buying today makes sense. The other big variable is interest rates. Looking at the chart above, it is clear that a 5% 30-year mortgage is way below the historical average. Locking in long term rates today may prove to be a very prudent decision (possibly the best decision of all mentioned above).
If this creates any questions, please email or call me. I’ll enjoy finding the answers.
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