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.

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

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

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.

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

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.

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.