Denver Real Estate Blog

Before you hit those after-Christmas sales in search of upgraded appliances for your home, take a minute to do your research - and make sure that your purchases will be eligible for the State Appliance Rebate Program, which is expected to launch in Colorado in March 2010.

MSNBC.com featured this program yesterday…here’s some of their article…

Modeled after the popular Cash for Clunkers program, which was intended to get cars with low gas mileage off the road, a federal appliance rebate program is launching in early 2010. It offers a boost to people buying energy-efficient clothes washers, refrigerators and other appliances — those that qualify for the federal “Energy Star” designation — and to manufacturers, whose sales fell 10 percent in 2008 and another 12 percent through mid-December this year.

Read the rest here.

The program differs from state to state, here are the details regarding Colorado’s program, from Energysavers.gov, where you can also go to learn about Energy Credits, to compare different products, etc.

The State of Colorado will implement a mail-in rebate program to help residents replace older, inefficient appliances with ENERGY STAR® qualified appliances. The program is tentatively scheduled to begin in March 2010 and will continue until funds are exhausted.Eligible products include

Refrigerators
Clothes washers
Dishwashers
Gas storage water heaters
Gas tankless water heaters
Gas furnaces
Gas boilers
The state encourages residents to recycle their old appliances. Check with state officials for information on proper disposal of appliances.

Contact: Governor’s Energy Office

Total Funding: $4,739,000

Program information subject to change. Rebates may be offered for a limited time only. Before purchasing a product, check with your program sponsor to ensure rebates are available, and to confirm product eligibility and program requirements. Products purchased must meet efficiency criteria as established by the state.

John Rebchook of InsideRealEstateNews.com has a great write-up on his blog, posted a few hours ago, detailing Denver’s latest top spot - Denver is on a lot of Top 10, Top 50, Top 100 Lists this time of year, as everyone wraps up 2009 in a big round ball and chucks it toward the recycling bin, but this is a FANTASTIC way to welcome the new Real Estate Decade.

Here’s a highlight…

Denver performed the best of the 20 major metropolitan housing market tracked in the closely watched S&P/Case-Shiller Home Price Indices report released today.

Denver’s housing market showed only a only a 0.1 percent dip in housing prices in the year ending in October, compared with an overall drop of 7.3 percent for the 20 areas in the report. The 10-city index in the report fell overall by -6.4 percent.

Tom Clark, executive vice president of the Metro Denver Economic Development Corp., said that Denver’s No. 1 ranking is the latest sign that Denver’s economy is out-performing the nation’s.

“Job growth does matter,” Clark said. “What a concept.”

Gary Bauer, an independent residential broker in Denver couldn’t agree more.

“Once again, this shows the strength of the Denver market,” Bauer said. “We continue to lead the nation as far as recovering from the recession - the recession is not over yet - but we will be one of the first to emerge.”

Bauer said that “two-thirds” of the Denver-area housing market “still moving,” if not showing spectacular performance. Only the high-end market continues to be soft.

“The market has moved from the only activity being in the first-time buyer to what I call the “move” buyer,” Bauer said.

Bauer has said that the move buyer will benefit from the expansion of the federal tax-credit for qualified people who own their owns. Some of those buyers who qualify for the $6,500 tax credit will downsize to smaller, less expensive units, while others will move-up, according to Bauer and other Realtors.

Read the rest here, then get off the fence already and join the party!

Interest rates are likely to rise to 6 percent by the end of 2010, predicted Amy Crews Cutts, deputy chief economist at Freddie Mac.

The end of the Federal Reserve program that buys mortgage-backed securities will drive rates higher because private buyers will demand more return than the Fed.

“Extraordinary resources have been put into keeping the rates down and supporting the mortgage markets and it’s hard to imagine that the rates can go much lower than they are,” Crews Cutts said. “Anything we get at or below 5 percent is a gift at this point.”

Source: Washington Post, Dina ElBoghdady (12/26/2009)

Uncle Sam is offering taxpayers generous incentives to make their residences more energy efficient. Many of the eligible home improvements, such as adding insulation, can earn a tax credit of up to $1,500. More ambitious upgrades, such as installing solar panels, can net a credit worth 30% of the total cost of the project.

Improvements must meet IRS energy-efficiency standards to qualify. Don’t assume an Energy Star label is enough. Sometimes it isn’t. Save receipts and manufacturers’ statements certifying the tax credit-worthiness of the products. The IRS could ask for them. Consult a tax adviser.

Tax credit capped at $1,500

Replace aging windows, HVAC systems, and non-solar water heaters, install efficient biomass stoves, add insulation, or fix a worn roof, and you might collect a tidy credit come tax time. To encourage greater energy efficiency, homeowners can recoup 30% of the cost, up to $1,500, for making any of these qualifying upgrades during 2009 or 2010. Claim the credit for the year in which you complete the project.

The improvements must be made to your existing primary residence to be eligible. You can include the labor costs for HVAC, stove, and water heater installations; only the cost of materials counts for insulation, roofs, and windows (as well as exterior doors and skylights). Ask your contractor for a receipt that itemizes materials and labor. The IRS refers to the tax relief you can get for these projects collectively as the Nonbusiness Energy Property Credit.

Keep in mind that the $1,500 cap applies to all of the projects combined for both years. You can’t claim a $1,500 credit for new windows in 2009 and a separate $1,500 credit for a new furnace in 2010. A $5,000 project would max out the credit.

Uncapped energy tax credit

There’s no cap on tax credits for a handful of residential projects that involve alternative energy sources including solar, geothermal, and wind. That’s good news considering costs can run into five figures for photovoltaic systems (for electricity), solar water heaters, geothermal heat pumps, and small wind turbines. Fuel cells qualify too, though they’re subject to slightly different criteria.

This tax incentive is called the Residential Energy Efficient Property Credit by the IRS. Homeowners can earn it anytime between 2009 and 2016 for the tax year that one of these systems is placed into service. The tax credit, equal to 30% of the project cost, applies to second homes as well as primary residences. New homes are eligible too. A rental property generally is excluded unless it’s a second home that’s only rented out part of the year.

You can use the uncapped tax credit even if you’re using the capped tax credit. In fact, you can claim separate uncapped credits for a wind turbine, a geothermal heat pump, and a solar water heater. Use IRS Form 5695, which has separate pages for capped and uncapped tax credits.

How tax credits work

A tax credit is usually more valuable than a tax deduction because the credit lowers your tax bill—or increases your refund—dollar for dollar. Think of it this way: A $1,500 deduction will save $363 on taxes owed for a married couple filing jointly with an adjusted gross income of $100,000. That same couple would save the full $1,500 with a $1,500 tax credit. Married filing separately taxpayers may be able to take separate $1,500 tax credits.

Residential energy tax credits do have limits. The IRS considers the credits “non-refundable,” which means you can’t claim more in credits than you paid out in federal income taxes. You may be able to carry forward some of your surplus uncapped tax credits to future years.

While Form 5695 shouldn’t take more than an hour or two to complete, it’s a good idea to consult a tax adviser. Credits are gold, so you don’t want to risk missing one.

Want more information about Tax Credits or the upgrades that qualify?  Visit www.houselogic.com - it’s a great resource for home purchasing, selling, or valuating.

As you are writing out your New Year’s Resolution list this year, you might find yourself adding “Sell this house and Buy a new one” to the list - and it would be great timing if you did.  With the Tax Credit extended to existing homeowners, and with a shortage of great properties on the market, early 2010 might just be your opportunity to Move Up to that bigger home, better neighborhood, etc.  Or, it might be a smart move to Move Down the property ladder, consolidate your stuff and move to a smaller place in a more walkable area.  Whichever way you are looking to go, there are going to be buyers looking for a place like yours, so now is the time to get it ready and get it on the market.   We are expecting a rush of new business at the start of the new year - especially because properties must be under contract by April 30 in order to qualify for both the First Time Buyer and Existing Homeowner Tax Credits.

Here is a list of small projects that will improve your property’s value - allowing you to get top dollar and pull the most equity out of your current home to put toward your new place:

1. Tidy up kitchen cabinets.

Potential buyers open kitchen cabinets and look inside, so make it look like there is plenty of space for all of their dishes and cooking supplies.

 2. Add or replace tile.

By retiling, you make a room look way nicer than it was, and you can do it on the cheap - many stores, including Lowe’s and Home Depot have $1 to $2 tile, so it’s very affordable to add a new kitchen backsplash or bathroom floor without breaking the bank, and it makes a huge impact on buyers.

3. Add a breakfast bar.

When a wall separates a kitchen from a family room try cutting out an opening to create a breakfast bar. Buyers will be looking for open floorplans and great spaces for entertaining.  So take a look at the walls dividing your rooms - if they don’t need to be there, get rid of them.

4. Install granite tile instead of a slab.

Granite kitchen countertops have become a necessity, even in lower priced homes, but slabs can be really expensive.   As an alternative, install 12-inch granite tiles with very tight grout lines - you will create a similar look and feel for a fraction of the cost of slabs.

5. Freshen up a bathroom without retiling.

An outdated bathroom is easily updated by installing a new medicine cabinet for $100 to $150, light fixtures for about $100, a faucet for $50 to $75, and a vanity for $200 to $300. Instead of replacing the tile, consider simply applying new grout - it can make ugly tile appear new again.  There are also tile paints that can cover seriously outdated colors in a fresh coat of white.

 6. Freshen up the basement.

If you have cement block or poured concrete walls in the basement, fill in cracks with hydraulic cement and then paint with waterproofing paint, then add a top coat to add color. You can also paint the basement floor with a good floor paint, which will really clean it up. The basement may not be finished, but it also shouldn’t be a damp dungeon.

 7. Add a room.

Look for large spaces that can be enclosed to create a new bedroom for just the price of creating a wall. As long as there is a window and  a closet in that new space, you have added a ton of value for very little investment.

 8. Spruce up cabinet fronts.

Update tired-looking kitchen cabinets. Paint or stain old cabinets for a fresh new look and feel in the kitchen.  Install new hardware as well - you will be shocked at the difference, and buyers will be able to focus on the counter space and layout rather than the ugly old oak.

9. Replace light fixtures.

Especially in the foyer and in bathrooms and kitchen, replacing the lighting is a very easy and inexpensive project that can change the entire look of the home.  Installing recessed lighting, especially when ceilings are low, and pendants over the kitchen island also add a lot of bang for just a few bucks.

 10. Tech-up the garage.

Replace the garage door opener with a remote touchpad entry system - makes any system feel high-end.

The door and wall leading to the basement, before.

Holy moly, I have really been neglecting this blog.  It’s been a bit crazy in Stacieland, though I am beginning to see the light - and the closings.   We are also remodeling our basement, and although it’s sort of hands-off for us this time as we have a great team of contractors working around the clock to get it finished in time for holiday guests, it has still created a bit of havoc around our house!

Even though it’s not quite done, I wanted to post some pictures and detail the work that we are doing - and estimate the value that it might add to our home, especially as we are considering selling sometime in the very near future.

Before:  Our basement must have been finished sometime after the house was originally constructed, which was 1986, but it was definitely stuck in the 80’s, with light wood panelling, mismatched carpet, and flat white paint throughout.  The dropped ceiling was glued to the drywall above it, and the boxed flourescent lights were not very flattering, to say the least.  The worst part was the huge bathroom/laundry room combination space - yuck.  The basement, no matter how many times I tried to organize it or make it appealing as a playroom, had really turned into a giant storage space with a laundry room where I hated to do laundry, and it really was not being used well at all.

After: We opened up the walls from the main floor all the way down to the basement, and removed the door entirely.  The idea is to integrate the 1,300+ SF in the basement into the rest of our home, and to make it truly usable space, which we desparately need.  We kept the 2 bedrooms which were existing, because the layout isn’t bad and the last thing we want to do is decrease value by turning 6 legal bedrooms into 4 or 5.  We installed recessed lighting throughout the space, drywalled the ceiling, removed the hideous wooden panelling and textured the walls, which will be the same creamy latte color as the rest of the house.  The baseboards and mouldings will match in white, and the carpet is a neutral speckled short pile - which we thought would be cozier than a berber or loop-style rug, but still stain-resistant and forgiving of our busy and often messy kiddos. 

Bathroom/laundry room, before.

The main room will house a living space with comfortable couches, a large flat-screen TV and the wii.  There will also be a game/poker/crafts table and a treadmill. 

There is now a wall and door separating the full bathroom and the laundry room - yay!  With ceramic tile, fresh paint, and a new vanity and mirror, as well as shelving in both spaces, I think this area alone will represent the biggest monetary return.

There is still plenty of storage under the stairs, but instead of 3 rough cut-outs for access, we installed built-in shelving in one space and closed off the other, leaving one access door for the storage area, which is located behind the bathroom door.

So, to break it down project-by-project, here is my estimated cost vs. value add sheet:

-Removing upper walls and door between main floor and basement:  Cost: $900    Value Added:  $4000

- Installation of recessed lighting and new ceiling:  Cost $2000  Value Added:  $3000

- Construction of wall and door between bathroom and laundry room:  Cost:  $300   Value Added:  $5000

Wood panelling, dropped ceiling, ugly cabinets and carpet, before.

- Cosmetic Improvements - tile, paint, texture, carpet:  Cost   $4000  Value Added:  $5000

- New bathroom vanity, mirror, hardware, and sink:  Cost $300   Value Added:  $1000

- Built in shelving:  Cost  $100   Value Added:  $500

Overall, I think this remodel will not only improve the value of our home for resale, it will also help it to sell more quickly.  For a basement to have a real impact on purchase price or days on market, it has to be done with a tight budget, and with the overall value of the property in mind.  Don’t dump $100K in to a basement if the entire house is only worth $200-300,000.  But, Colorado buyers are certainly looking for usable space in the basement in most neighborhoods, and if you can add value by making simple cosmetic improvements, it’s a good investment for sure.

(I will post more pictures as soon as it’s totally done!)