Posts Tagged ‘investments’
Move to Denver While There is Still Some Room!
The Denver Metro is HOT right now, and I’m not just talking about the 70 degrees and lovely sunshine we had today…check out what the Business Journal had to say about the lastest Standard and Poor’s report…
Prices of existing homes declined less through 2008 in the Denver area than in any of 20 major U.S. cities, Standard & Poor’s reported Tuesday.
The monthly S&P/Case-Shiller Home Price Indices said average prices of existing homes in Denver fell 4 percent between December 2007 and December 2008, less than any of the other 19 cities in the report.
The average decline among the 20 cities was 18.5 percent, S&P said.
Among the 20 cities covered in the Home Price Indices report, Dallas had the second smallest year-to-year housing-price decline after Denver, at 4.3 percent, followed by Cleveland at 6.1 percent and Boston at 7 percent.
The cities with the greatest price declines were Phoenix at 34 percent, Las Vegas at 33 percent and San Francisco at 31.2 percent, S&P said.
The survey also indicated that Denver had the second-smallest decline in existing-house prices between November and December 2008, at 1.5 percent, behind only Boston at 1.3 percent. Denver’s decline between October and November 2008 was 1.1 percent.
Phoenix had the greatest month-to-month decline from November to December, 5.1 percent, followed by Las Vegas at 4.8 percent and Minneapolis at 4.6 percent, S&P said.
Nationwide, the S&P report painted a gloomy picture of steadily declining home prices.
“The broad downturn in the residential real estate market continues,” David Blitzer, chairman of S&P’s index committee, said in a statement Tuesday. “There are very few, if any, pockets of turnaround that one can see in the data. Most of the nation appears to remain on a downward path.”
The survey tracks changes in the value of the residential real estate market by comparing sale prices of specific sample homes in a city at two different times. Calculations are by Fiserv, Inc. using methodology developed by Karl Case and Robert Shiller.
The survey assigns an index number to each city and does not report actual home prices. The index is a measure of how much home prices have gone up or down in each market since January 2000, which has been assigned a price index of 100 in that market.
The report said Denver had a home-price index of 125.74 in December, meaning home prices have gone up 25.74 percent since January 2000. Home prices in Denver peaked in August 2006.
Six of the 20 cities had a lower price index than Denver, with Detroit at the bottom at 80.93. New York topped the list at 183.50.
The average price index for all 20 cities of 150.66.
Questions My Clients Are Asking…
Wow, with the New Housing Plan has come a ton of new business - both buyers and sellers are getting in on the action, and we are seeing the Denver market pick up at an unbelievable pace. Case in point, the listing we put on the market last week already has a contract pending, and it had multiple offers for the list price. So, if you have been sitting on the fence and waiting for the perfect time to buy or sell, jump down and join the fun - that time is NOW.
Of course, with the changes put in place by the Stimulus Plan, there are a ton of questions that our clients are asking…here are just a few:
- Should I refinance now, and will the New Housing Plan help me out even if I have never missed a mortgage payment?
The answer is maybe. I like this summary from the New York Times:
Removing a limit on refinancing for “responsible homeowners”
4 million to 5 million households.
The bill will remove the current restriction on Fannie Mae and Freddie Mac that prohibits them from guaranteeing refinancing on mortgages valued at more than 80% of the home’s value. This will allow many more homeowners to refinance at lower rates.
Who may qualify
- Example
- Today A family’s home value drops to $400,000 from $475,000. The loan balance at $337,460 is now more than 80 percent of the home’s value, making it difficult to refinance under current rules.
- Under the proposal The family can refinance to a rate of 5.16% from 6.50%, which would save $331 a month and $3,968 a year.
Who doesn’t qualify
- Those holding loans not owned or guaranteed by Fannie Mae or Freddie Mac.
- Mortgages above a certain threshold — $417,000 for single-family homes in most areas and $729,750 in higher-priced regions.
- Those whose outstanding mortgage debt exceeds 105% of their current home value.
Helping renegotiate loan terms for “at-risk homeowners”
3 million to 4 million households.
The bill creates incentives for lenders to modify the terms of subprime and other loans. Participating lenders will reduce payments to no more than 38% of borrower’s income, with the government matching further reductions down to 31%.
Who may qualify
- Example
- Today A family’s home value has fallen to $189,000 from $230,000 and its loan balance is $214,016. Job loss has reduced household income and loan payments can’t be made.
- Under the proposal The family could modify the mortgage for five years, so that payments are manageable. This would save $406 a month or $4,870 a year.
Who doesn’t qualify
- Mortgages above a certain threshold — $417,000 for single-family homes in most areas and $729,750 in higher-priced regions.
- Homes that are not owner-occupied.
- Those who apply more than three years after program’s start.
There is also a good Question and Answer sheet posted on the US Treasury website: http://www.treas.gov/initiatives/eesa/homeowner-affordability-plan/ConsumerQA.pdf
- Are there areas in the Denver Metro that haven’t decreased in value over the past year?
Absolutely. There are neighborhoods that have increased in value over the past year - and that are projected to keep on doing so. Highlands, Berkeley, Sunnyside, Wash Park, Congress Park and Cheesman are just a few of the places where it’s still rare to find foreclosures - and still solid areas to invest in and live.
- Is it still possible to make a profit by flipping?
Of course, but you have to be super smart about it. You have to be careful about what you pay for the property, how much you put into it, how long you hold it, and how you price it to sell. There is a ton of competition for great investment proeprties, so the best thing to do is set up an automatic search that will send you new listings the day that they hit the market. If you see something that looks like a good investment, don’t wait - make an offer. And create a net sheet that will allow you to project your profit so that you can budget for the flip accordingly.
Saving for College - Rehab and Rent!
A college savings plan doesn’t always have to come in the form of a savings account or a 529. With three kids and another on the way, I’ve been giving some serious thought to how we will be able to support four kiddos as they get through school. We haven’t started any kind of savings strategy as of yet, but I know that we need to.
To refi or not to refi, that’s a serious question
Well, we found a renter for our house - the cute little ranch that we may be a tiny bit upside down in because we finished the basement while we were living in it and did a bunch of other upgrades, and then decided to move to a bigger place. I posted a few pics on Craigslist and got over 30 very interested responses! The first lady that cam to see it was fantastic, and she is going to be very happy living there, I know it!
I am so, so glad that we decided to feel out the rental market before selling while prices are low - I honestly was out of the loop as far as rentals were concerned in that area - and we are almost able to cover our mortgage even with the hike in interest rate that we had to take last year with our refi, in order to get my Grandpa, who co-signed on the house for us a few years ago, off the deed so that he would not have to stress over it.
But I have been wondering - should we do another no-cost refi and try to lower the payments even further so that we don’t have any monthly cost to keep the house on top of the rent that we receive? (more…)