Tuesday, October 31, 2006

MORE ON PRICES: According to numbers released yesterday by the Durango Area Association of Realtors, Durango home prices are up 11 percent compared with a year ago, but home sales have fallen 39 percent.

The median price of a Durango home was $436,050 in the third quarter - up $44,050 from the same period in 2005. But only 43 homes sold in the third quarter compared with 70 a year ago.

Durango's newest median price is $12,000 lower that last guarter's record high of $448,000. The median price of a Bayfield home in the third quarter was $306,000 - up 13 percent from a year ago. But home sales dropped 57 percent - from 23 to 10.

It's important to understand that "Median Price" is the point where the number of sales below that point equals the number of sales above that point. "Median Price" is not an average price.
But it is good indicator of economic trends. If more higher price homes sell, the median price will go up and vice versa.

We are seeing an increase in buyer activity in the properties priced below the current median. If the trend continues, our median price will drift downward. In our opinion, moving towards a more balanced market bodes well for the Durango real estate economy.

Daily traffic is increasing on both of our websites http://HomesInDurango.com and http://www.DurangoRealEstate.biz

Friday, October 27, 2006

NEW HOME PRICES: The Commerce Department reported that the median price for a new home sold in September declined by 9.7 percent from September, 2005 providing evidence of the slow down in the once booming housing market.

It is important to recognize that, here in Durango, we do not have the mega tract builders; Pulte, DR Horton and the like. In major markets these huge corporate builders create large inventories of product. When sales begin to slow, price adjustments and sales incentives reflect a downward turn in pricing. The resale market cannot compete with new home purchase incentives offered by builders. As a consequence, the housing market, overall, becomes depressed until inventories are depleted.

Locally, our inventory of new spec homes is relatively small with the majority being in the Bayfield developments of Dove Ranch, Mesa Heights, Sunrise Estates and Forest Lakes. Our builders are, by and large, sole proprietors who are active in the actual construction process. The product they produce is generally high quality with more of a custom look and feel. While our market has slowed due to the problems in the major housing markets, it doesn't look our prices are coming down measurably.

Learn more about Durango real estate at http://www.HomesInDurango.com and http://DurangoRealEstate.biz

Wednesday, October 25, 2006

CONSERVATION EASEMENTS: A conservation easement (or conservation restriction) is a legal agreement between a landowner and a land trust or government agency that permanently limits uses of the land in order to protect its conservation values. It allows you to continue to own and use your land and to sell it or pass it on to heirs.

When you donate a conservation easement to a land trust, you give up some of the rights associated with the land. For example, you might give up the right to build additional structures, while retaining the right to grow crops. Future owners also will be bound by the easement's terms. The land trust is responsible for making sure the easement's terms are followed.

Conservation easements offer great flexibility. An easement on property containing rare wildlife habitat might prohibit any development, for example, while one on a farm might allow continued farming and the building of additional agricultural structures. An easement may apply to just a portion of the property, and need not require public access.

A landowner sometimes sells a conservation easement, but usually easements are donated. If the donation benefits the public by permanently protecting important conservation resources and meets other federal tax code requirements it can qualify as a tax-deductible charitable donation. The amount of the donation is the difference between the land's value with the easement and its value without the easement. Placing an easement on your property may or may not result in property tax savings.

Perhaps most important, a conservation easement can be essential for passing land on to the next generation. By removing the land's development potential, the easement lowers its market value, which in turn lowers estate tax. Whether the easement is donated during life or by will, it can make a critical difference in the heirs' ability to keep the land intact.

The Colorado Legislature is once again revising the state income tax credit for conservation easements to correct inconsistencies with federal law, and to remove the temptation to use the credit in ways for which it was not intended. The credit, and the ability to covert it to cash by transfer or refund, have made land protection attractive and affordable for landowners at all income levels. Resident taxpayers and nonresident landowners who are members of Colorado pass through entities may claim the credit. However, the provision of the current law that allows an easement donor to claim a credit of 100% of the first $100,000 in easement value has raised the question of whether some easement donors have "donative intent," (which is necessary to qualify for both the federal income tax deduction and the state tax credit.) The same provision has led some landowners to structure a series of easement gifts in order to take maximum advantage of the credit. This practice, while not illegal, has resulted in smaller conservation easements that are harder for a land trust to justify. House Bill 1354, to take effect in January of 2007, eliminates the "100% of the first $100,000" provision, and also clarifies who may claim the credit. It changes the formula for calculating the credit to a simple 50% of the value of a donated conservation easement, and it raises the credit cap from $260,000 to $375,000.

Source: La Plata Open Space Conservancy - 2005 Annual Report.


Monday, October 23, 2006

BOULDERS: The developer of Boulders at Escalante, the 37 unit townhome development behind Home Depot is facing legal troubles.

In April, the developer ordered the contractor, Kurt Geary, to stop construction, apparently over financial issues.

Geary is now suing the developer for breach of contract and failing to make proper payments for labor and services. In the lawsuit, Geary alleges that he entered into a contract with the owner in May 2004 for services to be performed, and that the contract has not been fulfilled. Before the term of the contract was completed, Geary was order to stop work in April 2006.

The developer agreed to include four attainable units required by the City of Durango, but have since made a formal request to the city seeking exemption for building those units. The city has issued 10 certificates of occupancy at Boulders out of a total of 37 planned units.

Our experience with Boulders at Escalante has not been good. Last year one of our clients submitted an offer on a unit under construction. We attempted for weeks to obtain a response from the developer. No response, none. Our client finally gave up and purchased another property. In retrospect, given the current happenings, we're glad he did.

Keep track of real estate happenings at www.HomesInDurango.com and www.DurangoRealEstate.biz.
100 YEARS AGO: From the Herald - "A considerable movement in Animas City real estate is imminent. The Herald has information from reliable sources that several large transfers of lots will be made in the near future ... and it would not be surprising if quite a boom were to result."


Saturday, October 21, 2006

SKI SEASON IS HERE: Wolf Creek Ski Area will hold what is believed to be its earliest opening ever - by one day - on Friday. At least 57 inches of snow have fallen since September.

That's a week earlier than the area's projected November 3 opening.

Purgatory at Durango Mountain Resort has set a Thanksgiving day opening date and Telluride Ski Area has set Wednesday, November 22 as its official opening.

At Wolf Creek all facilities - ski school, rental and sports shops, Wolf Pup Building, Wolf Creek Lodge and the Pathfinder Bar are ready for the opening day. Forest Service Road 391 is groomed for cross-country skiing from the end of Alberta parking lot to Alberta Lake dam. Wolf Creek is celebrating its 30th year of free cross-country skiing.

View our Purgatory mountain cam at www.HomesInDurango.com
100 YEARS AGO: This advertisement appeared for The Local Security Co. "A bargain - Two fine building lots (corner) on Fourth Avenue for $400 if sold quick"

My, how things change. Keep up to date on Durango real estate at http://HomesInDurango.com and http://DurangoRealEstate.biz.

Friday, October 20, 2006

FINANCING: Likely the largest debt you'll ever take on is a loan to finance the purchase of your home. Your home is collateral for the loan, which is also a legal contract you sign to promise that you'll pay the debt, with interest and other costs, typically over 15 to 30 years. This contract is called a mortgage. It is usually in the form of a Deed of Trust. If you don't pay the debt, the lender has the right to take back the property and sell it to cover the debt. To repay the debt, you make monthly installments or payments that typically include the principal, interest, taxes and insurance, together known as PITI.

PRINCIPAL -- The principal is simply the sum of money you borrowed to buy your home. The amount financed is determined by the purchase price less the amount of cash, called a down payment. The larger the down payment the smaller the amount financed, hence the lower the interest expense over the life of the loan.

INTEREST -- Usually expressed as a percentage called the interest rate, interest is what the lender charges you to use the money you borrowed. As well as the given rate, the lender could also charge you points, and additional loan costs. Each point is one percent of the financed amount and, and some cases, can be financed along with the principal. Principal and interest comprise the bulk of your monthly payments in a process called amortization, which reduces your debt over a fixed period of time. With amortization, your monthly payments are largely interest during the early years and principal later. In addition to your principal and interest, your mortgage payment could include money that's deposited in an escrow or trust account to pay certain taxes and insurance. Generally, if your down payment is less than 20 percent, your lender considers your loan riskier than those with larger down payments. To offset that risk, the lender sets up the escrow account to collect those additional expenses, which are rolled into your monthly mortgage payment.

TAXES -- The taxes are property taxes your community levies based on a percentage of the value of your home. The tax is generally used to help finance the cost of running your community, say to build schools, roads, infrastructure and other needs. You must pay property taxes even if you don't need an escrow account and even after your mortgage is paid off.

INSURANCE -- Lenders won't let you close the deal on your home purchase if you don't have home insurance, which covers your home and your personal property against losses from fire, theft, bad weather and other causes. Even if you pay cash for your home, you should buy home insurance unless you can afford to repair or rebuild your home if it's damaged or destroyed. If your home is in a federally designated high flood risk zone within a flood plain and you are signing for a federally insured loan, federal law mandates that you must buy flood insurance. If you are not in a high flood risk zone, you still may buy the coverage. If you put less than 20 percent down on your home purchase, most lenders will also charge you private mortgage insurance (PMI) premiums. The coverage doesn't protect you, it protects the lender from you defaulting on the mortgage. Without the coverage, many buyers could not otherwise afford to buy a home. Effective for loans written on or after July 29, 1999, lenders must automatically cancel PMI when your mortgage balance shrinks to 78 percent of the home's original purchase price.

Give us a call or email if you have any questions or need further information. We're here to help.


Wednesday, October 18, 2006

POPULATION: 300,000,000 people in the United States; that's 299,955,000 that don't live here in Mayberry, I mean Durango. We have 45,000 people spread out over La Plata County. With our slow pace lifestyle, clean air, no traffic jams and low crime rate, it's no wonder the rest of the country wishes they could be here. But then, where would we put 300,000,000 people?


Monday, October 16, 2006

HOUSE HUNTING TIPS: 1. Location counts. You've probably heard the old real estate joke about "location, location, location," but the point still bears repeating. Location is crucial. How far are you really willing to commute to your place of employment? How good are the local schools, shopping centers, public transportation, seniors services and other public amenities? Will your new home be next to a vacant lot or a commercial property? Even a picture-perfect dream home can be a mistake if it's in an undesirable location, and a poor-location home can be a particularly bad choice if you anticipate reselling the home within a few years.

2. Make a list. Do you (and your spouse, if you're married) really know what you need and want in your home? You'll save yourself many hours of shopping (and potentially arguing) if you make a list ahead of time. Zero in on the features you must have, would like to have, definitely don't want and would prefer not to have. Your goal is to find the right home for your family without falling in love with one that doesn't suit your needs. Tip: Start compiling your wish list by thinking about what you like and dislike about your current home.

3. Do your homework. Not long ago, consumers had very little access to information about recent home sales prices, market trends, homes on the market, neighborhood statistics and the home-buying process. Today, all this information and more is available on the Web. Go surfing. Get educated. Become empowered.

4. Get preapproved for a mortgage. Your top-dollar home price is a function of your household income, your creditworthiness, interest rates, the type of loan you select and how much ready cash you have for the down payment and closing costs, among other factors. Rather than guessing or estimating how much you can afford to spend, ask a lender or mortgage broker to give you a full assessment and a letter stating how much you're qualified to borrow. The true amount may be much more or much less than you think.

5. Use a checklist. Touring multiple homes is a confusing experience for most people. Rather than relying on memory, make notes about the homes you visit. Turn your priorities into a personalized home-shopping checklist and use it track the features of each home.

6. Wear comfortable clothing and sturdy shoes. House-hunting can be tiring, especially if you're relocating from a distant community and not accustomed to our altitude. There's no sense in torturing your feet unnecessarily.

7. Be prepared to make an offer. House-hunting can also be frustrating, especially if you know in your heart you're not really emotionally or financially ready to buy a home. If you're not ready, don't put yourself through the exercise. If you are ready, go through a blank purchase contract ahead of time so you'll know what decisions you'll face when you make an offer. We'll be happy to furnish you one.

8. Relax. Granted, buying a home is a major life-altering event. But it's not worth making yourself insanely crazy or super-duper stressed. Save time at the end of your house-hunting expedition to unwind, calm your thoughts and emotions and keep the whole experience in perspective.


Wednesday, October 11, 2006

PREAPROVALS: Few people can buy a home for cash. According to the National Association of REALTORS® (NAR), nearly nine out of 10 buyers finance their purchase, which means that virtually all buyers -- especially first-time purchasers -- require a loan.

The real issue with real estate financing is not getting a loan (virtually anyone willing to pay lofty interest rates can find a mortgage). Instead, the idea is to get the loan that's right for you -- the mortgage with the lowest cost and best terms.

We routinely suggest that our clients start the mortgage process well before making an offer on a home. By meeting with lenders -- either online or face to face -- and looking at loan options, they will find which programs best meet their needs and how much they can afford.

We also recommend preapprovals for another reason: The Colorado Contract To Buy and Sell Real Estate form requires buyers to apply for financing within a given time period, in many cases, seven to 10 days. By meeting with loan officers in advance and identifying mortgage programs, our clients avoid having to quickly find a lender, check credit, and rush into a financing decision that may not be the best option.

What is it? "Preapproval" means you have met with a loan officer, your credit files have been reviewed and the loan officer believes you can readily qualify for a given loan amount with one or more specific mortgage programs. Based on this information, the lender will provide a preapproval letter, which shows your borrowing power. You can visit as many lenders as you like and get several preapprovals, but keep in mind that each one carries with it a new credit check, which will show up on future credit reports.

Although not a final loan commitment, the preapproval letter can be shown to listing brokers when making an offer on a home. It demonstrates your financial strength and shows that you have the ability to go through with a purchase. This information is important to owners since they do not want to accept an offer that is likely to fail because financing cannot be obtained.

How do you get preapproval? Real estate financing is available from numerous sources. Based on our experience, we recommend our clients work with local Durango lenders who offer competitive programs and deliver promised rates and terms. We have several we highly recommend.

The lender will carefully review your financial situation, including your credit report and other information. They then will suggest programs which most-closely meet your needs. For instance, a first-time buyer may need to finance as much of the purchase price as possible, while a repeat purchaser (someone who has bought a home before) with more equity (money invested in the home) might want to get a 15-year loan and the lower overall interest costs it represents. Typically, first-time buyers opt for the traditional 30-year loan, with either a floating interest rate or a fixed rate of interest over the life of the loan. In most situations we prefer our clients select a fixed rate loan.

If we can assist you in locating a local lender, give us a call or email. We'll be glad to help.

Monday, October 09, 2006

NEW INDUSTRIAL PARK COMING: County commissioners have unanimously approved the conceptual development plan for a new industrial park on about 220 acres of land, adjacent to and northwest of the Durango-La Plata County Airport.

Bobby Lieb, representing the Durango Chamber of Commerce and the applicant Durango Commercial Development LLC, was excited about the outcome and now plans to put specifics into the project. "We want to respect Commissioner (Wally) White's wishes and make the area aesthetically pleasing," Lieb said. "We want to design a place where people will want to work." White said he is concerned because the property, which is along the Florida River, potentially could be a scenic corridor.

Lieb said the bonuses of the location are that it is centralized in the county, consistent with the airport master plan, and it will provide Bayfield and Ignacio residents with jobs. "We are at a shortage of commercial space in the county, primarily at Bodo (Industrial) Park and the Durango Tech Center," Lieb said. While the recently approved gravel operation will start before the business park, at some point they hope to operate the two concurrently. Construction on the gravel pit will begin within the next couple months, said Lieb.

Several people from the public commented on the importance of the project. "This reminds me of the initial development of Bodo Park in the '70s," said Doug Shand, a founding member of the Durango Industrial Development Foundation, which created Bodo. "This project definitely parallels that." Commissioners also were positive about the impact of the future park.

It is good for the community to have more live and industrial commercial space," Commissioner Sheryl Ayers said. "I agree entirely with the fact that we need it."


Sunday, October 08, 2006

ARE YOU READY TO BUY? Do You Know What You Want? Whether you are a first-time homebuyer or entering the marketplace as a repeat buyer, you need to ask why you want to buy. Are you planning to move to a new community due to a lifestyle change or is buying an option and not a requirement? What would you like in terms of real estate that you do not now have? Do you have a purchasing timeframe?

Whatever your answers, the more you know about the real estate marketplace, the more likely you are to effectively define your goals. As an interesting exercise, it can be worthwhile to look at the questions above and to then discuss them us. It will help us understand how we can best help you.

Do You Have The Money? Homes and financing are closely intertwined. (Financing is the difference between the purchase price and the downpayment, commonly referred to as debt or the mortgage.) The good news is that over the years new and innovative loan programs have evolved which require only a 5 to 10 percent down payment. In addition to a down payment, you also need cash for closing costs (the final costs associated with closing the loan).

Keep in mind that the less you put down the higher your monthly mortgage payments will be. So most homebuyers choose to buy with some cash up front.

Is Your Financial House in Order? To obtain the best financing you need good credit plus fanancial stability. For at least one year prior to purchasing a home, you should ensure that every credit card bill, rent check, car payment and other debt is paid in full and on time.

Just getting started? Give us a call. We will be glad to answer any questions.


Thursday, October 05, 2006

CLOSING COSTS: Bankrate, Inc. last month released its 2006 National Closing Cost Survey results. Their findings showed New York State ($3,887) has the highest mortgage closing costs in the country, while Colorado ranked 23rd with an average closing cost of $2,988.

The survey provides a comparision of lender, title and settlement fees in 51 geographic locations, which includes cities in all 50 states and the District of Columbia. Each state listing includes their current ranking, compared to their 2005 position, a detailed breakdown of average closing fees for that state, and a printable worksheet for consumers to compare average costs to their lender fees.

To view the survey, go to www.bankrate.com/closing.


Wednesday, October 04, 2006

VALUES: House prices, slumping after a five year boom, are projected to decline in half of the nation's metropolitan areas, with the Northeast, Florida and California among the areas hardest hit. This forecast is made by Moody'sEconomy.com, a private research firm. Moody's projects that the median sales price for an existing home will decline in 2007 by 3.6%, which would be the first decline for an entire year since the 1930's.

The report projects that 133 of the nation's 279 metropolitan areas would sustain price declines. This is quite a contrast from the last five years when low mortgage rates pushed sales to five consecutive annual records and prices in the hottest sales areas skyrocketed.

How does this affect our Durango market? As we've previously posted, much of our real estate economy is driven by 2nd home buyers, retirees and/or investors; a significant percentage coming from California, Arizona, Florida and Las Vegas. The areas have already experienced sales volume and price declines. As these markets slow and turn down the number of potential buyers of Durango properties will decline. Our market will slow (as we're already seeing.) Will our home prices decline? We think not significantly but we certainly will not see the value escalations as in recent years.

Look back at our October 2 post. Many consumers are migrating from the metropolitan areas to smaller communities and Durango is America's #3 "dreamtown."

http://HomesInDurango.com / http://DurangoRealEstate.biz

Monday, October 02, 2006

DREAMTOWNS: Seven of the 10 small cities that offer the best quality of life are in western states, according to a Bizjournal.com study that identifies American "dreamtowns."

Bizjournals' study was inspired by the heavy public interest in small-town life and business opportunities. More than 1.7 million people move from metropolitan areas to small cities or rural counties each year, according to the U.S. Census Bureau research.

The study identifies the small communities that would be most attractive to people considering such a move. The highest scores go to well-rounded places with strong economies, light traffic, moderate costs of living, first-class educational systems, and good access to big-city attractions.

The study group was the nation's 577 micropolitan areas, which are defined as regions that are economically dependent on central cities with 10,000 to 50,000 residents. All Metropolitan areas were specifically excluded from the report.

Our Durango is the #3 ranked "dreamtown" in the nation. It's hard to believe that Bozeman, Mont. and Jackson, Wyo. came in ahead of Durango. Bozeman is too cold and Jackson too crowded. Then again, 3 out of 577 isn't so bad. Maybe that's why Durango is called the "Hidden Gem" of the San Juans.

You can be a part of this spectacular area. Give us a call or email us. We're here to help. Visit our websites http://HomesInDurango.com and http://DurangoRealEstate.biz for more information on Durango real estate.