Living Littleton

    Home loan rates for buyers in Littleton or Denver continue to drop.  FHA rates are about 4.25%, depending on the day you ask.  This is quite a surprise from what the experts were all predicting back at the first of the year.  If you remember, they were saying rates would start to rise in the second quarter because the Fed was going to quit buying home loans.  Most were saying rates could rise 3/4 to 1 % by the end of the year.  That would have us in the high 5’s, but we’re no where near that at the present time.  The Fed did quit buying home loans, however, there has been so much money pouring into Treasuries instead of stocks, that the price of Treasuries has been bid up.  They run counter to interest rates, so when the price of the bond goes up, the interest rate goes down.

    Today’s low rates, coupled with the supply of homes at bargain prices has made this a perfect time to buy a home in Littleton.  If you weren’t able to purchase by the end of April, to take advantage of the Federal Tax Credit, you aren’t left out in the cold.  The low rates will give you a return over what someone had to pay 5 months ago for their home loan, that will make up for the tax credit, over time.  

     Even with this perfect combination of rates and supply, home sales aren’t going through the roof.  I suspect that many wanna be buyers just don’t have the money.  If that’s your case, or you know of someone who’s faced with that issue, you may want to look at the attached loan comparison chart for a $200,000 home purchase, at the end of this post.  It’s the only Zero Down home loan available, outside of VA.  It’s a 30 year fixed rate loan that is always below market and doesn’t require any money down.  In addition to that, there are no closing cost, just pre-paids.  I’ve made reference to this loan in the past, however, I’ve never broke it out so people could see the benefits, when compared to FHA. . The first column is for an FHA loan, where the seller paid 3% towards paying buyer’s closing cost.  The second column is where the seller pays 3% to buy the rate down an additional .75%, to 3.25%.  Since there aren’t any closing cost, the buyer doesn’t need to have that money apply to his cost.  The third column is were the buyer elects to discount the price of the home by 3% and just go with the market rate on the Zero Down loan, which is 4%.

   If this is something you’re interested in, give me a call ASAP.  It takes a little longer to process these loans, as you have to attend a workshop, first, and they’re only held once a month.  I only make this loan available to my clients, so please don’t contact me if you have a relationship with another Realtor.

                                                                                    Loan Comparison

                                                                          Purchase Price $200,000

   High end homes in the Denver/Littleton area are starting to rebound from their record lows.  It’s no secret that the high end home market has been close to dormant over the last couple of years, with the uncertainty in the market coupled with the difficulty in obtaining jumbo loan financing.  The good news is that we are starting to see in increase in this market for homes priced over a million dollars.  In fact, sales in this price range have risen to a level not seen in two years.  Several factors have contributed to this, the most important being the steep discounting some sellers have been forced to do, in order to get their homes sold.  Coupled with a slowly building demand, record low rates, and the beginning of some sanity in the mortgage industry,  buyers are starting to become more active in this price range.

    This increase in the high end market may pull up the average sales prices in the Denver/Littleton market.  If this happens, hopefully buyers won’t be lead to believe all home prices have increased by the announce price increase, if there is one.  As I always stress, these figures are the average prices of all the homes sold, not the percentage increase in prices.

In their continuing quest to cut their losses by cracking down on sloppy underwriting for loans, Fannie Mae has instituted a new policy of ordering a second credit screening right before closing.  This last minute check will be to determine if the borrower has obtained, or even shopped for, additional credit.  It’s not unusual for Littleton and Denver new homeowners to shop for new appliances, new home furnishings, autos, new credit card, etc, however, opening these new lines  has the potential to stop the closing until the lender can do a full research and review on the borrower’s credit. 
Jerry Becker
jbeckerhomes@comcast.net

If you’ve actually taking out a new loan it may be large enough to put you over the top on your qualifying ratios.  This could kill the purchase.  Avoid the temptation to apply for a new credit when you go shopping for those home improvement items until after the home closes.  It’s OK to look, just make sure you don’t apply for credit so you’ll be ready to go when the homes closes.  Your lender can give you more information on this.

   As I mentioned in an earlier post, weakness in the Euro has caused an inflow of dollars into the bond market, resulting in some of the lowest home loan rates, ever.  Currently, Littleton lenders are quoting rates in the high 4’s for 30 year fixed rate loans.  In spite of these low rates, the number of purchase loans being applied for, is at a 13 year low.  I think much of this is caused by the market taking a breather after the expiration of the Federal Tax Credit.            
    As nice as these low rates are, no one can say how long they will last.  If our economy starts to pick up, as the talking heads all predict, we could see money leaving bonds to buy stocks.  When this happens, expect to see rates rise.
Jerry Becker
jbeckerhomes@comcast.net

For the fifth month in a row Denver Metro home prices, which includes Littleton, have shown an increase in year over year pricing.  There was also a slight increase from February of this year to March of this year.  These statistics came from the latest S&P/Case-Shiller Home Price Index.

The report showed the the average price increase from a year ago was 4.1%.  Once again, I want to stress that these are the averages of all the homes sold in the respective months, and not the increase of 4.1% for each home. 

Since much of the market was driven by the push of first time buyers to take advantage of the expiring tax credit, I suspect the market was weighted to more of the entry home price range.  We may see another increase in April as that was the last month to take advantage of the tax credit.  After that, the experts predict the number of sales will slow, however, we may see more of a mix of higher priced homes because of the fall off from first time buyers.  This may give us a continued increase in year over year prices, however, the total number of home sales may decline.  These experts also expected interest rates to be higher by now, but in fact, they’ve declined.  It’ll be interesting to see how all of this shakes out.            

Another index is a comparison of a market’s present average home values when compared to the year 2000.  Based on that index, Denver and Littleton came in at 125.31.  That means prices were 25.31% higher than they were in 2000.  The average for the top 20 cities was 143.35 in March.

Jerry Becker
Jerry Becker and Associates – Metro Brokers
jbeckerhomes@comcast.net

Back around the first of the year, Littleton mortgage experts predicted a rise in home loan rates after the end of the first quarter.  This was all predicated on the fact that the Federal Reserve was going to quit buying mortgage securities.  The Fed had been buying billions in mortgages to inject liquidity into the loan market to help stimulate the housing market with the hope of getting many of the sliding markets to stabilize.

Well, the Fed did quit buying and rates did start to move up about a quarter point or so, but the good news is that rates have softened.  In fact, they’ve softened so much that they are as low as they have been this year, so you could say rates have gone in the wrong direction.  This all came about because of the weakness in the Euro due to the debt crisis and bail out for Greece.  Investors have started to worry about the value of the Euro so they have switched to buying dollars.  This influx of money, has caused our rates to stay low for the time being.  More money chasing our bonds which cause the price to get bid up.  With bonds, when prices go up, interest rates go down.

If you felt squeezed out of the home buying market because rates went beyond where you felt comfortable, this present situation may give you another chance.  No one knows how long this will last, but it change and go the opposite direction in a short period of time, so take advantage of it now, if you can.

Jerry Becker
jbeckerhomes@comcast.net

    A new survey was conducted with first time  home buyers and was featured by RISC Media.  According to BBVA Compas many first time buyers weren’t totally prepared for the after purchase experience.  Going with the law of averages, some first time Littleton home buyers may find they agree with some of the findings.

    According to the survey, prior to purchase, the vast majority of buyers (88%) felt they had accounted for the expenses of owning a home.  This figure contrast significantly from those buyers that had purchased a home for the first time in the last twelve months.  Just over half (51%) found that expenses were more than they expected, resulting in a change in lifestyle.                                   

     The good news was that 70% of them felt the unexpected expenses leveled out after awhile, however, 87% did end up changing their lifestyle.  Although the study didn’t go into great detail, this changing of lifestyle may not be all bad.  I’m guessing the change resulted in less money for discretionary items, which means more money was spent on maintaining an appreciating asset as compared to spending on items that give no return except for temporary gratification.

     If there is anything to take away from this survey, I would say it’s to not stretch yourself too thin when buying a home for the first time.  It may make sense if your career is providing steady wage increases, but for most people either be prepared to tighten the budget a little or save up a little more before signing on the dotted line.  It’s still the best investment most people will ever make, just don’t be surprised with some of the initial unexpected bills.   

Jerry Becker
jbeckerhomes@comcast.net

     March sales statistics have been released, comparing March 2010 to March 2009.  The numbers aren’t consistent for the two Littletons.  By two Littletons, I’m refering to the City of Littleton (SSC) and unincorporated South Jefferson County (JFS), which is also known as Littleton.  Keep in mind that Trailmark, which is in Southern Jefferson County is part of the City of Littleton.

     When comparing the average days on the market, both areas experienced a decline, which was steeper in SSC than in JFS.  SSC went from about 93 days in March 2009 to about 68 days in March of this year.  JFS dropped from about 98 to 79 days.

     When it comes to average price for homes sold, this is where the areas reversed themselves.  SSC saw the average price of homes sold go from $310K in March of 2009 to about $210K in March of this year.  JFS, on the other hand, saw an increase from $275K to $345k in year over year numbers.  The  numbers are for all types of property, both single and multiple family.  I’ll break them out further in a future post.

     I want to stress, as I have in previous posts , the numbers don’t reflect the increase or decrease in home values but the average prices of all the homes sold in a particular period.  In JFS more expensive homes were sold in March 2010 than in March 2009, while just the opposite happened in SSC. 

Jerry Becker
jbeckerhomes@comcast.net

     Everyone knows the real estate market isn’t as hot as it was five years ago, and everyone also knows that the types of home loans available are a fraction of what they once were.  You can imagine my elation, when I stumbled onto a great loan two years ago, that nobody knew anything about.  It was unheard of because they didn’t advertise and rely solely on word of mouth.  I thought that with this loan, I would have people lined up to buy a home, but was I ever surprised.  I’ve mailed out over 1,000 post cards, advertised in a publication that went out to 20,000 homes in the Littleton area, and placed numerous notices on Craig’s List, only to be amazed at how jaded we’ve become to print media.
      I guess I shouldn’t have been that surprised as I find myself tossing many things from my mail box into the “circular file”.  It’s probably also the fact so many lenders have shouted from the rooftops that they had the greatest loan since the invention of the wheel, only to have the public get sucked into some type of loan they wished they never signed up for.  I read once that as a society, we get hit with about 10,000 messages a day.  I think the number was actually higher than that, but since I don’t have the quote in front of me, I’m going to be conservative.  When one takes all that into account, one shouldn’t be that surprised at the perceived lack of interest.
   Oh, yeah, about that Best Loan in Littleton, here it goes with some of the highligts;
30 Year Fixed Rate                                                                       
No Down Payment Required
No Closing Cost; Just Pre-Paids                                   
No Private Mortgage Insurance
Always Below the Market Rate
Can Have the Seller Buy the Rate Down
   So what do you think?  Should a loan like that get people’s attention?  I always thought so.
Oh, by the way, today’s rate is 4.75% fixed and I can get most sellers to buy the rate down to 4% for 30 years. 
www.YesYouCanHomeLoan.com
Jerry Becker
jbeckerhomes@comcast.net

     As many of you know, Colorado is different in their approach to local property taxes, because they allow for the creation of Special Districts.  In the majority of states, local improvements and services are funded through their local city and county governments.  Things like fire protection, recreational facilities, libraries, water, sewer, and even roads can be funded through special taxing districts.  Littleton is no different in the use of these funding mechanisms.

     When purchasing property, it’s the responsibility of the buyer to investigate the districts to the buyer’s satisfaction.  Paragraph 8.4 of the Colorado Purchase Contract explains about Colorado’s use of special districts.  This explanation and warning was inserted into the purchase contract to make purchasers aware of districts, especially in the light of the financial failures of some districts in the mid 1980’s.  It is to your benefit to understand special districts because they affect your property taxes.  You can obtain a free profile of any special district from the Division of Local Government by calling 303-866-2156.  The profiles will help you evaluate the financial health of a district.  Remember to have your real estate broker allow enough time for you to get a tax certification from the title company, so you’ll know what your taxing districts are.  With that information, you’ll know which ones to request profiles on.

Jerry Becker
jbeckerhomes@comcast.net