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

   Vacancy rates in the Littleton and Denver Metro area continue their downward trend.   In fact, they’re the lowest since 2001, according to the Denver Post.  This low rate is contributed to the fact more people are moving here, coupled with the fact fewer apartments are being built.  To give you an idea of how quickly rates have fallen, they were at 9% in the second quarter of 2009.  We’re also seeing a very healthy rental rate in single family homes from what Realtors were saying at a quarterly real estate trends class, I attended.  With very little apartment construction in the planning stages, along with the continued growth, experts are predicting rates to fall even lower in the coming quarters.  This will ultimately lead to higher rates and pickier land lords.

Jerry Becker
www.jerrybeckerandassoc.com

   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.

A local real estate company recently finished an analysis of which homes are most likely to sell.  As it takes a while for a home to go through the selling process, they limited their study to homes that went on the market from January through September of 2009.  What they found out was the odds of a home selling were dependant on several factors. 
1.  Homes owned by banks (REO) had the best chances.  90% of these listings sold, with the remaining 10% being withdrawn from the market or had the listing expire.
2.  Short sales (SS) were the least likely to sell with only 32% of these listings ever selling.
3.  Regular, non-distressed home listings had only slightly better odds than short sales, with 37% of these selling.

In the various categories, they discovered that the price of a home determined it’s odds of selling.  In the Denver and Littleton market, the least expensive, 10% of all homes sell for $85,000 or less. Non-distressed sellers in this price range had a success rate of 78%.  This is compared to a success rate of just 44% for SS sellers in the same price range.  At the opposite end of the range, the most expensive 10% of  the home sales sold for over $460,000.  This market segment requires a jumbo loan, and they weren’t easy to obtain, or cheap, during this time period.  In this high end, only 16% of the regular listings sold and only 14% of the SS.

For a middle of the pack comparison, let me tell you that in the price range of $210,000 to $315,000 for regular, non-distressed home listings, only 41% of these homes sold.  Now true, this information came from 2009’s market and we’re doing much better in 2010, however, as a seller, one really needs to pay attention to the prices of previous sales.  Over reaching in this market can end up costing you lots of time plus a potential sale.

Jerry Becker
jbeckerhomes@comcast.net

    Vacancy rates in Littleton and Metro Denver continue to show improvement, based on the latest report released by the Colorado Division of Housing.  When considering the rates of single family homes, for-rent condos, and other small properties, the vacancy rate for the first quarter had dropped to a two year low of 3.1 percent.  This is compared to a vacancy rate of 3.9 percent in the first quarter of 2009.  Our highest recent vacancy rate occurred in 2005, when it stood at 9.5 percent.  This was a result of people buying homes like crazy so they wouldn’t be priced out of the market.  Many accomplished this by using some of the creative loan products that were available, at that time, and of course we all know how that worked out.
    For those of you that are regular readers of this blog, you may note that last month I commented on how the vacancy rate stood at 6.5%.  Be sure to note, that it was for apartments, only, while the above data excludes apartments.
Jerry Becker
Jerry Becker and Associates – Metro Brokers
jbeckerhomes@comcast.net

    Presently, the main funding mechanism in town for buyers with limited funds has been FHA.  With the decline of the lending market, FHA has been hotter than ever.  Recently, there have been some changes that willaffect you, as a borrower.  First of all, the loan limit has been lowered to $368,000 for a single family home in the Denver Metro area.  Also, the amount required for a down payment has been increased from 3% ot 3.5%, although FHA will still allow this to be a gift from family members.  FHA now charges an up-front Mortgage insurance premium of 1.75%, which can still be added into the loan.  If you have questions about FHA financing, call me and I’ll put you in touch with several reputable lenders.

In today’s Rocky Mountain News, it was reported that metro Denver’s home sales average prices fell by only 1.1% in November, making it the best performing city in the S&P/Case-Shiller Home Price Index.  In the twelve months ending with November, Denver performed better than all large markets except Dallas, in the report.  According to Case-Shiller, Denver area prices fell by only 4.3% for that preceding 12 month period.  Several things were cites as contributing to Denver’s continued improvement; lack of new home inventory and starts, declining inventory, lack of the huge price run up experienced in other cities, lower jobless rate, and the net increase in population.  While it may sound dumb to celebrating even when the figures show a decline, one has to remember that these figures are comparing average sales prices.  Averages are determined by the mix and in Denver the lower priced tier of homes have been selling like hot cakes.  To be sure, most of these are being snapped up ;by investors, but they are still selling.  The middle ranges are holding their own while the high end has been building inventory because of slow sales.  Combining all these numbers is what gives us the average.  Readers should not be too concerened  about the bottom line number but the mix of sales that gave us that number.   As many buyers are discovering, they have some healthy competition for quality homes in some of their price ranges.

   I know from experience that not all Home Owners Associations are the same.  Most are
are very well run, however, I know that there are a few that aren’t.  Even if they are well
run some people will have a difference of opinion of certain issues that will make them
feel they have to draw that “line in the sand”.  If you fell this is what you must do, please don’t try and show your displeasure by withholding your dues.  In 1991 the Colorado
legislature passed the Colorado Common Interest Ownership Act which governs
HOA’s.  One feature of the act allows HOA’s to collect attorney fees from residents who don’t pay their dues.
If your dues have gone delinquent for an extended period of time, most HOA’s will have their legal firms
write the person in default a letter demanding back dues to be made current.  Here’s the bad news, most of
these legal letters will cost the HOA a minimum of $500, which you will also have to pay in addition to your
dues that are in arrears.  I was informed by a knowledgeable person in a large title company, that he’s seen
charges for collections from some the big wig legal companies as high as $5,000.  These cost get passed on to you and attach to your property.  Bottom line is that if you have a beef do your best to work through the
system, but don’t try to make your point by not paying your dues.

The 17 acres of land west of the Aspen Grove Shopping Center may be the site of a future multi-family development of 280 units.  These will be spread among seventeen two and three story buildings among the site which will also count a community club house, pool, and access to the South Platte Trail among the main amenities.  This project will be led by Alta Aspen Grove, which has recently filed a conceptual site development plan.  Doing so will start the project process and will involve meetings for community input as well as dealing with Arapahoe County’s Planning department. 

At this time I don’t know if this project will built for sale or to rent, but my best guess is that it will be for sale.  These types of developements, that are built close to light rail have been very popular and to date have sold quite well.  Plus, it could be a couple of years before the first ones are ready to go, which should position them for entrance into a much improved real estate market.   I’ll try and keep you posted as this proceeds through the process.