Rating for price trending was 2.8 (with the same median of 3.0 with lower meaning prices are falling and higher are rising). This is similar to what we are currently experiencing. Houses are still selling, some very rapidly still, bun on average we seem to be slowly chasing a deflating market. The good news is that this decreasing trend has slowed over the past months, and we are all waiting for the rebound in the early months of 2011.

With mortgage rates slowly starting to creep back to what some would call ‘normal levels’ buyers are still heavily motivated to buy today to secure extremely low costs of carrying a loan!

How this relates to housing in the long term at this point is anyone’s guess, but in the short term it should help prices from further sliding in a already challenging market. Deflation would only lower prices further, which if later followed by inflation could cause considerable losses in any industry, so thank you for RE2, and let see how the next few weeks go!

Colorado had a little over 6,000 properties filing for foreclosure last month, which is lower than the national rate. Although between August and September 2010 foreclosures rose 3% in Colorado.

Currently Colorado is ranked 12th among the all the states during September and during all of 2009 and the first six months of 2010 it was ranked 10th.

Foreclosure filings are just the initial documents filed, which are used to begin the foreclosure process. Foreclosure can end in 2 ways: one being where the homeowner settles with the lender or the other way is the home is sold through a foreclosure sale and the owner loses the property.

There were a total of 347,420 homes nationwide with foreclosure filings in September 2010, up 1.1 percent from September 2009 and up 2.53 percent from August 2010 according to RealtyTrac’s numbers.

The division of housing said new foreclosure filings in Colorado fell 10.1 percent from the same month of 2009 but were up 15.6 percent from the previous month according to the most recent official state report on foreclosures in Colorado.

Here is a summary of an LA Times article:

Bank of America is moving forward with halting foreclosure sales in all 50 states as the nation’s largest bank said it was widening its examination into how it handled home foreclosures.

The move by the lender might put pressure on other banks to declare foreclosure moratoriums nationally.
“Bank of America did the right thing today by stopping foreclosure sales in all 50 states,” said Assemblyman Ted Lieu, who has written a series of mortgage-related bills. “Other major lenders should also halt foreclosures in states such as California.”

Kevin Stein, associate director of the California Reinvestment Coalition, said the move by the bank indicated that there were widespread problems with the way banks were conducting foreclosures.

Three major banks — Bank of America, Ally Financial Inc. and J.P. Morgan Chase — had suspended foreclosures in the 23 states that process repossessions through courts. Bank of America hasn’t halted all foreclosure proceedings, however. “Our ongoing assessment shows the basis for foreclosure decisions is accurate,” the bank said.

Full article from LA Times

What are your thoughts on what this will do to Colorado’s real estate future?

Appraisals are very detailed reports. Appraisals are often confused with two other types of less formal home evaluations, CMAs and BPOs. There are two common appraisal methods used in Denver for residential properties. You will probably pay for the appraisal when you apply for your loan. Experienced agents often come very close to an appraisal price with their CMAS, but an appraiser’s report is much more detailed–and is the only valuation report a bank will consider when deciding whether or not to lend the money. Your lender will require an appraisal when you ask to use a home or other real estate as security for a loan, because it wants to make sure that the property will sell for at least the amount of money it is lending. The lender will study the appraisal carefully before determining whether or not the property qualifies to serve as security for your loan. Don’t panic if the appraisal comes in low, because there are often steps you can take to make the deal work. If the appraisal uncovers other problems, remember that most problems are correctable. A real estate appraisal is performed by a licensed or certified appraiser (in many countries known as a property valuer or land valuer and in British English as a “valuation surveyor”.

Let me give you the story;

I found a home for my buyers the first week in December 2008 in Castle Rock. It was a short sale. I proceeded to explain to my clients the potential problems, roadblocks and/or issues surrounding short sales in Denver. For example; it might take 6 months for us to get an answer from the short sale bank, these homes usually come as-is and a bunch of others reasons. After understanding the potential problems they decided to push forward with the offer. Well, to make a long story short, our offer got accepted the very next day WITH SHORT SALE APPROVAL.

We proceeded through the purchase process and get 3 days before closing. My client flies into town preparing to move in and I get a call from the title company telling me the short sale has not been approved. Not been approved?!?!?! We have already gone through Appraisal, inspection, 2 two-way airline tickets, the entire loan process let alone 18 or so contract deadlines and now I’m being told we don’t have approval when I have it (meaning the written approval) right in my hand.
Here is the moral of the story;

Even after the bank has agreed on a price for the short sale, and I mean agreed in writing, they are not obligated to sell the home until they have officially signed off on the final HUD. I have spoken to a half dozen Colorado Real Estate Attorneys in the past few days and the truth is…..Until your buyer has the keys in their hand, there are zero guarantees when dealing with a short sale property! They are not liable for ANYTHING until their signature is on that piece of paper at the closing table.

Forget contracts, they’re apparently worthless anyway….let’s just shake hands and call it a day!
I’m sure you don’t believe me. Check with your attorney and let me know. I am itching to get some comments on other’s opinions.

IN 2008 tax brackets for federal income tax runs from $8025-32,550 for 15% tax bracket and income from $32,550-78,850 is in the 25% tax bracket.

If your interest rate was 6% on a 165K loan your tax deductible mortgage interest would be $11,345.51 for the year. Your estimated yearly property taxes could be anywhere from $1100-2000yr. Let’s say its $1400 (because this is going to get us to our desired monthly payment of 1200 or less). As long as you are in either the 15 or 25% tax bracket then in addition to mortgage interest and property taxes you will be able to deduct your mortgage insurance; this could range monthly from $90-$130. Let’s estimate in the middle and use $110.0 that would be an additional $1320 a year to deduct.

My tax attorney said today that being a home owner brings about many additional deductions in addition to the obvious ones like mortgage interest and property taxes. I would love to give you my CPA’s contact information for a consultation he is really great, just let me know if you are interested in using him.

Remember we are allowed to itemize additional deductions that are not included below like the single deduction for $3450 for each dependent. The example below is just comparing the basic real estate deductions

**First if your income is higher than 32,550 you are currently in the 25% tax bracket and if you own a house you will more than likely drop into the 15% tax bracket and that’s HUGE. I’m not going to compare the two tax brackets because I’m going to assume that you are deducting something and getting yourself down into the 15% bracket already…I hope you are.

15% tax bracket 32,000 income Taxable ~ $4800 Federal tax

32,000 income – 11,345.51 (mortgage interest) -1400 (real estate tax) -1320 (mortgage interest) =17,934.49 taxable income = $2690.17 federal tax

Savings = $2109.83 yearly or $175.82 monthly. **** So if you think about it, you have an additional 175$ in your pocket every month if you own a home vs if you rent. AND this home is going to appreciate over time also giving you a retirement vehicle. You could adjust your take home accordingly, and put the additional money in various retirement plans , CD, 401K or just savings. You would be actually paying the same amount you would in rent, but you own the home have the opportunity for appreciation and now have the money to start contributing more to retirement. I read a study once that suggested our overall wealth is largely decided upon when we buy our first house.. incredible isn’t it?

Let me know your thoughts!