Reason #14 to Buy a Home in Denver NOW

 On Valentine’s Day CNNMoney ran a story of a survey of 1,000 single people and it found that over 33% of single women and 18% of men prefer to date a homeowner than a renter. Second, fewer than 5% of all singles would date someone who still lives in their parents’ home, for which Michael Corbett, a spokeman for Trulia said, “If you’re still living with your folks, you’re dead-on-arrival for dating.”   This is a fun, but very pointed, piece of info for our local real estate market, from my friend and premier loan officer Lonnie Glessner, Cell: 303-881-6374, Lonnie@EndingFinancialInsanity.com.    Thanks Lonnie!

Where’s my $2,000…..?

       On Feb. 9th the U.S. government announced a largest settlement with an industry since the tobacco industry settlement in 1998.  Folks who were homeowners between 1/1/08 and 12/31/11 and who lost their home to foreclosure during this period of time will be eligible for up to $2,000 from the U.S. government from this settlement with several of the largest banks:  Ally Financial (formerly GMAC), Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo.

    Colorado is supposed to get $73.3 million in funds to facilitate loan modifications for current home owners who are underwater.  You are supposed to be notified in the next 6-9 months if you are eligible but I am already hearing that you should be proactive and contact your lender if it is one of those in the settlement and get in line as soon as possible for the funds.  Channel 4 news says they have updated info on their website for those with loans now and for those who have been foreclosed upon during this 3 year period of time at:  www.cbsDenver.com

       Keep your eyes and ears open but don’t hold your breath, as with all things that have government involvement the wheels of progress turn very slowly and they are saying it will take 30-60 days just to “get systems in place” for handling all of this whole process.  But as I always tell folks foreclosure is usually never the best option.  And now there will be another way to try to get confidential and dignified help.  

Red Flags on Loans for Condos

I’ve posted on this topic before …. now come the evidence.  Currently only about 1/3 of the condo complexes in the Denver metro area are on the FHA approved list according to recent review.    Since most first time buyers use FHA loans to buy a condo, 2/3s of the condo complexes are not available for FHA buyer right now.   Who can buy in these complexes?  Cash buyers.   Generally cash buyers are investors.

One of the reasons the 2/3s of the complexes are not FHA approved for buyer loans is because too many investors own units in the complexes.   So we now have a vicious cycle that will take years and years to work out of.  First we need a strong economy to start working out of this messy cycle to raise the currently absurdly low prices of the condos.  Great opportunity for investors in condos … not so much for most first time home buyers.  Investors this is called a buying opportunity, but it’s one you’ve got to figure on holding for at least 5 years or more.

Condos have a legal description that identifies the condos by “unit” number.  Townhomes on the other hand are not affected by this situation and they have a legal description that identifies the unit by a lot number.   That’s what you buyer owner occupants should be looking for, and a good real estate agent working on your behalf can help you with that.

This will also impact current condos owners who need to sell as thepool of buyers just got smaller and whe the pool gets smaller prices go down.  Unfortunately many sellers will need to take a big bath or look at doing a short sale I fear.

                                                      Red Flags on Condos  Loans

Here are some of the specifics that FHA requires for a loan on a condo.  (Conventional loans have even higher owner occupant requirements!)

 Is the entire complex  50%  or greater owner occupied?

 That no more than 10% of units are owned by one investor or entity.

 That no more than 15% of the units are 30 days past due on their monthly assessments.  (There are complexes with a delinquency rate over 40%!)

 That at least 10% of the association’s budget be set aside for capital expenditures and deferred maintenance.  (This is tough for many HOAs to do right now!)

 The FHA also looks at special assessments and pending litigation, two other areas that can raise red flags. Be aware that nearly all pending litigation makes the entire complex un-financeable.  (A typical “pending litigation” is lawsuits to collect HOA fees!)

Denver Single Family Home Prices – Way Up and Way Down!

        Denver area real estate values and the market is a-changin’.   As far as single family home sales are concerned the news is good for sellers, and buyers you need to get off the fence and take action NOW.  Under $300,000 or so, it’s a seller’s market for Denver area single family homes.   That’s good news for sellers, in terms of getting a pretty quick sale IF you are at a realistic price.  But of course home values are nowhere near what they were 3 or 4 years ago, hence my caution that they must offered at a realistic current market price.  It’s a seller’s market because there is a lack of inventory.  This will help push home prices up but we aren’t getting back to market high values of 3 or 4 years ago over night.  And amazingly, at least for right now, buyers are still rather picky when it comes to the type of home for which they will pay a princely sum!

      Got to be careful though when interpreting news on home values in the Denver area.  One national real estate market watch group, CoreLogic, just reported that single family homes rose .2% in 2011, BUT you need to know that includes ALL sales, even distressed sales! When you exclude distressed sales, prices rose 1% in 2011 from 2010.  Denver was one of only 19 large cities that posted any price increase!  And actually, some areas and price points such as homes under $200,000 have seen wonderful increases from 1/1/11 to 1/1/12:  up to $85,000, were up 18%!!!;  $85,000 – $135,000, up 8%; and $135-$210,000, up 5%.

     Homes over $460,000 lost 11% and have 20 months worth of inventory on the market (4-5 months is excellent).   Cherry Hills Village in general had a 13% average price drop over the last year, while little ol’ Federal Heights saw a 13% increase!

      Calling all home buyers in the Denver metro area over $450,000, can you say “Everything is on sale right now which means Buy, Buy, Buy!”?  Interest rates aren’t going to get any lower so there is no point to waiting.