Gretchen Faber ~ LifeStyleDenver

I’ve been reading the news about home builders throughout the U.S. cutting back, downsizing or going out of business altogether.

Here in Denver, Colorado we’ve lost Village Homes, John Laing, and more. McStain is hanging on by a thread. The downturn in real estate is taking its toll. I hate to see builders leaving our city and the resulting job losses, but it may be a good thing for construction to slow down a bit - and for builders to realize that their business model is as important as throwing up houses.

One local builder that seems to be weathering the storm is Wonderland Homes. They’ve managed their business affairs well enough to hang in during the downturn and are turning the corner.

Wonderland has sold 10 homes since the beginning of this year. Steve Phua, Director of Operations, attributes this to the price point they build in. Their primary price is mid-$200,000’s to mid-$300,000’s. Wonderland builds a good house for that price, and buyers are thrilled by the floor plans and finishes.

Steve also told me that location is another important factor, and their developments closer into Denver seem to be faring better. Their main location is at the former Stapleton airport, now the Stapleton redevelopment area. Stapleton is a great new urban neighborhood full of families, parks, schools and offers great walkability.

Denver is fighting off the doom and gloom. Home resales and new construction are both experiencing a pop in activity since last year. Contact me if you’d like to see homes in Stapleton or any other area of Metro Denver. You can begin your online search at www.GretchensDenver.com!

Read the original at LifeStyleDenver.

It’s that time again! Time to review the performance of Denver’s real estate market in February.

Stocks are plunging, national employment numbers are falling and yet our real estate market seems to be weathering the storm. We may be on shaky ground, and we are still seeing some prices falling, but deals are coming together and most buyers are able to find financing at great rates. In fact, 4,183 homes were put under contract in the month of February - a 9.19% increase over January.

We’ve added inventory since last month, and currently have 20,059 properties on the market. The increase in inventory is reflective of sellers who waited out the holidays and had their house ready to sell after the first of the year. I would expect to see this number continue to rise over the next few months, but hope that the increase is slight enough to keep the days on market below 5 months. If the days on market rises significantly, prices are at risk to drop further.

The reduction in sales prices from a year ago is influenced by the mix of houses selling. The middle tier of homes are selling much faster, thus the prices appear to have dropped 14.63% since last year. You will also note that we had a price increase since January by 2.19%. That’s a fabulous sign for our market. Many sellers are reducing prices to get their homes sold which is clearing out the inventory, but has depressed the average price.

I’ll say it again - you want to buy low and sell high. Too many people are selling low right now in too many markets. Denver’s real estate market is showing signs of recovery. Now is the time to buy low. Don’t look back and see that you missed your opportunity.

The original article was written over at LifeStyle Denver. Mosey on over!

In today’s real estate market, there is a very compelling argument that it’s a good time to buy a move up property.

You say, “I can’t sell now, I’ve lost money on my house.” Assuming you’re not upside down and owe more than the house is worth, you may not be losing as much as you think.

Say you’ve lost 20% in value - as shown in the first slide - your “loss” compared with the loss the larger property incurs wouldn’t be as high. The percentage decline is a function of the value of each of the homes. If your loss is $90,000 and theirs is $130,000, then when you net this out you could say that you’ve gained $40,000 by trading up.

You’ve now moved into your beautiful, and larger home. Stay there awhile. You’ll need to hang tight for several years, but eventually inflation will take hold and the price of the home will begin to rise.

You decide to sell at some future point. The gain is 20% in value since you purchased the house. If you had stayed in your smaller home, your 20% gain over that time would amount to $72,000. The gain you’ll recognize on the larger house would be $104,000! Can you see why it’s a great time to move up when the market is depressed?

Rarely is there such a dramatic convergence of low prices and low rates. It can’t last forever. You should speak to a reputable mortgage lender and see if you’re a good candidate for a move up now. Check out Denver Real Estate at my web site, www.GretchensDenver.com, with nearly every listed property in the Denver Market available to see.

Thanks to Steve Harney and Keeping Current Matters for the terrific slides.

This article was first written at LifeStyleDenver.

You know that this would be a great time to get into investing. You know that mortgage rates are down. You know that the millions of people losing their homes to foreclosure can’t stay on their mother-in-law’s couch much longer. And you know that sellers are bargaining when a buyer finally does walk through the door.

Why not buy a rental property?

Yes, I know. You’re thinking:

• I don’t have any money for down payment or fix up costs
• I don’t think I’d make a good landlord
• My credit score is too low to qualify for a loan
• My investment adviser says she doesn’t offer that

Moving your account to a Self-Directed administrator who will facilitate such an investment is easy - getting your head around the rules regarding IRA purchase of property is a little harder.

The first thing you need to do is look at your IRA (or 401k) as a separate person or entity. If it’s easiest just call your IRA, “good old Uncle Ira.”

Uncle Ira can buy you real estate, and Uncle Ira can hold it for you. Uncle Ira pays all of the expenses out of his pocket for any work that needs to be done, and Uncle Ira pays the mortgage, if there is one. Uncle Ira also gets all of the potential gain in the future. The money from the rent and the appreciation all go into his wallet.

Being a dutiful niece or nephew, you’re going to help out Uncle Ira around his place. You’ll handle getting it rented (but make sure the tenant knows which address to send the rent checks to), you’ll coordinate any repair work needed (don’t pay for any of it out of your pocket.) And when the time comes to sell it, you’ll choose which Real Estate Broker to hire to list and sell the property, and Uncle Ira will pay the Realtor’s fee.

This is not a new provision to the tax code, it has been allowed since the inception of the rules stating what types of investments can be held in retirement accounts. Here are the basic rules in nutshell:

1. You can’t use the property personally.
2. Lineal relatives are disqualified persons (i.e. children or parents) and can’t reside in the property. A brother or sister could live there.
3. You can mortgage the property if your retirement account isn’t large enough for a cash purchase. You would use what’s called a “non-recourse” loan. Here in Colorado, First Bank of Colorado issues non-recourse loans. So does North American Savings Bank in Overland Park, Kansas.
4. If you’re bumping up against the Fannie Mae/Freddie Mac rule that you can’t own more than 4 investment properties - this is a way to buy a fifth or sixth. This type of purchase doesn’t count against the requirement because it’s Uncle Ira’s purchase, not yours.
5. You must place your IRA or 401k money in a self-directed account with a self-directed account administrator. Most fund managers do not offer this service because they’d rather put you into a mutual fund and call it a day. You are allowed to move your IRA or 401k money to another administrator. I’ve recently met with Patrick Hagen at The Entrust Group. Patrick, or any of the other staff at this small and very responsive firm can answer all of the questions that aren’t answered here. Their web site is www.NewDirectionIRA.com. Patrick’s email address is phagen[at]ndira.com.

After you’ve had the chance to talk to Patrick, contact me and we’ll start searching for your first rental property for Uncle Ira. You should choose a Real Estate professional who knows a little about this, because there are very specific rules about filling out the purchase contract.

Being a landlord isn’t that hard, and you can watch your IRA grow much faster than it would in a mutual fund!

First published at LifeStyleDenver.

Denver real estate sales seemed to take a hiatus in January.

While January is typically a slow month for closings, this was softer than usual. Buyers and Sellers were truly jarred by the economic cliff we fell off. As the plummet felt faster and faster in November and December, people hunkered down and focused on family and the holidays.

Remember, closings in one month are a result of contracts written the previous two months.

January 2009 was slow because at the end of 2008 people were waiting. Waiting for the new administration, waiting to see what their 401k looked like, waiting for rates to come down, waiting for the sun to shine.

We still have a much lower inventory of homes to choose from and judging from how many offers we’re seeing this month, things will pick up a bit from here. This is typically the best selling season in Denver (February - May) and I think that with the low rates and the lessening inventory we’ll see the under contract and closing numbers pop next month or the month after.

Here’s the thing, though… In order to get a truly balanced market, we need to begin to sell properties in all price ranges. The lower and middle range homes are still what’s selling - as I’ve said in past months. But, in January we only had 23 homes sell priced over $1,000,000. The luxury and high end market must clear out inventory to get our entire real estate market back on the fast track.

The past two weeks I’ve had a flurry of activity on my luxury property listings, and one is under contract, with two more possibly so. The buyers I’ve spoken with about this say they feel like the prices have come down enough to be a good deal. We’ll see what this portends. I’ll keep you posted!

This article was originally posted at LifeStyleDenver.