Posts filed under 'Real Estate'
There was an interesting article in the New York Times last month about working from a vacation home. The article was about Crested Butte, but it is applicable to any resort town in Colorado–or any second home anywhere, for that matter. There are a number of factors why working (at least part-time) from your second home is now possible for certain corporate executives, entrepreneurs and folks in many other careers. These factors include availability of broadband Internet service, better cell phone coverage and overnight courier service. You can read the entire article here.
Does this give any of you any ideas about getting a more scenic office?
–Editor’s note: Tom Harris is the principal of Colorado Lifestyle Real Estate, which connects second home buyers and sellers with the top Realtors in Colorado resort towns. He blogs about Colorado’s real estate market for CH&L and can be reached at Tom@ColoradoLifestyleRealEstate.com.
April 24th, 2009
According to Walter Molony, spokesman for the National Association of Realtors, the second home market is “fundamentally healthy,” despite short-term ups and downs.
The number of vacation homes sold nationwide fell 30 percent to 740,000 in 2007, from a record 1.07 million in 2006. The numbers for 2008 are not ready yet, and I suspect they will be lower. But the demographics are looking pretty good for the second home segment over the next decade.
“The long-term underlying demand is favorable for vacation homes because of the large number of middle-aged, middle-income Americans [who are the primary buyers of such properties],” says Molony. “In recent years, this market has been driven by the Baby Boomers, but there are two even larger population groups coming up right behind them. Those younger segments will continue to fuel this market for the next 10 years.”
“If you have the resources and are confident about your economic future, you’re not going to find a better market than we’ve got today in terms of affordability and raw buying power,” says Molony. “It doesn’t get much better than this.”
Do you agree with the National Association of Realtors’ optimism about future demand for second homes?
–Editor’s note: Tom Harris is the principal of Colorado Lifestyle Real Estate, which connects second home buyers and sellers with the top Realtors in Colorado resort towns. He blogs about Colorado’s real estate market for CH&L and can be reached at Tom@ColoradoLifestyleRealEstate.com.
April 16th, 2009
Fewer transactions in Steamboat but higher-than-average prices mean fewer people are buying more expensive properties. Realtors I have talked to indicate that buyers are still interested in real estate in Steamboat, but there is no sense of urgency because of the high inventory.
The average price of Steamboat Springs homes in the downtown market was $908,000 in 2008 compared to the average price of $824,500 in 2007.
The average price for Steamboat mountain properties (that includes condos and townhomes) was $952,000 in 2008 compared to $780,400 in 2007.
However, dollar volume for 2008 was less than half of the record $1.59 billion set in 2007.
There were 1,077 transactions in 2008, compared with 2,555 transactions in 2007 and 3,241 (a record) transactions in 2006.
There also seems to be a disconnect between many buyers who are looking for desperate sellers and sellers who are waiting for things to get better. We are seeing this scenario play out in many mountain communities.
–Editor’s note: Tom Harris is the principal of Colorado Lifestyle Real Estate, which connects second home buyers and sellers with the top Realtors in Colorado resort towns. He blogs blogging about Colorado’s real estate market for CH&L and can be reached at Tom@ColoradoLifestyleRealEstate.com.
April 9th, 2009
It’s a question both second home buyers and sellers– for that matter, all buyers and sellers–are asking: Have we reached the bottom of the economic drop?
According to Moody’s Economy.com, home prices nationwide will bottom out the end of this year if the Obama Administration’s efforts at pumping billions into the economy to stop foreclosures and unfreeze the lending markets works.
The median prices in 2008 for several (but not all) Colorado resort areas dropped between 2% and 15% (compared to an 11% drop in Metro Denver). Additionally, the volume of sales was off from 40% to 60%, depending on the town.
So what do you do? If you are looking to purchase a second home, here is an idea. Try negotiating by factoring in a discounted value for this year’s expected drop in value. That amount will vary by resort town and price point. Your Realtor should be able to give you some guidance. If it doesn’t work, go look at other properties–there are plenty available.
If you need to sell your second home, drop your intended price 5% to 10% lower than what other comparable property sales are averaging. You will attract more buyers and might even trigger a bidding war–an owner can dream, right?
What are your thoughts on the bottom of the market?
–Editor’s note: Tom Harris is the principal of Colorado Lifestyle Real Estate, which connects second home buyers and sellers with the top Realtors in Colorado resort towns. He blogs about Colorado’s real estate market for CH&L and can be reached at Tom@ColoradoLifestyleRealEstate.com.
April 3rd, 2009
Is now a good time to sell your second home? It depends. If you want to sell, wait. There is a lot of inventory out there right now and many buyers are on the fence.
If you need to sell your second home, that’s different. Here are some tips to help you sell your second home right now under these less-than-ideal conditions:
1. Price it right from the beginning. Most Colorado resort MLS boards are reporting a sale to list price ratio of around 92%. But that 92% may be after one or more price reductions – not the original list price. So this can be misleading.
2. Price it right from the beginning. A seller who chooses to list his or her property at prices above fair market risk fewer showings by missing the critical first four weeks that a property is on the market.
3. Price it right from the beginning. Make sure your Realtor does a thorough Competitive Market Analysis so you will know where the “fair market range” is for your property.
4. Speaking of Realtors, some specialize in listings only (or listings are the majority of their business). Many of these agents have their marketing plans down to a fine science.
5. Understand buyer tactics. Some buyers are making multiple offers on several homes to see which sellers are more negotiable (or desperate).
6. Make counter offers quickly – within 24 hours. That first offer may be the best offer, or only offer, you get.
7. Be flexible with things like delayed closings, furnishings, paint or carpet allowances, etc. Work with a potential buyer to help them with concerns or problems they may have.
Anyone have any other tips that have helped them sell a home in a spooky market?
March 17th, 2009
Renting out a vacation home can be a positive experience and help justify the cost and expense of vacation and second home ownership.
You may want to consider the following:
1. Rely on your real estate agent who has experience in vacation rental properties to give you a feel for the local market.
2. Check the fees on comparable rentals nearby on vacation-rental Web sites such as Homeaway.com, Ownerdirect.com, and Vamoose.com.
3. Determine whether the rental income would cover the costs of owning and maintaining the home. In addition to the mortgage and property taxes, the rental income should cover monthly utility costs, homeowners insurance, routine maintenance, and the cost of hiring someone to market, maintain and clean the home.
4. Decide who will manage the property. Fees for property management vary widely depending on location, but average fees run between 8% and 10% of the gross rental fee. The company should typically handle the maintenance, marketing and reservation.
5. Determine whether the home is a second home or an investment property. The IRS says if you use the home 15 days or more a year, or more than 10% of the days it is rented, it’s a second home so you can deduct expenses, including depreciation, repair costs and operating expenses.
6. Set up a rental contract. The contract should include details on cancellation fees, what the damage deposit covers and specifics on pets, smoking, etc. Free sample rental contracts can be found online at Formsguru.com, or for a fee you can order customized rental contracts from LawDepot.com.
7. Buy duplicates of bedding, towels, and kitchenware and store one set for your personal use away in a locked room or cabinet. Also, secure all personal objects, such as picture frames and family heirlooms.
Anyone have any other tips?
–Editor’s note: Tom Harris is the principal of Colorado Lifestyle Real Estate, which connects second home buyers and sellers with the top Realtors in Colorado resort towns. He blogs about Colorado’s real estate market for CH&L each week.
March 13th, 2009
The National Association of Realtors (NAR) has been pushing for several things to help the stalled housing markets. And it appears they have had some success.
Here are the highlights:
1. The loan limits will be raised to $727,000 in high cost areas, such as Aspen, Vail, Steamboat and Silverthorne.
2. The tax credit will be raised to $8,000 with NO payback (a true credit, compared with the old $7,500 credit that had to be paid back in increased taxes of $500 per year in years two through 16).
3. Interest rates have come down 125-150 basis points.
4. The bill has $75 billion in it for foreclosure mitigation
5. The bill drives down interest rates by buying another $200-300 billion of mortgage paper from Fannie Mae and Freddie Mac thereby freeing them up to do the same with new mortgages.
They were also able to preserve the mortgage interest deductibility, real estate tax deductibility, and the $250,000/$500,000 cap gains exclusion (an overall package worth more than $100 billion and for some a very attractive funding source for their pet projects).
Maybe this will unclog the pipeline and get some capital flowing into housing again.
What do you think? Will this help, or should the government have let the chips fall where they may and trust the market to recuperate?
–Editor’s note: Tom Harris is the principal of Colorado Lifestyle Real Estate, which connects second home buyers and sellers with the top Realtors in Colorado resort towns. He will be blogging about Colorado’s real estate market for CH&L each week.
March 6th, 2009
Hidden in the Obama administration’s federal budget outline is a provision to limit the mortgage interest deduction (MID) for many people and have a profound negative impact on the housing market.
The National Association of Realtors (NAR) is opposed to this proposal and the NAR’s president, Charles McMillan, has sent a letter to President Obama saying, “there is never a good time to propose something that undermines the basic foundation of home ownership.”
The plan, which came out last Thursday, reduces the mortgage interest deduction on families earning over $250,000.
The overall effect of this would:
1. Put increased downward pressure on home prices and values, and
2. Cause more distress to bank balance sheets by causing the value of mortgage-backed securities to decline.
Closer to home, this could significantly reduce demand for second homes in Colorado, which could:
1. Disrupt property values and tax bases in mountain towns,
2. Have a negative impact on travel and tourism in the state,
3. Reduce the number of jobs in mountain communities for construction, architecture, real estate and many other ancillary services.
What in the world is the Obama administration thinking? How is creating less demand for housing, depressing home values, lowering taxable bases and eliminating jobs in many industries going to stimulate the economy?
And, if this passes, what would prevent lawmakers from just tacking on a future amendment to lower the earning level to, say, $100,000?
–Editor’s note: Tom Harris is the principal of Colorado Lifestyle Real Estate, which connects second home buyers and sellers with the top Realtors in Colorado resort towns. He will be blogging about Colorado’s real estate market for CH&L each week.
March 3rd, 2009
Second home investment should be viewed as a way to make money over the long-term. Real estate is very cyclical with housing “bubbles” expanding, sometimes rapidly, and then just as suddenly decompressing. If you highly leverage the purchase expecting a fast profit, you can really blow yourself up.
You need to understand the investment you’re making with a second home and have a clear plan of how that new property will be paid for and possibly generate income for you.
Second homes can earn steady, though probably modest, income – allowing you to hold a tangible asset that will most likely rebound.
Keep these points in mind:
1. Enjoyment of your second home should take precedence over any profit potential.
2. Taking a long-term approach to real estate investing will protect you from the volatility of both the real estate market and other, riskier investment vehicles.
3. Do your homework. It’s possible to find a second home that will provide income and likely appreciate in value for that day when you decide to sell it or retire and move to it.
This may not be the best time to ask this question, but for those who bought your second home as an investment – how has that worked out for you?
–Editor’s note: Tom Harris is the principal of Colorado Lifestyle Real Estate, which connects second home buyers and sellers with the top Realtors in Colorado resort towns. He will be blogging about Colorado’s real estate market for CH&L each week.
March 2nd, 2009
Did you know second home can help fund your retirement?
A self-directed IRA allows you to put money in a wide variety of investments such as stocks, mutual funds, bonds, T-bills and real estate. Many banks won’t deal with a real estate IRA, so finding a bank that will accommodate a real estate IRA is your first step.
Self-directed IRAs have stringent guidelines that must be met in order to keep the tax-free status of the account.
In the case of a real estate IRA, these guidelines include:
- You must treat the real estate as an investment
- Rental profits must go to the trustee
- You, the IRA holder, cannot mange the property
- The real estate must remain in trust until the you retire
- If the trustee is directed to sell the real estate, the proceeds have to be reinvested in another retirement account.
The IRS says a second home can be used by the owner for 14 days in a year, or 10 percent of the days rented, and still be considered an investment property.
You can have your cake and retire with it too!
Does this sound like an attractive idea for your retirement? Or would you rather stick to more traditional methods of funding your IRA?
–Editor’s note: Tom Harris is the principal of Colorado Lifestyle Real Estate, which connects second home buyers with the top Realtors in Colorado resort towns. He will be blogging about Colorado’s real estate market for CH&L each week.
February 25th, 2009
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