6 Things To Do Before Purchasing A Home In 2012

Posted on December 18, 2011 by Hayden Mellsop

Given the positive economic indicators for 2012, it is looking like the coming year will be a great one to take that first step into the home buying market. Residential real estate values are stabilizing after several years of decline, while interest rates continue to remain at their historic lows. As jobless figures continue to fall nationwide, we expect to see an increase in the number of qualified home buyers as a result.

Yet despite these positive indicators, it still remains a daunting, at times volatile, market for a first time home buyer. Short sales and REOs can cloud the waters of a market already murky with stringent credit requirements, tighter lending criteria and unpredictable appraisals.

While real estate commentators Trulia offer sound advice with 5 Things To Do Now To Buy A Home In 2012, it is perhaps a sixth thing that is the most important: take advantage of the local knowledge and experience of a reputable realtor.

If the housing crisis of the last few years has shown us anything, it is that there is now such thing as a national real estate market. Local trends and conditions vary markedly, and there are a myriad of lending options available depending on a borrower’s circumstances. Short sale and REO purchases require a different approach and process, with their own advantages and pitfalls.

Sitting down with a local realtor to discuss your requirements, aspirations and capabilities should be the first step to proceeding down the path to home ownership. When choosing a realtor, you should be choosing a lifetime real estate counselor, someone who listens before they speak, and places your interests above their own. Their knowledge and expertise is often the difference between a successful closing on a sound investment or tears, frustration and missed opportunities.

Local is better

Posted on December 1, 2011 by Hayden Mellsop

Tucked away amongst all the encouraging news currently emanating from the national housing market - existing home sales rising year over year for the fourth month in a row, continued record low interest rates, unsold inventory down to an eight month supply, more first time home buyers entering the market – is one piece of data that should be of concern to everyone – buyers, sellers and those of us in the middle of a real estate transaction, the realtors. That is the continued high rate of contract failures.

Despite these encouraging trends, it seems home sales are still stuck in a narrow range that defies the market indicators, and failed contracts appear to be the leading reason why. This time last year, failed contracts accounted for 8% of those written, now that figure is at 33%.

While having the ability to withdraw from a contract should their position change is an important safety valve for buyers – inspection and loan conditions being two important ones – it seems that an inordinately high number of contract failures are due to loan application and appraisal / underwriting issues.

This is where the value of buyers working with local lenders becomes an important step in ensuring an offer to purchase matures into a successful closing. Nobody understands the nuances of the local real estate market better than local lenders and appraisers. They have a better understanding of what constitutes an effective comparable, how local neighborhoods determine value, which sectors of the market are strong, and the effect that seasonal employment, common here in Chaffee County, has on a prospective borrowers cash flow.

Fortunately, realtors here at Pinon are able to point to a rate of contract failures far below the national average as proof that when it comes to lending, local is better.

Real Estate Set to Rebound In 2012

Posted on November 14, 2011 by Hayden Mellsop

While real estate sales nationally have been slow for much of 2011, there are multiple signs that things are set for a rebound in 2012.

According to RISMedia, signs of a turn around include a rise in new home starts in September, reflected in increased builder confidence, a rise in mortgage applications, and a resurgence in regional markets across the country, particularly in the Great Plains region.

Looking ahead to 2012, National Association of Realtors chief economist Lawrence Yun predicts an upsurge in both new and existing home sales. As reported in HousingWire, Yun believes that a pent up demand created by tight lending conditions, population growth and improved employment levels will help fuel this upswing.

While mortgage rates will stay low, they are expected to increase from the high 3% – low 4% range currently available to around 4.5%, still very low from a historical perspective. As inventory falls, median house prices should see an increase, and lead to an upswing in new home starts also, by as much as 8%

While this is obviously encouraging news for the economy in general, it also reflects what we are seeing here in our local Chaffee County market. Sales, particularly residential properties, are showing modest increases over 2010, as buyers take advantage of low interest rates and modestly declining values.

Why is now a good time to buy a home?

Posted on November 8, 2011 by Hayden Mellsop

Spend too much time reading the newspapers or watching TV nowadays, and it is easy to convince yourself that now is not a good time to consider purchasing your own home. But look beyond the headlines for a minute or two, and there are several good reasons, some you may have thought of, others not, why now is actually a great time to buy.

1: Mortgage interest rates are at all time historic lows. Sub 4% interest for a 30 year fixed loan is cheap money. Given that historically, home values appreciate an average of 4 – 6% annually, and you can see that from a long term equity perspective, home ownership makes sense. Add to this the fact that in the tougher economic times of recent years home values have declined, making them more affordable, it makes even more sense to buy, rather than rent.

2: Whether you own or rent the roof over your head, you still have to make a monthly payment. The question is, whose mortgage are you paying? Yours, or your landlords? Plus, with a fixed rate mortgage, you get stability. You know long term what your monthly payments will be, making budgeting and financial planning easier.

3: There is a flip side to this if you are an investor. One of the outcomes of the sub-prime debacle is that fewer potential borrowers can qualify for a mortgage, given the higher credit scores required by lenders today. This in turn has lead to an increased demand for rental properties. Just ask our full time property manager.

4: There is a certain pride to owning your own home that is hard to replicate while renting. You can decorate and landscape how you want, form long term friendships and relationships with your neighbors and feel more a part of the community in which you live.

5: Places like Salida have proven that despite tough economic times, value for money and quality of life never lose their appeal. While real estate in other areas continues to decline, values in the Salida real estate market are holding steady.

There are definite advantages to owning your own home, and now is the time to take that first step. At Pinon, we’d love to talk to you.

Local developer wins prestigious award

Posted on November 1, 2011 by Hayden Mellsop

Trailside Estates, a Salida neighborhood designed and built by Rich Edgington of Pinon Development Corp., was recently announced as the 2011 winner of the prestigious Colorado Sustainable Design Awards. The award, given by ColoradoBiz magazine, the American Institute of Architects, Urban Land Institute of Colorado and the US Green Building Council Colorado, recognizes the people and businesses who “embrace the triple bottom line of economic, social and environmental responsibility.”

Given Salida’s reputation as a town for outdoor enthusiasts, Edgington wanted to design and create a neighborhood that connected residents to a network of hiking and biking trails that access both downtown Salida, and the thousands of acres of public land that surround the town. Within fifteen minutes of leaving their door by bike or foot, residents can be grocery shopping or sipping a riverside coffee downtown, or enjoying the beauty and solitude of the Colorado backcountry.

In addition to this access, all homes in Trailside are built green to Energy Star standard and situated to maximize passive solar exposure. Some feature photovoltaic panels and solar hot water, and one home is the only net-zero home in Chaffee County, meaning it has a net annual energy consumption of zero, as well as zero carbon emissions. In addition, a water right that went with the property when it was first purchased was donated to the school district, enabling the irrigation of the district’s new soccer fields across the road from the development.

“It is a great honor to be recognized by this award,” says Edgington. “There were close to 100 entries, so to win was both surprising and very satisfying. I like to think we have created a neighborhood that assists residents to live lives that are both healthy and environmentally responsible.”

Should mortgage underwriters be energy auditors also?

Posted on October 25, 2011 by Hayden Mellsop

Didi you know that the average American household spends $2000 annually on energy costs? That’s more than on either taxes or homeowner’s insurance. A new bill before Congress would require mortgage underwriters to recognize this expense when calculating a borrowers ability to service their mortgage.

The aim of the bill, the Sensible Accounting to Value Energy Act (SAVE), a bipartisan effort sponsored by Sens. Bennet (D-Col.) and Isakson (R-Ga.) is to enable borrowers to finance cost-effective energy upgrades as part of their mortgage, while giving lenders a more complete picture of a borrower’s ability to service their mortgage.

While on the surface this might seem like a good idea, there are naturally other issues to be considered. Energy consumption varies widely from household to household, and is often as much a reflection on lifestyle as a home’s energy efficiency. Just ask anyone who has wrestled with their spouse over where to set the thermostat in wintertime. The SAVE Act would seek to work around this anomaly by comparing energy bills from household to household, not borrower to borrower.

Opponents counter that promoting efficient energy consumption falls in the domain of local government working in tandem with local building codes, not mortgage underwriters. While it would seem that adding another layer of complexity to the already labyrinthine process of mortgage underwriting might make both lenders and borrowers nervous, any debate that focusses attention on energy consumption, and how we as individuals, communities and a nation confront the twin specters of rising energy costs and dwindling natural resources, seems to be a debate worth having.

For more on this story, read here.

Mortgage – Interest deduction may go away

Posted on October 18, 2011 by Hayden Mellsop

As law-makers in Washington grapple with the twin issues of rising national debt and falling tax revenues, one of the proposals on the table before the Joint Select Committee on Deficit Reduction is the elimination of the mortgage-interest deduction provision in the current tax code.

This provision allows home owners to lower their tax liability by claiming the interest they pay on their mortgage as a tax deduction. Proponents, such as Lawrence Yun, chief economist for the National Association of Realtors, argue that the deduction effectively lowers the cost of home ownership, in his opinion one of the cornerstones of a stable, democratic society.

Others studies counter that the deduction conversely inflates the cost of housing by as much as three to six percent, and favors those with the ability to buy larger, more expensive homes, and is to the detriment of those in lower income tax brackets.

It would seem that if Congress is to make any moves to repeal the mortgage-interest deduction, it is likely be phased out over time, and be offset with a universal tax credit. This would assist all level of income earners equally, while still yielding significant savings for the Federal Government – the current deductions cost Uncle Sam approximately $100 billion per year.

Regardless of the outcome of the debate, now is still a great time to buy a home. Prices are continuing a steady decline, and interest rates are at all time historic lows. It seems buyers looking in Chaffee County are taking advantage of these factors. According to Chaffee County MLS figures year to date, 2011 is seeing a modest increase in sales volume over 2010. It would seem things like quality of life and value for money never go out of fashion.

No news is good news

Posted on October 11, 2011 by Hayden Mellsop

When I first came to Salida, some twenty years ago, like many I was struck by the small town charm and atmosphere. Writing a letter to friends back in New Zealand ( no email in those days ) I described Salida as the kind of town where I expected to bump into Andy Griffith wearing a sheriff’s uniform.

This sleepy, leafy charm was reinforced by reading through the headlines in the local newspaper, The Mountain Mail. While the lives of others living in larger metropolitan areas take place to the background noise of dramatic events and conflicts, here in Salida our concerns are generally of a more mundane nature.

Right now, with an election looming in November, ballot issues are beginning to dominate the headlines, in particular a County sponsored initiative to increase taxes to offset loss of revenue that is affecting the County’s ability to maintain traditional services.

Cristo’s Over The River project is never far from the front page also, and I cannot think of a single event that had caused as much controversy in the time I have lived here. In 1994 I took some folks from Cristo’s team down the Arkansas River where they set up weather stations to ascertain the best locations to drape the fabric over the river, so this project has been in the pipeline a long time.

Opponents state negative impact on wildlife, disruption to their daily lives – particularly traffic congestion on the Highway 50 corridor, and lack of access to the river for fly fishing and other recreational pursuits as reasons for opposing the project. Proponents point to the overall boost to the local economy such a major event will have on the region, as well as shining the international spotlight on the Arkansas valley as reasons to proceed.

And then there was last week’s early season snow storm, which brought significant snow to the mountains, and allowed residents to awake on Saturday morning to a winter wonderland. As is typically the case here, the snow in town melted off pretty quickly, but the mountains retain their covering, boding well for the coming ski season.

So, while our headlines here may lack the attention-grabbing aspects of other media outlets, in a way that is the point of why we choose to live here. Long may it remain so.

Pinon Owner / Broker recognized as Realtor of the Year

Posted on October 5, 2011 by Hayden Mellsop

Susan Dempsey-Hughes, owner / broker of Pinon Real Estate Group, was recently voted by her peers as Realtor of the Year for the Chaffee County MLS district.

Susan is a native of Palm Beach, Florida, and like many residents of this valley, came here for what was intended to be a short time but wound up falling in love – both with the community, and her husband Zach, whom she met while kayaking in 1996. They have two young daughters, Isabelle ( Izzy ) and Margaret ( Maggie ).

Initially working as a river guide and kayak instructor, Susan gained her real estate license in 2002, and rapidly became one of the area’s top producing brokers. She joined Pinon Real Estate Group in February 2008, and became owner / broker in January 2010.

“I am humbled at the recognition, especially satisfying as it came from my peers,” says Susan. “I look on it more as an acknowledgement of all the good work our company does in the community. I feel privileged to work with the people I work with, and to live where I do.”

Salida neighborhood a finalist for Colorado Sustainable Design Award.

Posted on September 27, 2011 by Hayden Mellsop

Trailside Estates, a residential neighborhood located on the western edge of Salida, has been selected as one of three finalists, from close to 100 entries, in the Communities category for the 2011 Colorado Sustainability Design Awards.

The Trailside development is the brainchild of Rich Edgington, president of Pinon Development. Rich, a Colorado native with a B.S. in construction management from C.S.U., is a Certified Master Builder and past president of the National Association of Home Builders Builder Twenty Group.

Located on the Salida trail system, providing convenient walking and biking access to downtown, Trailside Estates neighborhood is registered with Green Built Colorado. The Craftsman style homes feature energy efficient design, superior indoor air quality, and incorporate the latest in construction materials and practices.

The Awards are broken into three categories: Commercial, Residential and Community. ColoradoBiz magazine, along with the American Institute of Architects, Urban Land Institute of Colorado and the U.S. Green Building Council Colorado, conceived of the awards. The intent is to shine a light on the people and businesses who, according to ColoradoBiz magazine “embrace the triple bottom line of economic, social and environmental responsibility.”

“It is a huge honor to be a finalist for this award, especially given the level of competition” says Rich Edgington. “A special word must go to the homeowners themselves, who have helped make this such a special, recognized community.”

The winners in each of the three categories will be announced at a special awards reception on October 27.