First Time Buyer advice from the Wall Street Journal

Here are the key points from an article I saw today. It is a bit simpler to me. I would say that the reasons to start sooner than later are not only that you have a better chance of finding a good fit for your needs but it takes longer now to get a loan approved, interest rates are very low but are likely to increase as the recovery progresses and federal borrowing increases, and there will likely be a bit of a rush on what is left in the spring so you will have more negotiating power now to increase your savings. I have worked with several first time buyers this year and would also say it is important to work with a lender that knows the local and state programs that can increase your savings and make it more likely you will qualify. There are some good programs out there that you may not know about.

Please let me know if you would like to know more about buying your first home in Steamboat with the $8,000 credit or the new programs available to repeat buyers that include a $6,500 credit. I know the process and the lenders with the best programs for first time buyers.

The Wall Street Journal recommends that First time Buyers act soon

November 20, 2009

Tips for buyers Interested in buying a home and claiming the home-buyer tax credit? Below are five tips:

1. Don’t procrastinate search now. Getting an early start will give you a better chance of finding the right house before the credit deadline.

2. Don’t count on another extension. The credit won’t be available forever. If you want to take advantage, be sure to make that spring deadline.

3. Mind the interest rates. Mortgage interest rates are low right now, but will likely rise next year.

4. Communicate with your lender. Throughout the process, make sure you’re communicating with your lender regularly; if there’s a piece of documentation you’re asked for, get it turned in as soon as possible.

5. Don’t take shortcuts. Don’t forgo any of the steps you would normally take just to make the tax-credit deadline. Make sure the house is a good fit for your needs and get a home inspection.

For more click back to the Steamboat Springs blog main page.

Steamboat 700

Here is a letter to the editor I just submitted. I have struggled with whether to support this since the beginning as I explain below. That is not the normal path for me. To be honest I never expected to support Steamboat 700 even though I thought along that they would get to the point of meeting the WSSAP's objectives.

Start of my letter:
Your article supporting Steamboat 700 is very well thought out and your points are well taken. For the record I never thought I would support Steamboat 700 because I was worried that it was too big and nervous about adding too much at once. The more I have dug into the issue and thought about how things will develop with or without Steamboat 700 I can't get around the fact that this is the only way to add the infrastructure we need for the growth that is coming. It will happen much further from town with no contribution if we don't allow Steamboat 700. I'd rather take some risk than face the nearly certain consequences of inaction. This is the first time I have supported Steamboat 700 in public or private. Just like everyone else I am very concerned about anything that could change Steamboat. Yes, I am an active real estate broker but I see Steamboat's livability and charm as the most important reason that my family is here along with those of my clients.

I believe that it is critical to make it possible for all of our friends along with people like teachers and nurses to become long term members of the community they make possible. They have earned this and will continue to do so. It shouldn't be too easy or doable on a whim but it should be possible for those that have dedicated themselves to living here and make our community special. I am nearly certain it is likely to reduce my own property values in town by having additional supply close by so this is not an economic judgement. For me it comes down to just a few things.

1 - Steamboat 700 is as close to the WSSAP as we are likely to get. Despite his ads to the contrary Kevin Bennett created this plan along with the water agreement that benefits that land. His signature is on the document. We asked for this and they have done a remarkably good job delivering it. Yes it would be wonderful to get more for "free" that is not really free but we don't live in a candy store where everything costs 5 cents.

2- We live in a beautiful, special, extraordinary place that is so compelling we have all worked much harder and made significant comprises to be here. This passion is one of the things that makes Steamboat even better. That is nothing new, most of us can only imagine how hard it was for Steamboat's founding families to make a life here especially in the winter. Great people like John Fetcher could have lived anywhere but they chose to live here and worked hard to make it special.

These compromises couldn't be more worth it and others will continue to be willing to make the same choices. I meet these people every week in my business and understand it well. My wife Wendy & I made this choice and couldn't be happier that we did. We need to do anything we can to protect what is great about Steamboat using plans that will actually be effective. I haven't been able to think of a way that not doing this development will actually achieve this goal. The Pilot is right to say it will only push people out further in the county, increase commuting, pollution and get nothing from that growth to help pay for the increased demands on our community's roads, schools and other infrastructure. If demand does not materialize there is no way it will get built so approving it does not put us at risk.

3- The biggest reason for me is precedent, there is not a lot of question what will happen if you look at Aspen and Vail. They have have not planned close in for the growth that has come and will continue to come. We have friends in both places and it is considered normal for people to commute from 30-60 minutes into town to work and play. They both have a slew of problems and a weaker community because of this. Housing in town is nearly unattainable and families have less time together as a result. I have played endless scenarios in my head and can't think of a way that we will be different if we take the same path.

I want a community that is together all day, remains a special place and has the resources to pay for the long term growth that will come either way. Those of us who were not born in Steamboat were lucky to be accepted by this wonderful community. We should be grateful for that and also take responsibility for keeping it a special place. That doesn't mean we should close the pass behind us. That is purely fantasy and will be the fastest path to pushing us and our neighbors out of town just like has happened in Aspen / Vail. This is a very tough decision but is has been studied and negotiated by our fellow citizens / representatives with tons of public input. I now have arrived to the same conclusion and trust them to implement this deal. I know it will not be perfect, nothing is but it will clearly be far better than the alternative.

Best,

Jon Wade

Options for continuing base area upgrades recieve a warm welcome from City Council

I am fortunate to be a part of the Urban Renewal Authority Advisory Committee that manages the funds for improvements at the base of the Steamboat Ski Area. We have laid the foundation for significant improvements to the base area and have had several breakthroughs in working through the designs and agreements necessary for construction of a new promenade linking the inside of the base area together.

To do this we need a second larger bond issue which has become more difficult to get and less comfortable given the current uncertain national market and uncertain city revenues. It looked like we would not be able to proceed and several naysayers asked why we even bothered to continue to meet. The answer was because we all care deeply about Steamboat and understand the importance of improvements to our base area. As business people it just wasn't in our nature to give up without looking at more options.

Several people on the team including myself suggested we see if there was a way to do this responsibly for the city. David Nagel stepped up to lead the effort and organize the team. With a lot of work in a short time we were able to put together a detailed analysis of how this could be structured to reduce risk on the original bonds and leave a comfortable margin on the new bonds given new properties that will be finished soon. It looks like we can proceed with minimal risk. City Staff and now Council agreed and we hope to have a final decision soon.

This is good for Steamboat now and sends a strong message about where we are going. I will look forward to seeing the council make a well considered choice from this group's recommendations on May 5th once we have new assessments of the base area property values that fund URA improvements to confirm we can safely pay the bonds.

You can read the Steamboat Pilot article by clicking here. If you have any questions about this project or how it will impact the base area and property values feel free to call me at 970-819-6930 or email jon@mybrokers.com. For more click back to the Steamboat Springs blog main page.

A New Closing at Marabou Ranch, overall signs of life in Steamboat

Some encouraging news from Marabou Ranch came in the form of a closing on a lot for $2.5M. Overall lot sales are limited right now so this speaks to the quality of the experience they deliver at Marabou, the relative value you can find in Steamboat compared to places like Vail & Aspen and people's continuing desire to spend more time in Steamboat Springs. This correlates with increasing amounts of positive news on the national front and the increasing likelihood that a recovery is in progress.

I have seen a big increase in sincere near term interest the last 4-5 weeks due in part to value, availability of people's first choice and the desire to realize goals while there are some good deals to be had. Volume within my firm is up significantly and we are seeing people in town after ski season specifically to look at property which didn't happen to often last fall.

Let me know if you would like to more insight into our current market here in Steamboat Springs and if there is an opportunity for you that makes sense. Call Jon at 970-819-6930 or email jon@mybrokers.com. I hope that everyone has a great spring.

For more click back to the Steamboat Springs blog main page.

The Perfect Steamboat Ski In Ski Out House?

It feels like we have gotten this much snow recently and more is on the way. It's funny that when I am up top of Mount Werner in the trees I am ducking limbs all of the time. Even after all the warm weather we had I can't help but feel like the snowpack in the trees is similar to last year's record season based on the number or branches I am ducking under in the trees. I don't know where this house is but it definitely offers the prospect of ski in ski out access to ENDLESS un-tracked powder. I can dream can't I?

For more click back to the Steamboat Springs blog main page.

Updated Colorado Home Price Trends compared to troubled states

Colorado remains in much better condition than most other states and far better than in the 5 key states that are driving the mortgage crisis. Volume in Denver has picked up considerably as people have become more active in buying foreclosures (lower average price than a non-distressed sale which does pull down average prices but will improve market health by reducing inventory) which I believe explains some of the dip in the graph below. I also read today that cash deals are way up which shows that the smart money is moving back into the market.

The old saying about how all real estate is local is very true. Nationwide troubles have impacted most markets but at the same time many markets are doing better than most new would lead us to believe and many of them are turning and starting to improve despite declines in the national averages. A good example of how Steamboat is different is that our foreclosure rate was 0.3% at the end of December which is dramatically lower than the 5-6% we see reported in the national news.

Colorado is the blue line in this first graph and red in the second one. The word I hear from several credible sources in Denver is stabilization and some improvement as inventory is going down. Original graph when this post was first done

The Steamboat Voice of Reason Blog had the audacity (many news sources find it more profitable to cover only the bad news) to post credible data from the Federal Reserve Bank of St. Louis showing the chart above that compares relative home price changes in California, Florida and Colorado. Colorado is the red line and it shows pretty clearly the differences between our market and the 5 states where the large majority of the housing crisis is playing out as represented by California and Florida. It is nice to see data that shows this so clearly from such a credible source. I am not saying we don't have issues in Colorado or the other 44 states but it is nice to see how individual states are doing and understand local markets better.

I follow this very closely and even I was surprised by the differences between these states and how good Colorado looks after so much one sided news coverage.

If you would like to know more, see if there are opportunities that makes sense from you in Steamboat or talk about how this affects your situation just give me a call anytime at 970-819-6930.

For more click back to the Steamboat Springs blog main page.

Are the Banks still lending money to buy in Steamboat?

You wouldn't think it but I get this question all of the time and the answer is yes. The stats show us that 8-15 families per week are buying in Steamboat and while volume is lower than last year average prices are up. That said there are a few deals to be found we are just fortunate to be in a market that is more stable than average due to our relative value for a mtn resort, little if any sub-prime exposure along with much more capable and conservative buyers that can make their mortgage payment.

The percentage of cash deals continues to increase just like Income needs to be documented but every loan application a client of mine or the broker who brought a buyer to one of my listings has done this year has been approved. To be honest the loans and closings have been some of the smoothest I have seen with anything from an immigrant fast food manager, to an unmarried couple with limited credit to jumbo loans. and things in between. The major change is that you need to go to a mortgage person that works for a bank vs. a typical broker who is on their own. The broker at the bank will still most often shop multiple wholesale lenders like traditional mortgage brokers did. The difference is the wholesalers feel better about working with someone that is responsible to a bank since many of the marginal loans in the 5 markets that most of the national mortgage issues are in were done by unaffiliated brokers. Most mortgage brokers were very honest but this was one of the steps that was taken to tighten up this system.

With the state of the economy and a the chance to pick the property of their choice at a discount buyers wanting to upgrade or make Steamboat a part of their lifestyle are taking advantage of the buyers market to fulfill their goals. These are not people ignoring reality but sophisticated people who are taking this break to purchase exactly what they want at a good price with the time to make a considered decision. If you would like to learn more or find a great mortgage broker let me know and I will give you thoughtful guidance. For more click back to the Steamboat Springs blog main page.

Local Lending situation update

Not a week passes that I have someone tell me about how they have read you just get a loan. These are all intelligent people that have come to this conclusion and it is no mystery why they think this given the simplistic and often dramatic headlines. I follow this closely because it is central to the health of our market and the advice my clients seek.

Here is the scoop. In talking with local lenders capable clients with good credit who can disclose income and bring 10-30% down depending on the property type are being issued loans everyday. It is not as simple as last year just more like 3-4 years ago which is just fine. One place it will be difficult is through independent mortgage brokers because the banks are keeping their mortgage originations in house. Locally Wells Fargo, Alpine Bank, Yampa Valley Bank and likely some others are actively approving then closing mortgages on Steamboat Condos, Town Homes and Single Family homes. Give me a call or send an email for my recommendations on the best mortgage lenders in town or anything else for that matter especially if it involves skiing or having fun in my favorite town of Steamboat Springs. For more click back to the Steamboat Springs blog main page.

Why the Mark to Market Changes will help stabilize the national market

I thought I would share this article I found on Mark to Market and how it is driving much of the current crisis. The current mark to market rules were added to increase the accuracy of financial statements but have become a real problem that is somewhat artificially squeezing banks out of business because tehy are forced to value assets on their books at the last sale instead of the value based on their expected payouts. As in all things there is a grey area since there is room for the unscupulous to manipulate things to hide problems but I think that the appropriate balance can be found to reduce the current domino effect we are seeing and allow assets to be held at reasonable values until there is a more normal balance of buyers and sellers. That balance will be helped in great parts by having banks that don't need to sell something today at a fire sale price that goes on to trigger additional sales by other banks and so on I have been describing this situtation to partners and clients a lot recently so I was happy to see it in a well written informative piece.

I believe in having a deep understanding of both our local market and the national real estate and credit markets that come to play in the decisions my clients are making so if you would like to discuss what is going on in more depth or work with someone who has the depth to advise you thoughtfully feel free to give me a call on my cell phone anytime at 970-819-6930. I will listen to your goals and thoughts then give you an honest picture of the things you need to consider to make a great decision.

In Steamboat we are fortunate to have a much more stable market that has either maintained values or increased in most segments and has a whole since we don't have the two key things that drove the 80% of the problems located in 5 key states. They would be risky loans and tremendous over-supply. We are also fortunate to have well over 95% of buyers that do not need to sell and very little foreclosure activity.

The article: "There are a lot of rumors about what is happening in the financial markets. This should give you some insight on one of the factors. Whatever the political posturing regarding the current rescue plan, a plan needs to be passed. Credit markets are frozen and banks are going bust every day. This is not totally because of "toxic" mortgages. This has a lot to do with FAS 157, also known as "mark to market". This is only one piece, but is important to understand.

Each day lenders must mark their assets to the marketplace. The increase or decrease in the value of these assets is offset in capital. If values increase, capital increases, and if values decrease, capital is decreased. It's like you having to appraise your home everyday. If your neighbor was under duress because they got very ill, divorced, or lost their job and was forced to sell their home quickly they may have to sell it inexpensively. Let’s assume that with a normal sales process it was worth $500,000 and they sold it for $400,000. Now, does that mean your house is worth that $400,000? Clearly not. Why? Because you are not under duress. You have the time to sell your home and get a more normal price, which more accurately reflects true market conditions. (Think of the price you get at a pawn shop versus selling the item on an open market.) But "mark to market" does not allow for valuing at true market conditions, which creates a vicious cycle.

Why is this so bad? Most Financial Institutions are required to maintain certain amounts of capital relative to their assets (primarily loans and investments). As lenders mark down their assets thru capital, the ratio of capital to assets decreases with no change to the amount of assets they have on their balance sheet. For example, say a bank has $1 million in capital and they have $15 million in assets outstanding. Their ratio is an acceptable 15 to 1. But should they take a paper write down of $500,000 due to mark to market requirements, their ratio suddenly changes to 30 to 1. This is because their capital is now only $500,000 after taking the paper loss, while their loans outstanding are the same $15 million. And at 30 to 1 this bank is viewed as risky. So the stock price starts to get hit, it becomes harder to borrow, and most importantly harder to make money. The bank is then forced to sell some of its loans or investments to reduce its ratio...at below “true” market prices. Yet really, nothing has changed at the bank. And this makes the vicious cycle continue.

This is not easy to understand for the general public. In fact most politicians don't get this either. That's why it is a difficult yet critical bill for them to vote on. Once this is done it will take some time but the markets will stabilize. As for the real estate and mortgage industries, it will take a bit of time but we will make it through this. Rates will remain attractive and the influx of credit availability will help the housing market gradually improve. This ultimately will be the medicine needed to improve the situation overall."
For more click back to the Steamboat Springs blog main page.

Colorado Home Price trends compared to distressed states

Here is an updated graph per a reader's request. Colorado remains in much better condition than others. Volume in Denver has picked up considerably as people have become more active in buying foreclosures (lower average price than a non-distressed sale which does pull down average prices) which I believe explains some of the dip in the graph below. Colorado is the blue line in this first graph and red in the second one. The word I hear from good sources in Denver is stabilization and some improvement as inventory is going down. Original graph when this post was first done
The Steamboat Voice of Reason Blog had the audacity (many news sources find it more profitable to cover only the bad news) to post credible data from the Federal Reserve Bank of St. Louis showing the chart above that compares relative home price changes in California, Florida and Colorado. Colorado is the red line and it shows pretty clearly the differences between our market and the 5 states where the large majority of the housing crisis is playing out as represented by California and Florida. It is nice to see data that shows this so clearly from such a credible source. I am not saying we don't have issues in Colorado or the other 45 states but it is nice to see how individual states are doing.

I follow this very closely and even I was surprised by the differences between these states and how good Colorado looks after so much one sided news coverage.

If you would like to know more or talk about how this affects your situation just give me a call anytime at 970-819-6930. For more click back to the Steamboat Springs blog main page.

More signs the Denver market is strengthening

It is good to see more news out of Denver that confirms what I am hearing from insiders down there. Lenders are cautious these days and Wells has a reputation for being careful that allowed them to sidestep the issues that so many lenders faced. so it means a lot when they make a call on a turnaround in Denver Real Estate. Jake Marsh has been pointing out the shift for several months in his newsletters so it is nice to see broader confirmation from sources like this. In Steamboat we see a lot of people up from Denver that like Steamboat's mountain, small town feel and have grown tired of the resorts along I-70 getting swamped every weekend. Increased confidence in Denver should help Steamboat continue to be a safe haven from most of the national real estate issues.

Denver Post: "Colorado's largest mortgage lender is making it easier for home buyers to borrow money. Wells Fargo Home Mortgage on Saturday upgraded the status of the Denver Metropolitan area's real-estate market from "distressed" to "stable." "The fundamentals in the Denver market are changing," said Greg Osborne, regional vice president of the mortgage company. "Inventory is being worked down, and as a result, prices are stabilizing." There were 24,648 homes on the market last month, a 20 percent drop from August 2007's 30,827 homes, according to data released last week. The improved status of the market means consumers can borrow 5 percent more than they previously could, Osborne said.

"I am hopeful that it will stimulate demand by increasing confidence in our market," he said. "We may have led the nation into the doldrums, but we're again leading out of the doldrums." Jim Theye, managing broker for Kentwood City Properties, said the move could signal that the market has hit bottom and is showing signs of improvement. "This will really help buyer confidence, and it will really help rekindle a positive market," Theye said. "Our brokerage is definitely seeing increased activity."

Lou Barnes, owner of Boulder West Financial Services, said the negative perception of Denver's market has been misplaced. Barnes points to the PMI Mortgage Insurance Co.'s risk index, which says Denver has a 1 percent chance of home prices falling. That's far better than the 35 percent chance of prices falling that PMI forecast for the region in 2003. "Despite Denver's high foreclosure count, as a matter of price decline and underwriting risk, our greatest exposure was at the moment the tech bubble blew back in 2002," Barnes said. Jerry Kaplan, vice president of capital markets for Cherry Creek Mortgage, said the Denver market has been stable since June.
"Fannie Mae and Freddie Mac removed Denver from their declining-market list several months ago," Kaplan said. "

For more click back to the Steamboat Springs blog main page.

Wash Post: Why This Autumn is a Great Time to Buy

Interesting article from the Washington Post. I think that we are seeing increased confidence due to some of the recent moves by the Treasury and strong signs of stabilization around the country. The 5 worst markets that are driving the national issues will likely take longer to recover but places like Denver are seeing a turn. In Steamboat we are seeing people with strong interest beginning to move more decisively to take advantage of the increased selection. YTD our dollar volume is still equal to 2006 which was a record year that was up over 30% but we are behind 2007 when things went crazy.

In Steamboat we generally are late to follow national downturns and among the first to come back. In most investments time is more important than the exact timing and I am seeing savvy people around town moving on quality properties. Give me a call if you would like a deeper understanding of what is going on here in Steamboat.

Why This Autumn is a Great Time to Buy
Washington Post 9/12/08

This fall could be a particularly great time for first-time or buyers long out of the market to jump in, say a variety of real estate professionals.

Here are the reasons why:
* Prices are probably as low as they are going to go as the market stabilizes thanks to the government takeover of Freddie Mac and Fannie Mae.
* Interest rates are likely to decline as Freddie and Fannie get government help.
* The Federal Housing Administration recently boosted its loan limits to $729,750 in expensive areas. It's going to take some of that back come Jan. 1, when the loan limit will shrink to $625,500.

Also in today's Washington Post: Mortgage Rates Drop Below 6%
For the first time since early spring, mortgage rates have fallen below the 6-percent threshold. Freddie Mac reports that 30-year fixed loans came in at an average of 5.93 percent this week, down from 6.35 percent a week ago and 6.31 percent at the same time last year. "Consumers see a five in front of mortgages, and they get excited," says Keith Gumbinger, a vice president at research firm HSH Associates.

For more click back to the Steamboat Springs blog main page.

Mae Mac Bailout drops rates significantly

The Federal Government has effectively guaranteed bonds issued by Freddie Mac and Fannie may by taking the agencies private on Saturday. This made their debt essentially risk free which translates in to lower Mortgage costs. A quick update from, Josh Kagan, a great mortgage broker in town.

"The government announced bailout of Fannie Mae and Freddie Mac had huge impact on conforming rates today including jumbo-conforming rates (up to $675,000 in Routt County). Conforming 30 yr fixed rates fell to 5.5% today and jumbo conforming rates to as low as 5.625%.

Whether you (or your friends and clients) are looking to purchase a new home at a relative bargain, refinance from an ARM to a fixed rate loan, or consolidate debt the current rates present significant opportunities. Please call or email if you would like any additional information."

For more click back to the Steamboat Springs blog main page.

Steamboat Base area improvements update

I got a question from a client about the status of projects and the public improvements at the base area so I thought I would share my response with you. In regards to base area improvements the public URA funded improvements are progressing and I just got chosen to be on the URAAC committee that manages what gets designed and built for the city. Intrawest has made the first round of on mountain regrading and new lifts at the base. Private project wise One Steamboat Place next to the gondola is doing their steelwork, Edgemont just up the hill below Bearclaw has broken ground and released the contract to build, Ski Time Square is being demolished as we speak but it will be at least a year before that starts due to planning time frames. Some things may go a little slower but not yet. Edgemont starting is a very good sign and a strong vote of confidence in Steamboat given the national lending environment.

I am always happy to answer questions or give you an update so call me at 970-819-6930 if you are curious about progress or the details. For more click back to the Steamboat Springs blog main page.

Steamboat Vacation Home Tax Tips

Here is some top level tax info from the Financial Insider on how owning vacation property can be a benefit come tax time in a few common scenarios. I work with a lot of people looking to buy in Steamboat Springs that want to know more about the tax implications of vacation property. I am happy to give them top level info and ideas on their options but always recommend they talk to their tax professionals for the details and what is best for their tax situation. I am knowledgeable but I don't read the IRS codes and you need someone that lives them.

From the article: "If a mountain getaway (In Steamboat Springs) or an ocean view has become your American dream, then perhaps you should know that a vacation home can offer some federal tax savings that may help pay for your hideaway. The tax laws differ depending on whether you use the home solely for enjoyment or mix business with pleasure by renting the property part-time.

As long as the combined debt secured by the vacation home and your principle residence does not exceed $1 million, you can deduct all of the interest paid on a mortgage used to buy a second home. The advantage is restricted to two homes. If you purchase a third, interest on that mortgage is not deductible. However, no matter how many homes you have, you may be able to deduct all the property tax you pay.

One break enjoyed by homeowners- the right to immediately deduct points paid on a mortgage- applies only to a principal residence. Points paid on a loan for a vacation home must be deducted gradually as you pay off the mortgage.

Personal Residence
Your vacation home counts as a personal residence even if you rent it for up to 14 days a year. In that case, you get to retain the rent tax free and don’t jeopardize your mortgage interest and tax deductions. However, you may not deduct any rental-related expenses. If you rent out the house on a continual basis, things may become more complicated. Different rules apply depending on the breakdown between personal and rental use.

First, if you buy primarily for pleasure but rent for 15 days or more, the rent you receive is taxable. Because the house is still considered a personal residence, you get to deduct all the interest and property tax. You may also be able to deduct other rental-related expenses, including the cost of utilities, repairs and insurance attributable to the time the house is rented. In some cases, you might even get to deduct depreciation. When the house is considered a personal residence, rental deductions cannot exceed the amount of rental income you report. In other words, your second home cannot produce a tax loss to shelter other income. In most cases, the interest and taxes assigned to the rental use of the house, plus the operating expenses, more than offset rental income, limiting your ability to write off depreciation.

Rental Property
Now consider your tax situation if you buy a property primarily as an investment and limit your personal use of the property to 14 days a year (or 10% of the number of rental days if that allows you more than 14). Because the house is a rental property in the eyes of the Internal Revenue Service, your deductions can exceed the amount of rental income you receive.

If your rental income does not cover the cost of renting the house, you may be able to claim a taxable loss. Rental losses are classified as passive and can be deducted only against passive income such as another rental property that realizes a gain. If you do not have a passive income to shelter, the losses have no immediate value (unused losses can be used in future years when you have passive income). There’s an exception to this rule, however, that permits taxpayers with adjusted gross income (AGI) under $100,000 to deduct up to $25,000 of passive losses against other kinds of income including salaries. To qualify, you have to actively manage the property. The $25,000 allowance is gradually phased out as AGI rises between $100,000 and $150.000.

When your vacation home is considered a rental property, the mortgage interest attributable to the time the premises are rented is a business deduction. The rest, though, cannot be deducted as home mortgage interests since the house doesn’t qualify as a personal residence.
The tax laws discussed here also apply to homes other than houses, such as apartments, condominiums, mobile homes or boats with basic living accommodations. Generally, these include a sleeping space, bathroom and cooking facilities. For more information, contact your tax professional. " For more click back to the Steamboat Springs blog main page.

Home Prices rise in 30 of 50 States

Somehow news like this rarely reaches the front page and instead the gripping headlines with bad news are almost always chosen. While the national market clearly has issues it is not all bad and there are often encouraging stats like this if you red some of the more thoughtful media.

According to the Office of Federal Housing Oversight's Housing Price Index for the 2nd Quarter of 2008 released August 26th, 30 of the 50 States had positive changes in house prices from June 2007 through June 2008, including Colorado!

Only 4 States (Arizona, Florida, Nevada, and California) experienced overall price declines of more than 5 percent.

The 20 ranked cities in the United States with the worst price declines over the last 4 quarters were ALL in Florida, California, and Nevada.

I really do sympathize with the people of these four fine States. Some of the price declines they have experienced are simply horrible! However, there are 50 States and only 4 with truly bad news for the last year. The rest of the country is simply experiencing a market correction from a rapid increase over the last 5 years combined with some sloppy loan practices that hurt the lending industry. The United States overall had a -1.71% change over the last year (skewed down heavily by the 4 troubled States).

However, even with the challenges over the last year, if you step back and look over a few years like any long term investment should be evaluated the United States STILL has had a 34.84% increase in home prices over the last 5 years! - That is not bad at all and the states that are down the most now are still up more than the national average. Over the last 5 years, Arizona STILL gained 62.68%, Florida STILL gained 54.03%, Nevada STILL Gained 50.81%, and California STILL gained 41.81% despite the losses of the last 4 quarters.

It is time for the news media to put away "The Sky is Falling" focus of their reporting and report the good news along with the bad. There are many signs that the market is working through the current challenges, inventory is going down and prices are stabilizing. While we still have challenges and some real problems the market is making progress.

Here in Steamboat we are up quite a bit more over time and prices have held stable and even increased in higher end properties. Only a few low end properties have been effected and those are still up by large percentages over a few years time. Give me a call if you would like to hear more about what is going on here in Steamboat. For more click back to the Steamboat Springs blog main page.

Dallas Morning News Features Steamboat Springs

Steamboat Springs is featured in a nice article by the Dallas Morning News this weekend with several quotes from Pat Stefanek a friend who has a "tough job" as a Master Guide at Marabou Ranch. Poor Pat has to Ski all winter and Fly-fish about 10 months a year.

Perfection in land of hoppers and droppers Saturday, August 16, 2008

STEAMBOAT SPRINGS, Colo. – The first year Pat Stefanek spent in Steamboat Springs (1991), he had three jobs, just trying to make ends meet. One thing he knew for sure. He'd do whatever it took to live his version of a Rocky Mountain high.

"I was lucky because I made my passion my living," said Stefanek, master fishing guide and river keeper for three miles of upscale private trout waters on Marabou Ranch, just outside of Steamboat Springs, and 40 miles of private trout waters on North Park Fishing Club in nearby Walden, Colo.

"Steamboat Springs is the world's greatest place to live," Stefanek said. "The name alone is very cool, but there's a terrific outdoor lifestyle here that's hard to match. There are great trout streams in every direction, many of them public waters. I had 110 days of skiing on the mountain last winter – lots of powder days.

"Everybody is hiking and riding mountain bikes – it's just a great, healthy lifestyle. Whatever you think you're good at, there's a 12-year-old girl in Steamboat Springs who can kick your rear." (8 or 10 years old would probably be more accurate, I am a pretty fast skier and I get blown away by the kids all of the time) For the whole article click here

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Pending Home Sales Rise Nationally

It is nice to see some more positive news on the housing market coming out. I frequently find good signs in more authoritative sources like Forbes and Barron's but the papers seem to look for the worst headlines. Things in Steamboat are generally quite a bit better with volumes at approximately 2006 levels and prices generally firm to up with the exception of some lower end properties.

"Some improvement is projected for existing-home sales in the months ahead, with broader gains seen by the fourth quarter as buyers take advantage of new provisions provided through the recently passed housing stimulus bill, according to the latest forecast by the NATIONAL ASSOCIATION OF REALTORS®. The Pending Home Sales Index, a forward-looking indicator based on contracts signed in June, rose 5.3 percent to 89.0 from a downwardly revised reading of 84.5 in May, but remains 12.3 percent below June 2007 when it stood at 101.4.

In the West: rose 4.6 percent to 101.0 in June but remains 1.7 percent below a year ago

Lawrence Yun, NAR chief economist, says sales have been in a pattern of rising and falling within a fairly narrow range.

“The vacillation of data from one month to the next indicates a housing market in transition,” he says. “The rise in pending home sales was broad-based with all four regions showing gains. This is welcome news because a rise in contract activity is necessary for an overall housing recovery. With a tax credit now available to first-time home buyers, increases in home sales could be sustained with the momentum carrying into 2009.”

Across the Region

Here's a deeper look at the index throughout the country:

• South: jumped 9.3 percent to 92.4 in June but is 16.6 percent below June 2007.
• West: rose 4.6 percent to 101.0 in June but remains 1.7 percent below a year ago.
• Northeast: increased 3.4 percent to 79.6 but is 15.4 percent below June 2007.
• Midwest: rose 1.3 percent in June to 79.6 but is 13.3 percent below a year ago."

For more click back to the Steamboat Springs blog main page.

4 feet on top since closing day

A friend told me that as of this morning there is 4 ft of fresh light stuff on top. So much so that the snowmobiles can't get close without a cut from the snow cats. The snow cats are having to actively keep all of the upper mountain roads open so people can get around to shut things down for the summer.

Its dumping outside again now so by the time you read this there will be at least another foot up there making for about 550 inches so far. What a year!

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New Wild Horse Gondola

Word is that we may hear something soon on a deal for increased capacity of the public gondola from Wild Horse Meadows and the Ski area parking lot to up next to the main Steamboat gondola at the base. The Wild Horse Developers have been playing hardball according to several sources but the Steamboat Ski area and others are working hard to negotiate for a higher capacity version. That is the best solution for everyone in my opinion. Either way the Wild Horse people have said that they plan to put up the towers this summer and that will be exciting to see. On a side note Trailhead Lodge, the first condo building in Wild Horse Meadows has the majority of their concrete work done and began the wood framing this week. The last update I got said they expect to finish the building in June 2009.

For more click back to the Steamboat Springs blog main page.