Pandemic Moving

We know that the pandemic has affect the real estate market across the country.  It has caused a lot of people to decide to make a move.  Over 8.9 million people have relocated since the beginning of the pandemic.  This information is from collect from both the National Association of Realtors and the United States Postal Service from March to October of 2020.  Top ten states with the most people moving IN during this time include: New Jersey, South Carolina, Maryland, Iowa, Connecticut, Nevada, Arizona, New Mexico, Ohio and Mississippi.  The top ten states with people moving OUT include: New York over 10,000 people left New York, New York alone, Texas, District of Columbia. North Carolina, California, Pennsylvania, Illinois. Minnesota, West Virginia and Florida. Much of this moving has been out of major cities. 

One of the communities that has seen the biggest gain in this time is Williamson County, Texas.  They have seen over 3,800 people move there. Interesting since the state of Texas has had a record number of people leaving the state.

In the data, Colorado was not mentioned as one of the top 10 for people moving in or out.  I have seen many people relocating here.  If you can live anywhere while you are able to work remotely, who wouldn’t love to live here with a view of the mountains from your desk.  This has increased our demand for both properties to buy and rent.  National Association of Realtors is expecting similar patterns of moving to play out in 2021.  Remember if you know anyone that is moving.  I can connect them to a great agent anywhere.  I am a part of a great organization that includes the top four percent of agents nationwide.  I can interview agents and pick the perfect person for them to work with.

A Northern Colorado Housing Bubble 2021?

Will there be a Northern Colorado housing bubble 2021?

This is a question that I am frequently asked. Articles like this one from the Denver Post seem to be published every week. But just what would a Northern Colorado housing bubble 2021 look like? A housing bubble is a temporary period of time that is characterized by high demand and low supply. This causes a boost in pricing. A housing bubble can be caused by a combination of low interest rates, economic prosperity and easy access to credit.

So, what is the concern with a housing bubble?

The concern is when speculators enter the market. This causes a boost in demand over and above “real” buyer demand. Speculators can be investors from out of the area and even fix and flippers. This causes an already tight market with limited supply to have even higher demand, pushing housing prices even higher. The price of housing, like any good in a free market is driven by the law of supply and demand. When the demand increases the price goes up. When the price of housing is going up faster than expected, many people fear that a Colorado housing bubble is about to burst and prices are going to come crashing down.

Is that the case in 2021? I would say that this is not likely. I see some major differences between 2021 and our last housing crisis.

What are the major differences?

1) Mortgage lending practices that brought down some of the major banks and mortgage companies during our last financial crisis have led to many regulatory changes. Federal regulators have new stricter requirements of borrowers and new requirements of lending intuitions. The Consumer Financial Protection Bureau was created to enforce these new regulations. Because of this the housing market is safer than it was 15 years ago.

2) In 2007 and 2008 the market in many parts of the country was flooded with foreclosure homes. This caused falling prices of homes. The pandemic has caused mass unemployment. However, the forbearance programs have allowed homeowners to postpone their monthly payments without penalties. Many of those unemployed homeowners resume their mortgage payments as they again become employed, avoiding foreclosure.

3) One of the major differences between the housing crisis and the pandemic is that homeowners today have EQUITY in their homes. This could prevent a Colorado housing bubble 2021 Equity is the difference between the current market value of your home and the amount that you owe on your mortgage. As prices have rises your equity increases too. During the housing crisis many home owners had the amount of their home value less than what they owed on the home.

No one can predict what will happen for sure but it is not likely that there is a Northern Colorado housing bubble in 2021. Low interest rates and demand have certainly driven prices up in 2021. You can always contact us for a free market analysis to find out where you stand. In the meantime hold on for the ride to see where we go for the rest of 2021.

Selling a House? Should You Worry About Capital Gains?

Capital gains occurs when you sell real estate for more than you paid for it. The difference between the original sales purchase price paid and the new sales price is the gain. In other words:

New sales price, minus purchase price of the property, minus the cost of sale = the amount of gain on the property.

This calculation can mean that most all sellers that are selling their home in Northern Colorado would show a gain on their property. Our market has seen nice appreciation of property values in recent years and this can lead to nice gain when it comes time to sell. It is great to sell your home for top dollar, but the IRS may want a piece of the gain that you receive.

When do you have to pay capital gains tax? The government allows you to exclude $250,000 in gain for an individual home seller and exclude $500,000 in gain for a married couple. For example, lets say that you bought a property 10 years ago for $250,000 and sold the property for $850,000. You are a married couple, filling your taxes jointly, selling your home that you have lived in the home for all of the last 10 years. You subtract the $250,000 from the $850,00 and the number is $600,000. You are allowed by the IRS to have $500,000 in gain so you will only pay taxes on the $100,000 which is over the $500,000. How bad might the taxes on that $100,000 in gain be. There are factors that the IRS takes into account when figuring but for a rough estimate the tax could be between 10 and 20 %.
In order to be able to exclude the gain, like in the example above you need to have:

  1. Lived in the home for at least 2 of the last 5 years.
  2. The home needs to have been your primary residence.
  3. You can not have claimed that you sold a primary residence in the last two year period.
  4. If you are selling your home in less than two years, but moving due to work, health or an unforeseeable event, you still might qualify!
  5. You also may be able to minimize your capital gains tax if you are able to show receipts for home improvements.
    If this sounds complicated it really might be. This might be the year to have a CPA do your taxes. The money spent to have a professional review your tax situation might be small in comparison to the amount you save in taxes paid.

One of the most asked questions in Real Estate…

The question that I get asked the most is, “how is the market”.  When there are things happening in the world, country and our area I hear that question even more.  People want to know if their investment is being negatively affected. Going through a global pandemic has folks asking that question even more.  In a word, the market is GREAT.

Median year to date home prices in Northern Colorado, through July 2020.

We are on track to see nice appreciation in the median price of properties in Northern Colorado this year.  Days on the market has increased this year, but list to sales price remains strong at over 99%.  It is a great time to own a home in Northern Colorado. Remember if you have questions about the market, just call, text or email me.  I am here to answer your questions.               

Record Low Mortgage Rates

Record Low Interest RatesThis week the rate for 30 year fixed mortgage hit an all time record low since data for this rate began being tracked in 1971. According to Forbes, the 30 year fixed rate reached a low of 3.07% and the 15 year 2.56%. This represents a great opportunity to either purchase a home to get locked in to these never before seen low rates, or to refinance your existing home mortgage. In either case we can put you in touch with a great local lender and if you are looking to refinance we can provide you with comparable sales to insure that you are able to appraise for the highest value. If you purchased a home with less than 20% down you likely have mortgage insurance however you may have 20% equity in the home at this point. You could refinance your mortgage, remove your PMI and have a lower interest rate. What could you do with a couple hundred extra dollars in your pocket each month, or the thousands of dollars you will save over the life of your loan? As always, we are here, contact us and let us know how we can help you.

So… How’s The Real Estate Market?

That is a very important question to have the answer to if you are considering stepping into the market after things open back up the end of April.  This is good information to know whether you are a buyer or a seller. Remember that the real estate market varies place to place.  Some parts of the country will be affected more by this Pandemic than others. 

In Colorado on 4/10/2020 real estate was deemed non-essential.  It took Colorado Association of Realtors (CAR) several days to get clarification from the Colorado Attorney General on what that meant.  We learned on 4/14 that we were not to have open houses or show property. Realtors were allowed to have walk throughs of properties already under contract and manage the sale of a property.  What has happened over the course of the past few days is that realtors are providing clients with as much information, photos, virtual tours, 3-D tours and disclosures on properties so that they would feel comfortable writing an offer on a property sight unseen.  Once the contract had been negotiated and accepted then the buyer and agent could see the property and do a walk through.  For the two buyers that I wrote contracts for using this method, both are moving through the process to closing.  Only surprises at walk through were happy, good surprises.

What is the market like right now for our area?  I have been tracking two numbers for the six weeks and would like to show you how those two numbers have been changing.  I have been tracking new listings on the market and under contracts in Fort Collins and Loveland area.  For the week starting March 8th and going to the 14th and every week after that I will show you those two numbers.

New listings    3/8 – 3/14     129                       Under Contracts      75

New                  3/15 – 3/21    122                       U/C                            68

New                  3/21 – 3/28    106                      U/C                            57

New                  3/29 – 4/4     130                      U/C                            46

New                  4/5 – 4/11      109                      U/C                            39

New                  4/12 – 4/18    59                        U/C                            59

This information shows that even after the Attorney General ordered that real estate was non-essential that real estate was happening.  Houses were being listed for sale and going under contract. The number of homes coming on the market has been pretty steadily declining.  The number of homes going under contract has been going down with the exception of last week. 

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One of the big questions now is what will happen after the “Stay at Home” order is lifted.  I think that real estate will bounce back.  Whether that bounce is a V shape graph, rebounding quickly or a U shape graph, with us rebounding more slowly we will have to wait and see.  I believe that housing will rebound.  We live in Fort Collins, Colorado.  One of the most desirable places to live.  People have spent more time in their homes in the last six weeks than many of them ever have.  Many may have decided that “home” is not for them.  That means they are ready to move.  Many have said that we have pend up demand out there.  I have talked to lenders that have told me that they are busy as can be with buyers getting pre-approved.  They want to be ready when the “Stay at Home” order is lifted. This is good news for us all.  Time will tell…but I think that the future of real estate is bright!