by neil kearney | Apr 2, 2009 | Boulder County Housing Trends, For Buyers, Real Estate 101
Interest rates are near historical lows and in many cases buyers are locking in rates that start with a 4. This is unheard of and represents one of the great buying opportunities in modern times. I just received a quote today for a 30 year conventional loan (below $417,000) with no discount points for 4.875%. This rate assumes at least a 10% down payment and a FICO score of at least 740. 
I remember my first sale back in 1992, the interest rate was 8% and everyone at that time was saying that it was a pretty good rate, not the best, but reasonable. During the last decade we have become spoiled. Rates have been mostly in the 6 – 7% range with a few quick dips into the 5’s.
Now I hear people wondering if they should wait for rates to drop further, maybe to 4%. Hello, how much further do you want them to go? I guess it is human nature to get greedy when you start taking something for granted. But I say wake up and lock-in right now! 4.875% could turn into 6% in a flash and then where would you be? I have always been pretty conservative with my planning and when I am ready to purchase or refinance I plan using today’s rates and lock-in today’s rates. Call me crazy but I don’t think you should gamble on something that can change your payment every month by a significant amount. Here is a continuum of principle and interest payments at different interest rates. This assumes a $400,000 loan.
- 4.875% = $2,116.83
- 5% = $2,147.29 ($1 a day savings)
- 5.25% = $2,208.81 ($1,103 saved a year)
- 5.5% = $2,271.16 ($1,851.96 saved per year)
- 5.75% = $2,334.29 ($2,609.52 saved per year, a nice vacation?)
- 6% = $2,398.20 ($3,376.44 saved per year, that is $16,882 over 5 years and $101,293 over 30 years.
The point is, that interest rates are fantastic! If you are happy with your house, you should look into refinancing. If you might consider a move during the next few years, think about it now. That new house will never be more affordable. Good decisions now will pay off for years to come.
by neil kearney | Apr 1, 2009 | For Buyers, Real Estate 101
The discussion of lead based paint comes up in every transaction that involves a house built before 1978. All sellers and landlords are required to disclose in writing the knowledge of any lead based paint hazards and provide results of any previous tests that they may have to any potential buyers or tenants. 
Lead based paint has been linked to health difficulties primarily in children but can also be hazardous to adults. Most older houses have lead paint somewhere under the layers of paint in the house. So what is the hazard? If the lead paint is contained it is not an immediate hazard. Only when the paint is released by chipping, sanding etc. does it become a hazard. Once released, it can be in the air, contained in dust or it can be in exterior soil.
In a real estate transaction a Lead Based Paint Disclosure must be filled out and signed by the Seller, Buyer and both real estate agents. This disclosure must be signed before or concurrently with the purchase agreement. If it is done after the fact, heavy fines can be placed on the Realtors. Along with the disclosure, a booklet explaining the hazards must be received by the buyer.
The buyer has the right to have the house inspected for lead based paint hazards, but in my experience I have never seen a buyer have the tests performed. The testing is expensive and can be invasive (samples). I think the object of the program set forth by HUD is education of the public and at least in the the properties I have been involved in, I think that goal is being fulfilled.
The EPA has a very informative websitewhich has more information if you are interested in learning more.
The cabin shown above is still standing, although I’m sure it is a lead based paint hazard. It is my grandfathers old cabin in MN near Itasca State Park. He passed away just over 10 years ago and my cousin and I have since built the new cabin below on a different location on the land overlooking Gill Lake. 
{I have recently converted my blog to a new squarspace platform. During the conversion all of my old posts made the journey but the functionality of the search has not come through cleanly. This is a previously published post that contains information that is still a good resource so I will periodically re-publish a few select topics so that they are searchable on the site.}
by neil kearney | Mar 28, 2009 | For Buyers, Real Estate 101
In order to close on the purchase of a home, a buyer must obtain a homeowners insurance policy. A few years ago a property insurance deadline was added to the buy/sell contract. This clause gives the buyer the right to shop around and make sure that an acceptable and reasonable homeowners policy is available for the house they are purchasing. This contingency came about after some insurers, after a particularly dry and fire laden summer, decided to add outrageous premiums to mountain homes. Many buyers were waiting until the last minute to line up their insurance and found it was too late to cancel the contract after they found out what it would cost. The situation has settled down now but the deadline and contingency is still in place. Here is a video that gives some good tips for those who are looking for homeowners insurance. It is also a good idea to shop around every few years to make sure you are not paying too much. Please let me know if you need a recommendation of a local insurance agent, I know some good ones.
http://www.howcast.com/flash/howcast_player.swf?file=164288
by neil kearney | Mar 25, 2009 | For Buyers, For Sellers
The real estate market in Boulder County is very interesting to study. On one hand we are doing great when compared to many markets, in its latest report FHFA ranked Boulder 17th in the nation in annual appreciation. I am very grateful! On the other hand sales are down to levels we haven’t seen since 2001. What’s up and what can you do about it. Here is a quick snapshot on how buyers and sellers should be thinking if they are looking to buy or sell a home in or around Boulder. I write a monthly statistics column in the Boulder Area Realtor Association newspaper The Realtor Review. Here is my lest entry. Let’s take a look.
Now is a great time to buy a house*. So why are sales in February down 24% from last year? The answer can be found in the asterisk. It is a great time to buy if:
1. You can buy a house and stay within the conventional or FHA limits.
2. You have a job, great credit, plenty of reserves and a letter from your 6th grade teacher.
3. You have confidence that your job is stable and that eventually everything is going to be okay.
4. You haven’t been scared to the point of inactivity by the images in the media; “Lost Trillions in Equity”, “Modesto Neighborhoods Decimated by Foreclosure”, etc.
5. You haven’t lost all of you savings in the stock market. It is easier to ignore and cope for some people than realize and act.
6. You don’t have a house to sell. See #4.
There are many thoughts running through the minds of our would-be clients and not many are positive. The six scenarios above are just a few of the variables in today’s market. Most of these challenges lead to one answer. Good homes in the lower price ranges are still selling!
There are many reasons why people buy and sell. Many of the reasons don’t wait for a better market. What the public needs now is accurate local information.
For Buyers:
· There are opportunities out there but our market is holding up very well. Sales price to list price ratio is still above 95% so offers at 60% of list price probably are not going to fly.
· Prices are holding steady. If you’re waiting for a big drop in our market you probably won’t see it.
· Take advantage of interest rates while they are low because all indications point toward our area being on the leading edge of the nation wide recovery.
For Sellers:
· Buyer’s have choices so your house needs to be both the best priced and best looking house in its price range. Many homes right now are not selling if they don’t get both just right.
· Now is not the time to put your house on the market at too high a price and wait and see. Be realistic now and save both time and money in the long run.
· Be ready to deal on inspection items. Buyers expect the roof to be in good shape and if there is a puddle under the water heater, replace it – it’s not going to get any better.
· Be patient and vigilant. There may not be many showings, so make each showing count.
The advice here becomes exponentially important as the price range increases. Right now 15% of homes under $500,000 in Boulder County are under contract while only 3% of homes over $1.5 million are under contract. Similarly, the absorption rate for properties under $250K is 4.25 months, between $250 – $500K is 5.71 months, $500 – $750K is 10 months, $750 – $1MM is 14.41 months, $1MM – $1.25MM is 22.73 months and above $1.5MM is 48 months of inventory.
by neil kearney | Mar 11, 2009 | For Buyers
Right now there seems to be many reasons why prospective home buyers are not buying. But the fact is, despite all of the excuses, people are still buying homes. According to the National Association of Realtors in their 2008 Profile of Home Buyers and Sellers, here are the reasons why buyers buy real estate.
- Desire to own a home – 34%
- Job related relocation or move – 11%
- Desire for a larger home – 10%
- Change in family situation – 9%
- Desire to be closer to family/friends/relatives – 6%
- Desire for a home in a better area – 5%
- Desire to be closer to job/school/transit – 4%
- Affordability of homes – 3%
- Desire for a smaller home – 3%
- Retirement – 3%
- Desire for a newly built or custom built home – 2%
- Establish a household – 1%
- Financial security – 1%
- Tax benefits – 1%
- Greater choice of homes on the market – 1%
- Desire for a vacation/investment home – 1%
- Purchased home for family member – 1%
- Other – 4%
I can break these down into three main categories: moves caused by change (25%), moves initiated by a desire (65%) and those who purchase because of a outside reason or as a result of logical analysis (6%).
The 25% who move beacuse of job or family changes move in any market, including now.
The 6% who see market opportunities are looking now.
The 65% of buyers who don’t ‘have’ to buy, but ‘choose’ to buy are a very sensitive group. Many of these people want to buy but are hesitant for any number of reasons. People can live with a house that is either too large or too small for quite some time before they feel compelled to act. Locally we have many people in this category. Our inventory has fallen as many people have chosen to wait until a better time. Now is a great time. Interest rates are low – Sellers are ready to sell and prices are steady to rising.
by neil kearney | Feb 12, 2009 | For Buyers, For Sellers
You have probably seen the attached picture before – is it a picture of a young women or an old women? The answer is it depends on
how you are looking at it. How you perceive it.
One definition of reality is: “all of your experiences that determine how things appear to you”. I agree with this on many levels – I believe you make your own reality and what you know and believe as well as your past experiences effect what is “real” for you. A slum dweller in India has a much different reality than a socialite living in Beverly Hills.
The key word in the definition above is experiences. I submit that this definition is not as true as it once was. Don’t worry, I will tie in to real estate in a moment.
In the past (B.C. through the 19th century), reality was based on what one actually experienced. All inputs to opinion were very localized. For example, when there was a famine, chances were that you were hungry. Perceived reality equaled actual reality. There were no outside forces to sway your perception.
During the last century, technology in all of its forms have provided us a wider set of inputs. I guess this is called globalization. We have access to and know more about more subjects. Where we used to just be concerned with our local experience, we now are fed data on an ever-broadening spectrum of subjects. Google (verb) whatever subject you can imagine and have instant access to other’s research and opinion’s. It is no longer our own experiences that form our perceived reality it is the experiences and knowledge of others.
My point is that our perceived reality may not always equal our actual reality due to the influence of non-localized information. I run into people all the time who can’t believe the sorry state of our real estate market. The problem is that they have no actual experience with the market, their perceptions are based on outside information. We are used to making the leap from “the market is bad in Las Vegas” to “it must be bad here as well”.
Right now, the media has plenty of negative news to report. There is blood in the water and the sharks are in a frenzy. Foreclosure’s in CA, value loss in Michigan, empty buildings in Florida, etc. Bad news all around, a fact. The problem is that people take that news and equate that news to all other areas. The message is that the market is bad, the conclusion is that the market is bad everywhere.
Perception does not always equal reality. While the market in Boulder County is not stellar, it is much better than what you would think by listening to the news. Prices are holding, properties are selling and foreclosures are not a big part of our market. We are very lucky and I’m spreading the word! When you are ready to buy or sell give me a call. I’m here to help. Neil 303-818-4055
