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In the Denver Post’s “Real Estate Notes” for January 26^th, Margaret Jackson noted the publication of a booklet that can help keep homeowners and homebuyers informed: the second edition of “A Guide to Swelling Soil for Colorado Homebuyers and Homeowners,” put together by the Colorado Geological Survey.  The booklet is 76 pages long and contains information on construction, maintenance, and landscaping.

I can remember in the 1980s when the effects of bentonite on

If you own or are looking into buying

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Article by Logan Chierotti

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The holidays have passed, and a new year has begun – which means that tax time is right around the corner.  If you are a Colorado homeowner, this is also the time of year when owning your own home really pays off.

There are a number of tax advantages and tax breaks for homeowners.  For example, if you own your own home you can:

1. Deduct the interest you pay on the mortgage for your primary place of residence.  This means a sizeable tax deduction, particularly in the early years of your mortgage, when your payments are applied primarily to the interest, rather than the principle (the amount you borrowed to buy your home).  The amount of interest you pay throughout the year is used to lower your taxable income on that year’s returns, in turn lowering the amount you pay in taxes.  For example, during the first few years of a $200,000 home loan, you might be able to lower your taxable income by as much as $14,000.

2. Deduct the interest you pay on the mortgage for your second home.  The home loan interest deduction doesn’t apply to just your primary place of residence: You can also deduct the interest paid on a second home, or a vacation home.  In places like Colorado, where many mountain towns and popular ski resorts boast thriving second home markets, this deduction is a big deal for homeowners.

3. Deduct the real estate taxes you pay on your home(s).  Every year, homeowners are required to pay property taxes on their homes.  Just like the interest paid on your loan, these taxes can be deducted on your tax return every year, lowering your taxable income.

Taking these deductions will require you to itemize, which will make your tax returns a little more complicated.  However, as a homeowner your itemized deductions will most likely end up being far more than the standard deduction, making it well worth your while to do so.  For a couple of sample scenarios, please see this article on AllLaw.com: The Tax Benefits of Home Owenrship.

If you are like most people, you probably see doing your taxes as an unfortunate chore, at best.  Owning a home turns tax time into a more satisfying experience, because you get to see how much money you’ve actually saved by owning your own home.

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Just when you thought the Federal Reserve was done tinkering with the interest rates, they’ve gone and done it again: On December 11th, the Feds cut interest rates a third time.

Like last time, this rate cut lowered the short-term interest rate only a quarter of a percent.  However, since the first rate cut back in September lowered this rate a half-percent, the rate is now at 4.25 percent – exactly one percentage point lower than it was several months ago.

Also like last time (and the time before), the Feds cut the discount rate, which basically means that banks can borrow from the Federal Reserve at a lower interest rate.  After another quarter-point cut, the discount rate is currently 4.75, also exactly one percentage point lower than it started before the rate cuts this fall.

This may seem like a lot of mumbo-jumbo, but it is indeed good news for Colorado homebuyers.  Although experts doubted as to whether the initial half-percent cut would help consumers very much, there is no doubt that consumers will benefit from rates being a full percentage point lower.  With interest rates at 4.25, you can save a lot not only on monthly payments, but also on the amount you would have paid over the life of your mortgage.

The rate cut also benefits Colorado homeowners.  If you are interested in refinancing your home, perhaps to get a better rate or use the equity to make some home improvements, keep a close eye on the rates – but don’t wait too long, or they may go up again.

One other, and sometimes overlooked, way that the rate can benefit Colorado real estate owners: Some cities and neighborhood associations offer residents special loans for home improvements.  These loans may offer low or no closing costs, and are typically offered at a set rate that isn’t much higher than the rates set by the Federal Reserve.

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According to an article on MSNBC.com, mortgage rates fell this week to 6.10 percent.  Rates this low haven’t been seen in more than two years.

Another article in The Denver Post reported a similar drop in mortgage rates last week: According to Freddie Mac, between the second and third weeks of November mortgage rates fell from an average of 6.24 percent to an average of 6.20 percent.

What does this mean for homebuyers in Colorado?  For one thing, if you buy a house or refinance a loan at this time, your savings are huge.  Not only does a lower mortgage rate mean lower monthly payments, it also means less money paid over the long run.  Even a four-thousandths of a percent less can save you thousands over the life of a 30-year loan.

And if mortgage rates keep falling, it could mean even greater savings for those buying or refinancing Colorado homes.

Finally, low mortgage rates could help boost the real estate market.  New homes sales in October actually rose 1.7 percent; falling mortgage rates could encourage home sales to increase even more.

These advantages could combine for a really great deal for Colorado homebuyers.  If you buy a home when 1) mortgage rates are low and 2) a buyer’s market enables you to get your home for less than fair market value, you end up with double savings!

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On September 18th, barely a month and a half ago, the Federal Reserve lowered two interest rates by half a percent each: The overnight lending rate was cut to 4.75 percent, and the discount lending rate was cut to 5.25 percent.

At the time, the Feds and other experts voiced concerns that while the lower interest rates would help ease the depression in the housing market, it could also speed inflation.  Therefore, the interest rate cuts, at half a percent each, were intended to be modest.

Apparently, though, the Feds aren’t finished.  On October 31st, both interest rates were cut again, this time by a quarter percent each: The overnight lending rate dropped to 4.5 percent, and the discount lending rate dropped to 5 percent.

According to the Feds’ official statement, the economy has recovered somewhat in recent months; the interest rate cut is intended to maintain economic growth by helping the housing market to recover.  However, the official report also notes that inflation is still a concern.

Since experts predicted the last interest rates cut would have little effect on consumer loans, the same would seem to be true of this cut, particularly because the difference (a quarter percent) is even smaller.  However, it is worth noting that the Feds intended the cut to counteract the downward trend of the housing market, which means that homebuyers should still benefit.

In fact, homebuyers have a unique advantage right now.  With the second cut in less than two months, interest rates are now as low as they were about two years ago.  At the same time, housing prices are down: According to the New York Times, U.S. homebuyers are paying on average 5 percent less than they were a year ago.

In other words, right now homebuyers pay less on property and on interest.  Sounds like a good thing to take advantage of, doesn’t it?

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Sunday, October 15^th was Blog Action Day.  The goal was for bloggers worldwide to post about the environment.

 
Just because Blog Action Day is over, however, doesn’t mean we should stop talking about the environment.  Here are five simple but effective things homeowners can do to make their lives more earth-friendly.

#1: Recycle.  It used to be that recycling was a luxury only the wealthiest homeowners can afford.  Not so anymore.  Recycling has become much more affordable, and there are a number of different services (and levels of service) to choose from.  Alternatively, many communities provide recycling dumpsters where you can drop off your recyclables, usually at no charge.

#2: Convert to electronic billing.  Many credit card companies, lenders, phone providers, and other businesses now offer electronic billing.  Instead of getting paper statements, you will get an email statement or an email reminder to check your current statement online.  You can usually pay online too, which saves paper on not only statements, but also on unnecessary checks and envelopes.

 
#3: Landscape to use less water.  You may have already seen the Denver Water signs around town: the “Use Only What You Need” campaign.  Frequently these signs are displayed on residential properties, where homeowners have landscaped with water conservation in mind, choosing rock beds, mulch, and low-maintenance shrubs over thirsty gardens.

 
Whether or not you want that square, orange sign displayed in your yard, the goal behind the campaign is noteworthy: Use less water on superfluous things such as landscaping, so that we have more (and longer-lasting) water for the things that really matter.

 
#4: Use less water inside the house, too.  Conserving water doesn’t have to be limited to the Great Outdoors.  Inside the house, you can use less water in a number of ways: Wait to do laundry or run the dishwasher until you have a full load, turn the water off while you are brushing your teeth or handwashing the dishes, and put a time limit on your showers.  Conserving water will benefit not only Mother Earth, but your bank account, too!

 
#5: Buy energy-conserving appliances.  I’m not saying you should run right out and spend thousands of dollars on new appliances.  However, appliances do need replaced periodically.  Most appliances can be found in energy-friendly varieties for about the same price.  Front-loading washing machines have also become popular, as they use considerably less water than the traditional top-loading kind.

 
As homeowners, we are in a unique position: We have control over things such as the kinds of landscaping we do and the types of appliances we buy.  We also have greater access to opportunities such as recycling, which can be difficult to get service for renters – particularly those living in apartments.

 
Doing things for the environment doesn’t have to be time-consuming or costly.  Simply making a few lifestyle changes, such as those listed above, can go a long ways toward preserving the environment for future generations.

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The residential market is still showing signs of slowing, the total amount of homes sold slid by 25% to only 3,737.  The average sold price of residential homes feel 6% to $278,615 from $329,783 last month.

In the condominium market we only saw a total of 3,453 properties go under contract almost 20% less then last month.  Only 2,928 solds a 25% decrease from last month. 

As we head deeper into the winter months the market begins to slow and it becomes a great opportunity for anyone look for a home.  Search for

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Recently, I discussed how the real estate slump has had little effect on the second home market in Colorado.  At the end of September, the Denver Post ran an article that supports this theory: The real estate market in Aspen is still going strong!

The gist of the article is that although real estate sales in Colorado’s Pitkin County fell a little bit in August, the sales for the year is still up from last year.  If that doesn’t sound promising enough for you, note also that 2006 was a record-breaking year, totaling $2.64 in real estate sales.  Sales for 2007 seem to be poised to set a new record.

The article also indicates that Pitkin County’s neighbor, Garfield County, has experienced a rise in real estate sales: Garfield’s August 2007 sales beat out the August 2006 sales by 30 percent.  Needless to say, that’s quite an increase for a country that is supposedly suffering a devastating housing market slump!

As you can see, the real estate slump depends mostly on where you stand.  From the point of view of Colorado mountain counties such as Pitkin and Garfield, the market looks pretty darn good right now!

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Investing in real estate is a tricky business as there are pros and cons involved. While it is possible to make a lot of money in real estate it is also possible to lose it all. The biggest disadvantage with investing in real estate is that there are no guarantees. 

Many times in nice areas to live real estate will not go down. But this is not the case everywhere. The real estate market fluctuates and while it can go up and you can profit from it can also drop where you will lose money and the real estate will not be worth as much as it was when you bought it.  

A good thing about investing in real estate is that the payment you make every month is fixed. There are no landlords to deal with and you do not need to worry about coming up with the rent, which can change. The mortgage company you use can also be lenient when you are going to repay your loan.  

It may be the case that your taxes go up. But this can be a good thing as your property may be increasing in value. You will also have various tax benefits if you own your own home. There are many things such as home repairs, mortgage interests, and taxes, which you can write off.  

One of the better things about investing in real estate is that you can enjoy your investment. This is unlike other investments such as stocks or bonds. You can decorate your home, fix it up, and do pretty much anything you want with your investment. By doing things like these you can also increase the value of your home.  

One of the bad things about real estate investment is that the property can be foreclosed on. If you can’t afford the property it can be taken from you. You can avoid this by budgeting properly and keeping a close eye on your mortgage statement. You also will have to deal with lenders and banks, which can get tiring.  

Owning a home is never easy. This is one of the major drawbacks to investing in real estate. You have to maintain the home, pay the bills on time, and worry about your investment. Owning property is not easy but it can be one of the most profitable as well as enjoyable investments.

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On September 18^th, the Federal Reserve finally did what many of us have been waiting and hoping for: They lowered interest rates. An article in the New York Times reported that two different rates have been cut by half a percent each: The overnight lending rate, which has more of an effect on home buyers, is now 4.75 percent. The other rate cut allows banks to get emergency loans at a reduced rate, as well: 5.25 percent.

The rate cut, which is the first in four years, reflects widespread concern regarding the slump in the housing market. Although recent studies of the Denver Metro real estate market have shown that more expensive homes are not as affected by the slump, many people are still concerned about the possibility of a recession. This threat of an impending recession most certainly fueled the Federal Reserve’s decision to cut interest rates, despite the concerns that the move would encourage inflation.

Unfortunately, the New York Times article predicts that the rate cut will not be as much of a boon for buyers as you might think. The nationwide increase in foreclosures has many people concerned about current lending practices, which in turn has lenders nervous about federal intervention and restrictions. As a result, many lenders have recently returned to more conservative practices.

This doesn’t mean that the rate cut was a pointless move, of course. For many homebuyers, the Federal Reserve’s decision will facilitate the lower interest rates – and, ultimately, more manageable monthly payments – that will enable them to get into (or refinance) the house of their dreams.

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