The Denver/Colorado Real Estate thread.....

[Meck77]

I've been calling for a bottom to the real estate market in Denver sometime next year. Home values are still slipping a bit but overall sales numbers are on the rise. This is a good sign but the big x factor is the volatile interest rates we have right now.

Here are the recent July #'s.

http://denver.bizjournals.com/denver/stories/2007/08/06/daily24.html?jst=b_ln_hl

[bronclvr]

What is amazing is that up here in the Mountains prices are rising with very little Inventory in the affordable ranges and in the local Paper in the last Month they said that values have increased 20%+ year over year-

[Meck77]

What is amazing is that up here in the Mountains prices are rising with very little Inventory in the affordable ranges and in the local Paper in the last Month they said that values have increased 20%+ year over year-

It's two different markets for sure. Mountain property is being gobbled up by baby boomers/2nd home owners at a furious pace. I don't see it letting up although jumbo loans took a large hit also. At my sales meeting this morning I heard a couple of large deals just fell because the buyers weren't willing to pay the higher interest rate. Even high end buyers are effected. The mortgage industry is clamping down on every part of the market not just the sub prime deals.

Another thing that is fueling the mountain property sales is people wanting out of large cities. 9-11 really shook some things up and many front rangers fled for the hills. I wasn't up here back then but there was a big surge of people moving from what I was told. Another 9-11 would probably do more of the same to the mountain markets.


What area are you in if you don't mind me asking?

[bronclvr]

Aspen/Glenwood

[Meck77]

Some new legislation that was passed this month in Colorado.





Effective 08.01.07

Colorado

To comply with the predatory lending provisions of Colorado HB 132, SB 85, SB 203, & SB 216, AmTrust Mortgage will not permit the registration of the following low documentation programs for loans on properties located in the State of Colorado on or after 08.01.07.

Discontinued documentation types include:
Portfolio Fixed and ARM No Income Verification (NIV)
Portfolio Fixed and ARM No Ratio (NR)
Portfolio ARM Stated Income/Stated Asset (SISA)
Portfolio ARM No Income/No Asset (NINA)
Standard ARM No Income Verification (NIV)
Jumbo Fixed No Income Verification (NIV)
Jumbo Fixed No Ratio (NR)
Lot Loan with No Income Verification (NIV)
RateSwap Plus

AmTrust Fast Solutions and AmTrust's Conforming Fixed Alt A Plus (NIV, NR & NINA) are still eligible documentation types for loans underwritten in the State of Colorado.

Effective for all loans closing on or after 08.01.07, the Correspondent/Broker must complete and sign the State of Colorado Warranty Form [WSL: 568] to be eligible for delivery to AmTrust. All Rate/Term and Cash-Out Refinance transactions will also require the Correspondent/Broker to complete the Multi-State Net Tangible Benefit Worksheet [WSL:569].

These forms will not print with the Gemstone closing package, therefore, they must be printed from the Forms Library in Gemstone.

Published July 31st, 2007

[ak1971]

We are going into an election year. Rates and the mortgage mess will be cleaned up so the replublicans can have something to hang thier hats on. Be damned if it screws up the dollar, the average moron in the street only cares that they cant use thier home as an ATM anymore. Oh and I see some 'decent' appreciation in S Denver/Parker/Castle Rock

[ak1971]

Some new legislation that was passed this month in Colorado.





Effective 08.01.07

Colorado

To comply with the predatory lending provisions of Colorado HB 132, SB 85, SB 203, & SB 216, AmTrust Mortgage will not permit the registration of the following low documentation programs for loans on properties located in the State of Colorado on or after 08.01.07.

Discontinued documentation types include:
Portfolio Fixed and ARM No Income Verification (NIV)
Portfolio Fixed and ARM No Ratio (NR)
Portfolio ARM Stated Income/Stated Asset (SISA)
Portfolio ARM No Income/No Asset (NINA)
Standard ARM No Income Verification (NIV)
Jumbo Fixed No Income Verification (NIV)
Jumbo Fixed No Ratio (NR)
Lot Loan with No Income Verification (NIV)
RateSwap Plus

AmTrust Fast Solutions and AmTrust's Conforming Fixed Alt A Plus (NIV, NR & NINA) are still eligible documentation types for loans underwritten in the State of Colorado.

Effective for all loans closing on or after 08.01.07, the Correspondent/Broker must complete and sign the State of Colorado Warranty Form [WSL: 568] to be eligible for delivery to AmTrust. All Rate/Term and Cash-Out Refinance transactions will also require the Correspondent/Broker to complete the Multi-State Net Tangible Benefit Worksheet [WSL:569].

These forms will not print with the Gemstone closing package, therefore, they must be printed from the Forms Library in Gemstone.

Published July 31st, 2007



These are just lender specific. The Legislature wrote the law very vague, in that different lenders are doing different things. I have still seen some lenders doing some SIVA stuff, but the No Doc stuff has pretty much gone away

[Meck77]

Women wear the pants when it comes to home shopping.......
Daily Real Estate News | August 15, 2007
Women Call Shots When House Hunting
U.S. women control or influence $7 trillion in consumer spending annually and make 85 percent of all purchase decisions, according to marketing experts. Single women accounted for 22 percent of all home purchases made between July 2005 and June 2006.

What do women want when they are house hunting?

Women respond best to a holistic approach when buying a house, says Richard Peterson, a psychiatrist who specializes in investment psychology. “They handle global impressions better” than men.

Men's ability to make multifaceted decisions, on the other hand, is diminished when they have to rely on "more than three to four factors," imaging studies of the brain show, Peterson says. For example, when men shop – an activity that requires dealing with an array of facts and feelings – stress hormones increase and focus dwindles.



continued.....
http://www.realtor.org/rmodaily.nsf/pages/News2007081502

[Meck77]

Housing-resale jitters
Biggest slump in 16 years stirs wider worries
By Aldo Svaldi Denver Post Staff Writer
Article Last Updated: 08/16/2007 02:56:07 AM MDT

Crippling debt loads and loose lending practices have backed many homeowners into a corner. Foreclosure is their way out. (Post / Craig F. Walker)

Home resales plunged nationwide during the April-to-June quarter, but Colorado is weathering the downturn better than most states.

Forty-one states suffered a decline in home resales compared with the same period a year ago, while a third of metro areas recorded a rare annual decline in median home values, according to a report Wednesday from the National Association of Realtors.

The downturn in housing is the worst recorded in the past 16 years. Driven by loose lending standards and a rash of speculative buying, the housing pullback has rattled financial markets worldwide, forced dozens of lenders to close and raised fears about the health of the U.S. economy.

The hardest-hit states were Florida, Nevada
More Information

* Read the full report from the National Association of Realtors and find out how the housing market performed in your city.

and Arizona, where spec ulative buying fueled huge jumps in home prices and a frenzy of new construction.

"Those are the markets that both went up the highest and will have the biggest adjustment problems," said Ingo Winzer, president of the Local Market Monitor in Wellesley, Mass.

Sales in the second quarter were down 41.3 percent in Florida, 37.5 percent in Nevada and 23.4 percent in Arizona compared with a year earlier.

Sales nationally fell 10.8 percent compared with the same period a year ago. In Colorado, the decline was a more modest 4.8 percent.

For those caught in the slump, the losses can be significant. Denver real estate analyst Gary Bauer said he has a friend who purchased a Las Vegas home for $250,000 a few years ago after a job transfer.

He is being called back to Denver, but the move will cost him.

"He will be lucky to sell the home for $190,000. It may be $175,000," Bauer said. "He is crying his woes."

Some Western states such as Texas and Colorado, which saw home prices run higher in the late 1990s but missed the most recent run-up fueled by low interest rates and easy credit, are faring better in the current downturn, Winzer said.

Colorado ranked 28th among states for its decline in home resales, while Texas was 38th. In Wyoming, which is enjoying an energy boom, home resales rose 10.8 percent.

Lawrence Yun, a senior economist at the National Association of Realtors, put a positive spin on the report, noting that two out of three metro areas saw price gains during the past year.

"Although home prices are relatively flat, more metro areas are showing price gains with general improvement since bottoming out in the fourth quarter of 2006," Yun said in a note.

Median home resale prices were flat in Denver-Aurora, up 2.3 percent in Boulder and 1.4 percent higher in Colorado Springs.

Winzer was skeptical that housing markets have bottomed.

"There are a lot of factors that will temper demand overall in real estate markets for several years. It will take three to five years to stabilize," he said. "There is more pain coming."

RealtyTrac, a California firm that tracks foreclosures, reported escalating foreclosure rates in 82 of the top 100 metro areas during the first half of the year.

Colorado reported the highest foreclosure rate of any state in 2006, according to RealtyTrac. But other states have since passed it.

Foreclosure filings rose 11 percent in the Denver-Aurora area, which ranked sixth among metro areas.

Foreclosure filings are up 256 percent in Stockton, Calif.; 99 percent in Detroit; and 142 percent in Las Vegas.

A rising fear among stock investors is that the housing slump will cause consumers to curtail spending, slowing the economy further and worsening the housing decline.

"Housing may trigger people making the decision that they can't spend more money," Winzer said. "When they stop buying, the economy slows down."

Stock indexes, which had been holding gains early in the day, dropped in late afternoon trading on news that Countrywide Financial Corp., the nation's largest mortgage lender, was struggling to get the money it needed to continue operating.

[ak1971]

buy in Morris Heights. With the move on UCHSC and Childrens Hospital, some good bargins there now

[Meck77]

buy in Morris Heights. With the move on UCHSC and Childrens Hospital, some good bargins there now

Solid advice. I see a plenty of upside in that whole area. Who would have ever thought a Hilton would be going up just down the street from Wolfs.

[ak1971]

Solid advice. I see a plenty of upside in that whole area. Who would have ever thought a Hilton would be going up just down the street from Wolfs.

I wish I would have had the insight to buy that old Holiday Inn from that nutso religious group. That thing has got to be worth millions now.

[Odysseus]

I've shopping for investment property but I'm looking for the market to take a substantial dump first. Am I waiting in vain?

I was trying to build some partnerships stateside with individuals who wanted to help me secure and turn around foreclosed properties. I want to turn property enough to build stake a much higher end play on real estate.

Meck knows I would love to get into one of those half million dollar ranch properties but I want to do it by turning property and putting that money in escrow but that eventuality. Is that a stupid plan? I know finding good people is hard.

What are some trade magazines to read in real estate to get an idea on what the realtors see going on out there? It's getting to the point that I am so sick of working with realtors that I am about to get a real estate license just so I don't have to deal with them. Is that what I am going to have to do? How do you get starting as a real estate agent anyways.

What books are out there to teach you REAL Real Estate?

This thread rocks by the way! Thanks for starting the ball rolling.

[ak1971]

I've shopping for investment property but I'm looking for the market to take a substantial dump first. Am I waiting in vain?

I was trying to build some partnerships stateside with individuals who wanted to help me secure and turn around foreclosed properties. I want to turn property enough to build stake a much higher end play on real estate.

Meck knows I would love to get into one of those half million dollar ranch properties but I want to do it by turning property and putting that money in escrow but that eventuality. Is that a stupid plan? I know finding good people is hard.

What are some trade magazines to read in real estate to get an idea on what the realtors see going on out there? It's getting to the point that I am so sick of working with realtors that I am about to get a real estate license just so I don't have to deal with them. Is that what I am going to have to do? How do you get starting as a real estate agent anyways.

What books are out there to teach you REAL Real Estate?

This thread rocks by the way! Thanks for starting the ball rolling.

Personally, I think you cant look to 'flip' properties right now. Thats why that area in Morris Heights is so attractive IMHO. Its the perfect area to cash flow a couple NOO for awhile while the market heals itself. With the hospitals moving there, there is going to be a need for rentals for students etc. Homes in that area are running in the 140K range. With rates still at 6.5 on a 30, great opportunity!

[Meck77]

I wish I would have had the insight to buy that old Holiday Inn from that nutso religious group. That thing has got to be worth millions now.

Any lot along that corridor of Colfax is worth millions. The old holiday in site is several acres I'm sure of that. Heck when I was a kid that area was pretty respectable. I went to elementary school right behind that building as a matter of fact.

Buddy of mine had the trailer court under contract across the street from the Hilton site. Well it's actually north of there a bit. He was going to cash flow that property and wait for the light rail but the numbers didn't meet his needs and they were actually pretty solid.

That area hasn't scratched the surface of what it will eventually look like. As far as I know the 225 light rail line to Fitz is already funded but I'd have to double check on that at my next light rail meeting.


QT your question is going to take some time to answer but I have to run. I'll be back a little later.

[Hotrod]

I've done very will with my western slope property

[ak1971]

Any lot along that corridor of Colfax is worth millions. The old holiday in site is several acres I'm sure of that. Heck when I was a kid that area was pretty respectable. I went to elementary school right behind that building as a matter of fact.

Buddy of mine had the trailer court under contract across the street from the Hilton site. Well it's actually north of there a bit. He was going to cash flow that property and wait for the light rail but the numbers didn't meet his needs and they were actually pretty solid.

That area hasn't scratched the surface of what it will eventually look like. As far as I know the 225 light rail line to Fitz is already funded but I'd have to double check on that at my next light rail meeting.


QT your question is going to take some time to answer but I have to run. I'll be back a little later.


They are trying to clean it up thats for sure. I was on a ride along with the APD a few months back. They arrested like 37 people in the strech from Sable to Peoria in about 5 hours

[Odysseus]

Any lot along that corridor of Colfax is worth millions. The old holiday in site is several acres I'm sure of that. Heck when I was a kid that area was pretty respectable. I went to elementary school right behind that building as a matter of fact.

Buddy of mine had the trailer court under contract across the street from the Hilton site. Well it's actually north of there a bit. He was going to cash flow that property and wait for the light rail but the numbers didn't meet his needs and they were actually pretty solid.

That area hasn't scratched the surface of what it will eventually look like. As far as I know the 225 light rail line to Fitz is already funded but I'd have to double check on that at my next light rail meeting.


QT your question is going to take some time to answer but I have to run. I'll be back a little later.

I remember all that junk property on Colfax and how they were giving away HUD houses that are now pushing $500,000 mark. I didn't have the money to do anything but if I knew the value later I certainly would have found a way. I don't think anything has changed. I am getting killer value downtown but right of way is making me want to think of alternatives.

I've been doing extremely well on luck. I think it's time I slowed down and learned why I have been so lucky.

[Odysseus]

Personally, I think you cant look to 'flip' properties right now. Thats why that area in Morris Heights is so attractive IMHO. Its the perfect area to cash flow a couple NOO for awhile while the market heals itself. With the hospitals moving there, there is going to be a need for rentals for students etc. Homes in that area are running in the 140K range. With rates still at 6.5 on a 30, great opportunity!

A friend of mine did this successfully in Buffalo New York. She bought some no money down houses for about $10,000 each. My thought is even at wholesales prices a house is a house. I just have to crack that code and I am in business. The trick is turning the deal with cash. If I get in and out with one eye on what the bubble is doing the worst case scenario is I get saddled with a cheap house cheap

I think you are right that the area you are talking about has some great long term steals but I am trying to build a stake so that I can get a dream property in Durango. My time frame is from last week to why don't I have one now.

I consider myself an extremely lucky novice. I am thinking of becoming a realtor just so I can make sure I even understand some of the real questions that I cannot find answers for. The funny thing is by the time I get all of that I could have purchased something of value and been making money. Go figure.

Great tip by the way. Thanks for your feedback.

[broncos_mtnman]

Some new legislation that was passed this month in Colorado.


Effective 08.01.07

Colorado

To comply with the predatory lending provisions of Colorado HB 132, SB 85, SB 203, & SB 216, AmTrust Mortgage will not permit the registration of the following low documentation programs for loans on properties located in the State of Colorado on or after 08.01.07.

Discontinued documentation types include:
Portfolio Fixed and ARM No Income Verification (NIV)
Portfolio Fixed and ARM No Ratio (NR)
Portfolio ARM Stated Income/Stated Asset (SISA)
Portfolio ARM No Income/No Asset (NINA)
Standard ARM No Income Verification (NIV)
Jumbo Fixed No Income Verification (NIV)
Jumbo Fixed No Ratio (NR)
Lot Loan with No Income Verification (NIV)
RateSwap Plus

AmTrust Fast Solutions and AmTrust's Conforming Fixed Alt A Plus (NIV, NR & NINA) are still eligible documentation types for loans underwritten in the State of Colorado.

Effective for all loans closing on or after 08.01.07, the Correspondent/Broker must complete and sign the State of Colorado Warranty Form [WSL: 568] to be eligible for delivery to AmTrust. All Rate/Term and Cash-Out Refinance transactions will also require the Correspondent/Broker to complete the Multi-State Net Tangible Benefit Worksheet [WSL:569].

These forms will not print with the Gemstone closing package, therefore, they must be printed from the Forms Library in Gemstone.

Published July 31st, 2007

Meck,

While this is happening with some lenders, there are still programs out there for SIVA, SISA, NIV, etc....

The guidelines are being tightened a little bit, but these are just about the only loan programs I use (I'm a mortgage broker in Frisco, CO).

There's no doubt that the industry is being shaken up a little bit, but this type of adjustment comes along every once in awhile. I've been through 2 previous periods like this in my 12 years as a broker.

By the way, in Summit County, CO, real estate is hotter than ever. Average appreciation rates last year were about 20% - 25%. I do some investing with a partner of mine and we've been very successful buying older properties (1980s) and flipping them with nothing more than cosmetic updates.

By the way, the poster who said that this isn't a good time to flip properties, I couldn't disagree more. A depressed market (which is what the Front Range has right now) is the perfect time to do just that.

I know we aren't able to "sell" stuff on the boards, but if someone wants to PM me, I would be happy to hook them up with some materials, courses, etc.

[ak1971]

[QUOTE=broncos_mtnman;1678748].

By the way, the poster who said that this isn't a good time to flip properties, I couldn't disagree more. A depressed market (which is what the Front Range has right now) is the perfect time to do just that.

IQUOTE]


What I was trying to get at here was that alot of people get the idea that flipping is quick money, and a lot of people think that its easy money. Its alot harder than that, especially when people were trying to flip these with no money down.

Who is still doing alot of the NINA, SIVA..etc?? Seems like more and more of that is gone. First Magnus shut down today so its touching the Alt-A market more.

[broncos_mtnman]

What I was trying to get at here was that alot of people get the idea that flipping is quick money, and a lot of people think that its easy money. Its alot harder than that, especially when people were trying to flip these with no money down.

Who is still doing alot of the NINA, SIVA..etc?? Seems like more and more of that is gone. First Magnus shut down today so its touching the Alt-A market more.

I understand what you're saying, it just didn't look that way.

It's true that some NINA, etc have gone away, but I still work with about 6 or so lenders who will do them, even the neg am ones.

[Watchthemiddle]

Just call me Mr. Baby Trumph.

Ha ha ha...

I recently bought some properties in Aurora, Co....for minimal money...spent $12.5 grand each to fix them up...( carpet, cabnets, paint, doors, and whatever else you want to add )

And am set to make a KILLING off of these two when and IF I choose to seel them. I have 3 daughters to put through college and Marry...so far I am getting good rent out of them and just might hang on to them for 20 years regardless of the Market because those two properties added to my current property would send them all to school and marry them someday.

You have to make a risk in order to get a gain. I will make a Gain.

And not too mention, am looking for another house.

Mtnman, can you hook me up with a lender to lend me some $$$$$$$$....lol

[Meck77]

Meck knows I would love to get into one of those half million dollar ranch properties but I want to do it by turning property and putting that money in escrow but that eventuality. Is that a stupid plan? I know finding good people is hard.

What are some trade magazines to read in real estate to get an idea on what the realtors see going on out there? It's getting to the point that I am so sick of working with realtors that I am about to get a real estate license just so I don't have to deal with them. Is that what I am going to have to do? How do you get starting as a real estate agent anyways.

What books are out there to teach you REAL Real Estate?

This thread rocks by the way! Thanks for starting the ball rolling.


Making money in real estate is not a stupid plan QT. As AK mentioned rates are still good and the front range is a buyers market unlike some of the mountain communities up here. If that ranch in Durango is the goal than set the goal now. Personally I wouldn't wait til you have all the money you need to take the ranch down. The key is being able to cash flow that ranch sooner than later. A great way to take some land down and pay down debt in a hurry is to subdivide it. In Colorado you can subdivide into 35 acre chunks no questions asked. Or you might find that right piece of land that can be subdivided further than that. At that point you can JV joint venture with a builder and spec (build homes for sale) and sell them. Or just sell lots.

I poked around Durango for land before I bought my ranch up here. Beautiful area indeed. Love the hot springs out there also. I'd get to know that area real well and find something there that can make you money or give you a place to enjoy while you are building your plan and your dream. s

I'm actually working on the concept and gathering all the information needed to do some joint ranch ownership deals. It's a relatively new concept but it is being done on a limited basis right now but the DEMAND is real as I've spoken to a number associates of mine who've expressed interest in my plan. With mountain condos and home being chunked up into 12th's or even weeks why can't a ranch? There is a baby boomer market out there of people wanting to live the ranch lifestyle but don't want all the work associated with owning a ranch full time. Make no mistake there is work involved with owning a ranch in the mountains.

There are deals in the front range also but there is just a ton of inventory out there right now. I know guys doing flips but you have to "Buy right". Buying right on a fix up is where you make your money. With all the do it youself shoes on TV these days you have all sorts of novice people thinking they can just slap some tile in a house and make 50 grand on an average priced home.

Watchthemiddle congrats on your homes in Aurora. Sounds like you are on the right track. Keep in mind your homes are worth what someone is willing to pay RIGHT NOW. That is the risk of doing a flip as most people doing flips have the urgency to sell because they have little down on the property and their cash in that house. I prefer the buy and hold strategy myself. Buying in this down market and holding for even 5 years I believe is a good strategy. A twenty year old...Even better! If a good aurora deal comes across my plate I'll zip you pm watchthemiddle. I still monitor that market via the MLS and have associates that keep their eyes out for me.

Buying and holding isn't as exciting as the flip but it can be every bit as lucrative if not more. QT you asked about what real estate books to read. I'd recommend a book called "The millionaire mind" to you. It's not all about real estate. It's about thinking like a millionaire and the trends and traits they have that got them there.

As far as becoming a realtor QT it can be done in a matter of weeks or months depending on how much time you have to go to school. Being a good realtor and making a living at it is a full time job. Many people think that it's something that they can do part time. I disagree. It can be done part time if you are buying and selling property on your own account but if you are representing buyers and especially sellers it's not a part time gig at all. There are several schools in Denver you can go to that I would recommend.

You can also take classes online. www.vaned.com Vaned is good for continuing education that we brokers have to take but not sure I'd recommend it for getting your license though but it can be done.


Bottom line there are hundreds of ways of making money in real estate it just depends on how you like to spend your time and how much risk you are willing to take.

QT when are you coming to Colorado next?

[Sassy]

Houses don't seem to be selling around here. I live in a townhouse and there are 3 of them that have been for sale since Spring. Last summer...my neighbor put his up for sale and sold in before the open house even ended...and he got his asking price. I have also noticed (I do a lot of biking) that many of the same houses that went for sale in the Spring are still not sold.

[Meck77]

QT...Here is a perfect example of someone taking down a couple hundred acres and splitting it up into 35's. http://www.homesandland.com/Listing.cfm?&ListingId=8127219

Woulda coulda shoulda...I looked at 160 AC out there maybe 5 years ago. It was pretty close to town, had national forrest access for 400k. Seemed a bit high to me at the time. Those 35's are probably worth 300k individually now. I'd have to do some research to get a better feel for that market though.

[Watchthemiddle]

Thanks Meck. I am doing the buying and hold strategy as well.

[Meck77]

Pretty good article about the recent rate cut and how it effects you....


What Is The Fed's "Discount" Rate And Does It Affect Housing?
by Blanche Evans

The Federal Reserve rate cut of last Friday failed to stop the bleeding in the U.S. stock market. That's because the Fed cut the "discount" rate, not the federal funds interest rate. What's the difference and how will housing be impacted?

You won't find the answer on financial news sites. They talk in jargon. Either that, or the journalists themselves don't know what the differences mean.

So if they don't know, you probably don't know either.

So here's a little lesson in American federal money flow management.

The Federal Reserve is the bank of the federal government and the guardian of the U.S. economy, and as such, regulates monetary and credit policies such as buying and selling securities, setting the cost of credit (interest rates,) how much money is available to banks for borrowing, and how fast and at what rates the money has to be repaid. The idea behind the Federal Reserve is to keep things running smoothly, so banks that are members of the Fed are federally insured, which is reassuring to depositors like you and me.

To accomplish the flow of money, The Fed operates 12 regional banks, who monitor the economy and loan money to "member" depository banks -- (member FDIC.)

There are two ways banks can borrow money using Fed-insured funds. They can borrow money directly from the Fed using the "discount" rate, or they can borrow from each other using the "federal funds" interest rate. Both are short-term or overnight rates.

The discount rate is designed to improve liquidity for the banks themselves. The federal funds interest rate is designed to improve or limit liquidity or access to credit for consumers.

Because the Fed can't dictate what happens in the open market or between banks, the Fed will issue a "target" rate for federal funds, which most banks stick close to. They can then charge consumers whatever they feel they can get away with in the form of credit card interest rates, mortgage interest rates, car loans and so on.

If the economy is sluggish and consumers aren't spending, the Fed will lower target rates to encourage banks to lower the cost of borrowing. If the economy is heating up more than about three percent of annualized growth, inflation is a danger, and Fed will make credit more expensive to slow things down.

This past Friday, the Fed cut its discount rate by 50 basis points, from 6.25% to 5.75%. Since the discount rate is used by banks for their own liquidity, it's considered a "secondary" rate because it doesn't impact consumers directly. The lowering of the discount rate is viewed by many in the economy as a largely symbolic gesture that the Fed is acknowledging that the economy might be slowing to the point that it will consider a cut in the federal funds rate so that consumers can benefit.

The Federal Reserve can decide at any time to raise or lower the cost of the discount rate to banks, but raising or lowering federal funds rates is done by the Federal Open Market Committee, composed of the Board of Governors and the 12 Reserve Bank presidents, although only five of those can vote at any single meeting. The Committee meets eight times annually to whether or not to raise key interest rates - the discount and federal funds rates.

Last week, the FOMC had just met and decided not to raise or lower federal funds rate, leaving the 5.25% funds rate in place for the ninth meeting in a row. But after the Fed cut discount rates, many pundits believe that the next time the Fed meets, in September, the FOMC will vote to lower key interest rates by 25 to 50 basis points.

Meanwhile, what housing consumers can look forward to is a general calming of the markets with less panic than has been shown lately.

Mortgage interest rates, in the face of expanding liquidity, are likely to drift downward, which will make buying a home more affordable in the short-term.

Published: August 21, 2007

Use of this article without permission is a violation of federal copyright laws -- http://www.loc.gov/copyright.



http://realtytimes.com/rtapages/20070821_feddiscount.htm

[Meck77]

Wow check this out. Warren Buffet is looking to buy Country Wide Home loans.

http://www.denverpost.com/business/ci_6678888

[theAPAOps5]

Houses don't seem to be selling around here. I live in a townhouse and there are 3 of them that have been for sale since Spring. Last summer...my neighbor put his up for sale and sold in before the open house even ended...and he got his asking price. I have also noticed (I do a lot of biking) that many of the same houses that went for sale in the Spring are still not sold.

It probably has a lot to do with asking price. Like Meck said your house is only worth what someone is willing to pay right now. Many people see what their neighbors sold a house for 2-3 years ago and think that is what they should be getting. But that was a different market.

[Meck77]

A hard look at the foreclosure numbers.

http://www.rockymountainnews.com/drmn/real_estate/article/0,1299,DRMN_414_5679239,00.html

[Orange_Beard]

We sold our house in Park Hill last month in 22 days.
5 grand under asking price. I thought it was over priced anyway....

Waiting here in California. It is a whole another world. I have had 2 differnt people tell me they think the market will keep turning down until next June....So we are going to wait and see.

[Meck77]

We sold our house in Park Hill last month in 22 days.
5 grand under asking price. I thought it was over priced anyway....



Congrats. Yeah there is a misconception in Denver about the market. Prices have not fallen across the board. There are areas that have seen good gains, areas that have remained flat, and areas with massive amounts of foreclosures.

Park Hill is a very desirable area. It's been on the up and up for many years now. Factor in all the redevelopment around Stapleton and it's proximity to downtown it's become a "trendy" Wash park type neighborhood.

I have my eye on the California market also. The Californians have been buying up my state for decades. It's time to turn the tables on them and take some of theirs!

They haven't seen the worst of it yet. Not by a long shot.

[Orange_Beard]

Congrats. Yeah there is a misconception in Denver about the market. Prices have not fallen across the board. There are areas that have seen good gains, areas that have remained flat, and areas with massive amounts of foreclosures.

Park Hill is a very desirable area. It's been on the up and up for many years now. Factor in all the redevelopment around Stapleton and it's proximity to downtown it's become a "trendy" Wash park type neighborhood.

I have my eye on the California market also. The Californians have been buying up my state for decades. It's time to turn the tables on them and take some of theirs!

They haven't seen the worst of it yet. Not by a long shot.

Any thoughts on when to buy in Cali?

We are renting, really because we were not sure where we wanted to live out here. Now that we have been out here for a little we are focused on a couple of communities. We looked at a place 2 weeks ago, the price had just dropped 50k and it is still on the market.

What do you think Meck?

[theAPAOps5]

Congrats. Yeah there is a misconception in Denver about the market. Prices have not fallen across the board. There are areas that have seen good gains, areas that have remained flat, and areas with massive amounts of foreclosures.

Park Hill is a very desirable area. It's been on the up and up for many years now. Factor in all the redevelopment around Stapleton and it's proximity to downtown it's become a "trendy" Wash park type neighborhood.

I have my eye on the California market also. The Californians have been buying up my state for decades. It's time to turn the tables on them and take some of theirs!

They haven't seen the worst of it yet. Not by a long shot.

I sold my house in Platte Park in 26 days. I lowered the price on it but I still made some decent money. Meck is exactly right. There are areas in Denver that are very desirable and can absorb the current market better.

[Meck77]

Any thoughts on when to buy in Cali?

We are renting, really because we were not sure where we wanted to live out here. Now that we have been out here for a little we are focused on a couple of communities. We looked at a place 2 weeks ago, the price had just dropped 50k and it is still on the market.

What do you think Meck?

I'm not a California expert Beard. Colorado is what I focus on. What I would do is look at the overall inventory numbers in the market you want to purchase in and use that as one tool.

Your realtor out there can give you updates regularly on the trends. The X factor on how far south prices will correct to are ultimately up to interest rates also.

I can't really comment on a 50k drop. Sounds like a lot but not if you are talking a 500k home. Personally I'd stay on the sidelines longer until you really have a feel for the market. It seems you have time to be patient.

At the end of the day though when you come across a good deal you just have to go with your gut. Sellers have different levels of motivation. If you can buy a home 10%-20% under current market conditions in the area you want that is a great buffer to come in with. That is what I've been doing with my clients after the market started going soft after 9-11.

It only takes one good deal. I wouldn't be afraid of writing 5-10 offers out there to find out who is motivated. You just never know until you start putting the pen to the paper.

Also when you get to contract writing don't let your emotions play into things. It's difficult not to do that but a good agent will help you with that process. Don't worry about "wasting an agent's time". They are there to work for you and make them earn their commission.

[Meck77]

Another update on the RE market in today's Denver post.

http://www.denverpost.com/business/ci_6692535

This credit crunch is adding another punch to the Denver market. Hang on folks! It's going to get a bit messy before we climb out.

FYI any investors or single guys/gals thinking about moving to Denver I have a line on 9 condos on the light rail line 15 minutes to downtown that are selling for less than 40k. That is cheap. There are circumstances to why they are so cheap that I'm looking into right now but these units were selling for 120k just a couple years ago.

[Odysseus]

I know we aren't able to "sell" stuff on the boards, but if someone wants to PM me, I would be happy to hook them up with some materials, courses, etc.

I DID PM you and you I got that standard good luck and see you later speech. I am now on the board requesting materials. What information did you need in my PM this time? Did you want to send it to Iraq?

[Odysseus]

Meck,

I appreciate all the digging that you did. That is a lot of information to take in when I got five minute to get packed and in the air. I'm glad this thread is prospering and staying on track. There is a lot of information that I don't have and I know becoming a real estate agent just to get the right information seems kind of excessive but I have a lot of ideas that like yours are not traditional and require a hands on expertise to get a result. I am pretty much a do it yourselfer for anything anymore. I get sick of explaining stuff that people say can't figure out so I just go make it work and get on to the next deal.

I'll check back in a couple of days.

[Meck77]

No problem QT. I'll be updating this thread periodically keeping you guys in tune with the Denver RE market. I'm actually heading down the mountain tomorrow and will be previewing this condos I spoke about. I'll bring my digital camera also to share some pics with anyone that wants further info.

FYI..I just spoke with my banker. He's quoting 6.375% on an FHA program with 3% down. That is still a great rate. Subprime is toast but people with decent credit can still get cheap money.

[ak1971]

No problem QT. I'll be updating this thread periodically keeping you guys in tune with the Denver RE market. I'm actually heading down the mountain tomorrow and will be previewing this condos I spoke about. I'll bring my digital camera also to share some pics with anyone that wants further info.

FYI..I just spoke with my banker. He's quoting 6.375% on an FHA program with 3% down. That is still a great rate. Subprime is toast but people with decent credit can still get cheap money.

subprime isnt toast. it will be back. Just dried up for a bit. If you are willing to put down 10% still lots of products available for everyone.

did you check out that equity accelerator program I sent?

[smalltowngrll]

Another update on the RE market in today's Denver post.

http://www.denverpost.com/business/ci_6692535

This credit crunch is adding another punch to the Denver market. Hang on folks! It's going to get a bit messy before we climb out.

FYI any investors or single guys/gals thinking about moving to Denver I have a line on 9 condos on the light rail line 15 minutes to downtown that are selling for less than 40k. That is cheap. There are circumstances to why they are so cheap that I'm looking into right now but these units were selling for 120k just a couple years ago.


What about for rental property? Are they in good enough condition to rent for a year or two? My daughter wants to move there in a year or two and it would be a great opportunity for me to get something that she could rent from me when she moves there.

[Sassy]

Meck...I'd be interested in more info on the condos, also!

[Meck77]

Got it AK. Thanks.

STG/SASSY I'm all over it. I know this complex well. The location is killer. My contractor friend has previewed some units. There is some cosmetic work to be done. I'm going to preview units while I'm down for the Browns game.

They would make great rental units STG. My friend checked the going rates in the complex and the 2 bedrooms go for around $875/month.

I'll have the HOA docs and minutes from their meetings soon. I'm going to review those first.

Two years from now I see plenty of upside on these. I wouldn't even mention these if I wasn't considering buying one myself. I'll be in touch.

[smalltowngrll]

Got it AK. Thanks.

STG/SASSY I'm all over it. I know this complex well. The location is killer. My contractor friend has previewed some units. There is some cosmetic work to be done. I'm going to preview units while I'm down for the Browns game.

They would make great rental units STG. My friend checked the going rates in the complex and the 2 bedrooms go for around $875/month.

I'll have the HOA docs and minutes from their meetings soon. I'm going to review those first.

Two years from now I see plenty of upside on these. I wouldn't even mention these if I wasn't considering buying one myself. I'll be in touch.

I'm definitely interested. Any info you can send my way, please do. And, if I can see one while I'm there in a few weeks, that would be Awesome.

[broncocalijohn]

Any thoughts on when to buy in Cali?

We are renting, really because we were not sure where we wanted to live out here. Now that we have been out here for a little we are focused on a couple of communities. We looked at a place 2 weeks ago, the price had just dropped 50k and it is still on the market.

What do you think Meck?

Stay renting. I am in the real estate business in OC and the market will be down at least until next June and maybe 6 to 12 months later. Keep renting so when the price drops, you will be getting closer to the Colorado price. You will need to buy I believe within 18 months but you will be saving a handful. San Diego is a great place to live and it is cheaper than OC. If you can afford OC but work in San Marcos (wife), try San Clemente or SJC/Dana Point area. Much isnt cheap because of horse and/or view property but it will be more affordable soon. Good luck and good move renting for now.

[broncocalijohn]

Got it AK. Thanks.

STG/SASSY I'm all over it. I know this complex well. The location is killer. My contractor friend has previewed some units. There is some cosmetic work to be done. I'm going to preview units while I'm down for the Browns game.

They would make great rental units STG. My friend checked the going rates in the complex and the 2 bedrooms go for around $875/month.

I'll have the HOA docs and minutes from their meetings soon. I'm going to review those first.

Two years from now I see plenty of upside on these. I wouldn't even mention these if I wasn't considering buying one myself. I'll be in touch.


PERFECT! We can all preview the property and write off the whole Denver trip as a business expense. I am liking this already. Nothing like going on preview in an orange bus. SWEEEEEET!

[Sassy]

PERFECT! We can all preview the property and right off the whole Denver trip as a business expense. I am liking this already. Nothing like going on preview in an orange bus. SWEEEEEET!

:pimp:

[Orange_Beard]

Stay renting. I am in the real estate business in OC and the market will be down at least until next June and maybe 6 to 12 months later. Keep renting so when the price drops, you will be getting closer to the Colorado price. You will need to buy I believe within 18 months but you will be saving a handful. San Diego is a great place to live and it is cheaper than OC. If you can afford OC but work in San Marcos (wife), try San Clemente or SJC/Dana Point area. Much isnt cheap because of horse and/or view property but it will be more affordable soon. Good luck and good move renting for now.

Thanks, That is pretty much what I was thinking. We stopped by an open house in Encinitas, the price had just dropped 50k, the listing agent called yesterday to say they were dropping it again....

[smalltowngrll]

Still interested, Meck! VERY interested!

[Sassy]

I'd like to know more about them, too!

[bronclvr]

Don't forget about me!

[Odysseus]

*update* I have a bunch of showing set for tomorrow on the condos/other properties I spoke about. I'll pm details to those who wanted more info. I couldn't get over there last time I was in town but I'll be hitting the streets tomorrow looking for deals.

Hit me up. I've been traveling again. I am still playing catchup. I am getting a ton of emails out of Durango right now that I have not answered yet.

[broncocalijohn]

Meck, time to preview these condos but what time would be available. I think you are away on Saturday.