Every odd year in Colorado, an assessor for the state assesses the value of homes to determine taxes due on your home.* Last year, our assessed value was about $5,000 less than the amount we paid for our house earlier that year. Not a fun little bit of information to get in the mail! Does this mean that our home had lost value over the last year, or, possibly, that the assessed value is a little bit inaccurate?
One of our exclusive buyer’s agent studied data from Louisville in the last year to find out. He compared sale price to assessed value since July 1 of last year to uncover what relationship, if any exists between these values.
It turns out, the assessed value is actually less than the sales value most of the time.
The data also shows that there is also very little relationship between the two values. In other words, the data suggests that the assessed value is somewhat random.
For most of the homes in the study, the assessed value was within -15% to +5% of the sales value. (The assessed value was 15% less than the actual value, up to 5% more than the actual value.)
This is one reason that our experienced exclusive buyers agents do not place much weight on the assessed value of a home in determining its current market value.
What is a better way to determine current market value?
Instead, our buyer agent went through an in depth evaluation of comparable homes (similar and recent home sales in our neighborhood) to determine the current market value. He adjusted the price based on specifics of our home compared to other home (for example, if there was a difference in flooring materials, or upgrades that our house had that the comparable home did not and vice versa.)
*For more information on how home values are assessed by the state, visit http://jeffco.us/assessor/assessor_T80_R10.htm.
First time home buyers are taking advantage of a 30% drop in home price in the mountain resort counties.
Colorado resort homes have seen a decrease in sale price from 2010 to 2011, allowing first time buyers to take advantage of some incredible deals that they would not have been able to afford in 2007 when resort home values were soaring. Now, short sales have continued to drive the prices down.
If you are looking for a resort home in the $200-300,000 range, you will be able to get a lot more for your money. However, these homes are not staying on the market for long with first time buyers hungry to get a good deal.
Great value on high end homes in 2011.
On the other end of the scale, high end resort homes have also seen a significant decrease in price. More high end buyers have purchased real estate this year than the previous year, and for less money. For example, buyers are able to purchase a home in the high end markets in Aspen and Snowmass Village in Pitkin county in 2011 for $10 or $15 million, compared to $30 million in 2010.
What’s in store for 2012?
Some counties experienced a decrease in both the number of transactions and the total dollar value for these transactions. Other counties and markets have seen an increase in both. With mixed signals, it is to early to predict how property values in Colorado mountain towns will change this year.
If you are interested in owning a resort home, it may be a good time to talk to an exclusive buyer’s agent to find out what is available in your price range. With the market slowly picking up, it is difficult to tell if buyers will be able to get the kind of deals that were available in 2011 in the future.
Do you know your neighbors? Are they good neighbors? Are you a good neighbor?
If you are a teacher, firefighter, EMT, or law enforcement officer in Colorado (or anywhere for that matter) you may qualify for the Good Neighbor Next Door Sales Program. The US Housing and Urban Development section offers a 50% discount to eligible employees in these professions on homes in “revitalization” areas.
What is a “revitalization” area (besides the wrinkles on my face)?
A revitalization area is an area that is designated by the HUD and authorized by Congress under the National Housing Act. These are areas where household income, rate of homeownership, and activity of FHA-insured mortgage loans are taken into consideration. By offering this program, it promotes new homeownership activity in these neighborhoods. These areas change on a daily basis. Currently, there is a 2 bedroom, 1 bath home in Adams county listed at $132,000. That means through this program an eligible employee can get this home for $66,000!
There are some crazy good deals here!
So let’s say you are a teacher, firefighter, EMT, or law enforcement officer. Now what? You must meet the requirements of that profession. For example, a law enforcement officer must work full-time for the government, state, local government unit, or tribal government. They must also be sworn to uphold the laws and promise to arrest those who violate those same laws. Watch out bad guys!
A teacher must also be full-time and work for a state-accredited public or private school. Also, the house they are buying must be in the same school district they teach in. A teacher from Jefferson County wouldn’t be able to buy a home in Douglas County under this program.
Firefighters and EMTs must be a full-time (man, they really like to make people work for it!) employee for the state, government, or tribal government as well. I am hoping my firefighter neighbor doesn’t secretly work for the Canadian government as a firefighter…..
The Fine Print….
A requirement for the Good Neighbor Next Door Program is for the buyer to sign a second mortgage for the discounted portion. This is a kind of insurance that the other requirement that the buyer has to use the home as their sole residence for 36 months is fulfilled. As long as it is made the sole residence for the 3 years, then no interest or payment has to be made on the second mortgage.
Show Me The Money…
VA loans, FHA loans, conventional mortgages, and cash can are all accepted forms of payment to buy a home under this program. Local Colorado Exclusive Buyer Agents can provide more details and answer questions about eligibility of a buyer or information on loans that will work through this program.
CLICK HERE FOR A FREE CONSULTATION WITH A COLORADO EXCLUSIVE BUYERS AGENT!
If you haven’t read the first half of this Top Ten list, check it out here. So the second half of this list does not include any Colorado towns, but I added a #11! Just because I love Colorado and think it deserves TWO spots on the list!
6. Winner of Best View for the Money: Deerfield Beach, Florida
When you hear under $100k do you think $99,999? How about a whopping $89,400 for a beach town?!?!?! Yes please. This city is located between Miami and Ft. Lauderdale, which is great for sports fans and cultural enthusiasts as well. If you chose Colorado as your home base, it looks like you could have an affordable second home in Florida!
7. Winner of Best City to Retire in: Durham, North Carolina
For the low, low price of $178,700 a retiree can have access to a world-renowned medical center at Duke, golf courses galore, and the greenest green of the Durham trees one can imagine. Duke not only provides excellent medical care, but they also offer over 100 senior learning classes. If that is not enough, there are also hit Broadway shows, hiking and biking to keep you busy.
8. Winner of Best City for Generation Y: Portland, Oregon
The average home price in this amazingly green city is $282,100. With the mountains a car ride away, the ocean a short drive, coffee shops to chill in, and green trees surrounding you this town is a sweet place to land. The community is generally a laid-back, environmentally conscious group of people. The large big name companies provide many great employment opportunities as well.
9. Winner of Best, Most Affordable Vacation Home: Pocono Mountains, Pennsylvania
With an average home price of around $110,000 (varies by region), you will not only enjoy an affordable home in a beautiful place, but everything the great outdoors has to offer you. Pocono lake offers you a peaceful place to sail, the ski slopes are always a blast on a powder day, ride a horse through the mountains, hike, fish, bike…your imagination is the limit here.
10. Winner of Best Military Town for the Money: Warner Robins, Georgia
Any family could be happy with an average home price of $110,400. In Warner Robins, the Robins Air Force base is the main employer. Because of this, the variety of people who call this place home is vast. Your new neighbor may be a rocket scientist, an architect, in the medical field, or be the wife of a serviceman. The recession didn’t affect this city as badly as most. There are plenty of things to do as well: aviation museums, parks, motor speedways….With the home prices being so low there will be cash leftover to enjoy the amenities.
So there is the list…OH WAIT! What’s that? One more????
Here is my top pick
11. Winner of Best Colorado Town: Ft. Collins, Colorado BABY!
Ft. Collins boasts the mountains on one side with awesome hiking, biking, and fishing. The town itself is alive with activity. Amazing microbreweries everywhere, ahem…Fat Tire. If you are a dog lover, they have plenty of fun dog parks. You can walk along the river and just meander your day away. There is always something artsy going on somewhere in town to feed your creative side. Colorado State University calls this city home and has several trial gardens and horse shows to check out, not to mention the football team. The list goes on and on for Ft. Collins. In fact, the next time I am up there I plan on taking the famous Foam on the Range tour of the breweries with my sister. Cheers Ft. Collins!
Wherever you are make sure you check out the local Colorado Exclusive Buyer Agents who can give you 100% buyer representation when you are buying a home.
I am sure you each have your own favorite part of Colorado. What city would you pick for your number 11?
Some members of CEBAA are wondering about the accuracy of the statistics many potential homebuyers are exposed to regarding average home price trends from month to month or year to year.
Some members of our Colorado real estate association, CEBAA, have PhDs, which tends to foster the analytic side of the brain. These folks are looking at reported house price trends as published in major newspapers and finding that the statistical analysis could be greatly flawed.
So if you read somewhere that there is a 7.1% increase in Denver area home prices, put on your own analytical hat before concluding that the recession is over and housing prices are on the upswing. Check with your buyer agent to see if they agree with this conclusion. If prices in fact are still declining, might this have a significant impact on your offer price, if not the decision in the first place to even buy?
The book, “Freakonomics” was one of the first mainstream books to point out how easy it is to “lie with statistics”, or have hidden human motivations be the real reason certain conclusions are made.
An anonymous reporter who works for a major Colorado newspaper confesses that “it’s remarkable that newspapers attempt to cover the industry at all. Our experience during the mortgage melt-down was that we faced boycotts and subscription cancellations any time we reported anything other than “everything’s great!”. She observes that reporters find expert sources with the data and then translate it for a general audience. They are not in a position to critique the data. Keep in mind that most real estate data is generated by metro listing services, which are owned and controlled by real estate people. Both people within and outside of the industry need to challenge the data.
It’s clear that the media are under tremendous pressure to report positive sales increases. Buyers are advised to put on their own analytical hats and get the opinion of your buyers agent.
