Mic Ortega

• Geothermal Heat Pumps 
• Solar Panels 
• Solar Water Heaters 
• Small Wind Energy Systems 
• Fuel Cells 

• Name and address of manufacturer
• Identification of the class of eligible building envelope component
• Make, model number and any other property identifiers
• A statement that the component is eligible for the credit (may include U factor, class of window or door, etc.)

Mic Ortega

The pop heard ’round the world when the housing bubble burst brought a lot of bad news — from plummeting home prices to mounting foreclosures.  We didn’t experience it as severely here in Denver as the rest of the country did, especially the east and west coast.  Regardless, it has had a lasting impact on our city and forever changed the way we deal with Real Estate.  The article below offers some really good insight into how the market has changed and what we can expect now to help us avoid the same mistakes in the future. 

But with all bad times comes a slew of good lessons to be learned, says Shari Olefson, author of “Foreclosure Nation: Mortgaging the American Dream.”

Depressed home prices and low interest rates may have you wondering if the real-estate market has reached its bottom. Even if the worst is behind us, it makes sense to take in the lessons of the past few years so we can avoid making the same mistakes again.

Lesson No. 1:Adjust your expectations. Years ago, people purchased a home, lived in it all or most of their lives, passed it down to their children and enjoyed a gradual increase in wealth as the home gained value. But in the last decade, people bought a house expecting it to increase in value about 5 or 10 percent in a couple of years, and they’d move on to something bigger, says Brendon DeSimone, a real-estate agent with Paragon Real Estate Group in San Francisco.

If the housing-bubble nightmare has shown us anything, it’s that you can’t count on a home to be worth more than you paid for it when you’re ready to sell. “It’s back to basics,” DeSimone says. “You have to be in it for the long haul and you can’t be looking at your home value every month to see how much it’s gone up.”

Lesson No. 2:You can’t time the market. When home prices were skyrocketing, many people bought homes they could barely afford — or couldn’t afford — thinking they’d ride the wave of rising equity since the market was on the upswing. Likewise, today, many potential homebuyers are sitting on the sidelines waiting for the market to reach its ultimate low.

“You will never sell at the all-time high and you’ll never buy at the all-time low by planning it,” says Tim Burrell, a real-estate agent for Re/Max United in Raleigh, N.C. “The market will time you. You will sell, and on occasion you may happen to hit the all-time high or happen to hit the all-time low, but to study it and plan it and figure out and actually do it — it doesn’t happen.”

Instead, take a long-term approach to real estate and look for a home that enhances your life and will increase in value over time.

Lesson No. 3:Don’t treat your home like a piggybank. At the height of the real-estate market boom, “We had a whole bunch of people refinancing high-interest credit cards with a low-interest second mortgage on their homes,” Olefson says. Today, some of those people have lost their homes or are in danger of doing so because they were unable to handle the mortgage debt.

“As a country, we’ve all gotten way too comfortable with credit and having debt in our lives,” Olefson says. “But the problem really came when that morphed into our homes.”

As the market rebounds, “We need to promote the value of owning your home free and clear again, because residential real estate really is the backbone of our country. It’s the biggest asset for most people,” Olefson says. Likewise, instead of depending on your home for all of your wealth, continue to build up your cash reserves, Burrell suggests.

Lesson No. 4:Do your own research. Some people ran into trouble before the real-estate market crash when they took the advice of mortgage professionals without doing their due diligence and making sure the advice was in their best interest. The wisdom of speaking to a financial adviser, calling a nonprofit housing agency or even reading books on real-estate transactions before signing on the dotted line became apparent as homeowners struggled with changing terms on mortgages that they didn’t understand. It also makes sense to check the credentials of anyone advising you. “Be careful who you trust, take time to educate yourself, and first and foremost, if it sounds too good to be true, it probably is,” Olefson says.

Lesson No. 5:Think long-term financing. Adjustable-rate mortgages appealed to those who wanted the lowest possible interest rates and expected to be able to either sell their homes or refinance them before the mortgages reset. However, after the real-estate market crash, many didn’t have enough equity to refinance and houses began to sit on the market as prices went into a free fall. When it comes to financing, “you can’t just look at the next six weeks or two months or next year,” DeSimone says. “You have to say, ‘What happens to me in five years?’”

Ultimately, the real-estate market collapse was a lesson in learning to adapt, experts say. “When you see overexuberance, expect that it’s going to change,” Burrell says. “The only thing constant is change.”

Mic Ortega

Should I rent or should I buy, the million dollar question in Real Estate.  The government sure has done its part in the past few months to encourage people to get out of their apartments and into a new home.  Whether to rent or buy is a complex decision, but timing is important. In many U.S. cities, the premium to buy–the difference between what you’d pay monthly to own a home, rather than rent–has dropped dramatically.

If that’s the case in your metro, Denver/Aurora/Broomfield ranked in the top 10, the next thing to consider is whether your home will appreciate. In these 10 cities the step up from renting to buying is a much smaller one than usual, according to data from Dallas-based Witten Advisors, an apartment market consulting firm, and the five-year S&P/Case Shiller home price outlook is particularly good.

To read more details on how these cities were chosen and go more in depth on the buy verse rent proposal, click here.  More great news for Denver and with the First Time Tax Credit set to expire, there has never been a better time than now to pull the trigger.

Metropolitan Statistical Area: Denver-Aurora-Broomfield, Colo.

Stacie Staub

Not sure if you will qualify for the Repeat Purchase (or Move-up Buyer Credit) if you buy another house this year?  The IRS has released the official guidelines for the $6,500 federal tax credit for repeat home purchases, which answer the questions that homeowners have  been asking.

Owners of existing homes — specifically, taxpayers who have occupied the same property as a principal residence for five consecutive years during the previous eight years — may now be able to claim a tax credit on a purchase of another house they intend to use as a principal residence.

The credit is for up to 10 percent of the price of the replacement home, capped at $6,500. The purchase contract must be dated from Nov. 7, 2009, to April 30, 2010 and the closing must occur no later than June 30.

Members of the armed forces and federal diplomatic and intelligence personnel stationed overseas get an extra year to claim the credit.

The maximum purchase price on houses eligible for the credit is $800,000.

Your modified adjusted gross income must be $125,000 or less if you are single, $225,000 or less if you are married and filing jointly. Above these limits, the allowable credit amount begins to phase down in increments and is eliminated once incomes hit $145,000 for singles and $245,000 for married joint filers.

Purchasers are not required to sell their previous home, but they must be able to demonstrate that the replacement house is or will be their principal residence.

On 2009 and 2010 tax returns, buyers should attach the following:  

– Form 5405, which can be found on the IRS website at  http://irs.gov

– A copy of the signed HUD-1 settlement sheet, including the contract sale price and the date of closing. This is to document that the timing of the transaction meets the program’s requirements.

– Evidence of long-term ownership and occupancy of the previous house to meet the five-consecutive-years requirement. This can be property tax records, homeowner’s insurance records or IRS Form 1098 mortgage interest statements for the five-year period.

– For buyers claiming a credit on a newly constructed home, for which a HUD-1 settlement sheet is not available, the IRS will accept a copy of the certificate of occupancy showing the purchasers’ names, the property address and the date.

– For buyers of mobile homes who are not able to get a settlement statement, the IRS will accept a copy of the executed retail sales contract showing the property’s address, purchase price and date of purchase.

Congress mandated all this extra documentation after audits uncovered widespread abuses by applicants for the $8,000 credit. Among these were fictitious home purchases in which taxpayers or tax preparers sought — or obtained — credits on properties that never were sold or bought. This time around, the IRS says it will rigorously investigate all claims filed, starting with a review of the documentation submitted. 

Consult with a tax professional if you are still unsure whether you will qualify for the credit!

An advisory posted by the IRS this month spelled out situations in which recipients of tax credits may have to repay them to the government. These include taxpayers who sell their houses within 36 months after purchase. Recipients must also repay the credit if they convert their principal residence to a rental or business property, or if their lender forecloses on the house.

With all the rules now available, here’s the action message to potential tax-credit seekers: Speed up your search for the house you want to buy. Get moving. There are only 14 weeks to sign a contract and just five months to go to closing. 

Mic Ortega

This is something I have never experienced in my years as a Realtor, having ready, willing and able buyers, and not being able to find them a home no matter how hard I look.  Believe it or not, the amount of inventory on the market right now is insanely low and we need more options for buyers.  The time to sell couldn’t be better.

I have had a few potential sellers say they are holding off until Spring when historically the market should be better.  But I would argue that now is the time and those that wait may be kicking themselves down the road.  A number of factors come into play with this argument.  First, at the end of March, the Fed will discontinue purchasing treasuries and mortgage backed securities.  This means the Fed will no longer be able to artificially keep rates low and it is expected rates will be back in the 6% range come April.  Right now they are still in the low 5% range, some of the lowest of all time.  A 1% increase can have a huge impact on the market and what buyers are able to afford.

And to top it off, the First Time Buyer and Move Up Buyer Tax Credits expire at the end of April.  At the end of October and beginning of November last year, buyers were scrambling to get in by the then November 31st deadline before we found out it was going to be extended.  If it weren’t for the extension, I would have had numerous buyers that wouldn’t have made the deadline since there was such a backlog with lending, and they were under contract in early October! 

I imagine that come April we are going to see the same situation arise and buyers lose out on the tax credit.  Because of this, I am advising all my buyers to start looking much earlier than the April deadline and my sellers to get aggressive to take advantage of this perfect time to sell.  From everything we are hearing, the Tax Credit WILL NOT BE EXTENDED, so don’t let this opportunity pass you by.  And if you are thinking of selling, or at least seeing what your options may be, contact your Realtor today!

Mic Ortega

New legislation signed on Nov. 6, 2009, extends and expands the first-time homebuyer credit allowed by previous Acts. The new law:

• extends deadlines for purchasing and closing on a home
• authorizes the credit for long-time homeowners buying a replacement principal residence
• raises the income limitations for homeowners claiming the credit 

Q. I bought my home in 2009 (early) and filed my 2008 tax return claiming the $7,500 first-time homebuyer credit that has to be repaid. Now the expanded law provides for an $8,000 credit that doesn’t have to be repaid. What do I need to do to get the $8,000 credit that doesn’t have to be paid back?

A. You can file an amended return.

Q. If I purchase a home in June 2009, and have already filed my 2008 tax return, can I amend my 2008 return or will I have to claim it on my 2009 return?  

A. You can either file an amended return to claim it on your 2008 return or claim it on your 2009 return.

Q. I am in the process of buying a home. Can I claim the first-time homebuyer credit now? That would allow me to use the refund for a down payment.

A. No. You may not claim the credit in anticipation of a purchase that has yet to happen. Until you have finalized the purchase of your home, which for most purchasers occurs at the time of the closing, you do not qualify for the credit. IRS news release 2009-27, First-Time Homebuyers Have Several Options to Maximize New Tax Credit, contains details for filing options if the home is purchased after April 15, 2009.

Q: When must I pay back the credit for the home I purchased in 2009?

A:  Generally, there is no requirement to pay back the credit for a principal residence purchased in 2009 or early 2010. The obligation to repay the credit arises only if the home ceases to be your principal residence within 36 months from the date of purchase. The full amount of the credit received becomes due on the return for the year the home ceased being your principal residence.

Q. If I claim the first-time homebuyer credit for a purchase in 2009 or early 2010 and stop using the property as my principal residence before the 36 month period expires after I purchase, how is the credit repaid and how long would I have to repay it?

A. If, within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full amount of the credit is due at the time the income tax return for the year the home ceased to be your principal residence is due. The full amount of the credit is reflected as additional tax on that year’s tax return. Form 5405 and its instructions will be revised for tax year 2009 to include information about repayment of the credit.

Q:  I’m already a homeowner. If I buy another home after Nov. 6, 2009, to use as my principal residence, do I have to sell my home to qualify for the homebuyer tax credit?

A: No. If you meet all of the requirements for the credit, the law does not require you to sell or otherwise dispose of your current principal residence to qualify for a credit of up to $6,500 when you buy a replacement home to use as your principal residence. The requirements are that you must buy, or enter into a binding contract to buy, the replacement principal residence after Nov. 6, 2009, and on or before April 30, 2010, and close on the home by June 30, 2010. Additionally, you must have lived in the same principal residence for any five-consecutive-year period during the eight-year period that ended on the date the replacement home is purchased. For example, if you bought a home on Nov. 30, 2009, the eight-year period would run from Dec. 1, 2001, through Nov. 30, 2009. (11/17/09)

Married and Co-Purchasing Homebuyers

Q. I am a long-time resident (have owned and used my current home as a principal residence for five consecutive years out of the eight-year period ending on the date of purchase of the new residence) but my spouse has lived there for only three years. Can we qualify for the long-time resident homebuyer credit if we purchase a new principal residence?

A. No. Both spouses must have owned and used the same previous principal residence for five consecutive years out of the 8-year period ending on the date of purchase of the new principal residence to qualify for the credit. (12/14/09)

Q.  I am a long-time resident and current homeowner and my spouse is a first-time homebuyer (has had no ownership interest in a principal residence during the three-year period ending on the date of purchase of a new principal residence) and we purchased a new principal residence. Can we qualify for either the first-time homebuyer credit or the long-time resident homebuyer credit if we purchase a new principal residence?

A. No. Both you and your spouse must be first-time homebuyers in order to qualify for the first-time homebuyer tax credit. Since you had an ownership interest in a principal residence during the three-year period ending on the date of purchase, neither you nor your spouse qualifies for the credit. Similarly, both you and your spouse must be long-time homeowners of the same previous principal residence in order to qualify for the long-time resident homebuyer credit. Since your spouse is not a long-time homeowner of your current principal residence, neither of you qualify for the credit. (12/14/09)

Q. I am a long-time homeowner of a principal residence and my spouse is a long-time homeowner of a different principal residence. Can we qualify for the long-time resident homebuyer credit if we purchase a new principal residence?

A. No. Both spouses must have owned and used the same previous principal residence for five consecutive years out of the eight-year period ending on the date of purchase of the new principal residence to be eligible for the credit. Since you and your spouse owned and used different principal residences, neither of you qualify. (12/14/09)

Q. How does the allocation provision work when unmarried taxpayers purchase a home together and both qualify for the first-time homebuyer credit under different tests? 

A. Co-purchasers who are not married may allocate the credit using a reasonable method. A reasonable method is any method that does not allocate any portion of the credit to a taxpayer who is not eligible for that portion of the credit. The maximum credit for a taxpayer who qualifies under the long-time resident test is $6,500, and the maximum credit for a taxpayer who qualifies under the first-time homebuyer test is $8,000. One example of a reasonable method is to allocate $6,500 to the long-time resident homebuyer and $1,500 to the first-time homebuyer. (12/14/09)

Home Construction

Q. I plan to build a home and occupy it in 2009 or early 2010. Can I claim the first-time homebuyer credit now and use the funds toward the down payment or other ongoing construction costs?

A. No. To qualify for the first time home buyer credit, the residence must be purchased. By statute, a residence which is constructed by the taxpayer is treated as purchased on the date the taxpayer first occupies the residence. (05/06/09)

Q. I entered into a written  home construction contract with a homebuilder before May 1, 2010, and the contract provides for completion of the home before July 1, 2010. Can I take the credit  for the construction costs?  

Stacie Staub

There seems to be quite a bit of misinformation floating around regarding the First Time Homebuyer and Move Up/Repeat Homebuyer Tax Credits that are being offered right now.    I have even heard both local and national news outlets misrepresenting the guidelines regarding these two incentives, so I thought it would be worth while to take a minute to answer a few Frequently Asked Questions.

First off, in order to qualify for the tax credit you MUST have a property Under Contract by April 30, 2010 and close by June 30, 2010.  Someone told me that she is planning to list her home later this Summer - I asked her why she was waiting, since she would qualify for the Move Up/Repeat Homebuyer Credit, basically meaning $6,500 for selling the home she has lived in for more than five years, and purchasing a new one.  “Well, I’m sure they are going to extend it again,” she said, “I think that they might even make it permanent.”  UMMMMM….NO.

Most industry specialists think that this is the last hurrah as far as Homebuyer Tax Incentives are concerned - it was difficult to push the extension through the last time, and there is absolutely no buzz that the credits will be extended any further.

SO, if you are considering a purchase, start looking NOW - inventory is LOW, and prices and interest rates are going up slowly but surely.  Most deals are taking 60-90 days to close right now, instead of the traditional 30 - and if you don’t close by that June 30 deadline, you are not going to get a tax credit.  I don’t know how to say it more clearly.

And, if you are thinking of selling your current home in order to take advantage of the offer for Move Up buyers - get your house on the market NOW.  For the same reasons as above - inventory is low, and your house will not have much to compete against.  Contact me if you have questions about what your house might be worth, what needs to be done in order to get top dollar, or if you are considering a move. 

If you would like more information about the Tax Credits, check out the official website at http://www.federalhousingtaxcredit.com/home.html - it’s a great resource and has loads of information about both the First Time Homebuyer and Move Up/Repeat Buyer Tax Credits.

Mic Ortega

In article out today from the Denver post, we see just how much the First Time Buyer credit has helped the real estate market, and with it pushed back to next summer, we should see more great results in the near future.  Historically people think winter is a slow time of year for Real Estate.  But these numbers tell a different story and I have never been busier, already lining up appointments for right after Christmas and new listings ready to go the first of the year.  If you have been sitting on the fence, now is the time to get off.

Here is a snippet from the article.  To read it in its entirety, click here.  Metro Denver’s housing market showed its first year-over-year improvement in 11 months, as the number of homes sold in November surged 23 percent over the same month in 2008, data released Tuesday showed.

At least part of the increase was attributed to a rush by buyers to take advantage of the $8,000 federal tax credit for first-time homebuyers, originally set to expire at the end of November but later extended through the spring.

But it wasn’t just first-time buyers who returned to the market. The median sales price for condos and single-family homes increased, a sign that more-expensive properties were also selling well.

“An increase of 23 percent versus a year ago suggests that confidence levels of potential buyers are higher,” said Jeff Thredgold, an economist for Vectra Bank Colorado. “Part of that is based on better economic news, and part is based on the most attractive mortgage interest rates in 40 years.

“We were all in this massive state of flux a year ago. The sky was falling, for all we knew.”

Last month, 3,599 homes sold, compared with 2,920 in November 2008. Sales last month were down 9.1 percent compared with the previous month, when 3,958 homes sold.

Martin Yeager

Earlier this year, I started redesigning and remodeling a home on Perry Street as my new residence. My sister, Pat Perry, is the owner and chef at the Highlands Garden Café and she the purchased the home three years ago. While she and our mother completed the gardens next to the home, the remodeling and construction was up to me. Imagine my surprise when I uncovered a bit of North Denver history lost under the floorboards.

The home was built in 1902 and it is a small unassuming flat roof structure, lacking the character and elegance of the surrounding homes. While working in the small cellar, I discovered a thin handwritten journal filled with names, drawings, and maps. You can imagine my surprise of discovering a lost journal though there was no mention of its author or the owner.

I decided to find out more and tracked down Frederick Stanford whose grandmother owned the home from 1910 through 1984. He graciously filled in all the details and I now find myself writing the Highlands Christmas Story in hopes of returning the journal to its rightful owner.

In his letter, he described the home on Perry Street perfectly and shared why this home has a special place in North Denver’s history. I have posted the entire story online at HighlandsChristmasStory.com and I am sharing a sample of his letter with you.

“It seems the flat roof on Perry Street was actually the perfect size for eight reindeer and a sleigh! Unlike the high-pitched Victorian style roofs of her neighbors, this spot was the best resting spot in the Highlands for Santa to allow his reindeer a quick break in their amazing journey. As kids we used to snicker when she told us Santa would drink her homemade Peppermint tea sitting on the ledge above the front door. Those snickers would be goose bumps now! You have proven her story true”.

To celebrate this Highlands story, you and your family are invited to the Highlands Garden Café on December 20^th from 1-3PM for decorating cookies and sharing in the conclusion of the story It is our hope to leave Santa hundreds of Highland cookies in homes everywhere to celebrate this Christmas season. The Café is also collecting new, unwrapped toys for donation to the Boys and Girls Club of Metro Denver. Your contribution will add to the smiles Christmas morning for those in need. If you would like to receive your own online copy of the story, please email me at martin@liveurbandenver.com and I will forward it to you.

Please RSVP online for the Christmas cookie party at HighlandsChristmasStory.com or call the Café at (303) 458 5920.

We hope to see you there!

Mic Ortega

It is funny how we keep hearing it is such a strong buyer’s market, something we have heard for years in Denver now.  But if you analyze the data, are we really?  Experts say that to determine if a market is a buyer’s or seller’s market, it is important to look at how many months of inventory there is.  If there is greater than 6 months worth of inventory, meaning it would take 6 months to sell the current number of homes on the market, then it can be considered a buyer’s market.  If there is less than 6 months inventory, then it can be called a seller’s market.

So to answer this question, once again we have to look deeper and go local.  The best way to break it down in Denver right now is by price range.  For homes under $85,000, there is less than a months worth of inventory.  Therefore, it is a very strong seller’s market.  In homes between $85,000 and $135,000 there is a two month inventory of homes, still a seller’s market.  The price range between $135,000 and $210,000 has a 3.4 months inventory.  This would tend still towards a seller’s market.  Between $210,000 and $315,000, there is a 4.2 months worth of inventory.  This price point also made up the highest percentage of sales with 26%, perhaps signifying a happy mediuem between a buyer’s and seller’s market in Denver right now.

It is above this $315,000 mark where we see the shift made towards a buyer’s market.  Between $315,000 and 460,000, there is a 6.7 months inventory worth of homes.  From selling in this price point lately, I would say it is definitely a buyer’s market for most homes and neighborhoods.  And when we get to $460,000 and above, there is a 16.4 month inventory of homes, meaning there is enough inventory of homes to last a year and a half, and that is assuming no more homes come on the market!  So if you are looking to buy in this upper price point, now is definitely the time and you can typically expect some great deals.

So it looks like the answer to this question is yes and no.  In the lower price points, it is a strong seller’s market and the higher you get in price, it is a stronger buyer’s market.  Some neighborhoods and styles of homes obviously don’t fit into these generalized price points, but it is a pretty good reference point regardless.