Lee Riley’s Real Estate Blog

This weekend is the 59^th annual Archuleta County Fair.  The fair runs Friday through Sunday with a whole host of events including live music, a rodeo, a chuck wagon dinner, a chili cook-off, a livestock auction, and lots of games and contests for the kids.  For a schedule of events, visit ArchuletaCountyFair.com I hope to see you there!

I was glad to read in the local paper that the upcoming United Way Charity Golf Tournament will be sponsored by BootJack Ranch.  The BootJack, a flagship property in the area, recently sold, and I’m happy to learn that the new owner is getting involved with one of our local charities.  This charity tournament, which will be held August 21, is the primary fundraiser for our local United Way.  If you’d like to get involved, contact Teddy Adler Finney at 970-731-0484, or you can just stop in.  The United Way office is located in our beautiful building, where our company has donated office space as our contribution to their efforts.

In other local news, San Juan Outfitting has recently relocated from Durango to the Pagosa area.  The company purchased the Rocking Bar MB Ranch, which is north of town just across the Hinsdale county line.  The company is currently building a ranch house along with some staff housing and outbuildings.  Originally, they had planned to include some guest cabins, but I understand that those plans have been shelved.  San Juan Outfitting offers trail rides and guided hunts all around our corner of Colorado.  You can visit SanJuanOutfitting.com for more information.

I recently spoke to Mary Jo at the Chamber of Commerce regarding any new developments in our business community.  Mary Jo had two interesting items to report.  First, many of our local businesses are expanding their hours and staying open on Sundays in order to better serve their clientele and capture as much business as possible.  In this rocky economy, I’m encouraged to see our businesses taking a proactive approach.  Second, congratulations to one of our local businesses known as Growing Spaces, LLC, which was named one of 50 “Colorado Companies to Watch” for 2010.  The award recognizes outstanding second-stage growth companies in our state.  Growing Spaces builds greenhouses in the shape of geodesic domes and sells them throughout the country and overseas.  You can learn more about Growing Spaces at GrowingSpaces.com.

On the real estate front, the stats have continued their unfortunate decline through July.  This was the first month in which we did not meet or exceed the sales numbers from last year.  Though there has been a recent upswing in the vacant land market, it is not enough to make up for the falling number of residential sales.  Perhaps it is just a coincidence, but I believe that the recent local downturn is related to all the negative news we were experiencing over the last several months.  Oil was gushing into the Gulf, Europe was showing signs of a financial panic, and all the talking heads were muttering about a “Double Dip” recession.

Recently, the news has turned more positive.  It appears that the oil leak is finally plugged.  Europe seems to be edging away from disaster.  Many corporations have come out with relatively upbeat earnings, and the stock market is on a strong run.  Over the past couple weeks, I have seen a marked increase in the number of people in my office and in my car.  The trouble is, it is difficult to translate showings into contracts.  Many potential buyers are feeling gun-shy right now.

July and August are traditionally very touristy months anyway.  We have a lot of short-term visitors in town who like to ride around in my car and play “looky-lou.”  They’ll get really excited about a property while they’re here, but once they get home, they cool off.  As we move into September and October, we usually see an increase in the seriousness of our buyers.  I’m hoping that this traditional seasonal improvement will combine with the more optimistic national news to create some sales.

Independence Day is always an exciting time in Pagosa. There is truly something for everyone. Of course, there are the old standbys: the parade and the fireworks. But we also have an Arts & Crafts Festival in the park, the Red Ryder Rodeo, a free concert or two, and a musical produced by the Music Boosters. (This year they did Annie.) I always have a good time around town on the 4th, and I hope you had the opportunity to partake in several of these activities.

The 4th of July also brings a lot of real estate buyers into town, and I always do my best to reach as many of them as possible. You might notice I have a big ad in the Independence Day issue of the Pagosa Springs Sun. This year, I’m highlighting bank repos in my ad. The reason I’m using bank repos for the headline is that they make the phone ring. The last contract I wrote was a couple of weeks ago. My clients called about a repo ad I was running, and they ended up buying something else!

This highlights an important truth about our market; the majority of sales in our county are not repos. Overall, repos account for 24% of the sales this year, though they represent just 4% of the entire inventory. Specifically in the residential sector, repos are 34% of the sales and 7% of the inventory. As you can see, repos are far less than half of our sales this year. And as my recent buyers can attest, there are good deals to be found with traditional sellers as well as bank-owned properties. The repos remain a driving force because they are usually very agressive in pricing, but if you are willing to compete with the repos, it is still possible to sell your property in our market.

You can view all the bank repos in town on my website, ISellPagosa.com. Or, if you prefer, I will email you a spreadsheet about once a week containing all the current repos on the market. Call me or email me if you’d like to get on the mailing list.

Regarding the local real estate market, my general feeling is that things are slowing down. The stats back me up on this, as we’ve seen a decline in the number of sales since April. (This is usually the time of year when things are heating up.) I’ve got a number of explanations for the decline, so you can pick the one you like the best. Uneasiness in the credit markets and some less-than-ideal economic numbers have led to a decline in the stock market over the past couple of months. The Dow Jones average is down about 10% since April. Also, the federal home buyer tax credits have now expired. I never thought that the first-time buyer credit was having much effect in our area, but perhaps the move-up buyer credit was pushing some sales earlier this year. Finally, it could be that all the negative news coverage of these events has people scared to make a move. Sometimes it is not the events themselves, but rather the news about the events that keeps the buyers away.

Below, I have created a graph showing the total monthly sales going all the way back to 2008.

I am focusing on the good news. Even after the recent decline, we are still well ahead of last year’s sales pace, and we are roughly tracking the 2008 numbers. Overall, we are up 53% over last year at this time. Because of uncertainties in other markets, mortgage interest rates remain at historical lows. Pagosa is a beautiful place to live, and people will always want to live here. The market will even out over time, and for now, there are bargains everywhere you look.

I am out of the office on vacation this week, so this newsletter will be short and sweet. My wife and I are on a cruise on the Oasis with Royal Caribbean.

Even though I am out of the office, I will not be out of commission. I will keep in regular touch with the office, as I usually do when I’m traveling. If you have any real estate needs, you are certainly welcome to contact Jody and Jarrett in the office. They will be my lifeline, and business will go on as usual. In fact, if you’d like to buy something while I’m away, I would certainly appreciate it. It would help me pay for my cruise!

In real estate news, our big bounce from last year’s low continues to hold up. May 2010 easily outpaced May 2009, and sales are now up 70% over last year. The residential sector continues to lead the way, running nearly double the 2009 pace.

Though improved over last year, vacant land remains a difficult sell. Why buy a lot and build when it is so much cheaper to just buy an existing home? There are currently more than 850 vacant parcels on the market, and the vast majority of them will not sell before the snow flies again. We have inventory coming out our ears and very few land buyers coming in the door. For these reasons, I expect vacant land prices to continue to decline for at least another year.

Despite the bleak outlook for vacant land, I remain optimistic. Residential sales are at a 4-year high. Pagosa remains a beautiful, friendly, and unique place to live. We are just entering the prime selling season, and bargains abound. Many people would love to own property in Pagosa, and the dream is now more affordable than it has been in years.

Happy summer to all my friends and clients!

Spring has sprung in Pagosa. The last few days have been breezy and warm, and the last remnants of the glacier on the north side of my house have finally melted away. At the office, it’s “listing season.” Spring is traditionally a time when my desk is piled high with paperwork for homes and properties just entering the market. The snow is off, and the first of the summer buyers will hit town within a couple of weeks.

In a bit of local news, the 3500-acre Bootjack Ranch has sold. Once listed at $88 million, the property recently closed for $46.5 million. The buyer was a Texas energy billionaire, and he got quite a bit of value for his dollar. Among other things, the ranch boasts a 13,800 square foot main house, guest accommodations for up to 50 people, and a 12,000 square foot spa and aquatic center.

If you are interested in buying property in Pagosa, the next few weeks will provide you with the greatest selection of the year. I expect inventory to peak in about a month or so. Although there are many properties on the market, the very best deals don’t hang around for very long. As the summer progresses, the inventory becomes more and more “picked over.” With the inventory likely at its highest level of the year and with interest rates on the rise, my message to my buyers has become simple: “You snooze, you lose.”

The statistics continue to show significant improvement over last year. The residential market is a particularly bright spot. We are currently running 82% ahead of last year’s pace. A few months ago, the sub-$200K market was packed with great deals. A local builder known as Great New Homes decided to dump their unsold inventory, and a few lucky buyers scooped them up quickly. Homes under $200,000 are becoming increasingly rare, and I believe that we are now at or past the bottom of the market.

Although poorly-priced properties sit on the market for months and stagnate, true bargains are often snapped up within a matter of days. If you are looking for a deal on your “perfect property,” I encourage you to call me and describe what you’re looking for. I can keep my eyes open and notify you when your ideal property hits the market. For a long time, the Colorado Dream was out of reach for many people. These same people are now finding that the dream is much more affordable than it was a few years ago. If this knowledge perks your imagination, I look forward to hearing from you.

I’ve got a brand new virtual tour for a very exciting property.

The Hill House was built in 1903 and still has its historic charm.This nostalgic home is one-of-a-kind and is priced to sell. Home was formerly a B&B. Owner has upgraded with recent amenities without changing its old-fashioned look. Original stained glass adds to its charm. Some furnishings are negotiable. Overlooking the San Juan River, it has great mountain views and is located on two city lots. Downtown location close to the Riverwalk, shopping, & Hot Springs.

You can view the virtual tour here.

I’m excited to report some positive news for a change.  Our frozen real estate market shows hints of thawing along with the snow.  We are certainly not out of the woods yet, but I have several surprisingly good statistics to share.

The headline number is a 95% increase in year-to-date home sales compared to the same period last year.  We are running nearly double of last year’s pace, we are ahead of the 2008 pace, and we are only one sale behind the pace set in 2007.  The condo market is up 75% over last year, and we’ve even had a few sales in the $200K+ range.  Sales in this price range were completely non-existent at this time last year.

While not quite as exciting, but still positive, vacant land sales are up 36% over last year.  This is certainly an improvement, but it is hard not to compare this year’s numbers with the blistering pace set in the boom years of 2005 and 2006.  Those heady days are long gone, and I do not expect them to come back any time soon.  I choose to focus on the fact that for now, things seem to be improving, as you can see in the following chart:

Bank repos continue to be a dominant force in our market.  While they represent only 7% of the residential real estate listings, they comprise 28% of the sales this year.  Even those properties which are not bank repos must be priced like bank repos in order to remain competitive.  We still have a large inventory, and it is growing every week as it always does this time of year.  If you have a home or property to sell, you absolutely must be priced toward the “bargain” end of the spectrum, or you likely won’t get many showings.  Sales numbers are improving, but being a seller is still a tough proposition.

I’d like to close with a few caveats.  The first quarter is traditionally a very slow time for Pagosa real estate.  Even though we’re showing some positive numbers, we’re dealing with a pretty small sample size.  Also, I should note that 2009 was a really lousy year for Pagosa real estate.  All together, we’re up 78% over last year at this time, but after a year like last year, there isn’t much room to go anywhere but up.

I look forward to the 2010 “selling season.”  We will soon see whether or not this statistical recovery has legs.  I’m hoping that these positive numbers are a sign of things to come, and not just statistical noise during a slow time of year.

Everybody keep your fingers crossed!

Finally, I’d like to remind everyone that the clock is ticking on the First Time Homebuyer Tax Credit and additional tax credit for move-up buyers.  In order to qualify for either credit, you must be under contract by April 30th.  Mortgage rates are headed back up again, and buying a house is currently more expensive than it was two weeks ago.  If you’re in the market for a home, the time to act is now, not later.

In my last newsletter, I laid out the 10 most important ideas I have picked up over the course of my life.  After I sent the newsletter, I received a wonderful response from my sister, Kathy.  She was kind enough to send me her 10 rules to live by:

Kathy’s Rules

1)  There is something special about everyone.  Discover their gift.  Be kind.
2) Be present with the one you’re with. Listen carefully.
3) Be the joy! Folks love to be entertained. Keep them smiling!
4) Tell a story to make your point clear.
5) Enjoy the beauty; it’s everywhere.
6) Trust. Listen to your inner voice.
7) Be grateful! County your blessings.
8) Spend 15-20 minutes in quiet, not planning. Make space to be inspired.
9) Listen to music that makes you want to dance. Other times, slowly enjoy one note at a time. Sing.
10) Be healthy in all you do.

Thanks to Kathy for sending her list along.  Does anyone else have a list of important ideas or rules which guide their life?

I have been very busy showing a lot of homes and condos since the first of the year. This is a good sign for the market. A lot of the folks are thinking about buying, but are having a hard time pulling the trigger. Either they are waiting for the perfect property or hoping prices will continue to fall. On a couple of occasions, my buyers have missed out on tremendous opportunities because they were stuck in indecision. Even in a lousy market, the screaming deals don’t stick around forever. Overall, the market is much better than it was a year ago. Sales are up 59% compared to this time last year.

The recent weather has been memorable; snow, snow, and more snow! After a relatively dry early winter, the powder has been coming by the truckload. The snowpack is now back up to 102% of average. Spring Break skiers are going to have a great time. Out of town folks will likely flood the area to take advantage of the powder.

When I don’t see a lot of sunshine, I start to get depressed and feel sorry for myself. To help work myself out of my funk, I decided to write down the 10 most important thoughts and ideas I have accumulated in my mind over the past several years. Hopefully, you will find them useful in your future. You may consider them to be common sense.

1) Write down your goals in as much detail as possible, and most of them will come true.

2) You will do and become what you think about most.

3) Visualize what you want passionately and your chance of accomplishing your goal is much better.

4) Now is the most important time and day of your life.

5) Do it now.

6) Procrastination is a waste of time.

7) Positive thinking is much better than negative thinking.

8) Don’t make excuses.

9) You’re only as old as you think you are.

10) Have fun!

I hope you and your family are doing well. I am looking forward to getting out of Dodge for Spring Break. For a week, we are trading our home in Pagosa in exchange for a home in a small town south of Cancun called Puerto Morelos.

I’ll close by reminding everyone that now is the greatest buying opportunity I have seen in quite some time. If you have money to invest, it’s time to act. If you’re looking for property somewhere other than Pagosa, I can provide you with a top notch Realtor anywhere in the country through my CRS referral network. CRS stands for Certified Residential Specialist, a professional designation that only 4% of the Realtors in the country have earned. Give me a call if you’d like me to assist you in finding a CRS agent anywhere in America.

The other day I was curious about just how much you can save by prepaying your mortgage.  “Prepaying” is when you make additional payments beyond what is required by the bank.  Prepayments go directly toward paying off the principal remaining on the loan.

Prepayments can save you a substantial amount of interest.  For example, with a $100,000 loan at 6% for 30 years, you will end up paying over $115,000 in interest over the life of the loan.  But by paying just $25 extra on each loan payment, you will reduce your total interest cost to $102,000.  This saves you $13,000 dollars, and allows you to pay off the loan almost 3 years earlier!

I put together the following chart showing different mortgage amounts and prepayment amounts.  All figures are for a 6% mortgage for 30 years.

With only one month of the new year under our belts and with this being the slowest time of year for Pagosa real estate, there is not much of a story to tell. We are up by a couple of transactions over last year, but the sample is so small that it’s hard to tell whether the numbers mean anything at this point or not. However, I can say this; we have an unusually large number of properties under contract for this time of year. At last count, there were 43 pending transactions. If even two-thirds of those transactions actually close, we will soon be well above last year’s to-date totals. The amount of activity in the pipeline is encouraging.

Bank repos remain the driving force in the market, and the number of repos on the market is up about 25% from a couple months ago. Not all the sales are bank repos, but the repos are setting the prices, and if you want to sell your property, you have to compete with them. From a buyer’s perspective, this creates an incredible opportunity. I see several screaming deals come across my desk every week. I regularly distribute a list of all the bank-owned properties currently listed around town. To view the current list, click HERE. If you would like to receive this list via e-mail on a regular basis, just give me a call or send me an e-mail, and I’ll add your name to the mailing list.

Here in Pagosa, we were recently blasted with a series of winter storms. In town, we received more than three feet of snow over the course of a couple of days. For all of you out-of-town folks who own homes in Pagosa, you need to have someone check out the snow load on your roof as soon as possible. The weight of the snow and ice dams can both create serious problems. If you need help finding someone to remove the snow and ice, give me a call and I’ll be happy to hook you up with someone trustworthy.

Though the weather causes problems for homeowners, it is a boon to skiers and outdoor enthusiasts of all types. Wolf Creek Ski Area currently has 107 inches of snow at the summit, and they have received 273 inches so far this year. The snowpack in the mountains is currently at 104% of average. If this continues, we’ll be certain to have a green spring and summer this year and a good rafting season.

Well, so much for now. Hopefully you haven’t given up on your New Year’s resolutions. Don’t forget that if you have friends or family looking for a top notch Realtor outside the Pagosa area, I have a list of Realtors known as CRS, or Certified Residential Specialists. These are the top 4% of Realtors nationwide; they are the cream of the crop. I am more than happy to connect you with them.