Consumer doubts about the purchase of a first home are sometimes considerable…. Can I afford a home? Will I qualify for financing? Where do I get a mortgage? How will I find a home that fits my needs? What will it cost? There is information available to alleviate these concerns and we encourage you to call a real estate professional to answer your questions and explain the home buying process to you. We believe the next four months offer one of the very best opportunities ever to become a homeowner and while there are many reasons you should make “Purchase My First Home” a New Year’s resolution here are ten benefits of home ownership we think are important. 

1. Pride of Ownership
   Owning your own home adds to your sense of self-esteem and personal pride. The satisfaction that comes from feeling connected to the land you own and the home in which you live is ages-old.
2. Security of Tenancy
   With homeownership comes stability. When renting, you never know when you may have to move because of new ownership, rent increases, deterioration of the property or other changes. As a homeowner, you decide when and if you want to move.
3. Privacy
   While there are usually some limits on the access landlords have to property, almost all landlords can access your property for necessary inspections and maintenance. For many renters, this lack of privacy is a significant discomfort. Homeowners on the other hand generally have much stronger property rights.
4. Decorating
   Homeowners are free to decorate, remodel and accessorize a home any way they want. Not only do you have the right to make improvements, but the value of those improvements becomes yours as well. Having your living space just the way you want it can significantly increase your satisfaction with your living environment.
5. Financial Predictability
   When you buy a home with a fixed-rate mortgage, most of your monthly housing payment is fixed. Financial planning and credit are more easily managed with cost certainty.
6. Building Equity
   When you own your own home, you pay rent to yourself instead of a landlord. Most homeowners pay for their purchase by obtaining a mortgage. As you pay off that mortgage, your equity builds and you gain an increasingly larger share in a valuable asset. Over time, that asset can work for you in many ways, such as home equity lines of credit.
7. Investment Appreciation
   There are certainly no guarantees of property value appreciation but in the long-term real estate valuations almost always increase. As an example, in Fort Collins the average price of a home in 1998 was $160,000 and today it is about $240,000, an increase of 50% or $80,000. When you decide to sell your home this appreciation is usually tax-free. You can reinvest that appreciation in other real estate or you may wish to downsize and keep the ‘profit’ for retirement or other purposes.
8. Tax Benefits
   The cost of home mortgage interest and property taxes are usually tax-deductible. Depending on your circumstances, thousands of dollars in taxes can be saved each year resulting in more take home pay.  In addition, there is an $8,000 tax credit available to qualified first time home buyers as long as you have a purchase contract completed by April 30, 2010 and the purchase closed by June 30, 2010.
9. Interest Rates
   Mortgage interest rates remain at historically low levels. This can save you a significant amount on your monthly payment and / or allow you to qualify for a bigger mortgage.
10. Supply

There is a good selection of all types of homes on the market, most properties are competitively priced and sellers are motivated.

As another year draws to a close, we would like to thank all of you for your comments, questions and suggestions. We appreciate hearing from you and are looking forward to another year of writing this column and wish all of you a Happy New Year!

November was another good month for local real estate with 205 closed sales representing a 39.5% increase from last year. This was supposed to be the last month for the first time home buyer tax credit and no doubt this deadline motivated many people to close on the purchase of a home to receive the $8,000 tax credit. The average selling price again took a bit of a hit due to the fact that over 70% of the sales were for homes priced under $250,000. In the last couple of months home sales have increased 42% compared to the same two months last year and have improved from a 14.6% drop to a 7.5% decrease in year to date sales. But before we get too carried away, we should put this performance in perspective. The 347 homes sold in October and November of 2008 was far and away the lowest in a very long time. The average October sales from 2000 to 2007 were 267 homes and for November 253 for an average two month total of 520, a long way from the 347 last year. The two month total this year of 493 is respectable but certainly not worthy of banner headlines trumpeting a 40% sales increase.

The final quarter of the year averaged 756 sales from 2000 to 2007. In 2008 there were 528 so that quarter last year was down 30% from the average. The sales in the first two months of the final quarter this year total 493 and if we at least equal last years December sales we will finish with around 675 sales for the quarter and 2,900 for the year which is a lot better than it looked just a couple of months ago. Still, this total takes us back all the way to 1995 which is the last time sales were under 3,000. In fact, for the ten year period from 1998 to 2007 Fort Collins home sales averaged 3,848 per year.

The median sales price has held steady for the last few months and is at $210,000 for the year to date compared to $212,000 last year. The average days on market for the November closed sales was 119 days compared to 112 last month and 126 last year. The inventory of homes for sale is the lowest it has been all year with 1,539 active listings at the end of November compared to 1,713 last month and 1.693 last year.

With the extension of the first time home buyer tax credit and a new $6,500 tax credit for qualified repeat buyers, together with 30-year mortgage interest rates under 5% plus the encouraging national housing data and economic news we remain hopeful that housing sales have bottomed out and we will see an improvement in sales and prices entering the new year. The biggest challenges facing our market will be making a dent in the inventory of homes priced above $450,000 plus dealing with the so-called ‘shadow inventory’. These are homes that are not yet on the market, either held in foreclosure or owned by the hundreds of home owners who would like to sell but have not listed their homes due to the very difficult market. As buyers gain more confidence and home sales improve we will have a lot of inventory to work through to get back to a normal market balanced between buyers and sellers.