Living Colorado Springs » Taxes and Government

Happy Independence Day!

Rick Van Wieren — Mon, 05 Jul 2010 14:51:14 +0000

Yes, I know the 4th of July was yesterday. But if I was a day late wishing you a Happy Birthday, you’d still take it it, wouldn’t you?
The 4th has always been special to me here in Colorado Springs. When we first moved here 19 years ago, we were so impressed with how the city went ‘all out’ to make it a real event. The symphony concert at Memorial Park was so good, the fireworks amazing, and the howitzers they brought in from Ft Carson for the 1812 Overture just were over the top.
I say were, because once again this year, budget problems caused the city to cancel one of our best traditions. Don’t get me wrong, there were fireworks at 6 different venues. And 4th of July fireworks at the US Air Force Academy is pretty cool too. But I’m looking forward to the time when we can plan on the City of Colorado Springs to continue with one of the best 4th of July celebrations I’ve ever seen.
As it turned out, there was enough rain, hail thunder and lightening going on at dusk last night, that we stayed home anyway. Appropriately, we watched the Ken Burns documentary on the life of Thomas Jefferson, so our patriotic spirit was still fed
I hope your 4th was a good holiday. It kind of marks the 1/2 way point of the summer (even though it is really only about 1/3). Here in Colorado Springs the weather has been superb (other than one of our first rains in a while hitting at fireworks time ) We are looking at 70’s and 80’s and lots of morning sunshine this week, how can you beat that?

How Much Was That $8,000 Tax Credit Really Worth?

Rick Van Wieren — Mon, 24 May 2010 14:57:26 +0000

The most frequently asked question I hear these days is, ‘How’s the market now the tax credit program is over?’ This is a really good question. While I’ve been very busy, the fact is, showing traffic is down, and I’ve had fewer calls from first time home buyers. This will be a busy closing week, as many of the first time home buyers are going to be closing on the homes they contracted for in April. May will likely be one of the best closing months of the year.
Having said all that, lets look at what the long term benefits of the tax credit really add up to, compared to other factors at work in the market. The $8,000 credit, when used in conjunction with other programs, freed up cash for buyers who did not have adequate down payment resources otherwise. This of course adds buyers to the market. But it really only helped buyers in the lower portion of our market, since the credit only covered the down payment of an FHA loan on a $228,000 house.
Since most buyers, even 2nd and 3rd time buyers pay for most of their home with a loan, the bigger issue is payment size. $8,000 spread over 30 years at 5% interest is a payment of $42.95. To put that in perspective, interest rates have fluctuated in the 3 weeks since the tax credit ended from around 5.25%, to 4.75% (I actually received quotes of 4.5% on certain loans this weekend). On that $228,000 house, that is a swing in house payments of $69.66 per month. So how much was the tax credit really worth? If you didn’t have the cash, quite a bit. But for those with even $8,000 in cash of their own, they will save substantially more from lower interest rates than the credit was ever worth. How long will these nice rates last? Unlike tax credits, they don’t announce these in advance, so you just have to take advantage of them when they are there!

Tax Credit Almost Done – Now What?

Rick Van Wieren — Wed, 28 Apr 2010 01:38:33 +0000

Many in the real estate industry are holding their collective breath to see what comes next after this Friday’s expiration of the First Time Home Buyers Tax Credit. While some thought it would be extended, the reality is that the Federal government has got to back off from its assumed role as rescuer of the housing market, and let people get back to business.
So does this mean that sales will dry up? Probably not. While we may have borrowed a few transactions from the summer months into the spring, the housing market does not really ebb and flow that much around special incentives, and is driven more by jobs, and the need for housing. Young people are still graduating from college, getting married, having kids and buying their first homes (not necessarily in that order!), with or without tax credit help. People are still transfering to accept new jobs, or retiring, or divorcing, or whatever other ‘change of life’ event that happens that changes housing needs.
Interest rates are trickling up a little, but are basically still at incredibly low levels. Colorado Springs homes are a great value, and there are lots of nice homes for sale right now. The economy is not great, but getting better by the month, if not the week. And Colorado Springs is still a GREAT place to live. Will sales slow? Maybe a little. But my own perspective is that there will continue to be many reasons for people to buy a house in Colorado Springs. And I’ll be here to help them!

Getting the Lead Out

Rick Van Wieren — Wed, 21 Apr 2010 13:48:33 +0000

1978 was a very good year, at least from an environmental standpoint. That was the year they quit using lead based paint in homes, fondly referred to as LBP by some of us in the business of selling houses. 2010 will be another important year, and April 22 may be one of those dates that ‘lives in infamy’, because new rules are going into effect on April 22 that will forever change the economics of doing major home renovations on homes built prior to 1978.
EPA (US Envronmental Protection Agency, occasionally joked about as the Economically Prohibitive Agency) has a web site that explains more about what is going on, but the basics are as follows.

Contractors doing work on homes built prior to 1978 will have to become certified
Procedures required for doing work on homes built prior to 1978 will slow down the construction process, and make it more expensive on older homes
Homeowners doing work on their own homes they live in are exempt, but not landlords, ‘fix and flip’ renovators, or pretty much anyone else doing work on a home they do not live in
Fines are HUGE for non-compliance

Before anyone goes and jumps off a bridge (or decides to inhale lead based paint dust ) over this, it isn’t really ALL bad. Over time, some contractors will probably get more efficient with the processes, and some initial ’scary’ quotes for work will likely diminish. While projects like window replacement will likely continue as they are needed (the older windows really aren’t very energy efficient), there will be at least some projects that people may elect not to do, such as removing walls. Projects that don’t disturb more than 6 square feet of wall space don’t require the new certification and procedures, so little stuff won’t be affected.
The other unintended side effect of these rules, is that homes built prior to 1978 that have NOT been updated much, are going to become a bit harder to sell. Fix and flip and landlord type investors are not going to be as likely to buy them, so the demand will be more from owner occupants. This group has had an insatiable appetite for newer homes all along, so demand for the older homes will likely fall, at least until people can get their heads around these regulations.

Colorado Springs City Budget Woes

Rick Van Wieren — Fri, 12 Feb 2010 16:15:57 +0000

Colorado Springs has a budget problem. Yawn. So does about every city, state and county in the country. The Federal government is about the only entity out there than can just print or borrow money when they are short. For those living in Colorado Springs, there are also some other issues however.

1. Every government entity in Colorado is required to have a balanced budget. That means the city can’t hit their Visa card to pay for services.

2. Taxes cannot be raised without a general referendum here. In fact, if tax collections rise as a result of, say higher auto sales, they can’t even keep the money without a vote. This law, called TABOR, has made it very difficult for cities to figure out how to maintain services.

3. Coloradans in general, and residents of El Paso County in particular (of which Colorado Springs is the bulk of) are pretty tax resistant. The recession hasn’t ignored us here, and with many either unemployed or underemployed, more taxes are not exactly on the morning breakfast menu when they wake up. Low taxes are in part why our cost of living is 7.7% below the national average.

At a national level, the debates rage over “guns vs butter”. To be more specific, defense spending vs health care spending in the current environment. At the local level, if revenue can’t be raised, it comes down to some pretty basic services, like trash cans and irrigation in the parks, street lighting, police and fire department staffing and response times, fixing pot holes, bus services, etc. In Colorado Springs, the city council is having to make some tough choices. Some of them may, at some point, cause noticeable drops in city services that we all have come to expect. The watering season for our parks really doesn’t start until May, so the decision not to run the sprinklers may not even be noticed until then. Who knows, with the weather being so weird nationwide, we might even get lucky and have a wet summer that makes this completely a mute point. There are even discussions underway to possibly sell the city owned Memorial Health System. They are auctioning off police helicopters, and even sold some buses to help continue funding the commuter bus service to Denver (called FREX for Front Range Express). CNN is supposedly working on a piece using Colorado Springs as an example of the municipal budget dilemma being faced around the country.

This week I had a homeowner tell me that they are going to try and organize their neighborhood to raise money for the watering and otherwise maintaining the neighborhood park in Old Farm. Old Farm Park is part of the network of parks connected by the Homestead Ridge Trail. It has awesome views, some nice play areas for the kids, and services an area of about 1200 homes. I was totally impressed by the level of commitment being expressed to not let this recession rob the quality of living in Colorado Springs in the Old Farm area. Perhaps this is just one park, but perhaps this will be duplicated in other areas, and just perhaps this sort of thinking will take hold across the country. Until this recession is over, maybe individuals and neighborhoods will chip in to do what government can’t afford to at the moment?

Colorado Springs Builders Face Timing Dilemma

Rick Van Wieren — Wed, 20 Jan 2010 15:53:09 +0000

The $8,000 First Time Home Buyer Tax Credit ($6500 for others who qualify) has created a little bit of a dilemma for Colorado Springs home builders (or for that matter, all builders, nationwide). With the housing recession not fully over, many have been either unwilling or unable to build a lot of inventory homes. After all, when credit is tight, it is just not that easy to be borrowing millions to build houses that are taking too long to sell. On the other hand, the tax credit program has some deadlines that create a logistical problem.

Most Colorado Springs builders need 4 to 6 months to start a house from scratch and finish it. Since the tax credit expires 6/30/2010 (you have to close by then), there is really only about a 6 week window left (as of this writing 1-20-2010) to start a house from scratch and have it still qualify. Starting a bunch of inventory homes can get them a jump start on the process (the contract has to be written and accepted by 4/30/2010), but it is risky, because if they don’t sell, it ties up a lot of credit and capital. Picking the models and lots to target is tricky as well, although there is some mathematical guidance here. Since FHA (the most common civilian financing tool right now) requires a 3.5% down payment, the $8,000 credit translates into the down payment on a $228,500 home. My guess is that we’ll see the most ’spec homes’ targeting that price range. Frankly, we can use more affordable new homes for sale in Colorado Springs!

For more information on new homes, please visit the New Construction section of our web site, or call me at 719-590-4768.

Hospital for Sale in Colorado Springs?

Rick Van Wieren — Fri, 08 Jan 2010 15:22:22 +0000

Colorado Springs is doing what hundreds of cities across America are doing – trying to come up with either cost savings or revenue sources. One of the discussions that has begun here is the potential sale of the city owned Memorial Hospital system. A citizens committee will be discussing this over the next few months, and it is very unclear with this will develop any ‘traction’ or not, but I thought it warranted some discussion here.

The last several years have seen a boom in the Colorado Springs health care infrastructure. Colorado Springs has 2 main civilian hospital systems. The first, the Penrose – St Francis system operates 2 large hospitals, ‘Penrose Main’ in the Old North End, and the brand new St Francis Medical Center at Powers and Woodmen. The other system is the city owned Memorial, with 2 major facilities. Memorial Central is next to the Olympic Training Center, near Boulder and Union. The other is the new Briargate Campus, at Union and Briargate Parkway.

Living in Colorado Springs with an aging mother-in-law on dialysis, we have experienced a lot of the medical system here. We’ve had friends whose lives have been saved in both systems, grandkids born in both systems, and spent hours in the emergency rooms of both systems. Overall I think our family consensus has been that health care is quite good here. If the Memorial system is sold, it would undoubtedly be to a company that will run it professionally, and standards of care will likely not change.

The City of Colorado Springs is a little unique to cities I’ve lived in previously in California and Michigan, in that they own both a hospital system as well as the public utilities. We’ve been really pleased with how that has worked on both counts. My personal hope is that the current budget crunch doesn’t cause our local politicians and anti-tax activists to take a short term approach, and sell irreplaceable assets for short term gain.

We were below zero overnight, but it looks like the sun will do us some good and get us back up to normal in a day or 2. Upper 40’s and even low 50’s on the horizon!

New House Tax Credit Program Should Be Good for Colorado Springs

Rick Van Wieren — Sat, 07 Nov 2009 16:01:00 +0000

We’ve seen some nice activity in the Colorado Springs real estate market from the current First Time Home Buyer Tax Credit program, but the new tax credit program should be even better. Here is a link to the IRS writeup on the new program.

For starters, it isn’t JUST for first timers any more. We’ve needed a little extra incentives for some existing homeowners, to consider a buying move (as if 5% interest rates weren’t enough!). While the incentive is a little less ($6500 vs $8000), it is a good start. It also only will apply to primary residence moves, so this won’t be an investor or 2nd home purchase program. And it only applies if the prior home was your primary residence for 5 of the last 8 years, thereby excluding anyone who has bought in the last several years and is ready to move on. It will also likely require many to sell before they rebuy, putting some pressure on short term rentals. But all in all, it should help a little at the higher end, because more buyers in the qualifying categories are likely to buy in the higher price ranges than 1st timers.

Some unintended side effects of the program could be:

1. Downsizing sellers could end up putting more pressure on lower priced homes, as well as adding higher priced homes to an already glutted inventory of more expensive homes. The 90th percentile in our market was only $345,000 last month, indicating some of this was probably already happening.

2. The additional buyers this may generate will have houses to sell, adding to the inventory in all price ranges.

3. Builders will see additional activity from this, however more contingent contracts will likely appear, contributing to some increases in ’spec’ homes, when move up buyers are unable to sell at terms they can afford. The program requires the contract to be agreed to by April 30,2010, but it can close as late as 6/30/2010, providing a little flexibility for builders, who often need 6 months to actually build a home from scratch.

It is a little cooler today, only 68 (ok, I’m bragging:), but probably the last day of the year that will be that warm. Pretty nice for November, that is for sure! Today’s photo is of Mt Sopris, taken from the hills above Basalt last month. Sopris is part of the Elk Mountains, and while not a 14er, presents a nice dramatic backdrop to the Roaring Fork Valley on the way to Aspen.

Got questions about living in Colorado Springs? Call me at 719-590-4768 or 888-568-6784! Visit me on Facebook to see even more photos!

Colorado Springs City Election Presents Hard Choices

Rick Van Wieren — Thu, 05 Nov 2009 16:20:00 +0000

The results are in, and Colorado Springs voters have taken a hard line against any kind of increase, or even maintenance of city tax revenue. We are a little famous for being very anti-tax here, so in some ways this should be no surprise. However, it does present some ‘interesting’ decisions for the city council, seeking to balance a budget that has been hit hard by decreasing sales tax revenue. Of course, all the fun stuff gets paraded out to the chopping block first (parks and bus service for instance). Police and fire salaries, whether by headcount, furlough, or layoff tend to be next. Street maintenance is never far behind, although since they are already doing so little in that area it isn’t that productive. Usually not mentioned are mayor and city council salaries (or size), wonder why? My personal hope is that the city will figure out some good creative ways to avoid cutting back things like park maintenance, we have some of THE best parks in the country!
I’m kind of glad Congress is getting serious about extending the 1st Time Homebuyer Tax Credit, both in time and scope. There is still some discussion going on, but I’ll cover this when the final version passes, maybe by tomorrow? The extension of the program to some existing homeowners is particularly exciting.
We may set warm weather records 3 days this week, with another day in the 70’s for today, pretty great for November! I’ll take it, we had snow last week to offset it!
Got questions about living in Colorado Springs? Call me at 719-590-4768 or 888-568-6784! Visit me on Facebook to see even more photos!

Tax Day and Shopping in Colorado Springs

Rick Van Wieren — Thu, 16 Apr 2009 14:08:00 +0000

Many cities in the country had Tax Day tea parties yesterday, and Colorado Springs was no exception. Friends who attended the festivities in Acacia Park were impressed with how smooth it all went. Conservatives protesting in the public square isn’t something you see every day, if they had been rowdy about it I guess it would really have been news! I was surprised the Gazette reported only 1500 people were there, friends had guessed double that. For as fiscally conservative as Colorado Springs tends to be, I would have thought more would attend, but then again, some of us were working!
The news of the General Growth Corporation Chapter 11 Bankruptcy filing is pretty sad here in Colorado Springs. The Chapel Hills Mall, across the street from my office in Briargate, is a General Growth Property, and while this is anticipated to go rather smoothly and not force any major closings, it still reflects on how difficult the business climate has become nationally. The mall is where my youngest son works, and while we are not big shoppers as a family, it is where we go when mall shopping is required, not to mention the food court is a pretty convenient quick bite for lunch, and the theaters are also very close and convenient. The other major mall in the city is The Citadel, which is quite a bit further south. The Promenade Shops at Briargate is a newer outdoor shopping and dining center that has competed somewhat with Chapel Hills in recent years, though it is really a different experience altogether.
Got questions about living in Colorado Springs? Call me at 719-590-4768 or 888-568-6784!