STEAMBOAT PILOT & TODAY

Before you shop for a new home, one of the first things you need to determine is which homes are in your price range.

The amount of home you qualify for is based on your monthly income, monthly debt and the amount you can put down for a down payment.

Lenders use “qualifying ratios” to determine a safe amount to loan a potential homeowner. A standard ratio is 33/38, but ratios can vary depending on the lender, said Lynn Reiff, mortgage consultant with Wells Fargo Home Mortgage in Steamboat Springs. For example, the FHA uses a ratio of 29/41.

“The 33/38 ratio is the basic, but depending on how good your credit score is and how much money you are putting down and how many cash assets you have, we could go higher,” Reiff said.

In the ratio, the first number is the “front ratio.” This is the maximum percentage of your monthly gross income that will be spent on monthly housing costs, including principal, interest, taxes, insurance and any Homeowner’s Association fees. In the example ratio cited above, you can’t spend more than 33 percent or one third of your income on housing costs.

The second number is the “back ratio.” This is the total of all your consumer debts - car payments, credit card payments, students loans etc... - as a percentage of your monthly income. A “38” back ratio means that, as a maximum, this figure should be thirty-eight percent of your monthly income.

In the 33/38 ration example, if you make $5,000 a month, your maximum monthly housing cost should be around $1,650. Including your consumer debt, your monthly housing and credit expenditures should be around $1,900 as a maximum.

Once you know your maximum monthly payments, you subtract. You have to do a little estimating, too. Estimate what your monthly taxes and insurance will be and subtract them from your maximum payment. That leaves you with the principal and interest payment.
Once you know the principal and interest payment, you can use our loan calculator to determine how much house you can afford.

If you don’t want to do the math yourself, there are numerous mortgage lenders in Northwest Colorado who can quickly help you determine your maximum home loan and can pre-qualify you for a loan.
Reiff said to pre-qualify a potential homeowner, she looks at income, debt and down payment. Generally, Reiff said, she does not pull a credit report until there is an actual loan application.

Choosing the Right Neighborhood.

STEAMBOAT PILOT & TODAY

Steamboat Springs is a small town, but it still has a diverse range of neighborhoods. For first-time homebuyers, people new to the area, or even Steamboat natives, deciding which neighborhood to live in can be tough.

A few helpful hints, however, can make this decision easier, and can help potential homebuyers quickly find the neighborhood that’s best for them, making it more likely that they’ll be happy with the home they choose.

The first factor to consider is price range. A lot of homes in Steamboat are simply out of the question for some buyers, said John Worden, a broker at RE/MAX Steamboat.
“I think affordability and price range would be one factor to think about early on,” Worden said.

Another factor buyers should think about in the beginning is whether they want to build their own home or buy an existing home. If they decide to build a home, the next decisions include what size and style of house they want, as well as how large of a lot they’ll need. The decision to buy an existing home means buyers should consider whether they want a new, modern home or an older home or a fixer-upper.

After figuring out how much they can spend for a home and whether they want to build their own home, Worden said that buyers should make a list of what features are most important.

One important factor is location. Living downtown could mean being able to walk a few blocks to work, while living on the mountain could provide easy access to the ski slopes. Subdivisions that are further away from town could provide the solitude and privacy and larger lots that are important to some buyers, but could also mean a longer commute to get groceries or to get to work.

Thinking carefully about location can help potential buyers narrow down their list of possible homes to buy before they even start looking.

Another important factor is the character of the neighborhood. A good way to get a feel for a neighborhood’s personality is to talk with the people who live there, and ask what they like about the neighborhood and what they don’t like about it.

How much utilities in the neighborhood cost, as well as what sort of growth is projected for the neighborhood are both important for making an informed decision. Buyers should also research what whether property values in the neighborhood have been rising or falling or staying about the same over the last few years.

Buyers also need to ask themselves whether they want paved streets or gravel roads, whether they mind being on well and septic, what sort of landscape they want to live in, how close they want to be to their neighbors, and what sort of amenities they want to have out their back doors.

The decision ultimately comes down to tradeoffs, Worden said. It’s nearly impossible for a buyer to get exactly everything that he or she wants in a single home. For instance, Worden said a lot of buyers come saying they want a home with a killer view, nice trees and a stream. But, interestingly enough, it’s hard to get all three of those features together. Homes at higher elevations mean a better view, but no stream. Homes with trees mean less of a view.

“The important thing is to prioritize,” Worden said.

The next step, once buyers make a list of what they want, is to get in touch with a local broker who can help show them around the area.
“Once you have that list, definitely call your broker,” Worden said. “ Then your broker will be able to zero in on it for you.”
Then, buyers should look at a lot of homes and take their time in making a decision.

For out-of-towners who are new to the Steamboat area, Worden had some additional tips. First, these buyers should schedule a week to two-week vacation to Steamboat so they can start looking. It’s important to have enough time to drive around the different areas and get a feel for what’s available.

Another tip is to look at the area when it’s covered with snow. Out-of-town buyers often forget that Steamboat is covered with snow for more than half of the year, and pick a property based on what it looks like in the summertime.

“It wouldn’t hurt to look at something when it’s covered in snow because it does look like that a lot,” Worden said.

Current Conditions in the Steamboat Real Estate Market.

STEAMBOAT PILOT & TODAY

Real estate activity in 2004 moved like a locomotive: It started out slow in the first quarter and gradually gained speed through the summer, fall and winter -- easily setting new records for annual sales and transactions in the area covered by the Steamboat Springs Board of Realtors Multiple Listing Service.

And still, the real estate train is giving no signs of slowing down.

"Consumer confidence is probably as high as it's ever been, and from what I've heard from other brokers, it is continuing," said Doug Labor, owner and broker of Buyer's Resource Real Estate and president of the Steamboat Springs Board of Realtors.

Total sales volume for the year was about $444 million, a 32 percent jump from sales volume in 2003 and an18 percent jump from the previous record for sales volume set in 2000, said Labor, who tracks real estate statistics in Routt County and parts of surrounding counties.

The board has been keeping statistics since 1995. About 10 percent to 20 percent of real estate in the area, including properties for sale by owners, is not tracked by the service.

At 1,259, the number of real estate transactions last year also was a big improvement from 2003, which saw fewer than 1,000 sales. Real estate transactions in 2004 easily beat the record, set in 2000, of 1,176 sales.

Low interest rates, as well as the many loan packages available, including interest-only loans, adjustable-rate mortgages and first-time homebuyers loans, were a big factor behind real estate activity in 2004, brokers said.
"Interest rates were good, and it was easier to borrow money," said Jill Limberg, a broker at Colorado Group Realty who also serves on the Board of Realtors board of directors.

Brokers also attribute burgeoning real estate sales in part to buyers' view of real estate as a way to diversify investment portfolios outside a shaky stock market.

"People are kind of getting tired of not feeling like they have control or security, so they're banking on appreciation of real estate," said Evlyn Berge of Axis West Realty. "That way, they have something they can use as well."

The "magic" of real estate is that it allows buyers more leverage with their money, Labor said.

Fourth-quarter sales volume in 2004 was down from the third quarter, which was another record-setter. But with $125 million in sales, the last three months of the year still were the second best quarterly volume numbers ever.

The fourth quarter set a record for median sales price, which falls in the middle of prices for the total number of properties sold. The median, about $286,000, was boosted by buyers' demands for bigger, higher quality homes, condos and townhomes, Labor said.

In 2001 to 2003, for example, condo sales saw the most activity in the $100,001 to $200,000 range. Last year, the $200,001 to $300,000 range had the most condo sales.

Aging baby boomers, looking for a full-time place to retire, have been a big influence in Routt County property sales, Berge said.

"They have money to spend, and they are looking for alternative lifestyles in retirement," she said.

The highest number of Routt County residents, about 19 percent, are concentrated in the 45 to 54 age group, according to the 2005-06 Community Indicators Project released by Yampa Valley Partners.

In 2000, the report shows the age group had increased a whopping 176 percent from 1990.

"There are definitely more people living here year-round," Berge said.

The absorption rate, which measures the number of listings to the number of sales, also is putting pressure on prices, Labor said.

Sales typically hover at about 12 percent to 16 percent of listings, as was the case at the beginning of 2004. As more properties sold, the absorption rate quickly increased to more than 25 percent in the second half of the year.

The highest recorded absorption rate was about 33 percent in the second quarter of 2000, according to MLS statistics.

Overall, 2004 real estate activity bodes well for sales this year, said Labor, who attended a National Association of Realtors conference in November.

Speakers there noted mortgage rates are not expected to rise drastically and the biggest dampeners on consumer confidence would be continued oil price increases and any terrorist attacks, he said.