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Second verse, same as the first: Colorado Springs home sales, prices hit another record high
By: Rich Laden 

 April 7, 2017 Updated: April 8, 2017 at 7:05 am

Area home sales climbed and prices hit another record high last month as Colorado Springs' hot housing market lived up to its recent ranking as the nation's seventh-best.

Single-family home sales totaled 1,247 in March, 6.4 percent higher than the same month last year, according to a Pikes Peak Association of Realtors report. Sales had dipped in February, but otherwise have risen on a year-over-year basis each month since summer 2014.

The association's report also showed:

- Homes were gobbled up quickly in March, selling in an average of 36 days. In the same month last year, homes spent an average of 47 days on the market before selling.

- Through the first quarter of this year, home sales totaled 2,955 - a 2.2 percent increase over the same period in 2016, which was a record-setting year for sales.

- The median price - or mid-point - for homes sold in March was $268,000, beating the previous record of $265,000 set in August 2016 and matched in January of this year, according to the Realtors Association. March's median price also was up almost 12 percent from the same month last year. Median prices now have risen for 28 straight months on a year-over-year basis.

- The average sales price in March was $295,828, a 10.4 percent increase over last year, although short of February's record of $301,385. When looking at median and average prices, economists and real estate experts tend to focus more on the median because averages can be skewed by a few very high or very low sale prices.

- The supply of homes remained very tight. There were 1,454 homes listed for sale in March, down one-quarter from the same month last year.

The Realtors Association report is based on home sales whose transactions were handled by its members; about 90 percent of those sales took place in El Paso County, with the rest recorded in other Front Range counties.

The association's report follows one last month by Realtor.com, which said the Springs' housing market ranked No. 7 in March among the country's top markets.

The Realtor.com report was based on an analysis of the demand for homes as measured by views of online listings. The report also looked at the supply of homes in a given area, which was measured by the median number of days that homes spend on the market before they were sold.

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Contact Rich Laden: 636-0228

Twitter: @richladen

Facebook: Rich Laden

HUBBLE SHIRE FARM by Homes By Design Magazine

by JoAnn Gadkowski Team

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HUBBLE SHIRE FARM

WRITTEN BY CAROLYN M. RUNYON

PHOTOGRAPHY BY ERIC ROTH

Steven Favreau, president of Favreau Design, longed to move to the French countryside. But with family in his hometown of Boston, and offices in both Boston and San Francisco, that kind of move presented a logistic challenge. In 2011, he found his solution in a 5,000-square-foot home that was built in 1832 and set on twenty-five acres in the beautiful countryside of Chelsea, a small farming town in Vermont. “I love American history,” says Favreau, “and decided to redo the home with a contemporary attitude, but with a nod to the period.”

Renovating a historic home is a great undertaking that often includes making unexpected structural and whole-house updates. “The electrical situation was so bad, I was concerned that a fire was very possible. We had to repair that immediately,” he explains. “And we found that a wall between the kitchen and dining room was putting pressure on the floor and causing the house to slowly sink into the basement.” He knocked the wall down and put in an enormous beam in the kitchen for support. The floor stopped sagging and slowly settled into its proper height.

 

The floors were the original pumpkin pine. Because the floorboards were textured and hand hewn, Favreau had them sanded down by hand to retain the aged details. They were then stained a dark espresso color, given a satin finish, and topped with a wax coat. On the walls, six layers of wallpaper were removed and the plaster was reskinned. Favreau maintained everything he could from the original architectural details. Moldings, five wood fireplace surrounds, the banister, and even the old hardware were carefully refurbished. The trim was painted a creamy white. Once these basic foundations were laid, the color—amazing, intense, intoxicating color—was introduced.

Favreau found photos dating from the 1800s that showed the foyer with stripes on the walls. He wanted the foyer to be dramatic and jolt the senses, but he also wanted it to be part of the whole. So he took bits and pieces of the foyer decor and incorporated them into the rooms surrounding the foyer. “The home is one [book] and each of the rooms is a chapter,” he explains.

He found mother-and-daughter artistic painters in town who accomplished the phenomenal striping on the foyer walls. “I had seen wonderful wallpaper with stripes, but it was no longer available. So I designed a similar stripe pattern using brown, fuchsia, and white paint,” says Favreau. “The painters astoundingly painted the stripes by hand!” A faux-leopard stair runner and white, faux-animal mounts lend a touch of whimsy.

The dining room off the foyer was papered in fuchsia with a pattern that is reminiscent of stacked plates. Favreau purchased the traditional chairs at an auction, then added bright-teal paint and the candy-striped upholstery. “I like a contemporary feel, but love antiques,” he admits. The cushions are in a purple crocodile-patterned material. In contrast, the table has a serene industrial feel. And the ceiling and rug offer a calming touch in subtle cream tones with patterns that mirror each other.

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The 1865 portrait over the fireplace is of Aaron Davis, a former Chelsea postmaster and one of the very early owners of the house. In fact, the estate is listed on the National Register of Historic Places as the Davis House.

The living room is much more subtle in its design approach than the dining room. The walls are a calm, sky-like color by Benjamin Moore called Palladian Blue. But as quiet as the room is visually, Favreau felt it just called for some orange. He designed the furniture, which is upholstered in gray faux-chinchilla framed in a bold medallion print by Pindler.

The designer kept the kitchen muted on purpose. “As much as I love pattern and color, I never want the design to go too far,” he says. “I used a wallpaper that has a wonderful pattern created by the end cuts of logs and gives the room an indoor-outdoor feel. It reminds me of the firewood piles found all over Chelsea.” The kitchen cabinets are reclaimed furniture pieces that came together over time. The island is supported by a printmakers’ chest with small drawers for storage. The overall tone is calm and light, but Favreau couldn’t resist a little color play. “We have a dog named Hubble and Chelsea is the county seat so it’s a shire,” he explains. “I did an arrangement of multicolored letters spelling out the name of the house ‘Hubble Shire Farm’ in the eating area.”

Favreau’s biggest challenge in creating this design was logistics. “I was living full time in San Francisco and working with a local contractor in Chelsea,” he says, smiling. “The entire renovation was done by e-mail, phone, sketches, and photos sent back and forth between us.” The result: a bold and courageously colorful design that still voices the historic tone of the 1800s.

The Misleading Math Behind the Rent vs. Buy Calculation from Realtor.com

by JoAnn Gadkowski Team

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The Misleading Math Behind the Rent vs. Buy Calculation

 | Feb 17, 2017

There’s about $13.1 trillion stashed away in the United States, in plain sight. Where? In our homes!

Do we have your attention yet?

 
 
 

That’s the total value of the equity held by over 75 million U.S. homeowners, according to the latest estimates from the Federal Reserve Board. And that works out to almost $175,000 per owning household.

This is unmistakable evidence that homeownership is a critical building block of household wealth. Owning a home is a key reason why the median net worth of a homeowner is almost $200,000 while the median net worth of a renting household is just over $5,000.

Sure, part of that is because owners were able to pony up a chunk of money to put down on a house, and to qualify for a mortgage. But the act of paying for a mortgage actually helps produce more wealth, by freezing payment amounts and building equity through forced savings.

A 30-year amortized, fixed-rate mortgage is a beautiful thing. It provides an affordable path to buying a home while locking in today’s cost of that home for the life of the loan.

The traditional rent versus buy argument compares the total monthly costs of buying a home with a mortgage with the corresponding rent. So that comparison is relevant when it comes to representing  the housing choice trade-off in clear cost terms.

Two years ago, that head-to-head heavily favored buying, thanks to very low mortgage rates and lower prices. Back then, more than three-quarters of the counties in the country saw lower buying costs than renting costs.

With prices and rates higher now, less than half of the counties in the country see math that favors buying.

But those raw numbers hide the fact that unlike a rent check, a percentage of every monthly mortgage payment—after the lender is paid interest—goes toward the owner’s home equity. That means it’s really a forced savings plan.

Over time, less of the mortgage payments go toward interest and more go toward equity, so the savings power is enhanced further.

Here’s how that works out for a median-price home of $250,000 bought in January with 20% down with a monthly payment of $976.

Before their first payment, the proud new homeowners had $50,000 in equity thanks to their down payment. (Actually, 20% down isn’t always typical or necessary, but, hey, it keeps this illustration simple.)

In the first year, an average of 29% of the monthly payments builds equity. After 12 payments, the homeowners have just over $3,400 in added equity.

By year 14, 50% of the monthly $976 payment goes toward equity. Don’t forget that the monthly payment hasn’t changed, because the interest rate was fixed.

At the end of the 14th year, just shy of $64,000 has been added to the initial $50,000 in equity.

In the final year of the 30-year mortgage, while the monthly payment remains $976, 98% of the monthly payments builds equity until that magic day when the home is owned free and clear.

Think you can beat that with rents? Researchers at Harvard put it this way:

“While studies simulating the financial returns to owning and renting find that renting is often more likely to be beneficial, in practice renters rarely accumulate any wealth. In no small part this seems traceable to the difficulties households face in trying to save absent either a clear goal or an automatic savings mechanism.”

So, you want a better rent versus buy illustration? First, find a place to rent for no more than $976—the same as our mortgage payment example above. If you can rent for less, great. Will you be able to save that difference amounting to at least $3,400 in the first year? That would imply you can really pay only about $700 in rent to get the same savings effect.

If you can’t save $3,400 yourself by paying less in rent, ask the landlord if he’ll take a portion of your rent payments and set it aside for your rainy day fund.

Then ask the landlord if he’ll set your rent payment at today’s rate for the next 30 years. And before you close the deal, ask him to raise the rainy day share each year by 1% to 2% until year 30, when he’ll get only 2% of the rent payment.

Clearly, this would not be easy to do.

Even if the house only keeps pace with inflation over 30 years, which is a very conservative assumption, the forced savings inherent in a mortgage guarantees a homeowner is building wealth. A renter household has to be extremely diligent to amass the same savings that the good ol’ 30-year mortgage does automatically.

One of the Most Misunderstood Tax Breaks from Realtor.com

by JoAnn Gadkowski Team

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The Home Office Tax Deduction: One of the Most Misunderstood (and Dangerous) Tax Breaks

 | Feb 24, 2017

According to the latest figures from the Bureau of Labor Statistics, 24% of employed people now do some or all of their work at home. Beyond the obvious benefits of unfettered access to your refrigerator and a dress code of stretchy elastic-waist pants, working at home can save you more than lunch money on National Tax Day, thanks to the home office deduction.

Simply put, the home office deduction allows you to write off part of your home expenses on your business tax return by separating out the costs associated with using your home for personal purposes (making pancakes) and business (answering work email). Yet of all the tax write-offs available, this one is among the most murky and misunderstood.

Allow us to clear the air for you happy home workers so you can claim your home office tax deduction with confidence.

Who can claim the home office deduction?

To claim the deduction, you must meet two requirements. First, an area of home has to be designated as your principal place of business, and—the clincher—used exclusively for work. Got that?

“This means your couch, exercise room, and kitchen table don’t count,” says Aaron Lesher, a CPA at Hurdlr, a finance management app. Ignore these rules and your chance of being audited can skyrocket.

To be clear, that room you work in that doubles as a guest room when mom comes to town won’t pass muster, even if you spend 40 hours a week there, says Abby Eisenkraft, financial expert and author of “101 Ways to Stay Off the IRS Radar.” So if you really want to do things right, kick mom out of your office and have her sleep on the couch!

While this separation of work and personal use is probably easier if your office is its own separate room, it doesn’t have to be. If, say, your desk is parked in a corner of your bedroom or part an open floor plan, simply measure the space you use for your office, whether or not there are walls.

The key is the area must be used only by you, just for work—not to peck out personal email or pay bills. To make that delineation easier, you can even put up a physical barrier like a partition or shelves.

What if I’m an employee for another company?

Employees of larger companies can also claim the home office deduction. But there’s an additional requirement that the home office must be for the convenience of the employer—for example, if the employer doesn’t have a local office.

“The IRS will look at this closely and request proof, such as a letter from the company,” says Eisenkraft. If you simply prefer to work at home, you can’t take the home office deduction.

“That’s considered for your convenience,” explains Eisenkraft, “not the employer’s.”

How to claim a home office deduction

The IRS offers two ways to calculate this separation—one simple, the other a bit more involved, says Jeff Morris, accounting partner at Nathaniel Jacobson, serving Maryland and Washington, DC.

The simple method: Since 2013, you can claim your deduction by figuring out the square footage of the space in your home that you use for business purposes. Each square foot you use for work is worth $5, and you can claim up to 300 square feet for a maximum claim of $1,500. This new method vastly reduces the paperwork required for taking the deduction, says Morris.

The complicated method: This method works best if the expense of your home business exceeds the simple $1,500 deduction. Calculating this involves tracking all the costs of your home (think maintenance, insurance, repairs, utilities, real estate taxes, etc.) and depreciation (normal wear and tear).

Next, separate and allocate those expenses based on the percentage of the home you use solely for business purposes. So if your office space breaks down to 10% of your home’s total square footage, you can deduct 10% of your home costs—which could add up to a sizable chunk of change. The key to using this deduction is keeping careful records.

Isn’t the home office deduction a red flag for an audit?

In a word: nope. In fact, the IRS created the simplified, square-foot-of-office-space method to take the audit fear out of the home office deduction.

“This might surprise some people, given the fear of an audit that the home office deduction used to strike in the hearts of many taxpayers,” says Morris. But in the age of telecommuting and online behemoths like eBay that started from a home office, the reality is that the deduction is becoming increasingly common, and it doesn’t make a taxpayer any more susceptible to an audit than any other deduction a small-business owner may take.

Still, if you want to make sure you don’t end up in the auditing line, there are things you can do. First off, remember this: “It’s not the home office deduction that flags a return for an audit, but the magnitude of specific claimed expenses that get taxpayers in trouble,” says Morris.

What would a red flag look like? Claiming 2,950 feet out of a 3,000-square-foot home for business use. “Or trying to write off that $25,000 pool renovation.”

In other words, as long as you’re legitimately working at home and aren’t unashamedly trying to con the system, you should be able to claim your home office deduction fair and square.

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Photo of JoAnn Gadkowski Team Real Estate
JoAnn Gadkowski Team
Berkshire Hathaway HomeServices Rocky Mountain Realtors
660 Southpointe #200
Colorado Springs CO 80906
719-339-8909

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