North Fork Real Estate: “Grousing” a Little About Valley Market Uncertainties

Downtown Paonia by Steve Huntley

“Grousing” a Little About Valley Market Uncertainties

By Mike Jackson – Coldwell Banker Colorado Realty – Hotchkiss/Paonia

I admit it.  I’m a sucker for a good aphorism. Wisdom embedded in a simple phrase that captures an essential truth.  “Pigs get fat and hogs get slaughtered.”  How’s that!  Everyone knows it’s wrong to be greedy.  But at times, like when engaged in negotiation, and in the heat of the moment, it can be difficult to have the proper perspective.  A buyer who wants to make an offer substantially below the asking price will often say, “I don’t want to offend them.”  And a seller that receives a “low” offer shouldn’t be offended, after all, somebody has looked around and wants to buy their property – that’s good news.  It’s not uncommon then for a seller to say “forget it, we’ve already come down by $_____”.  Emotions naturally run high.  It’s not just a house, it’s someone’s home.  It’s not just money, it’s the biggest investment that most people will make in their lifetime.  At times it can be difficult to know what to do and that’s when people start wondering about what the future holds.  Are prices going to stabilize?  Go up?  Go down?  What’s going to happen on the demand side of the equation?   Will there be more buyers or fewer?  What is the market going to be like next year?  Is it better to wait or sell now? All of which leads to another oft quoted expression, “Predictions are difficult to make, particularly when they’re about the future.”  Lately I’ve been asked what to expect from the local real estate market in light of the recently announced Bowie mine lay-offs and concerns about West Elk’s direction in the face of their voided mineral lease for expansion.  Obviously it’s bad news and comes just as things are starting to look up.

The pronounced decline in the number of new foreclosure filings locally is one good indicator that the effects of “The Great Recession” have begun to subside.  For someone who has lost their job and will have to move to find new employment there are few choices.  As we’ve seen, some people have chosen to rent their home, instead of trying to sell it, hoping that prices will rise.  Other times, particularly when the amount owed is greater than what it will sell for, entering into a short sale has been a helpful way to solve the problem.  Unfortunately the days of being able to execute short sales may be numbered.  Here’s why.  Traditionally the IRS considers forgiveness of a debt as income to the borrower.  Only through a specially enacted “loop-hole” have short-sellers been able to avoid having this “phantom income” create a tax liability.  This special provision expired in 2013 and without congressional action before the end of the year to extend it the old rules will go back into effect.  It’s hard to figure why our legislators would allow that to happen since it really doesn’t cost the government anything and has been such a usefully way to help recalibrate the real estate market.  Without a no-tax-penalty short-sale program you can bet that the foreclosure numbers will start to rise again next year.

Two other items in the news that have my attention but about which I am at a total loss to predict the outcome or effect on the real estate market are the listing of the Gunnison sage grouse as a ‘threatened’ species under the Endangered Species Act and which way Delta County is going to go regarding commercial development.  There are areas of habitat south of Crawford (mostly in neighboring Montrose County) where this designation may result in land being declared off-limits to development and even residential use.  Probably not a big blow to the market as a whole but it could be devastating to an individual property owner who bought land with plans to build a home but which could be forbidden.  The other being the county’s specific development regulations.  Since we don’t have zoning in the county, all new commercial development is reviewed on a case-by-case basis.  Delta County needs more job opportunities.  Jobs come from local businesses.  In the wake of the ongoing legal battle over a Powell Mesa chicken house it may be impossible for an aspiring entrepreneur to know whether or not they can set up shop here without the neighbors hauling them into court.   There is risk inherent with uncertainty – particularly when it’s about the future.