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Old 07-05-2013, 03:45 PM
 
Location: Wherabouts Unknown!
7,764 posts, read 16,840,183 times
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jazzlover wrote: Well, affluent retirees often DO drive real estate prices up in many areas of Colorado--that is a statistically provable reality.

As always, you have conveniently left out the other part of the equation regarding higher real estate prices. You forgot to mention the greedy sellers who ACCEPTED the bloated offers, some of whom are long time Colorado natives. OBVIOUSLY, they cared more about their own bank account than they did about keeping real estate prices in line. It takes a buyer AND a seller to bring about higher real estate prices. No one was holding a gun to the sellers heads when they accepted the $$$$$$. Just like people everywhere else...they took the money and ran off to their perceived greener pastures. Does that remind you of anyone?

Last edited by CosmicWizard; 07-05-2013 at 04:00 PM..
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Old 07-05-2013, 03:57 PM
 
Location: Denver, CO
9,158 posts, read 5,456,399 times
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Default Actually BUYERS exort enormous price pressure

Quote:
Originally Posted by CosmicWizard View Post
jazzlover wrote: Well, affluent retirees often DO drive real estate prices up in many areas of Colorado--that is a statistically provable reality.

As always, you have conveniently left out the other part of the equation regarding higher real estate prices. You forgot to mention the greedy sellers who ACCEPTED the bloated offers, some of whom are long time Colorado natives. OBVIOUSLY, they cared more about their own bank account than they did about keeping real estate prices in line. It takes a buyer AND a seller to bring about higher real estate prices. No one was holding a gun to the sellers heads when they accepted the $$$$$$. Just like people everywhere else...they took the money and ran off to greener pastures. Does that remind you of anyone?
Sellers will raise their prices to meet what buyers are willing to pay. Once buyers start disappearing from the market, sellers begin reducing their prices---uh, look at 2008 to 2012--that's exactly what happened when there weren't enough buyers. In fact, if you put more buyers into the equation than houses to sell, it will begin to put more houses on the market as people living in homes decide to take the extra dough resulting from increasing prices and head for another haven.

I think that was my Basic Marketing 101 course.

Wish I could return to Colorado as we loved the fourteen years we lived there. But when the wife retires next year we are heading to Idaho where there are still a lot more sellers than buyers---and it's much more friendly to retirees than Colorado.
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Old 07-05-2013, 04:56 PM
 
3,492 posts, read 4,935,380 times
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In the absence of building restrictions, prices will not move significantly. When buyers outnumber sellers and prices trend up by to 5 to 10 thousand, the extra profit over the cost to build will bring in home builders to make the type of house that is showing the largest increase. The reason Co Springs has what I would consider to be very reasonable prices for homes is that we allow more building. Fortunately, we also built an excellent road system to support it. Even in Denver, home prices seem to be much lower than in many other metros such as Portland, Seattle, and Chicago. Those cities are very different from each other, but all are more expensive than Denver.

If building restrictions are in place, then buying activity will be an enormous factor in setting the price. Now if you owned a home and had to choose between walking away with nothing because of the debt on the property, or walking away with 40,000 in your pocket which could be the down payment for your next house, which would you choose?

Affluent retirees can be great for an area also. They don't need jobs, and they use the resources they have saved over the course of their lives to buy products and create jobs for others.

I was actually quite surprised that prices in Colorado are so low, given the great weather and scenery. I would have assumed more people would have figured it out and moved to the area. Though, for quite a while Denver has been a top destination for the young and highly educated.

PS. The car registration fees can be circumvented by not driving a twenty thousand dollar car. My wife and I combine to pay under $200/year in those fees. It's not hard. You don't go to a dealership and buy a brand new car unless you are rich or have an entitlement issue. The land developers being able to develop land are the only reason property prices are reasonable here. If they could not develop, the prices would have soared.

Am I actually hearing an argument that blames sellers for taking the better offers on their property because prices are too high but wants to severely restrict the building of new homes that is keeping prices from getting significantly higher than the cost of construction? Builders and sellers create supply. Buyers create demand. When you want lower prices, but want to restrict the builders, you'd basically have to flog the buyers in the streets to scare them off. Arguments against low property taxes for residence are economically unfeasible. I'd know about economics, I've been tutoring it for quite a while. The low taxes for residents but higher taxes for companies means that being competitive as a company here just requires paying a lower wage. Something people can accept, because they pay less in property taxes / rent. The two should offset each other in every respected economic model in the history of the world. The thing that is remarkable to me is that the wages here lower than some coastal areas, but higher than the Midwest. Even the areas of the Midwest that have horrendously low wages combined with jaw dropping taxation rates. So, to be fair, the economic models struggle to explain why that situation persists in the Midwest, but it does explain the high native rate in the states that combine low wages with high taxes, since people are much more prone to do research prior to moving.

If someone buys a vacation house here and visits only occasionally, what city services are they consuming? Sure, they "only" pay the property tax, but if they actually spend time here to consume the services then they also pay the sales tax. They may avoid the income tax, but what harm are they creating by visiting for part of the year, paying sales tax while here, and paying property tax for the entire year? A large portion of property taxes are used to fund schools, and a secondary goal can be police. Since those short term residents won't be sending their kids to our schools, they aren't using up that resource. Since they are very unlikely to commit crimes, they aren't using up the police. Remember, the police services aren't being consumed by the victim of the crime, they are consumed in trying to rectify the situation created by the criminal.

I believe it was Minnesota that recently changed their tax law to target those that kept a secondary residence there. Can you guess which state is not attracting new people to pay property tax to a state they don't live in?

PPS. I really like you Jazzlover, even if you might not like me (since I fulfilled a dream in moving to Colorado). I know we disagree about some things, but perspective I picked up in your recent posts departs from logic and economic theory. I'm hoping that I just misunderstood you, because you tend to be a very intelligent and rational human being, even if we do often approach situations from the opposite sides.

Last edited by lurtsman; 07-05-2013 at 05:14 PM.. Reason: Adding PS, and again to add PPS.
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Old 07-05-2013, 05:29 PM
 
599 posts, read 832,840 times
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Quote:
Originally Posted by Dreaming of Hawaii View Post
Affluent people of ANY age have enough money to buy at a higher price than people with less money.
It used to be people from California who made a killing in real estate would come to Colorado and be able to afford to pay more, so we had bumper stickers that said "Don't Californicate Colorado".

Who are you going to start blaming in another ten years???
The point jazzlover was making was that the real estate market here will be crashing in the next ten years.

I happen to agree with him. This *is* a dead-cat bounce, and once the Fed backs off and interest rates go back to normal, we'll be seeing foreclosure after foreclosure all over again. As he points out, the economy in Colorado does not justify the housing prices in most areas. Also, the financial means of retirees do make a difference and drive up the prices in most areas. Take a look at the areas where retirees do *not* flock, and you'll see prices more in line with the local economy. You can buy a decent house, (not a trailer, a house) in Julesburg, or Wray or LaJunta for under $60,000.
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Old 07-05-2013, 07:10 PM
 
Location: Betwixt and Between
463 posts, read 979,045 times
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Quote:
Originally Posted by getmebacktothemountains View Post
Ok just throwing this out there: Jobs, housing and education in Colorado. Towns I am looking into (I used to live in Telluride 12 years ago) Canon City, Salida, Montrose, Ridgway and Ouray. I am familiar with Ouray, Ridgway and Montrose more than Canon City and Salida. I am aware that Montrose has grown quite a bit since I lived in that area, but that doesn't matter as much as having a job. I want to raise my kids out there, I just need some advice on which town has good education, housing and jobs. Thanks!
Have you considered Gunnison? I think you'll have a better chance of finding a job in a bigger town. You'll be competing with college students but if you have experience, it shouldn't be an issue.
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Old 07-05-2013, 07:17 PM
 
8,317 posts, read 25,785,875 times
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lurstman,

A few points here:

Highways and roads. Colorado roads are, in aggregate, in pretty pitiful and deteriorating condition. Unlike most, I have historical perspective. Most US highways and many state highways are in demonstrably worse conditions than they were 30 or 40 years ago. The conditions of major components--bridges, especially--are a real ticking time bomb. That is true in many other states, as well, but Colorado's already high costs of mountain road construction and maintenance really exacerbate the problem.

Car registration fees. The largest percentage increase in Colorado vehicle registration fees has been on older and cheaper vehicles. For example, a utility trailer that used to cost about $20 to register for a year can now cost near $100.

Affluent retirees. They are a mixed blessing, at best. While they may spend money in a community, their impact on public services is not small. If they are part-time residents, the impact is even more severe. Here is why. Whether they are in Colorado full or part-time, the infrastructure to support their presence must be paid for year-round. The local fire dept. doesn't stop protecting their home whether they are in Colorado or not, while they may only be paying income taxes (if at all) for part of the year and the same with sales taxes. While those affluent retirees often do not have children in Colorado schools, they also often vehemently oppose any tax increase to support schools, resulting in areas where retirees are a voting majority having underfunded schools. Also, property taxes make up only part of school funding, the rest coming from the state general fund. State funding for local schools is based on pupil count, so areas with a large percentage of people without children in schools get a proportionately smaller share of state funding. That means that local property taxes for schools--that burden disproportionately placed on the backs of commercial and industrial property owners--are higher in areas with a lot of retirees. That is another disincentive for businesses to locate in those areas, which further makes those places an economically unfriendly place for people who need a job in the local economy.

Finally, about the economic and taxation climate in Colorado versus some Midwestern states (and I've studied this extensively--a major part of my background is in economics and taxation issues). Here is a stark comparison--Minnesota vs. Colorado. Minnesota have very high tax rates for just about everything (even higher than corrupt Illinois), yet Minnesota has far more industry than does Colorado. Part of the reason is that a lot of that revenue in Minnesota is invested in first-rate public education from K-12 to college, while Colorado public education languishes in overall mediocrity, at best. Business, it seems, has this funny idea that a well-educated work force is an important factor in location. Before someone pipes up about Colorado being one of the "best-educated" states, it should be noted that many of those well-educated people, both native and transplant, acquired that education outside of Colorado. Unfortunately, too, the trend of Colorado public education in the last 30 years has been steadily downward. Many Colorado schools from K-12 to colleges are but a shadow of their educational excellence of 30 or 40 years ago. Colorado is really going to pay for that in its economy when the last of the very competently Colorado-educated population segues into retirement in the next few years. One other feature in the Midwest vs. Colorado picture is how one looks statistically at incomes and wages. Colorado is very much a state with "haves" and "have-nots." Wealthy people in Colorado tend to be very wealthy, while lower income people tend to be pretty poor. My analysis of many of the Midwestern states indicates that, while overall income averages may be lower in some of them, many of the "poor" are not as poor and the wealthy are not as wealthy as is the case in Colorado. Many of Midwestern states still have a broadly distributed middle-class population that are still in pretty fair shape economically. Colorado's wealth curve is less evenly distributed.

Taxation and business climate analysis is extremely complex, and it does not fit easily into a forum post or a news media sound bite. The "poisoning" of an economic climate is also something that does not occur quickly, nor can be cured quickly. Unfortunately, the slow poisoning of the Colorado economy is just beginning to become obvious--but a lot of damage has already been done, and that will manifest itself in some pretty ugly ways in the next few years.
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Old 07-05-2013, 10:36 PM
 
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We can certainly agree about Illinois. However, if the education that people bring to Colorado was achieved outside of Colorado, how would that impact the business decisions that are focused on the quality of the labor force? If they wanted high qualified candidates, wouldn't they be better off to go where those candidates choose to live, than where those candidates lived before? Honestly, when I was in Iowa there were very few businesses who cared to hire me, and few managers who cared if I lived to see the next week. It was an astounding display of apathy, and is reflected in the disgust I have for the city I lived in. When I came to Colorado, I was being actively recruited. Therefore, I will display

I'd love to see those schools fixed, but the way I would do it would get me voted out of office. Everywhere I go people are telling me what I can't do, but I ignore them and keep right on doing it.

Given that you're a fairly intelligent person, I do believe that if I responded and got into math with you about retirees and schools we would thoroughly derail the thread with a discussion very few people could follow. By the time we started posting entire pages of formulas and adjustments to hold other factors constant I'm sure Mike would tell us to keep it on topic. It's a shame you left Colorado, otherwise I'd invite you to enjoy a Mike's hard lemonade and an hour of banter about the economics of the system.
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Old 07-06-2013, 08:49 AM
 
Location: Wherabouts Unknown!
7,764 posts, read 16,840,183 times
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Wardendresden wrote: Sellers will raise their prices to meet what buyers are willing to pay.

Yep, it's called GREED! I plead guilty myself. It's always a two way street! Buyers and sellers are two sides of the same coin.
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Old 07-06-2013, 09:58 AM
 
Location: Na'alehu Hawaii/Buena Vista Colorado
4,876 posts, read 9,622,106 times
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And why not? Isn't one of the reasons that we buy (and invest in) real estate is to make a profit when we sell? When I was growing up many years ago, I always heard that I should buy rather than rent so that I could build equity.

I think that it would be foolish of me to sell my house at a lower price than the market will bear. The first thing I did when selling my house recently was to look at comparable sales in the neighborhood. The price we sold at was equivalent to what other similar houses sold for. And, yes, we made a nice profit.
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Old 07-06-2013, 02:32 PM
 
222 posts, read 368,925 times
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Carbondale, dude. It's outside of Aspen, so there are jobs, and it's mellow for kids, good schools, affordable. Check it out. Great community vibe.
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