I Found a Good Website About Downsizing for Retirement

A reader sent me the following message and I checked out his website. I checked it out, and it’s quite thorough and helpful. A couple things to keep in mind when reading it: 1) There is no “standard” real estate commission, but this website quotes a 6% standard commission. I charge 5.6% at most — less if I don’t have to share it with a buyer’s agent and less if I earn a commission on purchasing a replacement home. Also, my top commission for homes over $1 million is 5% with those addition reductions mentioned above. 2) If you use Golden Real Estate, you don’t need to rent a U-Haul for local moving. We provide a free moving truck similar to a large U-Haul, and in some cases we provide free driver and movers, plus free moving boxes, etc. Call for details!

Here’s the message received from a reader of this blog with that recommended website:

My name is Joseph and I work with RetireGuide.com; a free site dedicated to providing accurate, useful information to help today’s seniors fulfill their retirement goals.

We recently published a step-by-step guide to downsizing for seniors or those working towards retirement. Here we cover everything from finances and moving logistics to coping with the emotions that come from parting with a family home. Please feel free to take a look:


Thanks, Joseph!

Buyers and Sellers Are Confused by Today’s Chaotic Real Estate Market  

Frankly, we real estate agents are confused, too! Homes that would have attracted bidding wars a few months ago are sitting on the market — attracting few showings and no offers.

But it’s really a tale of two real estate markets, because there are “special” homes which still attract bidding wars. It’s the “ordinary” homes which are not getting any love — tract homes, mostly.

The trigger for this change, as we all assumed, was the abrupt increase in mortgage interest rates which occurred around April 1st, combined, no doubt, with a sinking stock market. There are investors who have already sold those stocks and are cash rich, but there are also investors who prefer to hold their depreciated portfolio and wait for the stock market to recover.

Buyers who can pay cash are unaffected by the rise in interest rates and continue to bid against fellow cash buyers for the “special” homes, especially million-dollar homes. They no doubt appreciate the reduced competition for those homes with the reduction in the number of buyers who depend on mortgage financing.

According to data obtained from REcolorado, the Denver MLS, there has been a negligible increase in the percentage of cash versus non-cash closings, but the rise in interest rates will likely be a factor ongoingly.  

The one statistically significant change I spotted was an 80% increase in closings for homes over $1 million  in the 2nd Quarter compared to the 1st Quarter of 2022. This compares to less than a 50% increase in the sales of homes priced between $500,000 and $800,000. I would normally expect the sales of those lower-priced homes to increase during the “selling season” at least as much as the homes over $1 million.

The chart above shows a sharp drop in total MLS sales this June versus the June of 2021, but there’s a longer trend at work than I didn’t suspect before creating this chart using REcolorado data. Notice that 2021 was the peak year and that 2022 showed a month-to-month decline in year-over-year sales for the first six months of the year. The drop in total sales only became significant in June, probably reflecting that change in the mortgage market.

You can also see that 2020 — the year in which Covid-19 appeared — was showing significant growth until the lockdowns occurred in March, resulting in a dramatic drop in total MLS sales, but only for the two months I highlighted in yellow. Then we saw a huge upswing in June, probably due to pent-up demand from April and May.

The question on everyone’s mind is where do we go from here?

My crystal ball is foggy right now, but I think mortgage rates have risen as much as they’re going to this year, and may even moderate in coming months, during which time buyers will come to accept rates in the 5% range as historically “okay,” which they are. We were spoiled by the 3% rates that we enjoyed in 2021, but the memory of those rates is fading. Unless the economy enters a recession, I feel that buyers will return to the market and we’ll see another surge from those buyers who have stayed on the sidelines these past couple months. Then homes which would have sold in less than a week a few months ago, will start moving again.

Indoor Air Quality Is a Subject of Growing Concern  

As America moves away from the use of natural gas and propane for home heating and cooking, the danger of carbon monoxide will disappear, but there are many other pollutants that are getting homeowners’ and builders’ attention.

It’s rare that a home buyer doesn’t order a radon measurement and demand that the level of radon gas be reduced through mitigation to below the EPA action level.

Also of concern are “volatile organic compounds,” which come from carpeting, particle board and other construction materials and furnishings.

Exhausting these gases and bringing fresh air into a home is just as important as filtering the air that is in your home. A new appliance that you’ll hear more and more about and begin seeing alongside furnaces and water heaters in your utility room is the Energy Recovery Ventilator (ERV) or the Conditioning Energy Recovery Ventilator (CERV), which monitors air quality and responds accordingly. Google it to learn more about it.

New Law Prohibits HOAs From Foreclosing Over Unpaid Fees  

You may recall that Green Valley Ranch’s master homeowners association filed over 50 foreclosure actions against homeowners who were delinquent in the payment or dues or even fines for failure to stow trash containers, and the like.

Well, the General Assembly responded and passed HB22-1137 (signed by Gov. Polis) prohibiting the use of foreclosure actions to enforce unpaid fees. Now an HOA can only use Small Claims Court to collect delinquent fees.

You’ll Love This Wheat Ridge Ranch on a Bluff  

Listed for $715,000

This unique home at 6965 W. 48th Ave. is tucked away in a secluded setting on a bluff overlooking the Clear Creek greenbelt.  It’s owned and listed by my friend and political soulmate, Rocky Germano, and I’m happy to promote it. Pride of ownership is immediately evident. The circular driveway welcomes you to the south-facing entry and its large sunroom. As you enter the home, you are greeted with arched ceilings, arched doorways, stucco walls, built-in cubicles and hardwood flooring typical of a Spanish style home built in 1946. The kitchen and formal dining room have an old world feel. The living room has a wood-burning fireplace and features a huge picture window with views of Arvada and the Front Range to the north. The two main-floor bedrooms are carpeted. Downstairs has a large family room with another wood-burning fireplace and large bedroom with full bathroom, an office area, a large storage room and laundry room. Outside enjoy a private backyard great for entertaining family gatherings and plenty of parking for guests as this home has a 2-car attached heated garage plus a carport and lots of off-street parking. To see it, call me at 303-525-1851 or Rocky at 303-902-1202. See over 30 interior and exterior photos at www.WheatRidgeHome.info.

Mortgage Interest Buydowns Can Benefit Both Buyers and Sellers  

Interest rates have doubled in the last year. Buyers have reduced buying power at higher rates, and sellers are seeing their listings take longer to go under contract. Lowering the list price is one strategy to entice buyers, but that makes a nominal difference in terms of the monthly payment for a prospective purchaser. 

I talked with Jaxzann Riggs at The Mortgage Network to learn how buying down the interest rate can take the sting out of rising rates and more importantly, how sellers might employ the offer of a buydown to increase the number of offers received.

There are two types of buydowns — temporary and permanent, and each has its own benefits, but the MOST important thing to know about buydowns is that they can be paid for by either the buyer or the seller.

Let’s look at both options for a fictitious buyer.  Rebecca is interested in a house that is listed for $695,000. She is planning on putting 20% down, and her mortgage broker quoted her a rate of 5.454%, with a monthly P&I payment of $3,141. This payment is a little above what Rebecca was hoping for, so she is thinking about asking the seller to assist with the cost of an interest rate buydown.

Temporary buydowns allow the seller or the buyer to contribute money to an escrow account for the benefit of the buyer at the time of closing. A portion of the escrow is used each month to reduce the borrower’s payments for a set amount of time.  A  “2-1 Buydown” is a common option that decreases the interest rate for the first two years of the mortgage. The rate is 2% lower the first year, and 1% lower the second. While the buyer’s mortgage contract is always going to reflect the note rate, the buydown escrow is used to pay the remaining interest balance each month. To ensure that she can afford the full monthly payment, she must qualify for the loan based on the note rate.

In Rebecca’s scenario, a 2-1 buydown will cost $11,968, and would lower her first year’s monthly payments to $2,482, equivalent to an interest rate of 3.454%. This is a monthly savings of $659, which will be paid out of the buydown account. The second year she will pay $2,802 monthly, comparable to a 4.454% rate, with a savings of $339 a month. The third year she will have exhausted the subsidized funds and she will pay the full payment of $3,141 for the remainder of the loan. While the effects of this option only last a couple of years, the monthly savings are significant and for borrowers who anticipate increases in income, this can make home ownership more of possibility.

Permanent Buydowns allow the rate to be “bought down” for the life of the loan. “Points” are paid to the lender at the time of closing in exchange for a lower rate for the life of the loan. While the monthly savings aren’t quite as dramatic as with the temporary buydowns, the benefit will continue throughout the life of the mortgage. 

For Rebecca, the dollars that she would spend for a temporary buydown, $11,968 would buy her rate down to 4.796% for 30 years, lowering her monthly payments to $2,968, saving her $157 a month versus a payment based upon a current rate of 5.45%.  Again, this buydown could be paid for by the seller instead of lowering their sale price, to make their listing more attractive to more buyers.

The bottom line is that buydowns make sense for some.  And sellers who are willing to participate in the cost of buydowns will dramatically increase their buying pool.

If you would like more information about buydowns, call Jaxzann at (303) 990-2992.

Are You Wondering If Your Home Is Underinsured? A Reader Shares His Research  

My column on May 12 addressed the problem of underinsurance faced by homeowners who lost their homes in the Marhall Fire last December. It reported that, according to the Colorado Division of Insurance, only 8% of the homes destroyed in that fire had guaranteed replacement coverage in their insurance policies. 

One of my readers took it upon himself to research the subject in the context of his own home close to the foothills. The rest of this week’s column is his writing, which he asked me to put under my byline. When he says “I,” he’s referring to himself, not me.

It turns out I haven’t been able to get good answers to questions.  Nonetheless, here’s an account of my dive beneath the surface to understand what I might expect of my house insurance in the event of a total loss due to fire, particularly wildfire:

The reporting on homeowners insurance coverage after the Marshall Fire —  which frequently referenced the Waldo Canyon fire — highlighted the extent  to which homeowners are underinsured for total loss of property.  This spurred me to revisit  our homeowner insurance replacement cost coverage.  I had already raised this concern with my insurance agent last summer, and he assured me the coverage was more than enough based on the insurance underwriter’s cost per square foot “replacement-cost estimator.” Besides, he said, the policy has an endorsement that would cover the actual cost of replacement regardless of stipulated coverage.

Even with such assurance, we were not reassured; so several weeks ago I reviewed my policy again.  Based on the average current construction cost per square foot for the Marshall Fire cited by the state Division of Insurance, along with my own estimate of the average construction cost of three new custom homes in my neighborhood, I determined that our policy’s coverage was about half what we would expect the cost to be to rebuild our house in 2022. Further, on closer reading, I realized the policy endorsement covering total replacement cost would not apply if the house were not rebuilt within two years of the loss! So, I got back in touch with my insurance agent to explain that rebuilding our house in two years or less would likely be impossible, especially if the house were among many to burn down in a wildfire, and, given this limitation of  the endorsement, the policy’s stipulated dwelling coverage, based on the company’s estimator,  was only half of the what replacement cost was likely to be; so we would need to double the coverage. 

Once I received the quote for the increase in coverage, I informed him that in the event our house was to be a total loss, we would probably not be willing to rebuild, thus would want to walk away (putting the lot up for sale after clearing the debris).

However, as I could find no provision for a cash-out for the amount of our coverage, I asked if we could expect the company to agree to a cash-out in lieu of replacement.  His answer was “probably”!  Given that uncertainty, I asked if any policy is available that would explicitly provide for cashing out. He found one company with that option for an annual premium approximately 20% higher.

The other wrinkle to this insurance rabbit hole is if the insurance company were to agree to a cash-out in lieu of rebuilding, the actual cash-out would not be the amount of coverage stipulated in the policy, but rather that amount minus the depreciation in value of the house at the time it burned down — the depreciation calculated by the insurance company’s claims department.

So far, I have been unable to obtain any useful information on depreciation from insurance companies, the Division of Insurance, or the legislature, and nothing on Google that I could see.

[While depreciation may be a reasonable factor when replacing an old roof destroyed by hail, it doesn’t seem appropriate to me when it comes to replacing a totally destroyed home, given that homes appreciate, not depreciate. —JS]

I am left to wonder why the insurer is not transparent about whether and under what circumstances the homeowner would be able to cash-out rather than rebuild.  (While recently passed legislation regulating insurance company payouts when homes are damaged from a wildfire does require providing a cash-out option and requiring it equals re-placement cost — if the stipulated coverage is sufficient — the law applies only to dwellings burnt in a wildfire that the Governor has officially declared a “wildfire disaster.”)

I would wager most homeowners would be surprised to realize their insurance may not give them the option of cashing out rather than rebuilding their house after a total loss, and likewise, homeowners would be surprised to realize that if they were to be availed of a cash-out, the actual payout would be the amount of stipulated dwelling coverage minus whatever the insurer calculates the depreciation to be, without the company having to disclose its methodology.

“Surprised” is the key word, because homeowners are likely to assume their insurance will pay the full amount of their stipulated coverage in the case of a total loss regardless of whether or not they were to rebuild. Reasoning that if the company is obligated to pay that amount when rebuilding and not deduct from that amount any depreciation, then what difference should it make to the insurance company whether they pay that amount as a cash-out in lieu of re-building?  

For most homeowners, their house is their most valuable asset, whose value at any point in time is based on market price, which can be validated by appraisal. I would expect my insurance company to pay me the full amount for which I’m covered regardless of whether or not I choose to rebuild. (I wouldn’t necessarily expect to be paid more than the cost of rebuilding if it turned out my coverage was greater than replacement cost.)

Further, I would expect not to have any amount for depreciation deducted when either being cashed-out or rebuilding. But what we homeowners expect does not usually align with what the insurance company would do.

The most homeowners can do is to know what their insurer can actually be expected to do, and that requires they do a thorough review of their policy. Nonetheless, based on what I’ve learned thus far, there are a couple of modest reforms that would improve the situation for homeowners:  1) The state Division of Insurance should publish replacement cost estimates annually, which would provide the homeowner with a basis for determining the amount of necessary coverage.  2)  At a minimum, policies should be transparent about whether a cash-out option is available and under what circumstances, including an unambiguous explanation of the depreciation method and formulas to be used in calculating actual cash value. 

It seems only fair that homeowners shouldn’t have to guess what they are buying when they purchase home insurance. As things stand at present, after a critical review of their policy, many homeowners are likely to come away feeling to some extent  that they have bought a pig-in-a-poke, or at least one that fails to meet their expectations. 

Golden Real Estate Welcomes Our Newest Broker Associate, Greg Kraft  

Greg told me that he has been reading my “Real Estate Today” column in the Denver Post from his home in Highlands Ranch for many years. A 20-year veteran of property management and real estate in the Vail Valley, he decided that he wanted to be part of our team instead of remaining on his own. He is officially on board now and handling floor duty at our downtown Golden office most weekends and working with clients during weekdays. You can reach him on his cell phone at 720-353-1922 or via email at gkraft48@gmail.com

Toronto Rejects High-Tech ‘Smart City’ for Something More Livable on Its Waterfront  

The last place I’d expect to see a feature about Toronto rejecting a “smart city” proposal in favor of a green oasis would be MIT’s Technology Review, but there it is in the July/August 2022 issue of the magazine. It’s a fascinating study of how technology lost out to human scale sustainable development on prime real estate in Canada’s largest city.

The original 2017 proposal for the 12-acre plot between an expressway and Lake Ontario was for it “to become a hub for an optimized urban experience featuring robo-taxis, heated sidewalks, autonomous garbage collection, and an extensive digital layer to monitor everything from street crossings to park bench usage,” according to the article. The proposal, appropriately, came from a sister company of Google, Sidewalk Labs, which is the urban innovation arm of Alphabet. Click here to read the full article.

The idea was that this development would be a “proof of concept, establishing a new development model for cities everywhere. It could have demonstrated that the sensor-laden smart city model embraced in China and the Persian Gulf has a place in more democratic societies.”

After a 2½-year effort to sell the concept to Toronto’s citizenry, Sidewalk Labs abandoned the idea, blaming it on Covid-19, but citizen blowback was the reason.

Personally, I like the idea of a “smart city,” especially when it comes to traffic control. For example, I like traffic lights to respond to traffic and minimize wait times. But some of the “smart city” concepts, such as robo-taxis, sound more like the product of “geeks gone wild,” rather than a development to improve city life.

The rendering of Toronto’s replacement plan, adopted in February 2022, warms my heart. The plan is delightfully low tech, yet it incorporates a design that is “zero carbon,” or what we call “net zero energy.”

This quote says it all: “The real problem is that with their emphasis on the optimization of everything, smart cities seem designed to eradicate the very thing that makes cities wonderful.

Interestingly, Technology Review had cited the original Toronto proposal in its 2018 article about “10 breakthrough technologies,” writing that “Sidewalk Labs could reshape how we live, work, and play in urban neighborhoods.” The architectural critic for the Toronto Globe and Mail chimed in, praising the 2017 concept as an exciting approach to urban development.

Renderings such as the one above “show trees and greenery sprouting from every possible balcony and outcropping, with nary an auton-omous vehicle or drone in sight. The project’s highly ac-complished design team… all speak of this new corner of Canada’s largest city not as a techno-utopia but as a bucolic retreat.” The new project design, according to the article, is “a conspicuous disavowal not only of the 2017 proposal but of the smart city concept itself.”

One of the city planners summed it up: “If you look at what we’re doing now on that site, it’s classic city building with a 21st-century twist, which means it’s a carbon-neutral community. It’s a totally electrified community. It’s a community that prioritizes affordable housing…. It’s a community that has a strong emphasis on green space and urban agriculture and urban farming.” 

A comment by one of the developers caught my attention. “In the U.S. it’s life, liberty, and the pursuit of happiness…. In Canada it’s peace, order, and good government. Canadians don’t expect the private sector to come in and save us from government, because we have high trust in government.”

Just Listed: Modern Denver Square on Capitol Hill Near Cheesman Park

JUST LISTED FOR $1,250,000

This home at 1250 Downing Street, built in 2006, is faithful to the Denver Square architectural tradition, but with modern touches, from the 9’ basement ceiling to the walk-in closets and walk-in pantry. You’ll see what I mean when you watch the video tour at www.DenverSquare.online. Since buying the home in 2018, the seller added new carpet in the basement, a 6-burner Thermador gas range, 6-foot-wide refrigerator/freezer, gas fireplace with custom cabinetry and mantel. The kitchen is fabulous! The oversized detached garage on the alley has a space with French doors that is partially finished and would make a great home office or studio. The home has over 3,100 square feet, 4 bedrooms and 4 baths. It has acacia hardwood on the main floor and an open floor plan. Upstairs you’ll find bamboo flooring and a wonderful master suite with a spa-like master bath & custom walk-in closet, plus two generous sized guest bedrooms and full bath. The finished basement has a family/media room, a 4th bedroom and 3/4 bath, plus a wet bar and wine cellar under the stairway. Listed by Chuck Brown, 303-885-7855, who will hold it open this Saturday, July 9, 11 a.m. to 1 p.m.