Saturday, May 19, 2007


Another "Best Cities" survey, another mention for Fort Collins.

Fort Collins has been ranked the eighth-best place to live in the United States, according to the recently released edition of Sperling's Cities Ranked & Rated (

Cities Ranked & Rated offers insights into more than 400 metropolitan areas in the United States and Canada (Paperback: 864 pages; Publisher: Wiley; 2nd expanded revised edition; May 7, 2007).

The guide rates cities in 10 categories: Arts & Culture; Climate; Cost of Living; Crime; Economy & Jobs; Education; Health & Healthcare; Leisure; Quality of Life; Transportation.

Interesting data about Fort Collins:

- The median age is 30.8 (U.S. median is 37.6)

- 22.68 percent of people are married with children (meaning 71.32 percent still have time and money!)

- Cost of living score is 105.90 (U.S. average of 100)

- Renters make up 39.69 percent of the Fort Collins population


- On average, there are 237 sunny days per year

- Climate comfort index is 62 (U.S. average is 44 - higher is more comfortable)

- Median household income is $52,192

- Water quality is 100 on a scale to 100 (higher is better)

On a highly related note, I was in FC this week with a CA investor looking at three bedroom, one and two bath rental properties in 80521, which is the ZIP closest to the university. This is the "bread and butter" formula house for investing in Fort Collins... with rooms renting at between $325 and $400 apiece, an investor can assume a cash neutral position with even a mildly motivated seller.

Of the 78 single family detached listings in the MLS meeting those criteria, 33 are currently under contract, including some DOGS I visited all the way back in January and February that looked like they would NEVER sell.

It's also taking longer for my property manager to answer the phone when I call these days, which either means he's busy working with prospective tenants, or he's finally gotten caller ID for his phone.

I'm hoping it's the former.

Saturday, May 5, 2007


People of Orange County... be afraid, be very afraid!

This is a chart showing historic debt-to-income ratios for median priced homes in Orange County, California, since 1981. The chart shows the percentage of the median household income it has taken to service mortgage debt on a median priced home with a 20% down payment.

In 1982, with rising prices and interest rates nearing 18%, debt-to-income ratios crossed the 60% (!!!) threshhold and the market abruptly went in the tank.

In the next cycle of appreciation, which took place in the late 1980s, debt-to-income ratios topped th 50% mark in 1989, followed by a sharp roll back in values that extended into 1996. That market bottomed out with DTI ratios back down to 30%, in line with traditional 28/36 underwriting guidelines.

Today, our chart shows that the cost of servicing a 30-year mortgage on a median priced home with an average Orange County household income will consume over 62% of that family's monthly income... before taxes, groceries, insurance, utilities, car payments, IRAs, gasoline or the monthly trip to Benihana's.

Now most folks who already own a home have some (or lots) of equity to burn, provided they bought before 2005 and they haven't already burned it all on boats, Hummers and trips to Maui. But for those who were late to get in the game, who is left to bail THEM out?

Is this model sustainable????

THAT is the $64,000 question.