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HARRY'S BI-WEEKLY UPDATE 1.26.15

by Harry Salzman

                                                           

January 26, 2015

HARRY’S BI-WEEKLY UPDATE

                                   A Current Look at the Colorado Springs Residential real estate Market

As part of my Personal Service, it is my desire to share current real estate issues that will help to make you a more successful and profitable buyer or seller.

                                      

     

THE AMERICAN DREAM OF HOME OWNERSHIP IS ALIVE AND WELL

The housing news, both on a national and local front, has been very positive and from the looks of it, more and more folks will be able to afford the home of their dreams.  Many will see greater appreciation in their current homes and first-time buyers are being afforded a number of options to make it easier to switch from renting.

All sources I’ve seen are predicting a strong housing market for 2015.  From NAR Chief Economist, Lawrence Yun...to Freddie Mac…to our local Southern California Economic Forum’s Director, Tatiana Bailey...the news that’s coming my way has all been positive. 

This is not “wishful thinking” from an eternally positive Broker/Owner—namely me.  This is reality—with all the respected industry economists agreeing.  There’s no better time than now to get off that fence and make your personal dreams a reality. 

With interest rates remaining at historic lows and current home appreciation on the rise, it’s time to put the equity you’ve built to work for you.  There are too many options to go into here, but why not give me a call at 598.3200 or email me at Harry@HarrySalzman.com and let me help you figure out what is the best plan for your particular wants, needs and budget. 

 

A LOOK AT SOME OF THE HOUSING EXPECTATIONS FOR 2015, LOCAL AND NATIONAL

From UCCS, College of Business and the Southern Colorado Economic Forum:

I’d like to share with you a presentation by Tatiana Bailey, Ph.D., Director of the Southern Colorado Economic Forum.  She spoke to the Pikes Peak Area Realtors (PPAR) on January 9, 2015 and I asked her permission to share the slide overview with you.  

The presentation includes information on both the national level, some of which I’ve shared with you previously, and a look at the local Pikes Peak area real estate market. 

Please click here for a look at some exciting statistics and projections.  If you have any questions, please give me a call.

 

From the National Association of Realtors:

The infographic below is from a video of NAR’s Lawrence Yun talking about his 2015 housing market expectations.  He expects existing-home sales to rise about 7 percent in 2015 behind a strengthening economy, solid job gains and a healthy increase in home prices.

 

                       

 

From Freddie Mac’s “2015 U.S. Economic and housing market Outlook for January”:

Realtor Mag, 1.21.15,  DS News, 1.21.15

Freddie Mac economists note that mortgage rates continue to remain below expectations, and they predict that mortgage rates will remain low at the beginning of 2015, staying around 4 percent for at least the first two quarters of the year.  Last week, mortgage rates dipped to a 20-month low, with the 30-year fixed-rate mortgage rate plunging to a 3.66 percent national average and the 15-year fixed-rate mortgage dropping to 2.98 percent.

“We…expect these low mortgage rates to help the growing purchase market continue to expand and reach the highest levels we’ve seen since 2006,” the economists noted.

But, as mentioned earlier, NAR’s Lawrence Yun predicts that mortgage interest rates could average around 5 percent—or higher—by the end of this year.

Buyers who have been sidelined due to high monthly rents preventing them from saving for a down payment on a home should be in a better position with new programs aimed to assist them in becoming homeowners.

Freddie Mac, along with Fannie Mae, believe its new announcement of offering mortgages with down payments as little as 3 percent, along with the FHA’s recent announcement that it will cut its premiums for new and refinancing borrowers by a half percentage point will help increase mortgage availability to first-time home buyers.

Economists also note in this report that home prices will likely rise by 3.5 percent this year.  Increased wages in the labor market will give consumers greater confidence.  The National Federation’s Independent Business Index for December showed that small businesses expect to raise employee compensation to the highest level since 2006.

In concluding, Frank Nothaft, Freddie Mac’s Chief Economist said, “On balance there are a lot of positive opportunities in the U.S. economy at the start of the year, and the real question is whether or not households and businesses will be able to seize these opportunities and make the most of them.  The reprieve in interest rates and drop in gas prices should help to spur economic growth.  Until rates start to rise later in the year, housing markets should respond positively, and we anticipate increases in home sales and continued improvement in construction activity.”

 

Down Payments Get Smaller

The Wall Street Journal, 1.25.15

More lenders are lowering down-payment requirements, allowing borrowers to commit 3 percent—or less—of a home’s purchase price to get a mortgage.  Many had been requiring at least 20 percent since the recession began. 

Some lenders are also waiving mortgage-related fees, and more are allowing down payments to be made by other parties, such as the borrower’s family. 

These deals are aimed at buyers with good credit scores and a steady income who have been unable to save enough for a sizable down payment.   In some cases, to qualify, borrowers will need a higher credit score and less debt relative to their income than is usually required, as well as having savings after the home purchase equal to at least 12 months of mortgage payments. 

Borrowers who want to get a mortgage with a particular lender could ask if they would allow a lower down payment than what is officially offered. 

In looking for loans, borrowers need to compare costs, including the interest rate, whether they have to pay any upfront fees to get that rate and what their total costs to get the loan will be.  A lower interest rate might not be such a good deal if it requires a larger out-of-pocket upfront expense.

So… what does all this mean to you?  To begin with, NOW is a great time to sell and trade up or buy for the first-time or investment purposes.  However, with all the options available in mortgage lending and in deciding what is best for your particular situation—it’s more important than ever to seek the advice of a reputable, knowledgeable real estate Professional. 

That’s where I come in.  As you can see from this eNewsletter, I do the homework so that you don’t have to.  I can help you determine the best housing situation and best lender for YOU.  As stated in the Freddie Mac report, it’s up to you to seize the possibly once-in-a-lifetime opportunities in the housing market.  In order not to miss out, give me a call and let’s see if we can make this positive market work for you.

 

5 FINANCIAL REASONS TO BUY A HOME

keeping current matters, 1.21.15

Eric Belsky, the Managing Director of the Joint Center of Housing Studies at Harvard University presented the top five financial benefits of homeownership in his paper entitled “The Dream Lives On:  the Future of Homeownership in America”.

I’ve mentioned these before, but with the market heading in such a good direction, I felt it important to reemphasize their importance. 

Here are the five reasons, each with an excerpt from the study:

  1. Housing is typically the one leveraged investment available.  “Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money.  As a result, homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor.  Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity.  With many buyers putting 10 percent or less down, their leverage factor is 10 or more.”

 

  1. You’re paying for housing whether you own or rent.  “Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord.”

 

  1. Owning is usually a form of “forced savings”.  “Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

 

  1. There are substantial tax benefits to owning.  “Homeowners are able to deduct mortgage interest and property taxes from income.  On top of all this, capital gains up to $250,000 are excluded from income for single filers and up to $500,000 for married couples if they sell their homes for a gain.”

 

  1. Owning is a hedge against inflation.  “Housing costs and rents have tended over most time periods to go up at or higher than the rate of inflation, making owning an attractive proposition.”

 

Bottom line?  Homeownership not only makes sense from a social or family reason, it also makes good financial sense.

 

HARRY’S JOKE OF THE DAY  (courtesy of Tatiana Bailey, Ph.D.)

                

 

 

 

 

Harry's Bi-Weekly Update 1.12.15

by Harry Salzman

                                    

January 12, 2015

HARRY’S BI-WEEKLY UPDATE

                     A Current Look at the Colorado Springs Residential real estate Market

As part of my Personal Service, it is my desire to share current real estate issues that will help to make you a more successful and profitable buyer or seller.

                                    

THE NEW YEAR IS STARTING OFF VERY POSITIVE FOR THE housing market

I hope everyone had a happy, healthy holiday season.  From everything I’ve been reading it appears that the housing market is off to a great start.  And as you will read, 2014 ended on a strong not and predictions for 2015 remain very positive.  This is great news for both Buyers and Sellers, and I’m happy to share some of the news with you.  As always, I’ll keep you abreast of all the happenings in real estate during 2015, both on local and national fronts.  So let’s get started.

 

DECEMBER LOCAL STATISTICS ARE POSITIVE

Statistics provided by the Pikes Peak REALTORS Service Corp, or it’s PPMLS

Despite the unusually cold weather and the busy holiday season, December still proved that the housing recovery is continuing to remain strong in our area.  The total number of Single Family/Patio Homes sold in the Pikes Peak area during 2014 was 11,197 for a 3.8% increase year over year from 2013.  This represents the highest number of single family/patio homes sold since 2006—before the recession.  Sales of Condo/Townhomes were 1,474 in 2014, for a 6.6% increase from 2013. 

These numbers indicate that the combination of historically low mortgage rates and homes priced to sell are helping fuel this growth.  The number of listings in both categories continues to dwindle as many renters are finding a way to become homeowners, some for the first time.

Here are some highlights from the monthly PPAR report.  Please click here to view the detailed 18-pages which includes both the monthly and annual reports.  If you have any questions, please give me a call.

In comparing December 2014 to December 2013 in PPAR:                    

                        Single Family/Patio Homes:

  • New Listings are 676,  Down 9.1%
  • Number of Sales are 873, Up 28.4%
  • Average Sales Price is $255,652, Up 7.3%
  • Median Sales Price is $225,000, Up 6.5%
  • Total Active Listings are 2,599, Down 19.4%

                        Condo/Townhomes:

  • New Listings are 98, Up 18.1%
  • Number of Sales are 125, Up 26.3%
  • Average Sales Price is $176,950, Up 18.8%
  • Median Sales Price is $150,000, Up 15.4%
  • Total Active Listings are 303, Down 12.9%

 

SPRINGS AREA MONTHLY SINGLE FAMILY/PATIO HOME SALES ANALYSIS*

                                                Median Sales Price               Average Sales Price

Black Forest                             $405,000                              $487,052

Briargate                                   $290,000                             $312,823        

Central                                      $184,000                              $208,810

East                                           $187,000                              $193,603

Fountain Valley:                       $201,249                              $204,179

Manitou Springs:                     $227,500                              $227,500

Marksheffel:                             $255,000                              $273,664

Northeast:                                 $207,750                              $227,881

Northgate:                                $352,706                              $360,356

Northwest:                                $305,000                              $333,365

Old Colorado City:                  $207,500                              $235,432

Powers:                                     $228,750                              $232,899

Southwest:                               $230,000                              $285,060

Tri-Lakes:                                 $348,000                              $400,549

West:                                         $179,750                              $212,500

*Statistics provided by the Pikes Peak REALTORS Services Corp,or its PPMLS.

 

2014:  A YEAR OF JOBS, RECORD-LOW INTEREST AND TIGHT INVENTORY SETS THE STAGE FOR 2015 GROWTH

RisMedia,, 12.24.14, Realtor.com, 12.24.14,  Relator Mag,, 12.24.14, 1.8.15, & 1.9.15

Realtor.com’s “Top 10 real estate Trends of 2014” nationally:

  1. Improving economic fundamental.  Strong consumer confidence returning with higher GDP (Gross Domestic Product) and an influx of new jobs during the latter half of the year.

 

  1. Historically low mortgage rates continue.  Mortgage rates declined despite the end of quantitative easing.

 

  1. Deceleration of abnormal home price gains or return to normal price.  After several years of abnormally high levels of home price appreciation, price increases in 2014 moderated and we are now experiencing increases consistent with long-term historical performance.

 

  1. Decline of distressed sales.  Foreclosures and short sales declined throughout the year and while total home sales decreased in 2014, normal (non-distressed) home sales increased over 2013.

 

  1. End of the era of major investors active in purchases.  Large scale purchase activity by major investors declined as the number of distressed properties dropped.  This enabled more room for traditional first-time home buyers.

 

And,  “Factors Holding Back Recovery”:

  1. Tight credit standards and limited mortgage availability.  Despite historically low rates, many households were prevented from capitalizing on mortgage access due to new lending and qualification regulations that took effect in January 2014. 

 

  1. Tight supply of inventory.  While total inventories increased as the year progressed, supply did not outpace demand.  Monthly supply of new homes and existing homes remained beneath normal levels and days on the market was down year over year.

 

  1. Depressed levels of first-time buyers.  The share of first-time buyers fell to the lowest level in over twenty years according to NAR.  “But the first-time buyer share is showing signs of modest improvement by the year-end,” said Lawrence Yun, NAR Chief Economist.  Federal policy actions, such as revised regulations for lenders and new low down-payment programs introduced in December are anticipated to have a positive impact in 2015.

 

  1. Record levels of renters and ever-increasing rent prices.  Continued decline in home ownership rates resulted in record numbers of renting households.  Rent increases became an inflationary concern in 2014, and looking ahead, the pace of these increases are not slowing down.

 

  1. Lack of recovery in homebuilding and low share of new home sales.  Single family starts barely increased in 2014 over 2013.  New home prices increased substantially again in 2014, revealing that higher priced product is limiting the demand.

 

Housing Forecast from NAR:  “HOME SALES ONLY GOING UP FROM HERE”

NAR is predicting that existing home sales will likely rise about 7 percent this year, as a strengthening economy and job growth leads to a healthier market.

Lawrence Yun said, “Home prices have risen for the past three years cumulatively about 25 percent, which boosts confidence in the market and traditionally gives current home owners the ability to use their equity buildup as a down payment towards their next home purchase.  Furthermore, first-time buyers are expected to slowly return as the economy improves and new mortgage products are made available in the marketplace with low down payments and private mortgage insurance.”

Several “speed bumps” that could still jeopardize the pace of the housing markets recovery include the anticipated rise in mortgage interest rates that are expected this year, Yun added.  And the fact that many homeowners have now locked in some of the lowest mortgage rates in history in recent years and may be hesitant to give up their low financing rate to move.  Also, lenders are being slow to ease underwriting standards to more normalized levels.

Yun is forecasting a growth in home prices, but at a more moderate pace than seen in recent years.  He expects it to moderate between 4 percent and 5 percent growth in 2015. 

 

Realtor.com’s 2015 Housing Forecast: Stage Set for the Return of First-Time Home Buyers”

Among the key developments forecasted is that first time buyers are set to return to the market in 2015.  “In 2015, increases in employment opportunities will empower younger buyers to return to the market and fuel the continued housing recovery,” said Jonathan Smoke, chief economist for realtor.com.  “If access to credit improves, we could see substantially large numbers of young buyers in the market.”

Realtor.com’s “Top 5 Housing Predictions for 2015”:

  1. Millennials will drive household formation.  Households headed by millennials will see significant growth as a reflection of economic gains.  They will also drive two-thirds of household formations over the next five years.  Additional jobs and household formations will be the two key factors driving first-time home buyer sales.

 

  1. Existing home sales will increase +8%.  Existing home sales will grow as more buyers enter the market motivated by a clear belief that both rates and prices will continue to rise.  While the majority of housing activity in 2015 will be driven by baby boomers preparing for retirement, millennials will account for 65 percent of first-time buyer sales.

 

  1. Home prices will gain +4-5%.  Low inventory levels and demand by improved employment opportunities will push home prices up in 2015.  While first-time buyers have many economic factors working in their favor, increasing home prices will make it more difficult to get into high priced markets.

 

  1. Mortgage rates will end the year at 5%.  Rates will increase in the middle of 2015, as the Federal Reserve increases its target rate by at least 50 basis points before the end of the year.  30-year fixed-rate mortgages will reach 5 percent by the end of 2015.  One year adjustable rate mortgages (ARMs) will rise minimally.  While still at historic lows, rate increases will affect housing affordability for first-timers trying to break into the housing market and will be another factor pushing them to less expensive locales.

 

  1. Home affordability will decrease 5-10%.  Affordability will decline in 2015 based on home price appreciation and increasing mortgage interest rates.  This decline will be somewhat offset by increasing incomes.  When considering historical norms, housing affordability will continue to remain strong next year.

MORTGAGE RATES KICK OFF 2015 AT A 20-MONTH LOW

Borrowing rates moved even lower last week, with the 30-year fixed-rate mortgage averaging 3.73 percent, its lowest average since May 2013. 

According to Frank Nothaft, Freddie Mac’s chief economist, “Mortgage rates fell to begin the year as 10-year Treasury yields slid beneath 2 percent for the first time in three months.” 

Again, many economists have predicted that mortgage rates will rise sometime this year, with the 30-year fixed-rate mortgage likely reaching the upper 4 percent or 5 percent range by the end of the year.

So, what does all this mean to you?  Well, once again, now is the time to sell and trade up or buy for the first time or for investment purposes. 

If you’ve been waiting for the holiday season to be over and wondering what 2015 has in store for the real estate Market, my suggestion is to wait no longer.  Inventories are not getting any larger which is a plus for Sellers, but could hamper your buying expectations.  However, there are always homes available to suit most of a Buyer’s needs and wants.  If you are considering a move and wondering what’s available, please give me a call at 598-3200 or email me at Harry@HarrySalzman.com and let’s get the ball rolling.  I’ll be happy to help you determine if indeed, the time is “right” for your personal family situation.

 

FHA LOWERS ITS MORTGAGE COSTS

Realtor.mag, 1.8.15

The Federal Housing Administration is reducing its annual mortgage insurance premiums by 0.5% in a move to “expand responsible lending to creditworthy borrowers,” the While House said in a statement last Wednesday. 

FHA also said it would take added steps over the next few months to “cut read tape and clarify lending standards” in reducing mortgage costs for hundreds of thousands of creditworthy borrowers, according to the White House. 

This move comes after several calls from industry trade groups, associations and members of Congress urging the agency to lower its insurance premiums, which were increasingly blamed for sidelining thousands of would-be buyers.  FHA-backed loans allow buyers to put down as little as 3.5 percent on the purchase price, and they are a major financing resource for first-time buyers. 

FHA’s mortgage insurance premiums will be reduced from 1.35 percent to 0.85 percent.  The reduction in premiums on mortgages could save an average borrower $1,000 a year on a $200,000 loan, approximately $83 monthly. 

This is a big deal for hundreds of thousands of buyers and I will keep abreast of the status on this and let you know as soon as it takes affect.  Anyone wishing additional information, please feel free to call me to discuss how it might affect you on a home purchase and loan. 

 

HARRY’S RESOLUTIONS FOR 2015  (Feel free to make them yours)

#1.  Learn to Better Manage My Time

 

#2.  Do My Part to Help the Environment

 

#3.  Start Saving Better For the Future (Broncos fans take note)

 

#4.  Make Sure to Use Sunscreen

 

#5.  Try to Keep a Positive Attitude

 

 

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Harry A Salzman
Salzman Real Estate Services
5475 Tech Center Drive, Suite 300
Colorado Springs CO 80919
719-593-1000 or Toll Free: 800-677-MOVE(6683)
Cell: 719-231-1285
Fax: 719-548-9357

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