HARRY'S BI-WEEKLY UPDATE 1.22.18
January 22, 2018
HARRY’S BI-WEEKLY UPDATE
A Current Look at the Colorado Springs Residential real estate Market
As part of my Unique Brand of 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 YEAR IS STARTING MUCH AS LAST ONE ENDED FOR RESIDENTIAL real estate…
Lots of good news still coming our way—the one-year change in the median sales price of all properties sold in El Paso and Teller Counties was +10.4%. A number of companies and their employees, as well as those simply wanting to relocate here, are eyeing Colorado Springs due to all the reasons we who live here experience—wonderful weather, exceptional work-life balance, relatively low cost of living, inclusion in many “top 10” lists of best places to live and not nearly the traffic problems of Denver or other larger cities--and so much more.
However, things would be far better if there were more homes to sell. Home prices are continuing to rise but listings are still at an all time low for the Pikes Peak region and most of the USA. That is contributing to the frenzy that’s still affecting many homebuyers.
It’s taking most folks longer than usual to find a home for a number of reasons. With so few listings, we are continuing to see multiple offers, all-cash offers, and very quick turnaround times. Low interest rates have afforded buyers to look at higher priced homes and renters are looking to buy due to high rental rates nationwide. This is making things a little more difficult for buyers, sellers and real estate agents alike.
I recently read that nearly one quarter of 2017 U.S. home sales were above the asking price:
- On average, homes that sold above their list price went for $7,000 over the asking price
- The share of U.S. home sales that were above the listed price increased from 17.8 percent in 2012 to 24.1 percent in 2017
- The typical price increase for homes that sold above the listed price was 3.1 percent
I’ve seen this with most of the bidding wars lately—folks are just worried that they won’t get into homes before interest rates increase or home prices go even higher.
Those who are wanting to sell and trade up are waiting to find their new home prior to listing their present one because it’s very likely that the present one will sell quickly and they could be “homeless” if they don’t know where they might go.
Folks relocating here or purchasing for the first time are seeing fewer homes that fit their needs, wants and budget due to the shortage of available existing homes. And the ones who are seeking new construction are finding that lots are selling quickly and prices are starting to escalate due to shortages of building materials, likely caused by the rebuilding going on due to the fires in California and the hurricanes on the east coast and Texas. This is bound to affect new home building across the country for some time to come.
That being said--there are still home options available in most price ranges and in most neighborhoods. It may take a bit longer to find what you want, or you may turn to new construction as an option, but you will find the perfect home for you.
If you are thinking of selling to trade up, buying for the first time or for investment purposes, just give me a call at 593.1000 or email me at Harry@HarrySalzman.com and let me help make all your residential real estate dreams come true.
DECEMBER 2017 LOCAL MARKET UPDATE AND MONTHLY INDICATORS ILLUSTRATE OUR CONTINUING UPWARD TREND IN GREATER DETAIL
Pikes Peak REALTORS® Services Corp.,
These reports contain much greater detail than the first of the month reports I share and cover ALL residential areas in the Pikes Peak Region.
The local median sales price increase year-over-year in all properties was 10.4%, a good sign that our housing market is still continuing to appreciate. The shortage of listings is helping to drive up prices and as I just mentioned, if there were more listings, more people would be moving—either selling to trade up or buying for the first time and for investment purposes.
In the recently published December 2017 Monthly Indicators and Local Market Update for El Paso and Teller Counties, new listings year-over-year were up 3.9% for the single-family/patio homes and up 17.0% for condo/townhomes.
The slight uptick in listings is great news and possibly due to sellers realizing that it’s a great time to put their home on the market. Doing so earlier than the “traditional” spring selling season gives them a head start—especially since the number of listings is so low. Again, let me remind you that if selling to trade up is in the cards for you, be aware of how quickly your present home will likely sell.
The “Activity Snapshot” shows the one-year change:
- Sold Listings for All Properties was down 3.2%
- Median Sales Price for All Properties was up 10.4%
- Active Listings on All Properties was down 24.6%.
You can click here to read the 16-page Monthly Indicators or click here to get specific information on the neighborhood of your choice from the 34-page Local Market Update. I recommend that you check out your own neighborhood, or one that you are considering, to get a good idea of the local pulse. I have reprinted just one neighborhood, Northgate, below to show you the type of information available for all local areas.
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Despite escalating home prices, interest rates are remaining historically low for the time being. That won’t always be the case as they are already starting to rise, so “sooner than later” should be your motto if a real estate move is in your immediate future.
For questions about any of these reports or just to find out how I can put my special brand of customer service to work for you, please give me a call.
TAX REFORM IMPACT AND PRICE OUTLOOK
Nar.realtor, 1.15.18
The new tax law is already in effect and the National Association of Realtors (NAR) has come out with their estimate of how home prices will trend in 2018. The new tax law reduces the limit on deductible mortgage debt and limits the deductibility of the real estate tax up to $10,000. These provisions are expected to have an impact on the housing market, and possibly negatively in the states with very high home prices.
The good news for us is that NAR is projecting Colorado to be number one in experiencing the strongest prices gains in 2018—approximately 5.9%, compared to a one to three percent gain nationally in 2018.
That’s just one more list we are on top of, and certainly one that should bring a smile to all your faces.
INTEREST RATES AND DOWN PAYMENTS
Rismedia, 1.3.18, The Wall Street Journal, 1.19.18
As mentioned earlier, interest rates are starting to inch up. The average 30-year fixed mortgage rate changed to 4.04 percent this past week, up from 3.99 percent the week prior. This is the first time the rate has risen above 4 percent since last May.
Lawrence Yun, chief economist and senior vice president of research at NAR, is forecasting at least three more short-term rate increases this year. He expects 30-year fixed rate mortgages to rise to 4.5% by the fourth quarter of 2018—and 4.8% by the end of 2019.
Down payment decisions are now a bigger factor than usual for several reasons. Low inventory nationally is pressuring some folks to make a bigger down payment to gain a competitive edge, but the possibility of rate increases and the new tax regulations may also affect how much buyers put down.
In addition to this, jumbo loan limits on mortgages purchased by Fannie Mae and Freddie Mac have increased. For 2018, in most of the U.S., mortgages of up to $453,100 are eligible for purchase by Fannie and Freddie, up from $424,100 in 2017. In high cost areas such as San Francisco and New York, the conforming loan limit is now $679,650, up from $636,150 in 2017. Therefore, a loan that may have been termed a “jumbo” last year may now be conforming—a matter that may affect mortgage rates and terms.
This can be a bit much to take in and that’s why you have me as your realtor. My investment banking background and knowledge of the current mortgage market gives me and my clients a distinct edge when it comes to finding the best financing for specific needs and budgets.
For a better understanding of what all this might mean to you personally, let’s get together and talk about it. I can be reached at 593.1000 and will gladly explain it to you.
COST V. VALUE: THE HOME IMPROVEMENT PROJECTS WITH THE HIGHEST ROI IN 2018
The average return on investment (ROI) for home improvement projects dipped across the board with “upscale” projects taking the biggest hit, according to Remodeling Magazine’s newly released “Cost vs. Value Report for 2018”.
The report which measures the average cost of 21 popular remodeling projects and their average resale value one year later, found that garage door replacement has the highest ROI at 98.3% (up from 85% year-over-year). Backyard patio jobs garner the lowest ROI, at 47.6% (down from 54.9% year-over-year).
Craig Webb, the magazine’s editor-in-chief and manager of this report, said the reason for the sweeping decrease in ROI isn’t immediately obvious, but notes that it’s likely related to the strength of the housing market currently.
“It’s not clear if…nationwide affordability concerns are leading (real estate) pros to question the value of renovations that would make a house even more expensive at resale,” says Webb.
However, since the report was generated prior to the country being struck with several natural disasters, including massive forest fires and hurricanes, there is a silver lining here. Since those occurrences, building supplies and the price of skilled labor has increased, but that’s expected to change over the course of 2018. As a result, you should expect to see the ROI of most of these projects level out by year-end.
Despite these events, some longtime trends continued through the new year. Remodeling is still far more cost-effective than replacement, but according to real estate pros, replacing is still the way to go. This year, there’s a 20-point difference in ROI: 76.1% for replacement jobs, versus 56% for remodeling.
Nationally, when it comes to renovation ROI, curb appeal still wins out.
Here are the top five projects with the greatest ROI in the report’s “midrange” cost category:
Manufactured Stone Veneer (97.1% ROI)
Entry Door Replacement (Steel) (91.3% ROI)
Deck Addition (Wood) (82.8% ROI)
Minor Kitchen Remodel (81.1% ROI)
Siding Replacement (76.7% ROI)
The top five projects with the greatest ROI in the report’s ‘upscale” cost category are:
Garage Door Replacement (98.3% ROI)
Window Replacement (Vinyl) (74.3% ROI)
Window Replacement (Wood) (69.5% ROI)
Grand Entrance (Fiberglass) (67.6% ROI)
Bathroom Remodel (56.2% ROI)
Nationally, and on the complete other end of the spectrum—here are the five projects with the lowest ROI in the “midrange” cost category:
Backyard Patio (47.6% ROI)
Master Suite Addition (56.6% ROI)
Major Kitchen Remodel (59% ROI)
Bathroom Addition (59.9% ROI)
Deck Addition (Composite) (63.6% ROI)
The five projects with the lowest ROI in the “upscale” cost category are:
Master Suite Addition (48.3% ROI)
Major Kitchen Remodel (53.5% ROI)
Bathroom Addition (54.6% ROI)
Bathroom Remodel (56.2% ROI)
Grand Entrance (Fiberglass) (67.6% ROI)
The 2018 Cost vs. Value Report compares, across 149 markets, the average cost of 21 popular remodeling projects with their average value at resale one year later. Average resale value is calculated based on estimates provided by real estate professionals.
Once again, any questions? You know where to find me.
