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HARRY'S BI-WEEKLY UPDAATE 10.27.14

by Harry Salzman

October 27, 2014

 

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.

 

                                                  

 NOTE TO SELLERS -- “TAKE TWO TYLENOL AND CALL ME IN THE MORNING”

The Wall Street Journal, 10.24.14

An article to be published next year in the Journal of Experimental Social Psychology is entitled, “Can Acetaminophen Reduce the Pain of Decision-Making?”.  It builds on previous work that shows emotional pain can overlap with the physical kind. 

This study caused Stefanos Chen, a columnist for The Wall Street Journal, to wonder if the painkiller Tylenol (brand name for Acetaminophen) could compel homeowners to reduce their asking price.

I, of course, read this article and couldn’t help but smile.  I thought you might enjoy a brief synopsis. 

According to Nathan DeWall, co-author and professor of psychology at the University of Kentucky, “when people talk about decisions they have to make, they talk in terms of pain.”  Consider the neighbor who says that selling his house “hurt”. 

An experiment of 95 undergraduate students showed, as predicted by researchers, that “loss aversion”, a decision-making theory that people would much rather avoid losses than acquire gains,  can be proven scientifically.  Loss was found easier to accept by those taking acetaminophen than those who did not. 

“It was easier for them to give up something they owned—and that’s really hard for people to do,” Prof. DeWall said of the group on acetaminophen. 

“It’s the same principle at play when a sentimental homeowner balks at an agent’s comparable sales figures and demands a higher price for his home,” he added. 

The study certainly offers insight but not all the answers, he said.  “I’m not saying that if you take acetaminophen people are going to stop fighting with their real-estate agents.”

The moral of the story?  When you and your real estate Agent are at odds over the pricing of your home or the thought of lowering the asking price—try Tylenol—and see if it helps.  It certainly can’t hurt!

 

RELAXED MORTGAGE LENDING RULES, LOWER DOWN-PAYMENTS, IN THE PIPELINE

The Wall Street Journal, RealtorMag, The Gazette, HousingWire, 10.14

So many stories this last week concerning new rules and regulations for home financing.  This past year has been tough for those looking for mortgages, especially first-time borrowers, in part due to the Dodd-Frank Act which went into effect January 10, 2014.  This regulation was intended to help financial institutions avoid sending the housing market into another recession due to “risky” mortgages made to borrowers who had marginal credit and little documentation to justify the loans. 

Unfortunately, as I and many others predicted, enforcement of the new regulations hampered many borrowers from obtaining a mortgage and the housing market slowed down substantially.  

Several things are in the pipeline and include:

  • An agreement between Fannie Mae and Freddie Mac, which could lower barriers and restrictions on borrowers with weak credit.  This would help lenders protect themselves from claims of making bad loans and would require a 3% down-payment (as was once the case) rather than the 5% minimum of recent times.  It’s possible the 3% could be limited to first time homebuyers, but those are the ones who have been hurt the most recently and this will drastically reduce their expense in obtaining their first home mortgage.

Fannie and Freddie do not make loans directly.  They buy them from lenders and package them into securities and then give guarantees to make investors whole if borrowers do not repay.  This payback comes from penalties charged to mortgage lenders and in turn, lenders have been making mortgage loans only to borrowers with excellent credit in the recent past.  Regulators and lenders are still walking a fine line between expanding mortgage access and moving too far toward the loose credit that led to the crisis.  Borrowers will still be required to not carry excessive debt relative to their income, but with the “lower down-payment loans” made “sellable”, more buyers will qualify for loans.

  • A long stalled provision of the Dodd-Frank Act has been approved by The Federal Reserve, Securities and Exchange Commission and the Department of Housing and Urban Development which will result in relaxed mortgage-lending rules. 

Originally, lenders were required to hold 5% of the risk of mortgages packaged and sold to investors or require a 20% borrower down payment. But regulators, concerned that overly stringent rules would harm the housing market’s continued recovery, backtracked on the 20% down payment. 

Banks will now be able to avoid the 5% risk-retention requirement if they verify a borrower’s ability to pay back the loan and comply with other requirements, such as a borrower’s debt payments not exceed 43% of income.  These represent an effort to ensure that more mortgage loans are available to consumers.

  • Mortgage lenders are looking to lower the minimum FICO scores that borrowers need to qualify for a jumbo loan.  A FICO score is the most commonly used method for determining credit scores and is used by Trans-Union, Equifax and Experian, the nation’s three biggest credit agencies. 

While today a borrower may be able to get a jumbo loan with a FICO score as low as 680 out of a possible 850, many lenders draw the line at anything below 720.  The best terms go to those with a score of 760 and higher.  Now, though, lenders are wanting to get more jumbo loans, those that exceed Fannie Mae and Freddie Mac conventional loan limits of $417,000 in most places and $625,00 in some high-price areas.  To do so they are looking at lowering the required minimum FICO score if all other factors are met.  

I realize all of this can be a bit complicated and every situation is different.  That’s why I’m here for you.  I study all the new regulations as they come out and do my best to mesh the best mortgage lender for each individual client.  My forty-two plus years in the local real estate arena has given me the edge in knowing exactly what’s available and I can help steer my clients in the right direction for their personal situation.  If you, or any family member or co-worker is in the market for a new, or new-to-you, home, please give me a call at 598-3200 or email me at Harry@HarrySalzman.com and let me put my extensive knowledge to work for you. 

 

MORTGAGE RATES STILL HISTORICALLY LOW, DEFYING EXPERTS’ PREDICTIONS

Housing Wire 10.15.14, The Wall Street Journal 10.26.14

Despite experts who have long predicted differently, interest rates keep tumbling and are offering borrowers a fresh opportunity to save money.

The week ending October 17, 2014 saw the fixed-rate, 30-year mortgage fall to 4.03%, the lowest level since June 2013 and it remained there through last Thursday.  This compares to 4.29% in mid-September and can translate into tens of thousands of dollars in savings through lower monthly payments over the course of a 30-year mortgage. 

Along with lower interest rates, home loan demands have surged, with applications jumping nearly 12% in the week ending October 17th compared with a week prior, according to the Mortgage Bankers Association. 

This increase is being driven by those wishing to refinance existing mortgages, but falling interest rates are also helping ease the sting of rising home prices by making it possible to afford a house that might otherwise by out of reach. 

All of this is good news for both Buyers and Sellers.  If you are looking to Sell and Trade Up, or Buy for the first time or for Investment purposes, the low mortgage loan rates are going to work in your favor. 

First time buyers will find that with increasing rental payments, it makes sense to own if at all feasible.  When you rent, you’re paying someone’s mortgage, so why not find out if it’s to your advantage to pay your own?

If you’re looking to Buy for Investment purposes, those higher rental prices are going to help you recoup your investment a lot sooner. 

And, if you’re looking to Sell and Trade Up, the lower interest rates will help you keep your new mortgage payments down while helping your potential Buyers do the same.

All in all, it’s a great time to be in the housing market and if you’ve been sitting on the fence, now is a great time to give me a call and determine whether or not your real estate dreams can be realized. 

 

WHEN PURCHASING A NEW HOME, SHOULD YOU RENT YOUR HOUSE RATHER THAN SELL IT?

Keeping Current Matters, 10.14.14

A recent study concluded that 39% of Buyers prefer to rent out their last home rather than sell it when purchasing their new home.  The reasons cited were that “many homeowners were able to refinance and ‘locked in a very low mortgage rate in recent years.  That low rate, combined with a strong rental market, means they can charge more in rent than they pay in mortgage each month…so they are going for it.’”

Residential real estate is a great investment right now and in some cases this makes perfect sense.  However, there are a number of questions you might ask yourself BEFORE you decide to follow this path.

  1. How will you respond if your tenant says they can’t afford to pay the rent this month because of more pressing obligations?  (This happens most often during holiday season and back-to-school time when families with children have extra expenses).
  2. Because of the economy, many homeowners cannot make their mortgage payment.  What percentage of tenants do you think cannot afford to pay their rent?
  3. Have you interviewed experienced eviction attorneys in case a challenge does arise?
  4. Have you talked to your insurance company about a possible increase in premiums as liability is greater in a non-owner occupied home?
  5. Will you allow pets?  Cats? Dogs? How big a dog?
  6. How will you actually collect the rent?  By mail?  In person?
  7. Repairs are part of being a landlord.  Who will take tenant calls when necessary repairs come up?
  8. Do you have a list of craftspeople readily available to handle these repairs?
  9. How often will you do a physical inspection of the property?
  10. Will you alert your current neighbors that you are renting the house?

Bottom line:  Historically, renting out Residential real estate is a great investment but not one without its challenges.  Be certain that you have decided to rent your home because you want to become an Investor, not because you are hoping to get a few extra dollars by postponing a sale.

 

WINTER SKI GUIDES AVAILABLE AT THE OFFICE

We have a limited number of copies of the 2014-15 Winter Guide produced by Colorado Ski Country USA at the office, so if you’re interested, just stop by and pick one up. 

 

HARRY’S PHILOSOPHY OF THE DAY

(some more words of wisdom I picked up at the Chicago conference..)

 

“Luck is a dividend of sweat.  The more you sweat, the luckier you get.”  --Ray Kroc

“To find joy in work is to discover the fountain of youth.”  --Pearl S. Buck

“”Try not to become a person of success, but rather try to become a person of value.”

--Albert Einstein

“The two most important days of your life are the day you were born and the day you found out Why.” --Mark Twain

 

 

 

HARRY'S BI-WEEKLY UPDAATE 10.14.14

by Harry Salzman

                                                            

October 14, 2014

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.

                             

SEPTEMBER LOCAL STATISTICS LOOKING GOOD

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

Local homeowners should be happy with the recently released housing statistics. While the month-over-month averages are not increasing as quickly as they did several years ago, the slow, steady growth we are seeing is a good sign that the housing market is stabilizing and continuing to provide increased equity for homeowners.

In general, September is a slower sales month.  People with children still at home and in school want to make certain they are settled in prior to the start of the school year, therefore more sales usually happen prior to Labor Day.

As you will see, September sales in El Paso County show that the relationship of selling price to listing price is 98.4%.  And the average days on the market is 80.  This means that if you are planning to Sell and you price your home realistically, it’s going to happen.  If you are in the market to Buy, it’s also a good time because prices are not increasing at too fast of a pace and interest rates are still historically low.  There are fewer homes available, though, and that’s possibly due to the higher price of rentals.  A number of renters are looking to become first-time homeowners, figuring that if they are going to pay someone’s mortgage it might as well be their own!

Here are some highlights from the report.  Please click here to view the detailed 10-pages .  If you have any questions about the report or anything else to do with Residential real estate, please call me at 598.3200 or email me at Harry@HarrySalzman.com.  

In comparing September 2014 to September 2013 in PPAR:                       

                        Single Family/Patio Homes:

  • New Listings are 1,249, Up 8.0%
  • Number of Sales are 1,026, Up 23.8%
  • Average Sales Price is $253,218 Up 3.3%
  • Median Sales Price is $225,000, Up 5.6%
  • Total Active Listings are 3,831, Down 5.9%

                        Condo/Townhomes:

  • New Listings are 172, Up 19.4%
  • Number of Sales are 153, Up 51.5%
  • Average Sales Price is $162,458, Down 6.6%
  • Median Sales Price is $150,000, Up 7.9%
  • Total Active Listings are 405, Down 11.2%
  •  

COLORADO SPRINGS AREA MONTHLY SINGLE FAMILY/PATIO HOME SALES ANALYSIS*

                                                Median Sales Price             Average Sales Price

Black Forest                            $393,500                              $380,587

Briargate                                  $272,750                              $312,731       

Central                                      $176,500                              $215,121

East                                          $175,250                              $185,264

Fountain Valley:                      $190,950                              $199,041

Manitou Springs:                    $275,250                              $294,493

Marksheffel:                             $258,000                              $277,047

Northeast:                                $220,000                              $243,386

Northgate:                                $350,000                              $377,733

Northwest:                               $307,250                              $336,629

Old Colorado City:                  $174,450                              $195,653

Powers:                                    $222,000                              $223,671

Southwest:                              $240,500                              $317,226

Tri-Lakes:                                $349,625                              $360,214

West:                                         $242,500                               $295,602

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

 

WORLDWIDE relocation COUNCIL MEETING FOCUS WAS “ENJOY LIFE”

I just returned from a week in Chicago where I attended meeting with Realtors from all over the world who specialize in relocation—either around the world, around the country, or simply around the corner.  It’s always energizing to share stories and gather new information that I can use to help turn what can be a stressful experience for my clients into one that is as stress-free as possible. 

Easing stress during relocation for the entire family is of prime importance to me.  There are so many stress triggers that need to be dealt with, such as:

  • Possible Negative Equity in the current home and its subsequent listing for sale
  • Loss of spousal income and spousal job search
  • Unfamiliarity of new town or neighborhood
  • Schools
  • Disclosure/Inspection issues
  • Household goods move
  • Mortgage qualifications

These stress triggers, and more, are just another reason why it’s important to deal with a competent real estate Broker who can assist you in all the above areas and help you find solutions to potential problems even before they surface. 

A Broker familiar with relocation will be acquainted with Brokers all over the world who can help with getting a current home listed when the move entails a cross-country or cross-the-world situation.  My many years of involvement with the Worldwide Relocation Council (WRC) has given me the pleasure of meeting Brokers who have the same “customer service” orientation as I do.  Knowing this, I can make certain that my clients will receive the same good advice that I give on a local level.

The “Enjoy Life” theme also concentrated on the “retirement journey” that many of us will travel, either soon, or one day in the future.  There are so many questions involved in setting goals and objectives for Retirement and many of them need to be answered long in advance of the actual act of retiring. 

Some of the Goals and Objectives might include:

  • Where do I want to live?  City, State, Country, Home, Condo, Retirement Community?
  • What do I want to be able to do with my time?
  • How is my health now and expectations for future?
  • Estimate how much you will need—one rule of thumb is that you will need 70% of your annual pre-retirement income to live comfortably
  • Create an overall plan, including financial lifestyle, family, long-term care, insurance, will

Looking at these areas are important to do BEFORE you decide to retire as the answers to many of these questions will determine where, when and IF you are ready to retire.

A MetLife Study of Baby Boomers (1946-1964) done in April 2012 showed:

  • 2011--- oldest Baby Boomers reached new milestone—Age 65
  • 45% of Boomers age 65 are now fully retired
  • 14% are retired, but are working part-time or seasonally
  • 37% of those who retired earlier than planned cited health-related reasons and 16% cited job loss
  • 27% of those working said they needed income for daily living and 13% cited desire to stay active
  • On average, Boomers not retired yet plan to do so by age 68.5
  • 71% are married or in a domestic partnership, 12% divorced or separated, 10% widowed and 7% single
  • 83% have children, 84% have grandchildren and 24% caring for at least 1 parent
  • 93% currently own their own homes, valued at $255,000

Lots to think about.  It’s always a good idea to make plans earlier than necessary and I’d certainly recommend you talk to your financial, tax and other advisors for help for your individual situation.  One thing you might ask them about is the possibility of owning investment property, which can help grow equity while providing you with a monthly income, probably more then the mortgage payment.  If that’s something that you are considering, give me a call and I can help you define your investment property goals. 

As an aside…I did manage some personal time in Chicago and lo and behold, I couldn’t escape my profession even while taking a leisurely walk.  The first building I saw was “The Realtor Building”, home to the National Association of Realtors, on Michigan Avenue.  There was a wooden-horse decorating contest going on and here is a picture of me with the one designed by the Realtors—entitled “The A-MARE-ICAN Dream of Property Ownership.”

 

A FEW MISTAKES THAT CAN SABOTAGE YOUR HOME SALE

RISMedia, 10.3.14 & The Wall Street Journal, 10.2.14

I’ve been asked over and over what I think needs to be done in order to get a home in “Selling Condition”.  My answer will differ from home to home and some will need more updating than others.  I wanted to share some information I recently read.  Not all of it will apply to all Sellers, but it’s certainly a good place to start. 

According to the real estate Staging Institute, a “staged” home sells 70% faster than a non-staged home.  Below is a list of common staging mistakes to avoid:

  1. Mistake:  Not creating space.  Clutter robs a home of space.  Make sure everything is cleared from the countertops and remove at least two-thirds of books on the shelves.  Closets should be half full.  If a Buyer sees a jam-packed closet they will think it’s too small for them.
  2. Mistake:  Excessive furniture.  Too much, or over-sized furniture can ruin a home sale.  Swap out a king sized bed for a queen in order to create more space unless the room is large.  Pull furniture two or three inches from the walls throughout the house and allow the corners of the room to be visible.
  3.  Mistake:  Household smells.  The only thing as important as decluttering is having an immaculate house.  A house that smells odd to a prospective Buyer, whether because of a cat’s litter box, a dog or exotic food smells, can easily be a deal breaker.  Don’t try to mask smells with room freshener.  Simply open windows a few minutes before your home is being shown.
  4. Mistake:  Failure to edit.  Too many personal items can increase clutter.  Remove as much as possible to allow the potential Buyers to picture the home as one they want for themselves.
  5. Mistake:  Having more than one focal point in a room.  Every room needs a focal point but more than one is overkill.
  6. Mistake:  Color Faux Pas.  It’s important to maintain a continuum of a neutral paint color throughout the main areas of the house to provide a sense of openness and flow.  This also helps make a room look bigger.
  7. Mistake:  Covering up the light.  Lighten up!  You want as much light to come in as possible.  Remove unneeded blinds.  Pull drapery aside.  You want a Buyer to think: “I could live here, it’s nice and bright.”
  8. Mistake:  Skipping the walk-though.  Make a trip through your home and test all the cupboards, cabinets and drawers for proper opening and closing.  Squeaky cupboards or jammed drawers will make the Buyers think they will need to fix them.  Replacing hinges and greasing drawer tracks is inexpensive and quick.
  9. Mistake:  Neglecting the exterior.  The front porch is the home’s first impression.  Painting the front door and placing seasonal planters on each side improve the look.  Keep lawns freshly mowed and pressure-wash outdoor decks and aluminum siding.  This can do wonders for a home’s first impression and boost its value.

So there you have it.  Just some common sense suggestions that can help get a home ready for sale.  This is a great time to pare down and get rid of things you have been saving but really don’t want to move to your next home.  And, as always, I’m here to help with suggestions for your individual property to make certain the “first impression” is a good one.

 

HARRY’S PHILOSOPHY OF THE DAY

(some other words of wisdom I picked up at the Chicago conference..)

 

“Never get so busy making a living that you forget to make a life.” –Dolly Parton

“”Don’t be afraid to give up the good to go for the great.”  --John D. Rockefeller

“”Things work out best for those who make the best of how things work out.”  --John Wooden

“We make a living by what we get, but we make a life by what we give.”  --Winston Churchill

“Choose a job you love and you will never have to work another day.”  --Confucius

 

 

 

 

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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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