HARRY'S BI-WEEKLY UPDATE 10.22.18
October 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.
AS YOU CAN SEE ABOVE, SEATTLE WAS THE VENUE FOR THIS YEAR’S WORLDWIDE relocation CONFERENCE
I just returned from a trip to Seattle where I met with my relocation-oriented peers from around the world. It’s always an enlightening time for me because I find similarities to Colorado Springs in so many other cities and countries—as well as stark differences. Those of you who have known me for a long time know that my nickname could well be “Mr. Positivity”. And when I’m attending this type of meeting I always find the numerous “positive” reasons to live and work in Colorado Springs.
A good example relates to the continued rise of mortgage interest rates. I’ve been predicting this for some time, along with many economists, and the time is finally here. It might be “sticker shock” to millennials and others who have never heard of mortgage interest rates above 3.5 or 4 percent. Those of us who have been around for a while can probably remember the days of 12 percent or more being the norm.
There have been a number of articles about the real estate “slowdown” and for a number of cities this will indeed be the case for the moment while price increases and lack of listings settle down and return to a more reasonable level.
Not so much for Colorado Springs, which is great news for those of us who live here. As you will see as you read further in this eNewsletter, local economy, number of available well-paying jobs and a continued significant increase in the median sales price of our homes has given Colorado Springs an advantage over many other communities. Our making the “top 10” lists in so many areas, including “Best Place to Live” has also contributed to the influx of millennials and others to our city.
Interest rates will continue to slowly rise, but as long as our median home price continues to rise more than the interest rate, folks here can still buy homes with confidence.
My advice to you? If you have even started to consider whether to sell and trade up or move to another neighborhood, NOW is the time. There are homes available in most price ranges, but they are continuing to move fast, so you need to know where you might land if your home sells as quickly as they have been.
My 46 plus years in the local real estate arena, along with my Investment Banking background, give me the ability to help put all of your wants, needs and budget constraints to work in making your Residential Real Estate dreams come true.
I can be reached at 593.1000 or by email at Harry@HarrySalzman.com and welcome talking to you, your co-workers, family and friends. It’s worth the to find out how to maximize your Residential real estate investment and I’m always happy to be of help.
SEPTEMBER 2018 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.
In the recently published September 2018 Monthly Indicators and Local Market Update for El Paso and Teller Counties, new listings Year to Date, year-over-year were down 1.0% for the single-family/patio homes and down 4.5% for condo/townhomes. We are starting to see a few more listings as folks are realizing that the time to sell AND buy is NOW.
The “Activity Snapshot”shows the Year to Date one-year change:
- Sold Listings for All Properties were down 17.2%
- Median Sales Price for All Properties was up 12.4%
- Active Listings on All Properties were up 2.4%.
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, Old Colorado City, below to show you the type of information available for all local areas.
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.
THE “SOFT” BUT STABLE U.S. housing market
The Wall Street Journal, 10.15.18, Keeping Current Matters, 10.2.18
We are beginning to see reports that more housing inventory is coming to the market and buyer demand may not be increasing at the same pace it did earlier this year. The headlines on these stories can be confusing as some headline writers may confuse “softening home prices” with “falling home prices”.
While home values in some areas may not be appreciating at the same levels as they had over the last several years (softening prices), this does NOT mean that prices are depreciating (falling prices).
And most importantly, the slowdown looks nothing like the historic collapse that took down the whole economy in 2007.
The volume of existing home sales has fallen compared with a year ago along with the volume of new single-family homes across the U.S. The reasons for this are simple. Mortgage rates have risen about a percentage point in the last year. Rising prices have squeezed affordability. In addition, the tax law passed in December reduced homeownership incentives, foreign buyers have pulled back and an ample supply of rental apartments has made buying less urgent than it was for many.
According to Fannie Mae Chief Economist, Doug Duncan, “The rise in rates paired with this very strong price appreciation absolutely is slowing housing.”
The good news is, compared to a decade ago the housing market doesn’t have far to fall. As crazy as the market has been in recent years with bidding wars and double-digit price increase, it never came close to the level of the last boom by most measures. That positions it for a much gentler slowdown economists say.
Instead of oversupply, the U.S. has experienced the worst shortage of homes for sale in at least three decades, driving up prices even more and locking first-time buyers out of the market. It can be argued that a recession might be good for the housing market because it will slow home-price appreciation and improve affordability.
Unlike the last downturn, average home prices don’t usually fall nationally, even during recessions. The next slowdown is likely to mark a return to that historical pattern.
Ralph McLaughlin, chief economist at Veritas Urbis, analyzed data from the recessions in the early 1990s, early 2000s and 2007 to 2009 to forecast the likely effect of the next recession on current home price growth. If the next recession resembles either the bursting of the dot-come bubble in the early 2000s or the mile early-1990s recession, home prices will likely stagnate for a year or more, but not fall.
The high end of the housing market, where the majority of new construction did take place, could be more significantly affected, as rising interest rates push buyers toward lower price points.
Bottom Line:
Be careful when reading headlines that discuss home values. There is significant difference between “falling” and “softening”. Read the entire article. If the word depreciation is not mentioned, home values are not falling.
Also important is “localizing” these articles. Colorado Springs is experiencing an upswing in economy, employment opportunities, unprecedented median home prices and more. We were not as hurt by the 2007 housing bust so have recovered and flourished since that time. Our city is one of the most desirable places to live in the country and that will only continue to drive more folks here.
I will say it one more time—NOW is a great time to both BUY and SELLfor most everyone. Just give me a call and let’s see if it’s the right time for YOU.
AS MORTGAGE RATES JUMP TO A SEVEN-YEAR HIGH, WHERE ARE THEY HEADED IN 2019?
Keeping Current Matters, 9.25.18, Wall Street Journal, 10.12.18
Mortgage interest rates hit their highest level in more than 7 years last week, at nearly 5%, which could defer some potential home buyers. The interest rate you pay on your home mortgage has a direct impact on your monthly payment so it is important to know where rates are headed when you start a home search.
Below is a chart created using Freddie Mac’s U.S. Economic & Housing Marketing Outlook:
As you can see, interest rates are projected to increase steadily over the course of the next year. Depending on the amount of the loan you secure, a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly.
With median home prices continuing to rise and interest rates going up, families would wind up paying considerably more for their next homes.
Bottom Line:
DON’T WAIT UNTIL NEXT YEAR. Even a small increase in interest rate can impact your wealth, so call me TODAYto review your family’s Residential real estate plans for the future.
GREAT NEWS FROM THE UCCS ECONOMIC FORUM
UCCS Economic Forum, 10.18
This year’s UCCS Southern Colorado Economic Forum was as informative as ever and I was especially thrilled with how well the Colorado Springs economy is doing. As I mentioned earlier, we are in a different league than a number of other U.S. communities as we have a number of well-paying jobs available, a robust economy and as well as being one of the “most desirable and affordable places to live”, among other things.
I want to share just one of the many charts that helps portray the employment situation here. It will help you realize why I say that things that might be happening in the rest of the U.S. in terms of housing just aren’t affecting us here in the same way. And that’s just a big WOW.
WHAT TO ASK AFTER A HOME INSPECTION
Realtor Daily, 10.09.18
After reading the report from a home inspector, a buyer may feel a bit overwhelmed by any flaws that might have been found so it’s important to take the opportunity to learn more so you feel confident in moving forward in the transaction.
If there is something in an inspection report you don’t understand, ask questions like “What does this mean?” or “Do I need to follow this up with another expert’s opinion?” or “Is this a major or minor issue?”
Home Inspectors are bound to find something in a home that needs repair as no home is perfect. The majority of the problems they uncover will be minor but be sure to have the inspector clarify which problems fall within the “minor” or “major” categories.
According to Frank Lesh, executive director of the American Society of Home Inspectors, “The inspector can’t tell you, ‘Make sure the seller pays for this’, so be sure you understand what needs to be done.”
If the inspector identifies a potentially major problem, you might want to follow up with whether or not to call in another expert such an electrician to take a closer look at the electrical problem or a roofer to check a problem roof. These specialists can give you and idea of the cost to fix the problem which can be presented to the seller. If the seller is not wanting to fix the problem, you can then decide if you want to go forward and pay the cost yourself.
Understanding an inspection report is important. That’s why you’ve got me to help you understand what all of it means. I read your home inspection report thoroughly and will not only answer your questions, but will make recommendations based on your individual situation. Between your inspector and me—we’ve got you covered. You might not always like what you hear—especially if you have to walk away from a property you wanted—but at least you know what you’re getting into BEFORE you get into it!
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