Real Estate Information Archive

October 20, 2020

 

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.  

 

 

 

AND SO IT CONTINUES….

Having been in the Colorado Springs residential real estate arena for more then 47 years I often think I’ve seen it all…but then something happens and I realize there’s still more to see. What I’ve been seeing and thinking about lately is how much has changed in the last several years--in the world generally, but also in my professional world.

Home prices are going through the roof—literally.  And mortgage interest rates are going into the cellar—also literally.  We’ve seen enormous home appreciation over the past several years and until there are more available listings, this is going to continue.  In the U.S., the average home appreciation from August 2019 to August 2020 was 5.9%.  Our local appreciation was almost twice that.  

Mortgage interest rates keep spiraling downward—and this is affording many folks the ability to get 15-year mortgages rather than the more traditional 30-year ones, resulting an even greater savings in interest and faster home equity.  When I first started selling real estate, a 12% mortgage was the norm and I’ve even seen ones at 9% and higher!  Today, mortgage rates are under 3%—something I could never have imagined back then.

And interestingly enough, if you think about what really matters—monthly housing out-of-pocket costs—things haven’t changed that much.  I often need to remind my clients that with prices increasing and mortgage rates declining, out-of-pocket monthly cost can often be less than it was with lower homes values and higher interest rates.  

This current pandemic has caused so many of us to reconsider what we want and need in our living spaces. WFH (working from home) is the new normal for many and not likely to change in the near future.  Home schooling and virtual learning can be an option due to COVID-19.  Folks are avoiding their normal workout places and ordering exercise equipment for the home, and outside entertainment areas have become a necessity. These factors have created the need for separate spaces so the entire family can proceed with life in the new normal in the best way possible.   

Some are taking this time to deal with renovation of their present homes while others are looking for new homes or new neighborhoods.  Unfortunately, this pandemic hit at a time when available housing is at a record all-time low locally.  When homes come on the market, they are tending to sell in record time and often over list price.  Bidding wars are prevalent, and disappointment is all too common.  Buying and/or selling a home should be an exciting adventure and I try to make it as stress-less as possible for my clients.  Therefore, it’s quite distressing for me to see my clients disappointed due to not getting their first or second choice or having to deal with buyers who have not-so-scrupulous lenders, and more.  I often wonder if some of the “new” real estate professionals could possibly imagine a day when there were so many homes for sale that buyers got a relative bargain at times.  Those days are long gone, but they sure made things easier for all.

New home construction has become a choice for many of my buyers due to some of the above reasons and also because a lot of the new homes have the “spaces” that folks are now realizing they want and need.  Inventory is better than it was previously since home construction was able to continue while other industries were shut down.  However, the availability and price of lumber and other materials has contributed to new construction price increases as well.  

I’ve been working with a number of clients, both local and ones who are relocating here, in dealing with home builders and have helped them in site selection, home features and have also directed them to lenders who can work with their individual situations.  This is a service I provide AT NO ADDITIONAL COST to my clients and one that has saved them substantial dollars as well.  If new construction is an option, please give me a call and let’s discuss the possibilities for you and your family.

Actually, no matter whether it’s new construction or existing home sales, I’m your guy.  With all my years of experience, along with my investment banking background, I’m your “ace in the hole” when it comes to residential real estate.  

So, if you’ve been thinking about making a move, or even purchasing for investment purposes, NOW is the time to at least see what you can do to make your real estate dreams a reality.  Just give me a call at 593.1000 or email me at Harry@HarrySalzman.com and let’s get the ball rolling.  

 

real estate INVESTING 101

YPN Realtor, The Lounge, 10.8.20

As many of you know, I put my money where my mouth is.  I have been investing in residential real estate since I started in this business and it has proven time and again to be not only a sound, but also lucrative business.  In fact, just last month I sold the very first home I purchased for investment back in 1977.  I purchased it for $20,800, sold it for $289,500, and collected rent on that home for all the years in between.  You do the math—even after essentially gutting and redoing it prior to sale, I still made a substantial profit.  

Being a landlord can be quite rewarding, but it’s not for everyone.  At first I acted as my own property manager, but now I employ one to take care of my investment properties.  Either way can work—it all depends on how much time and energy you want to put into it. 

Here are a few tips that can help you become the owner and property manager of a successful rental property:

 

1.  Run the Numbers.  A rental property should serve as another source of income.  Unlike buying an owner-occupied property, it’s all about your bottom line.  That means you need to consider the numbers rather than emotions when you’re looking for a property.  You need to strive for a positive cash flow when considering the property’s monthly expenses and how much rent you can charge in the current market.  This needs to be the driving force behind your decision.  The goal is to exceed your monthly home payment and repair budget.  And investors typically need 20% down to qualify for a mortgage so there’s that to consider too.

 

2. The Rental Search.  There are a lot of layers to this, but number are the key, followed closely by location.  Traditionally, purchasing a home in an expensive area may help guarantee that the home will hold its value or increase in price.  Yet some investors prefer a more affordable area where purchase prices are lower but may not gain equity as quickly.  The difference is higher instant gains versus long-term returns.  Also important is weighing the pros and cons of different property tax rates and potential assessments.  (Your tax and/or investment advisors can help steer you in the right direction.)  Proximity to your home is also important if you plan on handling repairs yourself. 

 

3. Single-Family Homes vs. Attached Housing.  Single family rental properties may have more long-term expenses such as the roof, siding, and mechanical replacements.  Again, it’s all about running the numbers when considering a single-family property versus a townhome or condo in a multi-unit building. If a condo can give you a positive cash flow, that might be the way to go.  Attached housing could also be a great opportunity to ease into investing.

 

4. Maintenance.  If you are good at home repair, bravo for you.  Most of us need to hire others to tackle repairs in our homes and that would include rental properties as well.  You can keep the cost down by tackling some small items you can handle while hiring out things like plumbing, electrical, heating and cooling, etc.   As I mentioned earlier, some folks hire property managers to handle all of this, as well as the collecting of monthly rent.  For this they take a percentage that will run you around 10% to 15% or more. 

 

These are just a few things to consider and I’d be happy to discuss my own personal experiences in owning rental properties with you if you are interested.  Again, let me remind you that it’s important to discuss all options with your tax and/or investment advisors first.  I can help you find an investment property, but I can’t advise whether it’s advisable or even feasible for you to do so from a tax standpoint.

 

MORTGAGE RATES SET RECORD LOW FOR 10^TH TIME

Freddie Mac Survey, 10.16.20

Mortgage rates fell slightly the week of October 15^th, setting a new record low for the 10^th time this year, according to Freddie Mac.  The 30-year, fixed-rate mortgage averaged 2.81%, the lowest rate since Freddie Mac began tracking such data in 1971.  The previous low of 2.86% was set in mid-September.

“Low mortgage rates have become a regular occurrence in the current environment,” says Sam Khater, Freddie Mac’s chief economist.  “As we hit yet another record low, many people are benefiting, as refinance activity remains strong. However, it’s important to remember that not all people are able to take advantage of low rates, given the effects of the pandemic.”

However, home buyers who are ready to enter the market are rushing to take advantage of these lower borrowing costs.  “With mortgage rates to remain near 3% for the next couple of years, homebuying activity is expected to stay strong for several more years,” Nadia Evangelou, a research economist for NAR wrote on NAR’s Economists’ Outlook blog.

 

AND, ACCORDING TO LAWRENCE YUN, NAR chief economist:

“Home prices have mostly outpaced broader consumer price inflation over the past decade.  From 2010 to mid-2020, the median home price (nationally) rose 61% to reach $295,300.  The key reason:  steadily shrinking supply coupled with steadily rising demand.  Americans saw inflation of 18% and a wage hike of 30% over the same 10-year period.  Yet, incredibly, the percentage of income devoted to a mortgage principle and interest payment to buy a median priced home is essentially unchanged, reflecting the awesome power of low mortgage rates…”

“More amazingly, in the midst of a pandemic and high unemployment, home prices are setting new highs, with multiple offers common on many properties.  The rate of home sales, after plunging during the spring shutdown (nationally) is poised to surpass 2019 levels in the final months of the year.”

Yun’s comments reflect what I’ve been telling you for some time.  NOW is the time to buy and sell. No matter the higher cost of the homes, it’s the monthly payments that count…and they are likely much lower than you might imagine.  Give me a call sooner than later and let’s discuss.

 

 

October 5, 2020

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.

OWNING A HOME IS MONEY IN THE BANK…

Actually, and realistically, homeownership today is FAR BETTER than money in the bank when you consider what banks are actually paying for your money and what your home appreciation continues to be.

This was brought home (no pun intended) to me this past week when I was virtually attending the UCCS Economic Forum.  Listening to keynote speaker Dave Nelsen, Futurist and President of Dialog Consulting Group, I was even more acutely aware (if that’s possible) of why owning residential real estate is so vital to personal economic stability and wealth.

Mr. Nelsen gave us a glimpse into the not too distant future, one in which things are going to be radically different than we have been used to in terms of work, transportation, living arrangements and so much more.  These past six months of living with the pandemic have already begun to alter the way so many of us do our jobs, educate our children, and spend our leisure time (more on that further on, as well as the link to listen to the keynote yourself).

In some ways, that’s probably a good thing since virtual living and working, automation and robotic devices, artificial intelligence, self-driving automobiles and other similar concepts are banging on our doors. We need to be prepared to let them in whether we want to or not.  

The one constant in most all of this is residential real estate.  As we’ve recently witnessed, our homes have provided not only shelter, but also classrooms, workout places, employment spaces, food preparation and serving areas, movie theaters and more.  

As I’ve told you in recent eNewsletters, folks are looking at their homes in new ways and discovering what they like and don’t like about how and where they have been living.  Some are renovating, and others are making lists of their wants and needs and are hoping to realize them as quickly as possible.  Yet others still are wanting to move to places like Colorado Springs not only for the obvious reasons, but also to get away from big cities now that working from home (WFH) and virtual meetings have become a new reality and they are now able to live wherever suits them best.   Quite honestly, if you ask me, I’d certainly pick the Colorado Springs area over anywhere else as well. 

According to the National Association of Realtors Pending Price Index, contract signings in August rose 8.8% over July and were 24.2% higher than a year ago.  The housing market has made a strong comeback since the COVID-19 outbreak first hit and remains a key factor in the national economic recovery.  

And that presents the current problem of our severe lack of existing homes for sale.  As soon as we get a home listed it oftentimes has a line of buyers ready to pounce, and the listing price is often just a starting point in the negotiations.  It’s crazy.  But it’s reality.  

With interest rates below 3%, rising rental prices and escalating home appreciation, folks are realizing that now is the time to buy—especially with a new list of wants and needs.  

These are just some of the reasons that homebuilding in Colorado Springs has reached a 15-year high.  New home construction is affording folks the opportunity to create the spaces they need for all facets of their “new” housing reality.  With the supply of existing homes at an all-time low locally, new homes are fast becoming a viable choice for a number of my clients.  

Fortunately for them, and for you, I have good working relationships with a number of local builders and can help with site and model selection as well as assist in helping direct you to the best lender for your individual situation.  And did I mention?  This comes at no additional cost to you.  Just one of the many services you get with a seasoned professional like me.  

In fact, I recently had clients who were relocating here from Hawaii and did not have time to visit beforehand.  I sent them information on new homes being built that met their specified wants, needs and budget and they had me personally select their site location and oversee the homebuilding process.  The first time they saw the home in person was when they moved here this past week!  

My 47 plus years in local residential real estate, along with my investment banking background and personal brand of customer service, makes me the best choice to help you find exactly what you and your family want, need and can afford.  In this highly competitive arena, it pays well to have me on your side.  I’ve been through all kinds of market situations and can help you navigate the home market as smoothly and stress free as possible.

If you’ve even been wondering what’s out there that can satisfy your individual family situation when it comes to residential real estate…NOW is the time to find out.  Just give me a call at 593.1000 or email me at Harry@HarrySalzman.com and let’s see how together we can help you realize your ideal homeownership situation. I look forward to helping you and your family members in this endeavor.

 

And now for statistics…once again “off the chart”…

You will see that home prices are continuing their upward trend due in part to low interest rates, low inventory and a pent-up demand created by the pandemic. With so many folks looking to buy, I would expect to see these numbers, along with the number of sales, to continue to increase over the next few months.  

A good thing to remember when considering a move is that the equity in your present home is potentially greater than you might think, and with interest rates so low, it’s possible you can get into another home for not much more in monthly payment costs.

 

SEPTEMBER 2020 

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

Here are some highlights from the September 2020 PPAR report.  Remember that the format of this report no longer provides monthly statistics for each individual neighborhood.  However, if you are interested in what’s happening in your neighborhood, I can provide you with this information through other means.

In El Paso County, the average days on the market for single family/patio homes was 21.  For condo/townhomes it was 15.  

The sales price/list price for single family/patio homes was 100.8% and for condo/townhomes was 100.9%.  

Please click here to view the detailed 8-page report, including charts.  If you have any questions about the report or to find out how it relates to your individual situation, just give me a call.

 

In comparing September 2020 to September 2019 for All Homes in PPAR:                      

                        Single Family/Patio Homes:

·       New Listings were 1,665, Up 17.2%

·       Number of Sales were 1,804, Up 29.4%

·       Average Sales Price was $431,293, Up 17.1%

·       Median Sales Price was $385,000, Up 18.3%

·       Total Active Listings are 996, Down 52.3%

·       Months Supply is .06, Down 63.2%

 

Condo/Townhomes:

·       New Listings were 255, Up 19.7% 

·       Number of Sales were 261, Up 29.2%

·       Average Sales Price was $295,276, Up 9.2%

·       Median Sales Price was $277,000, Up 14.9%

·       Total Active Listings are 134, Down 35.9%

·       Months Supply is 0.5, Down 50.4%

And a look at more statistics…

 

September 2020  LOCAL MARKET UPDATE  AND MONTHLY INDICATORS  ILLUSTRATE OUR LOCAL TRENDS IN DETAIL

Colorado Association of REALTORS^{® ,} Pikes Peak REALTORS Service Corp, or it’s PPMLS

Providing greater detail than the above report, this contains information on both El Paso and Teller counties for Residential real estate. 

It is broken down by geographical areas and you can look to see how your neighborhood is doing in terms of sales, prices, and more.  

The “Activity Snapshot” for all residential properties in El Paso and Teller counties shows the Year to Date one-year change:

• Sold Listings for All Properties were Up 26.7%
• Median Sales Price for All Properties was Up 17.7%
• Active Listings on All Properties were Down 54.1%

You can click here to read the 16-page Monthly Indicators or click here to get specific information on the geographical area of your choice from the 18-page Local Market Update. I recommend that you check out your own area or one that you are considering, to get a good idea of the local pulse. As an example, here is a detailed report on the Colorado Springs area:

THE COST OF A HOME IS FAR MORE IMPORTANT THAN THE PRICE

Keeping Current Matters, 9.22.20

Housing inventory is at an all-time low, with 39% fewer homes for sale today nationally (and 50.9% fewer locally) than a year ago.  Buyer demand continues to set records, along with home prices which have increased 5.5% nationally and 17.7% locally over the same time last year.

The home value appreciation is great news if you’re planning to sell your home, but as a first-time or repeat buyer, this may seem troubling.  However, potential buyers should realize that the price of a house is not as important as the monthly cost.

Let’s break it down.  

Two weeks ago, Freddie Mac announced the average interest rate for a 30-year fixed-rate mortgage was 2.87%.  At the same time last year, the rate was 3.73%.  Using this as an example, let’s talk about how that difference impacts the true cost of a home.

Assume you purchased a home last year and took out a $250,000 mortgage.  Using the national average price increase of only 5.5% over the past year, to buy the same home would necessitate taking out a mortgage of $263,750.

The table below calculates the difference in your monthly payment:

That’s a savings of $61 monthly, or $732 annually, and $21,960 over the life of the loan.

Bottom Line?  Even though home values have appreciated, NOW is a great time to buy because of the historically low interest rates.  

 

UCCS ECONOMIC FORUM UPDATE

UCCS Economic Forum, College of Business, updated 9.11.20

I just received the updated statistics from the UCCS Economic Forum and wanted to share them with you, as always.  Please click here for the look at both the national and local updates on the economy in terms of employment, local demographics, real estate and more.

As I mentioned earlier, the virtual UCCS Economic Forum held last Thursday was very informative.  The theme of the meeting was “Our Resilient Future” featured futurist Dave Nelsen as the keynote speaker.

Aikta Marcoulier, Executive Director, Pikes Peak SBDA, presented a Pikes Peak Region Small Business Resiliency and Report to the Community.

Dr. Tatiana Bailey, Director, UCCS Economic Forum, presented Economic Conditions and Outlook for the Pikes Peak Region.

You can access the presentation in its entirety by going to the UCCS Economic Forum’s website:   www.uccseconomicforum.com

There is excellent information here for all-- not only about the state of the economy and city today, but also scenarios that can help prepare both our businesses and our lives for the future.  If you have any questions, please give me a call.

 

HARRY’S THOUGHTS OF THE DAY: