December 27, 2010

 

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET

 

HAPPY NEW YEAR FROM ALL OF US AT SALZMAN real estate SERVICES !!!

We know you all are busy enjoying the Holiday season and don’t want to be bothered with some boring facts about the real estate market, so, we’ll limit ourselves to just a short list of reasons why you should consider buying a home in 2011 and a holiday poem, for your enjoyment.

Happy Holidays and Best Wishes for 2011.

5 Reasons to Buy a Home in 2011

Michele Lerner, author of “Homebuying: Tough Times, First Time, Any Time”, offers reasons why real estate is likely to improve in 2011. Here are five reasons she thinks consumers should consider a home purchase next year:

• Mortgage rates will stay low. Even with rates climbing — maybe to as high as 6 percent by 2012 — they are still well below where they have been historically.
• Tax cuts could help. Extending the tax cuts will encourage a more rapid recovery for the economy.
• Americans want to be home owners. A recent Fannie Mae survey showed that Americans still believe a home is a safe and desirable investment.
• Builders are about to begin building. Home builders have been sitting on the sidelines. This year, they think pent-up demand will create an appetite for new homes.
• Homes are shrinking. Homes are getting smaller, which has made them more affordable.
  
  Source: Investopedia, Michele Lerner (12/24/2010)

 

HERE’S A POEM ABOUT THIS REALTOR’S

NEW- YEAR’S DREAM-VISITOR

'Twas the night before New Year’s, and I don’t want to grouse

But not a listing was selling, not even one house.

The signs were all planted on front lawns with care,

In hopes that some Buyer might look for them there

 

While Sellers were nestled all snug in their beds;

With visions of quick-sales abuzz in their heads;

I was here with my laptop and Blackberry, too;

Just burning the night-oil, with nary a clue.

 

When out on the lawn there arose such a clatter,

I sprang from my bed to see what was the matter.

Away to the window I flew like a flash,

Tore open the shutters and threw up the sash.

 

The moon on the breast of the new-fallen snow,

Gave a lustre of midday to objects below,

When what to my wondering eyes did appear,

But a miniature sleigh and eight tiny rein-deer,

 

With a little old driver so lively and spry,

I knew in a moment he intended to buy.

More rapid than eagles his coursers they came,

And he whistled, and shouted, and called them by name:

 

"Now, Fannie! now, Freddie! now Prancer and Vixen!

On, Comet! on, Cupid! on, Donder and Blixen!

To the top of the porch! to the top of the wall!

Now dash away! dash away! dash away all!"

 

As leaves that before the wild hurricane fly,

When they meet with an obstacle, mount to the sky;

So up to the housetop the coursers they flew

With the sleigh full of earnest money, and down-payments, too-

 

And then, in a twinkling, I heard on the roof

The prancing and pawing of each little hoof.

As I drew in my head, and was turning around,

Down the chimney my Prospect came with a bound.

 

He was dressed all in fur, from his head to his foot,

And his clothes were all tarnished with ashes and soot;

A bundle of loan approvals he carried on his back,

And I knew he would buy, I was on the right track.

 

His eyes—how they twinkled! his dimples, how merry!

His cheeks were like roses, his nose like a cherry!

His droll little mouth was drawn up like a bow,

And the beard on his chin was as white as the snow;

 

The stump of a pipe he held tight in his teeth,

And the smoke, it encircled his head like a wreath;

He had a broad face and a little round belly

That shook when he laughed, like a bowl full of jelly.

 

He was chubby and plump, a right jolly old elf,

And I laughed when I saw him, in spite of myself;

A wink of his eye and a twist of his head

Soon gave me to know I had nothing to dread;

 

He spoke not a word, but went straight to his work.

He filled out an offer; then turned with a jerk,

And laying his finger aside of his nose,

And giving a nod, up the chimney he rose;

 

He sprang to his sleigh, to his team gave a whistle,

And away they all flew like the down of a thistle.

But I heard him exclaim, ere he drove out of sight—

“Here’s your first sale of 2011, Harry !!!

Now, have a good night!”

 

And, please remember, I would be honored to serve as your Broker for all of your residential real estate needs. I want to help you, my reader, make the most prudent and accurate Real Estate business decision.

Also if you know of anyone who desires to buy or sell local real estate, or, who is moving in or out of the Pikes Peak region, remember that, with over 37 years of providing relocation and Real Estate services to clients throughout the country, I am uniquely qualified to assist them with the relocation process, including buying and/or selling their homes on both ends of their move. Please allow me to implement my negotiating skills on your behalf.

Just click on the icon at the top of this email to listen to my latest podcast. ….And, if you would like to learn more about our Job Loss Protection Program, or, about our CyberHomes Complete Market Analysis of a property, please contact us. 

 

LATEST STATISTICS

Click here for the latest Sales and Listing statistics for the Pikes Peak area

 

Dec. 20, 2010

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTAIL real estate MARKET

 

THE NEW TAX LAW GIVES TAXPAYERS AND THE ECONOMY A SIGNIFICANT BREAK

The recently-passed extension of the “Bush Tax Cuts” will give most taxpayers a significant break on their income taxes for the next two years. Because of the 2001 tax act sunset, ordinary income tax rates were scheduled to increase for 2011. After a lot of bickering about “The Rich”, Congress finally decided that the 2010 Tax Relief act would extend the lower rates to all brackets for two years.

Now, leaving aside the details, let’s compare how much taxes were scheduled to have been paid vs how much will be paid under this new extension and see what effect this new tax bill will have on some typical taxpayers:

Single Worker - $50,000 Income, No Children              

Tax would have been  $10,680     Tax will now be $9,075

 

Married Couple - $150,000 Income, 2 Children in college

Tax would have been $34,753      Tax will now be $23,170

 

Senior Retired Couple - $100,000 Income

Tax would have been  $13,762      Tax will now be $8,590

Obviously, this tax relief will take some financial pressure off a lot of taxpayers and will allow them to spend more money in the economy, thus stimulating small businesses, new hires, consumer spending and economic activity in general. Hmmm, wait a minute. Isn't that what we call a “stimulus”?  Golly, why didn’t we think of that sooner?       

 

BUT WAIT, THERE’S MORE …

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, also extends and expands a wide variety of valuable tax breaks, most notably a payroll tax reduction for 2011.

Payroll tax rates

For 2011 only, the 2010 Tax Relief act reduces the employee portion of the Social Security tax on earned income from 6.2% to 4.2%. The self-employed pay both the employee and employer portions of Social Security tax, and the Tax Relief act also reduces their rate by two percentage points for 2011, from 12.4% to 10.4%.

As of this writing, the maximum taxable wage base for Social Security taxes hasn’t been established for 2011. But for 2010, it’s $106,800, and with inflation low it likely won’t increase much for 2011. So the maximum tax savings from this break will likely be between $2,100 and $2,200.

Long-term capital gains rates

Under the 2001 tax act, the 15% long-term capital gains rate was scheduled to increase to 20% in 2011. The 2010 Tax Relief act extends the 15% rate through 2012.

Qualified dividend tax rates

The 2010 Tax Relief act extends taxation of qualified dividends at the 15% long-term capital gains tax rate through 2012 (0% for those in the bottom two brackets). Without Congressional action, dividends would have gone back to being taxed at ordinary income rates in 2011, with a top rate as high as 39.6%.

Increased exclusion on small business stock gains

To make investing in certain small businesses more attractive, the Small Business Jobs Act of 2010 (SBJA), signed into law in September, temporarily increased the qualified small business (QSB) stock gain exclusion to 100% for stock acquired after Sept. 27, 2010, and before Jan. 1, 2011, that’s held for at least five years. Additionally, the SBJA eliminated the alternative minimum tax (AMT) preference item on such gain, making it tax free for AMT purposes as well.

The 2010 Tax Relief act, however, extends the acquisition deadline for 100% gain exclusion and elimination of the AMT preference item to Dec. 31, 2011.

Itemized deduction and personal exemption phaseouts

The 2001 tax act reduced the adjusted gross income (AGI)-based reductions on itemized deductions and personal exemptions for 2006 through 2009 and eliminated them for 2010. The 2010 Tax Relief act extends this elimination through 2012.

Deduction for state and local sales taxes

For the last several years, taxpayers have been allowed to take an itemized deduction for state and local sales taxes in lieu of state and local income taxes. This break can be valuable to those residing in states with no or low income tax rates or who purchase major items, such as a car or boat. But this break expired after 2009.

Now the 2010 Tax Relief act has extended it for 2010 and 2011 (but not for 2012).

Dependent care credit

The 2001 tax act increased the maximum amount of eligible expenses for the dependent care credit from $2,400 to $3,000 for one qualifying dependent and from $4,800 to $6,000 for more than one qualifying dependent through 2010. The 2010 Tax Relief act extends these higher limits through 2012.

The maximum credit is generally 20% of eligible expenses, which is $600 for one dependent and $1,200 for more than one dependent. There’s no upper AGI limit for claiming the credit, but taxpayers with AGIs of $43,000 or less are eligible for a larger maximum credit.

For 2010 and 2011, the Tax Relief act also allows you to offset your AMT liability with certain nonrefundable personal credits (such as the dependent care credit and certain energy-related credits) for which you’re otherwise eligible.

AND, IN ADDITION ….

• If you have loved ones in the middle or lower tax brackets, they may benefit from extensions of breaks that you won’t qualify for, such as various education- and child-related credits and deductions.

• If you’re interested in reducing energy consumption, you may want to take advantage of extensions of various energy-related breaks.

• If you’re currently unemployed, you may benefit from the act’s extension of unemployment benefits.

Considering all of these significant changes, we think you had better check with your tax advisor about how these changes will affect your tax liability. After all, we want you to be comfortable with your finances when it comes time for you to buy your new house from us.

MORTGAGE RATES JUMP ….WILL HOME PRICES FALL ???

Borrowing money to buy a house just got more expensive. The average rate on a 30-year mortgage rose to 4.83%, Freddie Mac said Thursday. That's an increase of about two-thirds of a percentage point in five weeks.

The rate increase means monthly payments on new mortgages will jump. Five weeks ago, a buyer with a 30-year loan would have had mortgage payments of $487 a month. Now it's $526. That's an 8% price difference – more than enough to give most shoppers pause.

Will costlier mortgages push already wobbly home prices lower? History offers some answers.

The recent rise in rates isn't nearly the sharpest in Freddie Mac's history. Between June of 1979 and April of 1980, 30-year mortgage rates rose 5%. And, our recent 8% increase in monthly payments over five weeks has nothing on the record five-week jump of 21% in 1980. In that single five-week period, monthly payments per $100,000 soared from $1.109 to $1,347.

The effect on house prices? They rose more than 15% from 1979 to 1981.

Bottom Line: Better buy now !!! Call us !!!

 

MORTGAGE RATES AND HOME PRICES

Inflation, to be sure, offset all of the increase and more. Subtract it, and house prices declined 9% over those two years. The nominal price increase, however, suggests that a whopper of a rate increase failed to trigger a selloff.

In 1987, following only a moderate uptick in inflation, the Fed gradual raised the core interest rate from 6% to 6.75% in late April and early May. The 30-year mortgage rate took a wilder rise, spiking nearly one and a half percentage points to 10.47% over five weeks ended May 1. Monthly payments rose 13%, to about $913 per $100,000 borrowed.

House prices soared 9% that year. Inflation averaged just 3.6%.

Mortgage payments rose nearly 11% over five weeks ending Aug. 8, 2003, to $621.58 per $100,000 borrowed. The increase signaled a broad economic recovery; growth in gross domestic product accelerated from 1.8% in 2002 to 3.6% in 2004. Immediately following the 2003 mortgage rate rise, prices shot 42% higher after inflation over three years.

It's unlikely that the recent mortgage rate increase foretells a rally of anywhere near that magnitude, but homeowners shouldn't assume that higher rates worsen the outlook for house prices. Current mortgage rates, after all, are still extraordinarily low. The 4.17% rate recorded five weeks ago is the lowest since at least 1970, when Freddie Mac was created. The average rate over the past four decades was close to 9%.

That's not to say that house prices won't dip for other reasons. Even before the recent rate increase, the Case-Shiller index of house prices fell 2% in the third quarter following a 4.7% rise in the second quarter.

Jobs, incomes and economic growth will likely decide what happens next, not a change in the 30-year mortgage rate.

The down-side, however, is that rising rates could still squeeze some housing markets because first-time home buyers may find that they’re not able to qualify for as large a loan as they could just four weeks ago. That could put pressure on home sellers to reduce prices.

Higher rates are also certain to push others completely out of the market. Analysts at Credit Suisse estimate that the recent rise in rates has the same effect as a 7% increase in home prices for prospective buyers. Assuming a 10% down payment, with rates at 4.5%, a buyer typically needs income of $84,000, to qualify for a $400,000, 30-year fixed-rate loan. At a 5.5% rate, the income requirement rises to $92,000. A general rule of thumb holds that every one-percentage-point increase in rates effectively raises home prices for buyers by roughly 10%.

Bottom line:  Rising rates certainly doesn’t make it any easier for homeowners to sell.  But how much will it hurt? Economists say the impact might not be all that bad if rates are rising, because the economy is growing. As one economist said, “For the housing market, low rates in a crummy economy are worse than higher rates in an improving economy,”

            

THE “QUE” SAYS WE’RE DOING BETTER AND 2011 LOOKS GOOD

The Southern Colorado Economic Forum *(SCEF) publishes the QUE, a quarterly report on the El Paso County economy. The Forum is part of the College of Business outreach to the Colorado Springs Community.

Here are several interesting facts that are contained in the latest issue of the QUE.

Fred Crowley, Chief Economist of the Forum, reports that our local Business Conditions Index (BCI) stands at 77.32. This is 12.6 percent higher than its low of 68.67 in February 2009. The current BCI lagged the anticipated levels for the third quarter by approximately 5 percent. This reflects the sideways trend in the national economy during the same period. While disappointing, this is not believed to be a precursor to a double dip recession.

Despite these quarter-to-quarter observations, the longer term pattern suggests the local economy is growing, albeit at a rather snaillike pace. The Forum believes growth will become more apparent in the 4th quarter of 2010. The BCI is expected to be in the low to mid 80’s through the first quarter of 2011.

With reference to the local housing market, despite an expected decline, single-family building permit activity has held up well. October 2010 surpassed October 2009 by 7 units.

Another factor pointing towards an improved real estate market is the decline in the number of active listings in the region. Currently, there are 5,124 active listings. This is approximately 464 fewer than there were in October over the last several years. The decline in the supply of homes for sale is expected to lead to a more stable housing market.

Last quarter, the QUE reported the rising trend in housing prices. The average price of an MLS facilitated home sale in October 2010 was 12.64 percent higher than the average price in October 2009. Sustainable price increases will depend on job/income growth, low interest rates and some semblance of a balance in the supply and demand for housing.

Further increases in housing prices are anticipated as the economy continues to recover, employment increases, foreclosures decrease and interest rates remain near record low levels. An improving local economy, rising home prices and low interest rates are expected to reduce foreclosures by 600-700 in 2010.

In general, increasing retail sales could be a harbinger for solid economic activity in the first quarter of 2011 and reduced unemployment in coming year.

All of these comments, plus many more, are contained in the latest edition of the QUE. The QUE is available free via an electronic subscription. If you would like a subscription, send an e-mail to fcrowley@uccs.edu and have the word SUBSCRIBE as the subject. To see a complete copy of the latest QUE, please click here.

*The Southern Colorado Economic Forum gathers, analyzes and disseminates information relevant to the economic health of the region. Through its efforts, the Forum has gathered a number of unique data sets. The Forum and its staff are available for fee-for-service work to analyze business situations, develop forecasts, conduct and analyze surveys and develop solutions to other business problems you may have. Examples of prior work include Small Area Forecast for the Pikes Peak Area Council of Governments, Colorado Springs Airport Passenger Survey, exit survey for La-Z-Boy, a Community Audit for the Pikes Peak Workforce Center and the Data Mining Project for the Colorado Workforce Centers. If you would like additional information about how the Forum can assist you, contact Fred Crowley at (719) 255-3531 or e-mail at fcrowley@uccs.edu.

And, please remember, I would be honored to serve as your Broker for all of your residential real estate needs. I want to help you, my reader, make the most prudent and accurate Real Estate business decision.

Also if you know of anyone who desires to buy or sell local real estate, or, who is moving in or out of the Pikes Peak region, remember that, with over 37 years of providing relocation and Real Estate services to clients throughout the country, I am uniquely qualified to assist them with the relocation process, including buying and/or selling their homes on both ends of their move. Please allow me to implement my negotiating skills on your behalf.

Just click on the icon at the top of this email to listen to my latest podcast. ….And, if you would like to learn more about our Job Loss Protection Program, or, about our CyberHomes Complete Market Analysis of a property, please contact us. 

LATEST STATISTICS

Click here for the latest Sales and Listing statistics for the Pikes Peak area

 

JOKE OF THE WEEK

December 13, 2010

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTAIL real estate MARKET

 

FOR TOO MANY, THE real estate MARKET HAS BEEN "GROUNDHOG DAY          

If you saw the movie, “Groundhog Day”, you’ll remember that it told the story of a not-so-smart follow who had to repeat living the same day, over and over, until he got it right. By the end of the movie, by trial and error, he had all the right answers and was making all the right choices.

Well, for the past several years, since the bottom fell out of the real estate market, it seems that many people have been living their own version of Groundhog Day. Buyers, Sellers, Investors and Realtors have begun each day by having the media inform them that “The Recession is Over”, and “We’ve Bottomed Out”, only to be told by the media later in the day that “Foreclosures are up”, “More Homeowners are Upside-Down”, and “The sky is falling”.

So, where are we now, really?  Have we reached the point where the market has stabilized enough that you can make some good choices, or, are you still in the middle of Groundhog Day?  For our part, we are convinced that there is now enough stability in our local market that Buyers and Sellers can make some wise, informed decisions and profit accordingly.

With this in mind, we thought that it might be helpful to our readers if we reviewed some current facts and some recent comments by industry experts, so that prospective Buyers, Sellers and Investors might get a better idea of where they stand.   

Here are some facts and comments about our current real estate market:

• OUR LOCAL MARKET IS BETTER THAN MOST - Remember that “All real estate is Local” and in almost every national survey, Colorado Springs comes out in the top ten cities for recovery, standard of living, opportunity for growth, etc.  Regardless of how bleak things might look in Phoenix or Las Vegas, our local market shows every sign of being poised for a rebound from the housing slump. All we need for that to happen is more jobs !!! and our new Governor has pledged to place that goal at the top of his priorities.   
• OUR LOCAL ECONOMY IS GROWING – Again in November, sales tax collections climbed. November collections were $8.94 million, for an increase of 6%. This is the 13^th straight month of year-over-year growth. This means that people are spending again and that’s great news for our local economy. 
• FALLING HOME PRICES - Nationally, price-cutting continues. The share of homes for sale that experienced at least one price reduction in November jumped 24.1 percent compared to the same month last year, (ZipRealty). As of Dec. 1, sellers had cut asking prices on 48.4% of all listings. Out of 26 national markets, 19 saw double-digit jumps in the number of discounted homes. However, Readers, please take note: In October and November, Denver (and the state of Colorado in general) had the smallest share of discounted listings, at 34.2 percent.

Now, finally, many national housing experts are saying that, "Prices seem to be stabilizing as sellers have finally figured out that they have to adjust prices to meet the market.

•  LOCAL MARKET VALUES – Our local average sales price grew from $214,062 in November of 2009 to $233,286 in November of 2010, an increase of 9%.  Median sales price grew from $187,950 in November of 2009 to $198,000 in November of 2010, for an increase of 5.3%. We’re now going in the right direction.
•  INVENTORY - Inventory typically goes down month-to-month in November, when many people decide to wait until after the holidays to sell, and November’s inventory was down 3.8 percent from October. On a year-over-year basis, however, inventory continued to trend up: In 2010, it rose 11.6%, to 629,086 properties.
•  FORECLOSURES - There are currently upwards of 11 million distressed properties on the market, including short sales and foreclosures.  Dale Stinton, CEO of The National Association of REALTORS® (Dec.12, 2010) summed up the problem when he stated,”2010 was all about the distressed market—We need to start clearing out that system before the market sees real recovery or any return to normal,”  The bottom line is that these foreclosures will slow our eventual recovery, but, for now, will make for low prices for some fortunate Buyers.
•  INTEREST RATES – The good news is that Interest rates are still a real bargain. The bad news is that they have gone up. According to the Gazette (Dec, 11, 2010), “Rising government borrowing costs have driven mortgage rates to their highest level in six months, challenging the still-shaky housing market and the Federal Reserve’s efforts to boost the U.S. economy.” 

This week, according to the Gazette, the rate for a 30 year, fixed-rate mortgage averaged 4.61%, up from 4.46% a week ago and the highest level since June 24, 2010. “This rate increase has been so sudden and so sharp that it’s almost too late for many borrowers to refinance”, said Kevin Cavin, mortgage strategist for Sterne Agee in Chicago.

 This upward trend in mortgage interest rates will likely continue and should remind us that, if you are going to buy or sell a home, there will probably not be a better time to do it than right now.  Remember,  ...“He who hesitates is lost”.

• GROWING LOCAL HOUSING NEEDS - Every year, a tremendous amount of new homeowner needs are added to the market by virtue of the population growing and reaching adulthood. There is somewhere in the neighborhood of half a million to a million new households that need shelter every year.  In Colorado Springs, in addition to this “normal” increase in demand, we are fortunate enough to benefit from the influx of troops to Fort Carson.  Many of these incoming troops enter the housing market, and they attract additional outside service companies.

THE MORAL OF THE STORY FOR SELLERS – There are still Buyers out there, but the houses that are selling are the ones that are priced right.

THE MORAL OF THE STORY FOR BUYERS – The house you postpone buying today, will cost you more tomorrow.

 

HERE’S SOME REASSURANCE FOR HESITANT PROSPECTIVE HOMEBUYERS –

THE JOB-LOSS PROTECTION PROGRAM 

Job-Insecurity is one reason why some prospective Buyers are reluctant to buy their new home. It’s an understandable concern, and it’s the reason why Salzman real estate Services introduced and offers the Job-Loss Protection Program.

This program, which is available only from Salzman real estate Services, will pay the Homeowner up to $1,800 per month for up to 6 months, during the 24 month coverage term of the policy, if the Homeowner becomes unemployed after 60 days of closing.

This innovative protection plan is paid for by the Seller and is, therefore, a benefit to the Seller (by making his/her listing more attractive) and to the Buyer (by removing “Employment Anxiety”).

If this Plan is of interest to you, please give us a call, to learn more about it.

And, please remember, I would be honored to serve as your Broker for all of your residential real estate needs. I want to help you, my reader, make the most prudent and accurate Real Estate business decision.

Also if you know of anyone who desires to buy or sell local real estate, or, who is moving in or out of the Pikes Peak region, remember that, with over 37 years of providing relocation and Real Estate services to clients throughout the country, I am uniquely qualified to assist them with the relocation process, including buying and/or selling their homes on both ends of their move. Please allow me to implement my negotiating skills on your behalf.

Just click on the icon at the top of this email to listen to my latest podcast. ….And, if you would like to learn more about our Job Loss Protection Program, or, about our CyberHomes Complete Market Analysis of a property, please contact us. 

 

JOKE OF THE WEEK

 

 STATISTICS 

Click here for the latest Sales and Listing statistics for the Pikes Peak area. 

December 6, 2010

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTAIL real estate MARKET 

 

WHAT ARE OUR LATEST MORTGAGE INTEREST RATES ?

Effective Monday, December 6, the interest rates in the El Paso County 2009A bond program for new loan reservations are: 4.25% “Non-Assisted” Loans without DPA and 4.75% “Assisted” Loans with 3% DPA Grant

Conventional 30 year fixed rate with no origination fee or points are at 4.625% and VA & FHA 30 year fixed 0+0 are at 4.5%

As we have been warning our readers, rates continue to climb.  If you are considering buying a new home or an investment property, be aware that values have leveled out and increased rates will mean less home for the dollar. With QE2 on the governments agenda to help out the stock market, it appears highly probable that these rates, if not higher, may become the norm.

 

MAJORITY OF AMERICANS SAY: BUYING A HOME IS A GOOD DECISION

Despite the continuing challenges facing the U.S., nearly eight out of 10 respondents believe buying a home is a good financial decision, according to NAR's eighth annual Housing Opportunity Pulse Survey.

The survey, which measures how affordable housing issues affect consumers, also found job security concerns to be the highest in eight years of sampling, with 70 percent of Americans saying that job layoffs and unemployment are a big problem in their area; eight in 10 cite these issues as a barrier to homeownership. The telephone survey of 1,209 urban and suburban adults in the top 25 metropolitan statistical areas was conducted for NAR by American Strategies and Myers Research & Strategic Services for NAR's Housing Opportunity Program.

Some key results:

• Americans continue to believe that buying a home is a good financial decision (77 percent believe strongly or not so strongly, 68 percent strongly so).
• More than two-thirds of respondents (68 percent) say that now is a good time to buy a home.
• Job insecurity and the lack of jobs continue to be the primary obstacle to home ownership and market recovery.
• Respondents see the recession and job losses as the main reasons for the foreclosure problem, a shift from last year when they were more likely to blame homeowners who bought homes they could not afford.
• A majority of renters say that owning a home at some point in the future is either one of their highest priorities (39 percent) or a moderate priority (24 percent). Just 21 percent of renters say that owning a home is not a priority at all.
• Frustration with banks is up: now a majority worry that banks have made it too hard to qualify for a home mortgage loan.
• 51 percent of respondents say foreclosures remain a big or moderate problem in their area. While there has been a significant drop in the percentage of those surveyed who say foreclosures have increased, 51 percent say that the rate of foreclosures is about the same as it was last year.
• Most of those surveyed say that it is harder to sell a home in their neighborhood than it was a year ago.
• Looking forward, 70 percent expect real estate sales in their neighborhood to remain about the same over the next few months. A nearly identical number (69 percent), also expect home values to remain the same.
• Nearly one-quarter (23 percent) are now very concerned about the number of homes and condos for sale in their area—a number that is up 7 points from last year.
• Most respondents are more concerned about the drop in home values than they are about home costs being too high. Still, cost remains the significant barrier to many who would otherwise like to buy a home.

 

ONE INTERESTING REASON FOR THE HOUSING GLUT: Fewer New Households

According to RISMEDIA (December 4, 2010) and the Census Bureau, U.S. household formations are at their lowest since 1947. And that's helping to keep the supply of unsold homes at near-record levels nationwide, even though relatively few houses are being added to the inventory.

Between March 2009 and March 2010, the number of households rose just 357,000, according to the census data. In the previous 12 months, the number increased only 398,000, the third-smallest increase on record since World War II. (Between 2002 and 2007, before the economy started on its downward trajectory, household formations averaged 1.3 million a year, U.S. census data show.)

In a well-functioning economy, household formations "would be closer to 1.25 million," said Mark Zandi, chief economist of Moody's Analytics in West Chester, Pa.

"The drop in household formations is the consequence of the consumer fear of what's happening with the economy and with the job market," said Lucien Salvant, a spokesman for the National Association of Realtors.

"When people are afraid of losing their jobs or not being able to get into the job market, they are not thinking about buying a home," Salvant said. "Many opt to stay at home with parents, or to share rentals with friends."

The nation's gross vacancy rate — the proportion of housing units that are vacant — stood at 14.5 percent at the end of the second quarter of 2010, census data show. During normal times, builders need to add about 1.7 million houses a year to meet underlying demand stemming from, among other things, the need for replacement homes and the desire for second homes, as well as conversions from nonresidential to residential uses and increases in the number of households.

For example, about 250,000 new homes are needed per year to replace houses that are destroyed by fires and natural disasters or that wear out from neglect or old age. Demand for second homes combined with other miscellaneous factors accounts for 50,000 to 100,000 new houses a year.

Household growth typically requires 1.3 million to 1.4 million units.

"The sharp drop in household formation largely explains why the housing glut remains stubbornly high, despite the plunge in housing starts in recent years," said housing economist Patrick Newport, of IHS Global Insight in Lexington, Mass.

Two major sources of household formation — immigration and marriage — remain well below the averages of recent years.

The National Center for Health Statistics reports that the number of marriages per thousand population fell from 8.2 in 2000 to 6.8 in 2009. Divorces per thousand population fell from 4.0 in 2000 to 3.4 in 2009.

There are no hard data on "doubling up" — young people sharing rentals or moving in with their parents in a tight job market — though anecdotal evidence indicates the latter has become more commonplace in recent years.

Another big factor in the decline in households is the decline in immigration. During the late 1990s and in the first years of this decade, the housing industry banked on immigration for a good part of its growth.

Between 1990 and 2000, the U.S. population grew by nearly 33 million, with almost half of that gain attributable to immigration, according to data provided in 2003 by James Johnson Jr., a professor at the Kenan-Flagler Business School at the University of North Carolina-Chapel Hill.

In the 1990s, census data show, immigrants accounted for 250,000 household formations a year. Immigrants typically rent for their first few years in this country, housing economists say. Then, after becoming established, they become a major factor in the for-sale marketplace.

Newport believes that a drop in immigration might have played a greater role early in the recession than it did later on. In 2009, census data show, households headed by the native-born under age 35 fell by 338,000, indicating that doubling up was the larger contributor.

The number of households headed by those ages 15 to 24 fell 124,000 (students moving back in with parents), while households with six or more people rose 355,000, an 8 percent increase.

A common misconception, Newport said, is that foreclosures account for the oversupply of houses.

"A foreclosure or a bank taking possession of a home," he said, "does not by itself add to the housing glut. If a household vacates a home and moves into a rental unit, the housing supply is unchanged. Supply increases, however, if one household moves in with another, or if its members become homeless”, Newport said.

The moral of the story is: Don’t just move in with your patents …Do the patriotic thing. Get married and buy a house !!

 

COLORADO SPRINGS HOME SALES PRICES ROSE IN 2010 ..AND THAT’S BETTER THAN MOST AREAS IN THE COUNTRY

The most recent NAR report on median sales prices of existing single-family homes for metropolitan areas shows Colorado Springs prices were up 3.2% over 2009, as opposed to the national prices which were down .2% from last year. These figures emphasize that we are outperforming most other metropolitan areas of the country. (To see the complete report, click here)

In a nutshell, our local market is still very slow, with only 600 sales in November, but the outlook for Buyers looks great. Large inventories (Yes, foreclosures are still adding to the inventory), low interest rates (not as low as last month, but still a bargain), low prices and eager Sellers all add up to a wonderful opportunity for both Homebuyers and Investors. ..And, there is a growing pool of renters out there that should keep our vacancy rates low, for the foreseeable future.  

Call us and let’s discuss how these factors fit into your investment strategy.

 

THE ‘FIRST-TIME DEFAULTER’: the Newest Customer Segment for Banks  

Over the last two years, a new customer segment—the "first-time defaulter" (FTD)—has emerged and is presenting a new challenge for banks, according to a new survey examining the future of consumer lending by the Deloitte Center for Financial Services.

According to Deloitte's survey, 11 percent of bank customers surveyed have been hit with a negative credit experience for the first time in their lives during the past two years. Overall, 22 percent of consumers have experienced a serious negative credit situation since the peak of the crisis in September 2008, including events such as delinquency, foreclosure, bankruptcy and charge-offs.

"This is a significant new customer segment that banks should be aware of," said Andrew Freeman, executive director of the Deloitte Center for Financial Services, Deloitte LLP. "Our research shows just how sizeable the first-time defaulter group has become."

More than half of FTDs (58 percent) have been contacted by a collection agency, and 43 percent have been delinquent in their medical bills.

According to the survey, these events could be costly for financial institutions, as poor interactions and unmet customer expectations may cause the first-time defaulters to look elsewhere: 63 percent of respondents say they are not at all likely to borrow from their current institution in the future based on the lender's efforts to help resolve their issues.

"Today, retail banks are rethinking their broader lending strategies and practices," said Freeman. "As part of this reassessment, lenders are likely to be paying careful attention to how they serve this new segment. When implementing strategies to re-engage with these customers, financial institutions may want to recognize that once many of these individuals are able to regain their economic footing, they may become profitable again."

Other findings of the survey, from the full base of respondents, include:

• Almost two-thirds of consumers (65 percent) say they have the same level of satisfaction relative to two years ago with their bank.
• At the same time, most respondents have seen little change in the lending process overall, although 16 percent said they have seen higher fees associated with loans and credit.
• Only 28 percent believe the Dodd-Frank Act and other new regulations will have immediate benefits for consumers. Furthermore, a significant proportion of consumers expect higher fees, higher rates, more paperwork and fewer offers from lenders in the next 12 months.
• More than half of those surveyed (52 percent) would prefer to use a single bank for all their financial services needs. But, with consumers' interest in obtaining loan products from their primary bank surprisingly low, the survey findings indicate that banks' cross-selling efforts will likely require some fresh, creative efforts.

Unfortunately, this is just one more problem they have to face in today’s competitive market.

 

CHIEF ECONOMIST FOR NAR TO SPEAK IN COLORADO SPRINGS

Lawrence Yun, Chief Economist for the National Association of Realtors, will speak at the Crowne Plaza Hotel, in Colorado Springs on Wednesday, February 16, 2011, 9am-11am. Attendance will be by registration only and will be limited to 300. Registration for the event will begin at 8:30am.

Dr. Yun creates NAR’s forecasts and participates in many economic forecasting panels, including Blue Chip and Harvard University Industrial Economist Council. USA Today recently listed him among the top 10 economic forecasters in the country.

The registration fee for this event is $10. Be sure to register ASAP, to insure getting a seat to hear this outstanding speaker.

The Sponsor of this outstanding presentation is Land Title Guarantee Company.

And, please remember, I would be honored to serve as your Broker for all of your residential real estate needs. I want to help you, my reader, make the most prudent and accurate Real Estate business decision.

Also if you know of anyone who desires to buy or sell local real estate, or, who is moving in or out of the Pikes Peak region, remember that, with over 37 years of providing relocation and Real Estate services to clients throughout the country, I am uniquely qualified to assist them with the relocation process, including buying and/or selling their homes on both ends of their move. Please allow me to implement my negotiating skills on your behalf.

Just click on the icon at the top of this email to listen to my latest podcast. ….And, if you would like to learn more about our Job Loss Protection Program, or, about our CyberHomes Complete Market Analysis of a property, please contact us. 

 

LATEST STATISTICS

Click here for the latest monthly Sales and Listing statistics for the Pikes Peak area.

 

CHRISTMAS JOKE OF THE WEEK

Q: Where do polar bears vote?
A: The North Poll.

Q: How does Al Gore's household keep Christmas politically correct?
A: On Christmas morning, they give the presents TO the tree.

Q: What do you call a cat on the beach at Christmas time?
A: Sandy Claus!

Q: How do sheep in Mexico say Merry Christmas?
A: Fleece Navidad!

Q: What nationality is Santa Claus?
A: North Polish.

Q: What do you call a bunch of grandmasters of chess bragging about their games in a hotel lobby?
A: Chess nuts boasting in an open foyer!

Q: What goes Ho, Ho, Swoosh, Ho, Ho, Swoosh?
A: Santa caught in a revolving door!

Q: What do you call people who are afraid of Santa Claus?
A: Claustrophobic.

Q: How come you never hear anything about the 10th reindeer "Olive" ?
A: Yeah, you know, "Olive the other reindeer, used to laugh and call him names"

Q: Why is Christmas just like a day at the office?
A: You do all the work and the fat guy with the suit gets all the credit.

Q: What's a good holiday tip?
A: Never catch snowflakes with your tongue until all the birds have gone south for the winter.

Q: Why did they have to cancel the Nativity pageant in Washington, this year?

A: Because they couldn’t find three Wise Men or a Virgin.