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HERE'S A BRAIN-TEASER QUIZ FOR YOU

by Harry Salzman

April 25, 2011

HARRY'S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTAIL real estate MARKET

 

 

"NEIGHBORHOODS" OFFERS AN IN-DEPTH LOOK AT OUR real estate MARKET

On Sunday, April 24, 2011, the Gazette published its annual "Neighborhoods" guide to real estate in El Paso County. This invaluable resource gives neighborhood-by-neighborhood analysis within our county and shows where prices are rising and falling. It contains maps and data about where you live and charts on how your area is doing.

The guide contains a 10 year comparison of median sales prices in each of 80 neighborhoods in El Paso County, per the county Assessor's office. The numbers shown in the guide do not differ significantly from the data published by the Pikes Peak Association of Realtors in the MLS.

Some of the significant data for El Paso County shown in the guide are:

  •  Approximate population                              622,263
  • Houses in County                                       163,221
  • Houses sold in 2010 (no foreclosures)              5,681
  • Foreclosure sales, 2010                                  1,499
  • Total houses sold  2000-2010                       121,861                             
  • Median sales price 2000-2010                     $195,763
  • Median sales price 2010 (no foreclosures)    $210,000
  • Median sales price 2010 with foreclosures    $200,000
  • Average age of houses in years                         18

 The guide data shows the increase in median sales price of homes between 2000 and 2010 to be 34%, or 3.4% per year, which is slightly less than the PPAR figure of 4.18% annual appreciation. Considering the fact that last years sales were down, that kind of growth is surprisingly good and compares very favorably with the national figures.

 In May, NAR will report on the first quarter sales for the nation and we are looking forward to seeing how our county compares with the rest of the nation. Indications are that we will look very good, compared to the rest of the U.S. We will share the NAR data with you as soon as we receive the report.

 To see all of the information in "Neighborhoods", click here.

 

 

WANT TO MAKE 100% PROFIT PER YEAR ON YOUR INVESTMENT? ..BUY A HOUSE !!

The Gazette Guide to real estate which we feature, below, makes a great case for buying a house in El Paso County RIGHT NOW !!!

Here's the facts:

 

  • You can currently buy a home through FHA with 3.5% down (That's your investment)
  • Homes in El Paso County have appreciated an average of 3.5% per year during the past ten years (Even including the recession)
  • That means you will make back your investment (i.e. your down-payment) the first year you own your home
  • After ten years, you will have made 1,000% on your original investment. .And that's not even counting the money you will make with your home-interest payment deductions and your property tax deductions)

Let's see the stock market try to match that kind of return !!!

Call us at (719) 598-3200 or 800-677-MOVE (6683).

 

AND SELLERS, TAKE NOTE. THERE'S A BRIGHT SIDE FOR YOU, TOO

The "Return on Investment" arguments that we discussed, above, can also make it easier for you to sell your house. We are experts at showing prospective Buyers how buying your home makes sense for them. We are also able to negotiate to make the entire transaction as simple, convenient and cost-effective as possible for both the Buyer and the Seller.   

Call us at (719) 598-3200 or 800-677-MOVE (6683).

 

HOUSING IS BOUNCING BACK

 Nationally, sales of existing homes rose 3.7% in March, with distressed sales making up 40 percent of all purchases. This marks the sixth consecutive monthly rise for existing home sales in the last eight months, the National Association of REALTORS reported Wednesday.

NAR's housing affordability index shows the typical monthly mortgage principal and interest payment for the purchase of a median-priced existing home is only 13 percent of gross household income, the lowest since records began in 1970.

"We're clearly on a recovery path," says Lawrence Yun, NAR chief economist. "Although home sales are coming back without a federal stimulus, sales could be notably stronger if mortgage lending would return to the normal, safe standards that were in place a decade ago - before the loose lending practices that created the unprecedented boom and bust cycle," Yun explained.

So , let's take a look at who's buying and currently driving the market:

First-Time Buyers: A NAR practitioner survey shows first-time buyers purchased 33 percent of homes in March, compared with 34 percent of homes in February. When the federal first-time buyer stimulus was being offered, first-time buyers accounted for 44 percent in March 2010.

Investors: Nationally, all-cash deals made up a record number of sales last month and accounted for 35 percent of all resold homes. Investors continue to make up a big part of those cash deals. Investors are buying distressed homes and flipping them for a slight profit or turning them into rentals.  

Traditional buyers: Traditional buyers are re-emerging. Mortgage applications to buy homes rose 10 percent over a seven-week period, according to the Mortgage Bankers Association's most recent report.

It's obvious that the market is making "slow, steady progress" and demand in housing is rising even with higher mortgage rates.  



HERE'S A BRAIN-TEASER QUIZ FOR YOU

Consider the following recent articles from the Gazette and decide which conclusion is the most logical.

 

  • Area apartments filling up; rents going up (Friday, April 25, 2011)
  • INVESTORS STILL BUYING UP HOUSES (Friday, April 21, 2011)
  • HOME PRICES DROPPED IN 2010 (Sunday , April 24, 2011)
  • PEOPLE ARE MOVING HERE FASTER THAN THE JOBS ARE (Monday, April 25, 2011)

Possible conclusions:

  1.  Golly, with home prices so low, but climbing, and mortgage rates still very low, this is probably not the time to buy an investment property.
  2. Hmm, with more people coming to live here every day, thus causing apartments to fill up and rents to rise, this is probably not the time to buy an investment property
  3. Gee, with foreclosures still adding more families to the pool of prospective renters  ..families that are used to living in well-maintained homes, but are now not credit-worthy enough to qualify for home loans, this is probably not the time to buy an investment property.
  4. Gosh, with rentals in short supply, with rents going up, with more families looking for places to rent, with both the cost to acquire investment property and mortgage rates still very low, I'd be crazy not to investigate buying some investment property.  

If you chose option #4, give us a call. We will be happy to assist you in cashing in on our present "Opportunity Market".

Call us at (719) 598-3200 or 800-677-MOVE (6683).

 

PROPOSED 20% MINIMUM DOWN RULE WOULD SEVERELY DISRUPT THE housing market

A plan unveiled by the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve on March 29 to require a minimum 20% down payment for "qualified residential mortgages" would disrupt the fragile housing market and jeopardize the struggling economic recovery, according to both the National Association of Home Builders and the National Association of Realtors.

In addition to NAHB and NAR, diverse industry and consumer groups and housing finance experts took strong exception to the proposal, pointing out that it could prevent millions of credit-worthy borrowers from buying homes and would be a major setback for the housing industry as it slowly emerges from its worst downturn since the Great Depression.

Lawrence Yun, NAR chief economist said, "Given that FHA and VA government-backed loan programs turned a modest profit over to the U.S. Treasury last year, and have never required a taxpayer bailout, we believe low-down payment loans should continue to be available for those consumers who have demonstrated financial responsibility and are willing to stay well within their budget. Raising the down payment requirement would unnecessarily deny credit to many worthy middle-class families and veterans."

By mandating a 20% down payment on qualified residential mortgages, the Administration and Federal regulators would essentially exclude those without huge cash reserves - which constitutes most first-time home buyers and many middle-class households - from a chance to buy a home. First-time home buyers historically average 40% of home-buying activity. It would take an average family 12 years to scrape together a 20% down payment.

Borrowers who can't afford to put 20% down on a home and who are unable to obtain FHA financing would be expected to pay a premium of two percentage points for a loan in the private market to offset the increased risk to lenders.

To meet the 20% down payment requirement and adding in another 5% in closing costs, the buyer of a $172,000 median-priced home would have to bring more than $43,000 to the table. (And even with a 10% down payment requirement, that buyer would need to bring $25,000 in cash to the closing.)

This would disqualify about five million potential home buyers, resulting in 250,000 fewer home sales and 50,000 fewer new homes being built per year, according to the National Association of Home Builders.

Six federal agencies are seeking comments on the risk retention proposal.

The proposed rule will become effective one year after the final rule is published in the Federal Register.

Editor's Note: We are very concerned about this proposed rule. This proposal, combined with the Dodd-Frank financial reform law passed last year, which requires lenders to retain 5% of the credit risk of each loan they grant, will further diminish mortgage credit availability and drive costs higher.

We should point out that millions of low down-payment loans have been originated safely for decades. Low-down-payments are not what drove this lending crisis. It was lax underwriting standards.

We are very concerned that when combined with other recommendations from the Administration's white paper on housing finance - including 10% down payment minimums for Fannie Mae and Freddie Mac mortgages and possibly higher down payments for FHA borrowers - this proposal will move the lending industry's goalposts unacceptably far from the reach of low-, moderate- and middle-income home buyers.

Basically, the government is telling Mr. and Mrs. America, "Thanks for paying your mortgage during these tough times, and thanks for building your wealth around housing, as we have encouraged you to do, but we are now changing the rules. We are going to reduce the value of your retirement nest egg even more than the recession already has. And as an extra thank you, your kids are going to find homeownership that much more difficult to obtain."

 

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 39 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,  please contact us. 

 

LATEST STATISTICS

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

FORTUNE MAGAZINE SAYS, "IT'S TIME TO BUY AGAIN".

by Harry Salzman

April 18, 2011

HARRY'S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET

  

FORTUNE MAGAZINE SAYS, "IT'S TIME TO BUY AGAIN".

Fortune, April 11, 2011

 In their April, 2011 issue, Fortune Magazine's cover trumpets, "The Return of real estate" and their headline article declares, "Forget stocks. Don't bet on Gold. After four years of plunging home prices, the most attractive asset class in America is housing. It's time to buy again".

Fortune bases their recommendation upon the fact that, according to recent reports of inventories in 41 major housing markets, there are only 78,000 houses for sale or under construction in those markets. That's less than one fourth of the 343,000 units at the peak of the frenzy in 2006, and well below the level of a decade ago.

In normal times, those inventory levels would sell in 2 ½ months and we would have an incredible shortage. The article declares that's where we are heading.

Karl Case, one of the two economists who founded the famous S&P/Case-Shiller Home Price Index, states that, "People think I'm crazy to be optimistic, but housing is looking like the little engine that could".

Two basic factors are laying the groundwork for dramatic recovery in residential real estate:

  • The historic drop in new construction
  • The steep decline in prices

The new affordability will gradually lure Americans back to buying homes and the return of the homeowner will start raising prices in many markets this year.

As to affordability, analysts find that homeowners now pay just 9.8% of their income in after-tax mortgage, tax, and insurance payments. That's down from 17.2% at the bubble's peak in 2007 and by far the lowest number since 1999.

As to the cost of homeownership, in 28 out of 54 major markets, it's now cheaper to pay a mortgage and other major costs than to rent the same house.

For this scenario to play our, however, America will need a decent economy (translate: JOBS) and a  resulting rise in consumer confidence.

In non-distressed areas like Colorado Springs, where our foreclosure numbers are low, compared with most other areas of the country, it will not take as long for the market to work through our housing inventory. Since our inventory stands at about a seven month figure, a modest increase in demand will translate into strong gains in both prices and new construction. Again, the key will be JOB GROWTH.

Zandi of Moody's Analytics expects that prices will rise three to four points faster than inflation for the next few years in virtually all of the non-distressed markets like Colorado Springs. His view is that prices will increase in line with rents, which are now growing briskly because rentals are in short supply. These higher rents will encourage buyers to buy a home of their own.

The non-distressed markets will also lead the way in construction, Zandi says. He predicts a rise from our present 470,000 national starts in 2010 to as much as 700,000 starts this year.

What about the inventory of foreclosed properties? Well, keep in mind that many of them are now being purchased and converted into rentals, thus reducing our inventory. So, as the inventory of homes available for sale decreases, selling prices increase and new construction picks up.

All in all, it looks like real estate is poised for a dramatic comeback.  ..And, it's about time.

Call us to discuss your new home, or you new investment property at (719) 598-3200 or 800- 677 MOVE.

The train is starting to move. Don't get left at the station.

FREDDIE MAC MARKET OUTLOOK PREDICTS AN INCREASE IN HOME SALES

Freddie Mac forecasts a 5 percent increase in 2011 home sales over 2010, according to its U.S. Economic and housing market Outlook for April.

The report also contends that refinancing will likely account for a smaller share of loan applications later this year as wealthy borrowers decrease and mortgage rates increase.

"Expect to see a bit of spring in homes sales activity during the second quarter," said Frank Nothaft, VP and chief economist at McLean, Virginia-based Freddie Mac.

Nothaft continued, "Sales contract signings for existing homes were up in February, positioning the market for a bounce up going into the traditional home-buying season."

The expected pick-up in home sales is due to recent positive employment reports, the Market Outlook reveals. Unemployment declined for the fourth straight month to 8.8 percent, and net employment increased by 216,000 jobs. real estate employment was up by 10,000 jobs since last November.

The report also calculates that the share of adjustable-rate mortgage loans will be 7 percent in 2011 compared to the 5 percent 2010 average.

Freddie Mac compiles data on major economic and housing and mortgage market indicators and offers forecasts based on those indicators.

  

SPRINGS FORECLOSURE RATE 18% LOWER THAN A YEAR AGO

The Gazette

While many areas of the country saw their foreclosure situation worsen, the Colorado Springs area fared far better in the third quarter from both the previous quarter and from a year earlier, according to RealtyTrac's report.

According to the Gazette, the Springs had one foreclosure for every 129 households during the third quarter, which ranked it No. 64 among 206 communities. In the second quarter, Colorado Springs had one foreclosure for every 67 households, and ranked No. 53. At the end of 2009, the Springs had a rate of one foreclosure for every 39 households and was No. 50.

Although El Paso County Public Trustee Tom Mowle expects upward of 4,000 foreclosures this year, this would still be short of the record 5,470 filings established in 2009. Last month's total was the fewest number of filings since September 2008.

This is good news for our local real estate market and it is a good sign that our market is stabilizing.

 

PRICES ARE LOW! MORTGAGES CHEAP! BUT, CAN YOU GET ONE?

CNN Money

Yep, mortgage interest rates are low, but there's a catch: It doesn't matter how cheap rates are if you can't get a loan.

And these days, only highly qualified borrowers can get financing -- let alone the best rates.

Nearly a quarter of people who apply for loans are turned down, according to the Federal Reserve.

"Good borrowers with one or two blemishes on their credit are being denied credit," said Lawrence Yun, chief economist for the National Association of Realtors.

The denial rates tell only half the story. Many potential buyers aren't even applying for loans because they assume they can't get one.

Who's buying homes? The people with cash and/or good credit

That shows up in credit scores for loans financed with backing from Fannie Mae and Freddie Mac. The average credit score has risen to 760 from 720 a few years ago. For FHA loans, the average score has gone to 700 from 660. Loans made to borrowers with sub-620 scores are almost nonexistent.

Another factor keeping people out of the mortgage market is that lenders now require much more up-front cash. The median down payment for purchase is about 15%. During the housing boom, it approached zero. On most loans, banks want 20% down. On $200,000 purchases, that's $40,000, an insurmountable obstacle for many young house hunters.

Industry insiders say all these factors have reduced the pool of buyers, lowering demand for homes and hurting prices.

"We feel it really reduces the demand for houses," said Mike D'Alonzo, president of the National Association of Mortgage Brokers. "It's an unbelievable buyer's market, but there hasn't been as much activity as you would expect because not as many people qualify for loans."

If you have questions about your present ability to obtain financing, please give us a call to discuss it, at

(719) 598-3200 or 800- 677 MOVE (6683).

 

LEGISLATION INTRODUCED TO SPEED LENDER RESPONSE TO SHORT SALES  

Two lawmakers, one Republican and one Democrat, have joined forces to push federal legislation through that would facilitate wider use and shorter transaction timelines for a foreclosure alternative that some say could be a lifeline for millions of underwater homeowners while drastically reducing the number of empty, repossessed homes lining U.S. neighborhoods - the short sale.

The bill, introduced by Reps. Tom Rooney (R-Florida) and Robert Andrews (D-New Jersey), would impose a deadline of 45 days on lenders to give an approval, disapproval, or status of a decision on an offer for a short sale.

Rooney and Andrews say their legislation, the Prompt Decision for Qualification for Short Sale Act of 2011, will bring the processing time for short sale price approvals in line with the home-buying and home-selling consumer's expectations - at most 45 days after submitting the request for short sale approval.

A similar bill - in fact, by the same name - was introduced last September but never came up for debate before a House committee before the legislative session ended.

The National Association of Realtors (NAR) is throwing its support behind the new bill. Our trade group has been actively pushing the lending industry to improve the process for approving short sales, which represent about 13 percent of recent home sales according to NAR data.

The Prompt Decision for Qualification for Short Sale Act of 2011 has not yet been referred to a committee.

 

CITY'S SALES TAX TAKE IS UP ..AGAIN
The Gazette

Colorado Springs sales tax collections shoed a small gain from the same month a year ago, the city reported Tuesday.

Although the gain was only a .83% gain, it represented the 17th consecutive month of year-over-year gain.

These tax revenues fund more than half of the city's annual budget for police and fire protection, roads and other services and they serve as a barometer of the vitality of the local economy, so the upward trend is a hopeful sign of recovery.

 

MORTGAGE RATES RISE; 30-YEAR FIXED IS AT 4.91%

Wall Street Journal, Friday, April 15, 2011

Mortgage rates rose slightly, with the average rate on 30-year fixed-rate mortgages climbing for a fourth straight week, according to Freddie Mac's weekly survey of mortgage rates.

The 30-year fixed-rate mortgage averaged 4.91% in the week ended Thursday, up slightly from the prior week's 4.87% but down from 5.07% a year earlier.

Mortgage rates generally track U.S. bond yields, which move inversely to Treasury prices. Rates have climbed this year after slumping most of last year when prices rallied on economic uncertainty.

Rates on 15-year fixed-rate mortgages averaged 4.13% in the latest week, up from 4.1% in the previous week but down from 4.4% a year earlier.

Five-year Treasury-indexed hybrid adjustable-rate mortgages were 3.78%, up from the prior week's 3.72% but down from 4.08% a year earlier. One-year Treasury-indexed ARMs were 3.25%, up from 3.22% but down from 4.13%, respectively.

Keep in mind that these 'official' rates are normally rounded up to the nearest eighth, at the Buyer' level.

To obtain the rates, the 15-year fixed-rate mortgages required payment of an average 0.7 point and the others required an average 0.6 point. A point is 1% of the mortgage amount, charged as prepaid interest.

Even with these increases, these are still great rates for Buyers, but the trend is going up, so call us today to discuss your new home, at (719) 598-3200 or 800- 677 MOVE (6683).

  

LET US TAKE YOU OUT TO THE BALL GAME 

Salzman real estate Services would like to invite you to be our guest at a Sky Sox game. We have four season tickets to all Sky Sox home games and, if you give us a call and if nobody else has already requested the tickets, we would be happy to let you have them.

These are great seats, in the first row, right behind the Sky Sox dugout.

However, you'll have to buy your own peanuts and Crackerjacks. Sorry !!

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 39 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, please contact us. 

 

LATEST STATISTICS

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

 

JOKE OF THE WEEK

John was driving when a policeman pulled him over. He rolled down his window and said to the officer, "Is there a problem, Officer?"

"No problem at all. I just observed your safe driving and am pleased to award you a $5,000 Safe Driver Award. Congratulations. What do you think you're going to do with the money?"

John thought for a minute and said, "Well, I guess I'll go get that drivers' license."

Judi, sitting in the passenger seat said to the policeman, "Oh, don't pay attention to him -- he's just a wise guy when he's drunk and stoned."

Brian from the back seat said, "I told you guys we wouldn't get far in a stolen car!"

At that moment, there was a knock from the trunk and a muffled voice said, "Are we over the border yet?" 

The policeman decided to postpone the award until John is released from prison.

Homeownership is on the line

by Harry Salzman

April 11, 2011

HARRY'S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTAIL real estate MARKET

 

HOW DOES THE FUTURE LOOK FOR COLORADO SPRINGS ??

Our city is positioned well for future growth. To cite some of the recent good news from the Gazette:

  • Wage and Salary jobs are up 0.2%
  • Initial claims for unemployment are down 11%
  • New auto and truck registrations are up 14%
  • Taxable retail sales are up 4%
  • Hotel occupancy rate is up to 50.3%
  • Foreclosure filings are down 23.4%

As further evidence of our nationally-recognized quality-of-life reputation, Colorado Springs was just named by Forbes Retirement Magazine as one of the top places in the U.S. to retire.

The bad news is:

  • The unemployment rate is up to 10.5
  • Single-family home permits are down 60.8%.

The obvious bottom-line is that we need to create more jobs to address our short-term and long-term challenges.

Historically, our city has done a good job of attracting such groups as non-profit organizations (i.e. small staff organizations) and retirees. Furthermore, we have been very fortunate in attracting military installations like the Air Force Academy, Fort Carson, Peterson Field, etc. These bases have provided much-needed economic activity and stability for our city. The happy result of their presence has been that we have not suffered the effects of the recession as badly as most other parts of the country.

Our weakness, however, is that we have failed to attract large corporations to our city. It is increasingly obvious that we must get more aggressive in attracting large corporations into our area. In fact, in recent years we have actually lost businesses to other parts of the country. Large, clean, corporations like Intel (which left Colorado Springs) hire large numbers of highly-paid, high-tech employees and greatly enhance the economy of their host cities. We need companies like that to move to Colorado Springs.

As evidence of how obvious our need for job-creation is, in the recent local elections, 5 of the 9 new members of the city council have already listed "job-creation" as their top goal.

So, since we all agree that 'job-creation' is our most pressing need, we think it's time we created a  dynamic partnership between our city government and the private sector to persuade businesses to relocate here. ..the kind of partnership that has worked so well in attracting new industries to relocate in other cities.

If the new city council is serious about going after new businesses, they should tap into our pool of successful, private sector entrepreneurs for assistance and advice about attracting new businesses to Colorado Springs. These successful entrepreneurs are business people who know what it would take to persuade other businesses to come here. They know what benefits and incentives could be offered to demonstrate to corporate leaders that, by moving to Colorado Springs, they could improve their productivity, their effectiveness and their bottom line.

These volunteer leaders would gladly serve as "sales representatives" for our city.  They could assist the city council in "pitching" Colorado Springs to the many companies that are now searching for places that are more 'business-friendly' than their present locations.

We know, from personal experience, that such input and assistance is effective in persuading businesses to move here. For example, in relocation, our specialty, there are many business incentives available that could easily persuade an out-of-state CEO that Colorado Springs could help him make his company more profitable. Tax-breaks, real estate discounts, relocation bonuses, etc. are valuable tools in the campaign to attract businesses and, we would be very happy to work with the city council as an asset in their efforts to attract new businesses.

We are all convinced we need these new businesses.  Now, all we have to do is show them that they need us.  

 

RULEMAKING COULD CRIMP THE AMERICAN DREAM:  HOMEOWNERSHIP IS ON THE LINE

RISMEDIA, April 5, 2011-Recently, the Federal Deposit Insurance Corporation adopted for public comment a proposed rule concerning risk retention on mortgage-backed securities, as required by section 941 of the Dodd Frank Act. The rule could have profound consequences for this country's housing finance system. Most at risk, perhaps, are prospective first-time HomeBuyers who have little hope of saving a 20% down payment plus closing costs.

The primary purpose of the Dodd-Frank risk-retention provision is to ensure that lenders retain a sufficient amount of risk (5%) to align their interests with those of the investors. The statute does allow exemptions to risk retention for securities backed entirely by loans meeting certain standards, as defined by the regulators. For residential mortgages, such exempted loans will be known as "qualified residential mortgages," or QRMs. However, the regulators have designed the QRM to be "conservative," in the belief that the exemption should cover only a small part of the market, leaving a "liquid, active market" for securitization of nonexempt loans.

The proposal explicitly recognizes that the proposed QRM definition is likely to exclude many prudently underwritten loans to credit worthy borrowers. The most severe limitation would make eligible only loans for which a borrower provides a 20% down payment (plus closing costs) in cash.

Other requirements that are likely to disqualify many borrowers include:

  • The maximum loan-to-value ratio of 80% for the purchase of mortgages by the issuers of mortgage-backed securities must be calculated without considering private mortgage insurance.
  • The borrower may not have been 60 days past due on any debt within the last 24 months, and
  • Tighter debt-to-income ratios than were standard long before the recent housing crisis.

As presently written, the proposal would preclude most first-time home buyers from a QRM loan.

Under the proposal, as long as Fannie and Freddie are in conservatorship, their guarantee will be deemed to have met the risk-retention requirement. But what will be the impact of any reduction in the activities of Fannie Mae and Freddie Mac (as both the Obama administration and House Republicans are now proposing)? Will there be successors to Fannie and Freddie, and how will their securitizations be treated? And what will be the impact on the Federal Housing Administration, taxpayers, and communities if in the end all low-down-payment mortgages are insured 100% by the government through FHA?

If some of the radical privatization schemes under consideration now are implemented, we will be looking at a dramatically different housing market. Homeownership could become only a dream for many of America's middle-class families. The irony of this situation is that, if the widespread concerns about bad lending and securitization had been heeded years ago, today's families would not have to depend upon a highly complex rulemaking process and an uncertain legislative future.

The rule, which contains 174 multipart questions for comment, is now up for public comment. If you would like to get more details about this proposed rule, or, if you would like to voice your concerns about it, please contact us. It is important that we're heard this time-we've got 60 days.

Give us a call at  (719) 598-3200, or, 800-677-MOVE (6683).

 

HERE'S A "FORESOME" OF RECENT UNSETTLING NEWS ITEMS:

ONE IN FOUR MORTGAGE APPLICATIONS ARE NOW BEING REJECTED

Daily real estate News, April 6, 2011

According to the latest data from the Federal reserve, nearly a quarter of people who apply for a mortgage are rejected.

"Good Borrowers with one or two blemishes on their credit, are being denied credit", says Lawrence Yun, the chief economist for the National Association of Realtord.

Lenders are now requiring higher credit scores and down payments that have kept Buyers out, experts say. For example, the median down payment to buy a home nowadays is about 15% (which will rise to 20%, if the proposed rule, described above, is adopted). During the housing boom, down payments were nearly zero.

"Tighter lending requirements and higher down payment requirements have really reduced the demand for houses", says Mike D'Alonzo, president of the National Association of Mortgage Brokers. 'It's an unbelievable Buyers' market but there hasn't been as much activity as you would expect because not as many people qualify for loans.

Indeed, Anthony Sanders, director of real estate Entrepreneurship at George Mason University, estimates that the tighter credit standards has caused as many as 30% of would-be-buyers, or even more - to sit on the sidelines.

MORTGAGE RATES EDGE UP FOR THE THIRD MONTH IN A ROW;  30-YEAR FIXED IS AT 4.87%

The Wall Street Journal  April 8, 2011

Mortgage rates mostly edged higher in the latest week, for the third consecutive week, with the average on 30-year fixed-rate mortgages rising slightly to 4.87%, according to Freddie Mac's weekly survey.

Mortgage rates generally track U.S. bond yields, which move inversely to Treasury prices. Rates have climbed this year after slumping most of last year when prices rallies on economic uncertainty.

Freddie Chief Economist Frank Nothaft noted that rates were little changed after what he called "an encouraging employment report" from the Bureau of Labor Statistics.

The 30-year fixed-rate mortgage averaged 4.87% in the week ended Thursday, up from 4.86% the prior week but down from 5.21% a year earlier. Rates on 15-year fixed-rate mortgages were 4.1%, up from 4.09% the previous week but down from 4.52% a year earlier.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 3.72%, up from the prior week's 3.7% but down from 4.25% a year earlier. One-year Treasury-indexed ARMs were 3.22%, down from 3.26% and 4.14%, respectively.

To obtain the rates, the five-year ARMs required payment of an average 0.6 point and the others required an average 0.7 point. (A point is 1% of the mortgage amount, charged as prepaid interest.)

BORROWERS RUSH TO SECURE GOVERNMENT-BACKED LOANS

Daily real estate News - April 6, 2011

Purchase applications for mortgages increased 6.7% last week, reaching its highest level of the year, according to the Mortgage Bankers Association.

The MBA reports that government loan applications reached their highest level since May, 2010, increasing 10.3% last week, compared to the week prior.

The MBA attributes the surge to borrowers who were likely motivated to apply for government loans before a scheduled increase in FHA insurance premiums.

ALL OF WHICH PROVES THAT MY GRANDPA WAS RIGHT WHEN HE SAID, "IN A RECESSION, CASH IS KING"

As a result of the credit squeeze, NAR reports that, in February, 33% of existing-home sales were made to cash Buyers. That number is projected to grow to 40% by the end of 2011. But it's not just Investors who are buying these homes. Many of these sales are to international Buyers, according to NAR.

 

SO, WHAT'S THE BOTTOM LINE FOR BUYERS, SELLERS AND INVESTORS?

The bottom line for our readers is that now, more than ever before, is the time to invest in real estate. Prices are low, interest rates are still a bargain, inventory is high and the pool of available renters is growing every day. Every mortgage application that is turned down represents a prospective renter for your investment property. Furthermore, these new regulations will soon make it even more difficult to buy.

The caution is, however, that our market is changing every day and you will need the assistance of a Realtor who understands our local money market, our local lenders and our local neighborhoods. With over 39 years of experience and a strong background in finance, we can help guide you through the confusing maze of regulations that is now turning off so many prospective Investors.

Give us a call at (719) 598-3200, or, 800-677-MOVE (6683).

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

Because football season is about to begin and Sportsbars around the country are getting ready for the big football weekends, we thought it might be helpful to address some of the more common beerdrinking problems:

BEER TROUBLESHOOTING

SYMPTOM: Feet cold and wet.
FAULT: Glass being held at incorrect angle.
ACTION: Rotate glass so that open end points toward
ceiling.

SYMPTOM: Feet warm and wet.
FAULT: Improper bladder control.
ACTION: Stand next to nearest dog, complain about house
training.

SYMPTOM: Beer unusually pale and tasteless.
FAULT: Glass empty.
ACTION: Get someone to buy you another beer.

SYMPTOM: Opposite wall covered with fluorescent lights.
FAULT: You have fallen over backward.
ACTION: Have yourself leashed to bar.

SYMPTOM: Mouth contains cigarette butts.
FAULT: You have fallen forward.
ACTION: See above.

SYMPTOM: Beer tasteless, front of your shirt is wet.
FAULT: Mouth not open, or glass applied to wrong part of
face.
ACTION: Retire to restroom, practice in mirror.

SYMPTOM: Floor blurred.
FAULT: You are looking through bottom of empty glass.
ACTION: Get someone to buy you another beer.

SYMPTOM: Floor moving.
FAULT: You are being carried out.
ACTION: Find out if you are being taken to another bar.

SYMPTOM: Room seems unusually dark.
FAULT: Bar has closed.
ACTION: Confirm home address with bartender.

SYMPTOM: Beer is crystal-clear.
FAULT: It's water. Somebody is trying to sober you up.
ACTION: Punch him.

SYMPTOM: Hands hurt, nose hurts, mind unusually clear.
FAULT: You have been in a fight.
ACTION: Apologize to everyone you see, just in case it was
them.

SYMPTOM: Don't recognize anyone, don't recognize the room
you're in.
FAULT: You've wandered into the wrong party.
ACTION: See if they have free beer.

SYMPTOM: Your singing sounds distorted.
FAULT: The beer is too weak.
ACTION: Have more beer until your voice improves.

SYMPTOM: Don't remember the words to the song.
FAULT: Beer is just right.
ACTION: Play air guitar.

REGULATORS UNVEIL NEW MORTGAGE-LENDING RULES

by Harry Salzman

April 4, 2011

HARRY'S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTAIL real estate MARKET

 

NATIONAL housing market SHIVERS .BUT COLORADO CONTINUES TO LOOK GOOD

According to the Wall Street Journal, the Case-Shiller home-price index reports that housing prices across the U.S. continued falling in January, fueling concerns about a "double-dip" recession. However, Colorado Springs home prices are actually rising. Furthermore, our local foreclosure filings and sales are dropping, indicating that our local housing market has stabilized.

In March, our local foreclosure filings amounted to only 272. This represents the lowest figure since September, 2008, and a 42.1% drop from March of last year, when 471 filings were registered. The first quarter of 2011 saw 971 filings, down nearly 20% from 2010.

Local housing-sales figures are also looking good. According to the latest PPAR statistics, March saw 776 sales of single-family homes, which is a big jump from sales in January and February, which registered only about 400 sales in each month. There were additional sales of 80 condos/townhouses.

All of this data gives us good reason to be encouraged by the progress our local real estate market is showing.

For your information, the breakdown of sales by price shows

  •  Up to $199,999              412 sales
  • $200,000 - $299,999       183 sales
  • $300,000 - $399,000       70 sales
  • $400,000 plus                49 sales

These numbers show that sales of homes under $300,000 accounted for 83.3% of total sales.

To review all of the Sales and Listing statistics for March, CLICK HERE.

 

AND IT'S NOT JUST THE real estate NUMBERS THAT ARE LOOKING GOOD !!

The Gazette reports that several new businesses will be relocating to Colorado Springs. Olson Motor & Control, Inc. will locate a manufacturing facility in Colorado Springs.

Additional companies and organizations that have announced plans to relocate or expand since January 1 include Space Foundation, Outreach, Inc., Xiotech Corporation, Cosmic Advanced Engineering Solutions, Howell Precision Machine & Engineering, Inc.

Looks like the EDC is doing a good job of selling Colorado Springs.

And, more good news for our community, Fort Carson will be getting a new combat aviation brigade. The new 113-helicopter unit will be the Army's 13th combat aviation brigade and will push the post's population of soldiers to nearly 30,000.

According to post officials, $750 million will be spent to house the new helicopter brigade with construction cash starting to flow as soon as this fall. This influx of new Colorado Springs residents will definitely help reduce our inventory of available homes.

If that's not enough, Colorado Springs and the state continue to rank well in important categories: 

  • Colorado was ranked 3rd Smartest State by CNNMoney.com.
  • Colorado Springs ranked 8th in Housing Markets for Best Recovery Bet by CNNMoney.com.

OK, that's the good news. The following article describes what most people would see as 'bad' news

 

REGULATORS UNVEIL NEW MORTGAGE-LENDING RULES

Federal regulators have proposed far-reaching changes to lending rules that eventually will raise the cost of borrowing for most homeowners, kicking off what is likely to be a furious effort by the housing and banking industries to soften the proposal.

Tighter Standards are on the horizon

Mortgages that aren't subject to costly 'risk-retention' rules must meet certain requirements:

  • 20% down payment for new mortgages; a 75% loan-to-value ratio for refinances, and a 70% ratio for 'cash-out' refinances
  • Borrower hasn't missed two consecutive payments on any consumer debt within two years
  • Mortgage-related debt is no more than 28% of income, and total debt doesn't exceed 36% of income
  • Fully amortizing loans

Source: FDIC

"With the way this proposal is drafted, very few loans are going to qualify" says Lewis Ranieri, the pioneer of the home-mortgage-bond market.

Furthermore, the Dodd-Frank financial-overhaul law requires banks to hold 5% of the credit risk for mortgages and other loans that are bundled together and sold off as securities. The idea is that banks and other issuers of securitized loans will do a better job ensuring the quality of those loans if they are required to have more "skin in the game."

The real-estate industry and consumer-advocate groups already have forged an unlikely alliance to push for less-restrictive rules. They say the rules could substantially raise borrowing costs, particularly for first-time home buyers. "You're clearly creating a nation of have and have-nots when it comes to housing," said Jerry Howard, president of the National Association of Home Builders.

Critics of the rule say relatively few borrowers will be able to obtain the less costly, gold-standard mortgages. Around 46% of all homeowners with a mortgage had less than 20% equity in their homes at the end of 2010, according to CoreLogic Inc., a real-estate data firm.

"A rigid 20% down payment requirement is going to unnecessarily prevent the middle-class, first-time home buyers from getting affordable mortgages," Sen. Kay Hagan (D., N.C.) said in an interview.

 

SO, WHAT DO ALL OF THESE CHANGES MEAN TO YOU ???

Well, if you are a Buyer or a Seller, these new rules will make it more difficult for you to buy or sell your home. Taken collectively, they make it harder for Buyers to obtain financing and for Lenders to stay in business. In fact, one of our preferred Lenders has already advised us that, because of the profit-squeeze that these new rules establish, they will be going out of business at the end of the month.

Understandably, most Buyers and Sellers do not appreciate the intricacies of arranging for a "good" mortgage. However, the foreclosure crisis that has faced us in the last several years is a dramatic example of what happens when "bad" mortgages are allowed to enter the market. Many of these foreclosures are the result of overbuying, poor negotiation, excessive fees, and poor choice of lenders.

That is why it is more important than ever that Buyers and Sellers be guided by experienced, ethical Realtors, as they negotiate the maze of governmental regulations and market variables that are a part of the selling process.

When we work with our clients, we make sure that:

  • the Client ends up with the best possible price for the home (through knowledgeable negotiation)
  • the  Buyer can actually afford his/her choice of home
  • the best mortgage interest rate is obtained for the client
  • the Lender does not load the deal with excessive fees (This alone can save the Buyer between $2000 - $4000)

We feel confident that we can provide these services because of our 39 years of experience in the local market, our intimate knowledge of every financial aspect of the process and our close, working relationships with the most ethical local lenders and suppliers.

As a matter of fact, as we look back at all of the clients we have served over the years, we are not aware of even one of our clients that has gone into foreclosure. That's probably the best measure of a Realtor's professionalism.

Call us to discuss these issues at 800 677-MOVE (6683) or 719 598-3200  

 

WHY NEW HOMES AREN'T SELLING 

Once a common home buyer's dream, new homes have lost some of their appeal. Instead, it's fixer-uppers and foreclosures that have been capturing buyers' attention, creating a window of opportunity for those still looking for new construction.

While the real estate market has struggled across the board, new homes have been hit harder than ever before. Existing home sales are down about 3% in the last year, according to the latest data from the National Association of Realtors. That's peanuts compared to new home sales, which have fallen a whopping 28%, according to the U.S. Census.

To some extent, existing homes have always recovered before new construction, but analysts say this situation is so extreme that it could delay a meaningful recovery for the new-home market by two more years. "It's not looking promising for new housing," says John Vogel, adjunct professor of real estate at Dartmouth's Tuck School of Business.

The reason for the discrepancy is clear, experts say: New homes are currently 29% more expensive than existing homes, about double the typical margin, according to the NAR. At the same time, there are some radical discounts in the existing home market, foreclosures and short sales specifically, which accounted for nearly 40% of all sales in February. (In 2010, they accounted for 25% of all sales, according to RealtyTrac.com.)

But a shift in consumer psychology has also hurt new home sales. Pre-recession, buyers expected high-end appliances and fancy countertops, and builders delivered. Now consumers are more enthusiastic about a home that's easier and cheaper to maintain, says Vogel.

For many buyers, that even includes smaller rooms - a rarity in homes built during the real estate boom - that are more affordable to heat or cool. More buyers are also looking to live in or near a city - where relatively fewer new homes exist - to be closer to their job and to spend less on gasoline costs.

The trend doesn't seem to be reversing itself any time soon. In spite of the lagging sales, new home prices are still expected to rise by nearly 1% this year, according to the NAR: Builders have all but stopped building, says David Crowe, chief economist at the National Association of Home Builders, and supply is dwindling.

Nationally, there are around 186,000 new homes on the market right now, the lowest since 1967. And even builders who want to build may not be able to get financing. Just 20% of builders are shopping for loans, down from 80% pre recession, Crowe says.

But there are also bright spots for buyers: Eager to sell, some builders are unloading homes for less than the cost of building the house. Though limited in number, that's mostly happening in the hardest hit states of Arizona, California, Florida and Nevada, says Crowe, and often because the builder's loan for that property has come due. Buyers in these markets could end up with a new home for a price close to that of the fixer-upper down the street.

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, please contact us. 

 

JOKE OF THE WEEK

A winter statistic:
 
98% OF AMERICANS SCREAM BEFORE GOING IN THE DITCH ON A SLIPPERY ROAD.

THE OTHER 2% ARE FROM COLORADO AND THEY SAY, "HOLD MY BEER AND WATCH THIS." 
  
Now, you're from Colorado if.........
 
You'll eat ice cream in the winter.

It snows a foot and you don't expect school to be cancelled.

You'll wear flip flops every day of the year, regardless of temperature.

You have no accent at all, but can hear other people's. And then you make fun of them.

"Humid" is over 10%.

Your sense of direction is: Toward the mountains and Away from the mountains.

You say "the interstate" and everybody knows which one.

You think that May is a totally normal month for a blizzard.

You buy your flowers to set out on Mother's day, but try and hold off planting them until just before  Father's day.

You grew up planning your Halloween costumes around your coat.

You know what the Continental Divide is.

You don't think Coors beer is that big a deal.

You went to Casa Bonita as a kid, AND as an adult.

You've gone off-roading in a vehicle that was never intended for such activities.

You always know the elevation of where you are.

You wake up to a beautiful, 70 degree day and you wonder if it's gonna snow tomorrow.

You don't care that some company renamed it, the Broncos still play at Mile High Stadium!!

Everybody wears jeans to church.

You actually know that **South Park** is a real place not just a show on TV.

You know what a 'trust fund hippy' is, and you know its natural habitat is Boulder.

You know you're talking to a fellow Coloradoan when they call it "Elitches," not ""Six Flags."

A bear on your front porch doesn't bother you.

Your two favorite football teams are the Broncos and whoever is beating the crap out of the Raiders.

When people back East tell you they have mountains in their state too, you just laugh.

You go anywhere else on the planet and the air feels "sticky" and you notice the sky is no longer blue.

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Photo of Harry A Salzman Real Estate
Harry A Salzman
ERA Shields / 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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5475 Tech Center Drive, Suite 300
Colorado Springs, CO 80919

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719-598-4210
Harry@HarrySalzman.com

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