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HARRY'S BI-WEEKLY UPDATE 4.20.15

by Harry Salzman

                                                            

April 20, 2015

 

HARRY’S BI-WEEKLY UPDATE

                               A Current Look at the Colorado Springs Residential real estate Market

As part of my Personal Service, it is my desire to share current real estate issues that will help to make you a more successful and profitable buyer or seller.

                                         

THE AMERICAN DREAM CAN BECOME A REALITY, EVEN WITH FINANCIAL SETBACKS OR LIMITED INCOME

The Wall Street Journal, 4.15

While Colorado Springs fared better than a lot of the country, a number of folks still found themselves forced into foreclosure or a short sale during the recession because of negative home equity or loss of income.  With the economy still in recovery, many people are finding that they can again qualify for a mortgage loan. 

Foreclosures and most negative credit events can stay on your credit report for as long as seven years.  Since the majority of the homes were lost to foreclosure between October 2007 and October 2008, many of those events will not show up on current credit reports.  As long as those affected have worked to keep their credit in good standing, borrowing for a home should become easier from here on. 

According to Mark Zandi, chief economist at Moody’s Analytics, “The dark shadow of the foreclosure crisis is finally beginning to fade.  That should be a positive for single-family housing and, by extension, for the broader economy.”

Some previously foreclosed homeowners have also been able to obtain new mortgages without waiting seven years.  The FHA allows borrowers who went through a full foreclosure and have repaired their credit to become eligible for an FHA-insured home loan just three years after a foreclosure is completed and even in as little as one year in rare circumstances.

Fannie Mae and Freddie Mac—which typically guarantee loans that have higher credit quality and lower costs for borrowers than those backed by the FHA—will back loans as little as two years after a short sale under certain circumstances such as a job loss.

The Wall Street Journal recently featured a column about a 30-year-old who is working to become a first-time homeowner.  Even thought he had a full-time position running the technology department of a Catholic high school and teaching classes there, he decided to get a second job at Starbucks in order to save faster for his family’s dream of homeownership.  While this is not an easy situation at present, he’s focused on knowing that eventually owning a home will be a vehicle to provide long-term equity.  It will also likely provide him with deductions that rent paying does not. 

I’ve told you about the new regulations now in effect for first-time homebuyers that require as little as 3% down and the allowance of down payments to come from family members.  These are other vehicles available to those who are finding the ability to move out of their parents’ homes for the first time.  With rents continuing an upward climb and vacancies down, it’s probably a good time to consider all the options available.

It appears that the Federal Reserve is not sold on raising rates in June, which is a plus for those who have not yet taken advantage of the historically low mortgage interest rates.  The raise WILL happen, but probably not quite as soon as we expected, more than likely in September according to predictions from Fannie Mae’s chief economist, Doug Duncan.     

Now is the time to act.  If you or any family member, co-worker or friend has shied away from homeownership due to a previous short sale or foreclosure, looking for a first-time buy, or simply looking for the “right” home to trade up or invest in, please call me at 598.3200 or email me at Harry@HarrySalzman.com and let’s get together to see what we can do to help you realize your residential real estate dreams. 

 

NEW REGULATIONS FOR WATER HEATERS 

American Home Shield 4.15.15

New federal energy efficiency standards went into effect on 4.16.15 for the replacement and manufacturing of water heaters.  I attended a session explaining these regulations and feel it important to share them with you.

Key points of the new standards are:

  • Gas, oil fired, electric, tabletop (low boy) and instant (tank-less) water heaters are included
  • Existing functioning units do not require replacement
  • Existing inventory can be sold and installed
  • 55-gallon and larger gas units will implement condensing technology—impacting cost of unit, installation & new venting requirements.  This may require added electrical supply.  There is a required efficiency gain of about 30 percent.
  • 55-gallon and larger electric units will implement heat pump technology—which will also impact costs.  Efficiency gains of 40 percent plus are required.
  • “Standard” 40-50 gallon units will see moderate price increases.  Technology will remain the same in many instances.  Energy efficiency will largely be achieved through increased insulation.
  • All water heaters are expected to be larger (1” x 3” for most, more for some).
  • Structural modifications may be required for units located in small, tight spaces—crawl spaces, closets, under stairs, etc.

What does this mean to you? 

To begin, with, water heaters are one of the “big 3” when it comes to replacement so this could eventually result in higher costs for homeowners who have not “upgraded” any existing home warranties to provide for this possibility. Today’s 40-gallon water heater costs approximately $1500-$1600.  We have been told that to replace it, a new 40-gallon water heater could cost upwards of $4000.

It will also mean that when selling your home, or buying a new one, home inspectors will be looking at the water heater to specifically determine if it’s up to standards.

For those with a current home warranty, I would recommend you check with your warranty company to see if and how these new regulations affect you and your home.  Better to “be safe than sorry”.

If you are planning to Buy or Sell, I would suggest that you offer or ask for the “upgraded” level of Home Warranty coverage to help cover any unexpected events.  The additional cost, probably less than $50 for the higher coverage, will be a PLUS in both Buying and Selling a home.

 

BUYING V. RENTING?  A SMART DECISION IN MOST CASES

Realtor Mag, 4.13.15

Homeownership tends to be a smarter decision than renting for many Americans according to new research by Realty Trac.  This is particularly true when rental costs are skyrocketing and in many cases are higher than what a mortgage payment might be.

While homeownership is not for everyone, it makes good sense for many.

Lawrence Yun, NAR’s chief economist, says that families with homeownership tend to have a much higher net worth overall than renters.  Homeowners have the benefit from equity and long-term price appreciation.

NAR’s Economists’ Outlook Blog used the chart below to respond to Buyers’ concerns over “I can’t afford to Buy”.

                          

Over 30 years, a homeowner with a 30-year mortgage payment has a paid-off home while a renter has a stack of 360 rental receipts, analysts noted on the Blog.  The Blog also notes that the lifestyle and social benefits to homeownership show better education achievement by children and an increase in community involvement by homeowners. 

Think you or someone you know can’t afford to own a home?  Maybe you should think again, or at least check it out.  Give me a call and let me run the numbers to see if there is a way to turn a renter into a homeowner and help increase their net worth at the same time.

 

5 HOUSING TRENDS TO WATCH NOW

Ris Media, 4.18.15

While Spring tends to be the “perfect time” for Buying and Selling, don’t expect this year to be perfect--especially if you are a Buyer. 

Limited inventory of homes for sale is starting to increase competition among Buyers—with multiple offers on homes—even those in the high sales brackets. 

On the bright side, though, credit standards are looser than a year ago so you might find it a bit easier to obtain a mortgage.

Trending now:

  1. Still Not Enough Homes.   Get ready to compete with other Buyers due to low inventories, which will likely continue.  The situation might worsen when interest rates finally go up, as homeowners may want to hold on to their lower interest rate mortgages. 

 

  1. Possible Uptick in Mortgage Rates.  Probably not going to happen just yet, but Buyers and Sellers need to be prepared for this possibility by early Fall.

 

  1. A Rise In Home Sales.  Home sales of previously owned homes are expected to rise about 8 percent this year, according to Jonathan Smoke, chief economist at realtor.com.  Home prices should also continue to increase, forecasted to go up 5 percent, Smoke added.  New homes should also rise, with the Mortgage Bankers Association (MBA) expecting a jump of 13 percent in sales in 2015.

 

  1. An Increase In Credit Availability.  Credit availability is expected to continue to increase through the Spring, says Mike Fratantoni, chief economist for the MBA.  “I expect that credit availability will continue to slowly improve over the next couple of years….and another beneficial change is that FHA reduced mortgage insurance premiums in time for the Spring season,” he added. 

 

  1. A Rise In High End Homes.  If you are looking for a vacation home or looking for a high end home, the market has heated up fast.  Sales of homes in the $750,000 to $1 million range grew 12.6 percent in February, compared with the previous February, according to NAR.  Baby Boomers and international Buyers are driving this surge, but the trend is also attributed to the threat of higher interest rates later this year.  Some lenders are saying that they tend to get a pickup in business when rates go up a bit because folks are worried they are about to lose the opportunity that’s been prevalent for while.

My advice?  There are still homes available in most price ranges and neighborhoods, although less than there were.  If you are in the market, don’t wait too long.  The above trends are proving realistic and things are sure to tighten up once the rates start rising.

 

MORE SPRING BUYING STRATEGIES

Realtor mag. 3.24.15

Just a few suggestions that will help in the Spring Buying Frenzy:

  1. Step Away From The Computer.  Approximately 90% of home Buyers start their search on the computer, but Buyers should also consider going outside and canvassing their desired neighborhoods.  In today’s situation of low inventory, if you waste too much time the home you want may no longer be on the market.  You will need to be in a position to make a decision quickly.

 

  1. Get To Know The Current housing market.  Every market and neighborhood is different so it’s important to do research on the area where you are thinking of buying.  Knowing market values is important so you will know when the right situation presents itself.  The more educated you are, the better you can make an informed decision.

 

  1. Grab Those Low Mortgage Rate—Before It’s Too Late.  Mortgage rates are still hovering below 4% but it’s not realistic to assume they will stay that way as I mentioned several times earlier.  These low rates can make a difference in the home price-range you desire, so do not delay as time may not be on your side.

 

  1. Create A Dynamic Team.  I cannot over-emphasize making certain you have a competent, knowledgeable real estate Professional by your side.  Before considering any move, it’s important to ensure you have someone working for you who can help you 1) do the necessary research, 2) get you pre-approved for the mortgage lending best for you and 3) who works with a competent home inspector.  With all of this in place, you are ready to make a move the minute you’ve found the “right” property. 

 

  1. Be Prepared For Bidding Wars.  As mentioned earlier, this is a distinct possibility.  With a good team on your side, you will be more aware of the pros and cons of getting into a bidding war.  It’s often possible to “win the battle, but lose the war”, so to speak.  Having a competent real estate Professional on your team can make a big difference in these circumstances, especially when common sense oftentimes give way to desire for what you want.  It’s important to consider all options and your Real Estate Professional can be more objective than you might be in this situation.

What can I add?  Again, while it’s not the “Perfect Spring” for Buyers, having someone like me there for you will make all the difference and help alleviate a lot of the stress. 

 

HARRY’S JOKE OF THE DAY  

 

HARRY'S BI-WEEKLY UPDATE 4.6.15

by Harry Salzman

April 6, 2015

 

HARRY’S BI-WEEKLY UPDATE

                        A Current Look at the Colorado Springs Residential real estate Market

As part of my Personal Service, it is my desire to share current real estate issues that will help to make you a more successful and profitable buyer or seller.

 

THANK YOU.  I’M HUMBLED BY THE MANY RESPONSES I RECEIVED

I’ve been writing this eNewsletter for around 12 years and often get responses for each issue and I try to respond to each.  That being said, the number of responses and emails I received this past week just blew me away.  I heard from clients and friends, some of whom I haven’t heard from since I sold them a home more than 20 years ago.  It was heartwarming to know that not only did you take the time to write me, but that you also take the time to read the eNewsletter. 

With the move and all that it entailed, I was not able to respond to the hundreds of emails I received so I want to take a minute now to thank you for all your good wishes.  As you might imagine, this was not an easy decision, and knowing that my clients and friends “have my back” and took the time to let me know, made it so much easier. 

I look forward to welcoming you all to my new office and to working with you again in all your Residential real estate needs.  For those of you who missed the article concerning my move last week in The Gazette, you can click here to read it. 

Again, thank you.  And now enough of me, let’s get on with the “news”:

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SPRING IS HERE…AND THE BALL IS IN YOUR COURT…LITERALLY

Baseball season begins this Thursday and as most of you are aware, Salzman real estate Services has four front row season tickets for all Colorado Springs Sky Sox home games.  These are available on a first-come, first-served basis so simply give me a call at 598.3200 or email me at Harry@HarrySalzman.com and get your requests in early.  Most Friday night games are followed by a fireworks display, so it’s a great family evening, compliments of me.

Big changes came with this season.  After 20 plus years of affiliation with the Colorado Rockies, the Sky Sox are now the AAA team affiliated with the Milwaukee Brewers.  This appears to be a great association and we look forward to another record setting season, especially in terms of game attendance.

Spring is also a time of “Residential real estate Frenzy” and this year seems to be starting early as those who have been waiting for either higher prices for their current homes or lower interest rates are finally waking up from hibernation and realizing that this could be the last chance for a great deal. 

I’ve been telling you about the predictions of higher interest rates and it appears that the Federal Reserve is finally going to be addressing this at their June meeting.  No one can predict the outcome.  However, I can predict that historically low interest rates won’t be around by this time next year or maybe even by the summer’s end. 

If you’ve been waiting for the “right” time, I’d suggest you wait no longer.  With fewer listings, it’s a great time to put your present home on the market.  While you won’t have as many choices as last year at this time, we can still help you find the home of your dreams that will fit your needs, wants and budget. 

An added advantage for first time homebuyers with good credit is the 3% down mortgage loans available through Fannie Mae and Freddie Mac.  Parents can also help out with down payments on most of these special loans so potential borrowers don’t have to show large savings deposits. 

I’ve given you my “pitch” and the “ball is in your court”.  Give me a call and let’s see what we can do to make your dreams a reality.  Time is no longer on your side and I’d like to see you take advantage of interest rates that we are not likely to see again for a long time, if ever. 

 

MARCH LOCAL STATISTICS CONTINUE TO SHOW POSITIVE RESULTS IN HOUSING

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

According to these statistics it does appear that the Spring Buying season began early again this year. The number of sales are up, the prices are up and homes are being listed, but not in the numbers of several years ago.  Some of that is due to foreclosures going steadily down and the recovery of equity that has helped some people keep their homes or borrow against it for home improvements.

March was the eighth straight monthly increase in sales.  With sales from January through March totaling 2,362, this was the best quarter for any year since 2006.  These numbers reflect stronger consumer confidence along with continued historically low interest rates that many Buyers feel will soon go up and don’t want to miss out on.

Here are some highlights from the monthly PPAR report.  Please click here to view the detailed 13-page report.  If you have any questions, please give me a call.

In comparing March 2015 to March 2014 in PPAR:                      

                        Single Family/Patio Homes:

  • New Listings are 1623, Up 1.8%
  • Number of Sales are 1,009, Up 21.3%
  • Average Sales Price is $259,352, Up 9.3%
  • Median Sales Price is $225,000, Up 7.1%
  • Total Active Listings are 2,538**

                        Condo/Townhomes:

  • New Listings are 176, Down 4.3%
  • Number of Sales are 151, Up 64.1%
  • Average Sales Price is $153,200 , Up 2.4%
  • Median Sales Price is $143,000, Up 10.5%
  • Total Active Listings are 262**

**The Active numbers are real time only.  Due to the Matrixc conversion it is not possible to determine those figures for March 2014.

 

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

                                                Median Sales Price             Average Sales Price

Black Forest                            $389,950                              $472,645

Briargate                                  $317,500                             $329,913        

Central                                     $163,000                              $184,024

East                                          $180,000                              $194,499

Fountain Valley:                      $189,900                              $200,860

Manitou Springs:                    $277,000                              $291,666

Marksheffel:                             $268,000                              $271,489

Northeast:                                $215,500                              $236,495

Northgate:                                $354,790                              $391,934          

Northwest:                               $335,000                              $362,496

Old Colorado City:                  $205,000                              $204,503

Powers:                                    $219,950                              $225,854

Southwest:                              $269,500                              $396,468

Tri-Lakes:                                $420,000                              $453,879

West:                                        $214,650                              $233,914

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

 

U.S. HOME PRICES CONTINUE TO CLIMB, TIGHT SUPPLY HINDERS SALES

Realtor Mag 3.26.15, The Gazette, 4.1.15

Existing-home sales continued to improve slightly in February but remain constrained by low inventories of homes-for-sale that are pushing price growth to the fastest pace in a year, according to the NAR.

The median U.S. existing-home price for all housing types was $202,600 in February—up 7.5% from a year ago.

“Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices to near unsustainable levels,” says Lawrence Yun, NAR’s chief economist.  “Stronger price growth is a boon for homeowners looking to build additional equity, but it continues to be an obstacle for current buyers looking to close before (mortgage) rates rise.”

While mortgage rates still hover near historical lows, this is not forever.  “With all indications pointing to a rate increase from the Federal Reserve this year—perhaps as early as this summer—affordability concerns could heighten as home prices and rents both continue to exceed wages,” says Yun. 

An NAR study in March found a widening gap between rent and income growth across the country, which is making it more difficult for renters to become homeowners.

According to David Blitzer, chairman of the index committee for Standard and Poor Dow Jones Indices, “Home prices are rising roughly twice as fast as wages, putting pressure on potential homebuyers and heightening the risk that any uptick in interest rates could be a major setback.”

Bottom Line?  Once more I’m going to say it.  If you’ve been waiting...wait no more.  While home prices are higher than they were, interest rates are still low.  You will get more for your present home, probably pay more for your “trade up” home than you might have last year, but hopefully the interest rates will stay low for a bit longer and the increased equity from your present home will help offset the difference.  If you are in the market, give me a call and let’s see how we can turn your dreams into reality when it comes to Residential real estate.

 

FOR HOMEOWNERS, SEVEN TIPS FOR TAX TIME

USA Today, 3.19.15

Homeownership is still one of the best tax “deductions” available to most Americans and with a little knowledge and the right documents to back you up, tax time can quickly move from being a “chore” to being a satisfying benefit thanks to deductions on your annual return.

Here are seven important items for homeowners to note so they can take advantage of the biggest possible return on their home ownership.  As always, I encourage each of you to consult with a tax professional to make certain you get the best advice for your individual situation.

  1. PMI Deduction Survives:  In 2014, it was an open question on whether Congress would extend tax provisions including a deduction for personal mortgage insurance, or PMI.  Thankfully for homeowners, legislators passed a package in December to extend a number of tax breaks—including one for PMI.
  2. Mortgage Interest:  A report from Congress’ Joint Committee on Taxation estimates about $70 billion in mortgage interest deductions annually among American taxpayers.  Make certain your get your fair share—not just because mortgage interest can be substantial, but this tax break alone opens the door for many taxpayers to itemize other smaller breaks instead of settling for the standard deduction.  Simply use Form 1098 if you have paid more then $600 in mortgage interest in the tax year.
  3. Local real estate Taxes:  Many taxpayers overlook the fact that homeowners can deduct local, state and even foreign real estate taxes on their federal returns.  There also may be special property tax benefits for lower-income homeowners based on your state or municipality of residence, so be sure to check into that.
  4. Losses By Weather, Fire or Theft:  Form 4684 is designed to specifically help you in the event of casualties and thefts.  While no one is looking for damage or theft, the IRS grants a break to any property or casualty loss that is more than 10% of your gross income and is not reimbursed by insurance.  Documentation is key to prove both value and the circumstances of what was lost.
  5. Renovations Cut Taxes at Sale Time:  While most renovations you make on your home are not tax-deductible, you might still want to hold on to receipts and documents—most particularly if you are in a hot real estate market or have an expensive property.  That’s because the IRS allows sellers “only” a tax-free profit of $250,000 on a primary residence—but—if you’re above the threshold, you can reduce the tax burden on those real estate gains by proving your investment in the property via renovations and other work.  In simple terms, if you spent $30,000 fixing up a kitchen, then you can make $280,00 from your primary residence and not pay any taxes on that profit.
  6. Selling Costs Count, too:  The commission paid to a real estate Agent, as well as any legal fess and closing costs, is tax deductible.
  7. Don’t Forget Moving Expenses:  If you moved more than 50 miles for a new job and started that job less than one year prior to purchasing a home, you might be able to deduct moving expenses.  Refer to IRS publication 521 for more specifics.

 

NEW ROADBLOCKS TO HOMEBUYING DUE IN AUGUST

Inman.com, 4.4.15

On Aug. 1, 2015, a shift is coming to wreak havoc at the closing table for both real estate Agents and clients alike.

On that date, the new TRID (TILA-RESPA Integrated Disclosure) forms replace the HUD-1 Settlement and Good Faith Estimate. The Consumer Financial Protection Bureau’s mission is to rebuild the mortgage banking landscape so that the industry will avoid the type of conditions that led to the Great Recession. The CFPB replaces the Department of Housing and Urban Development for oversight because HUD did not provide specific consumer protection.

While increasing consumer protection is a desirable goal, the unforeseen ripple effects of these changes could seriously disrupt how the closing process is conducted.

The new rules will require a new three-day waiting period when there are any changes in the TRID forms.  It is recommended that an extra 15 days are allowed to close transactions.  In other words, 30-day contracts will now require 45 days and 60-day contracts will require 75 days.

While in most cases these issues are resolved and the transaction closes the next day, there could be instances where multiple properties are involved and the delay on one’s home closing could delay others from closing, too.

Many other things can be affected, such as a moving van ready to move things in or an interest rate lock that could possible expire.  These are just some of the possibilities and just another good reason why I always suggest you hire an experienced, knowledgeable real estate Professional to help you with your sale. 

We do the homework and can help you avoid the aforementioned situations before they can arise.  As regulations get tougher and tougher, this becomes more and more important.  I keep abreast of all new regulations and do my best to make your home Buying and Selling experience as stress-free as possible.

 

HARRY’S JOKE OF THE DAY  (In the spirit of Easter and Passover)

 

 

 

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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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