Real Estate Information Archive

April 26, 2021

 

HARRY’S BI-WEEKLY UPDATE

A Current Look at the Colorado Springs Residential real estate Market

As part of my Special Brand of Customer 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.

 

 

“NEW NORMAL” IN RESIDENTIAL real estate KEEPS EVERYONE ON THEIR TOES…

Just when I begin to think that things in residential real estate couldn’t get crazier…they do.  The current lack of existing homes for sale and the wait list for new construction are hard enough for buyers to comprehend but now more than ever before the “offers” on existing homes need to be especially creative and more comprehensive.

And this isn’t just a Colorado Springs “thing”.  All across the country buyers are encountering not only rising prices and lack of homes for sale, but those who do make the winning bids are those who have real estate professionals on their side who understand exactly what it’s going to take to make certain their client’s offer even gets considered.  Fortunately for you, you’ve got me on your side.  With my 48 years in the local market along with my certification in negotiation and up-to-the-minute knowledge of all things residential real estate, I have a distinct advantage over most.

However, that still doesn’t always allow my clients to get their first “pick” these days.  One of the new additions to contracts that was recently created by The Frascona Law Firm is an “appraisal gap” clause in which the buyers indicate the minimum accepted appraisal they agree to accept in order to make an offer on the home.  What that means is twofold:  the buyer agrees to purchase the home as long as it appraises up to the amount to which they agree to in the contract and that if the appraisal comes in under the offer price, the buyer will increase the size of the down payment in order to offset any decline in the amount of the new mortgage loan caused by the appraised value being less than the purchase price.

This is not a requirement in the purchase contract, it is an additional “provision”; however, without that provision it is not likely that the buyer will get the home they want in today’s highly competitive market.

You might wonder what’s behind this new normal and it’s coming from all directions at present.  The shortage of existing homes for sale is being created by folks deciding to renovate their current home, baby boomers choosing to “age in place”, and folks just simply living in their homes so much longer than in the past.  This has caused the median price of existing homes to reach a 15-year high across the country with prices in March increasing 17.2% over the previous March.  This marks the biggest price increase in National Association of Realtors (NAR) data going back to 1999.  

At present, the U.S. home shortage is nearing 4 million units.  That represents a 52% rise in the nation’s home shortage compared to 2018 and underscores the severity of the deficit.  

With loan rates dropping again this past week to 2.97% for a 30-year fixed-rate mortgage, there are still many potential buyers who are vying for the few existing homes for sale.  For something that should be an exciting prospect, especially one involving one of the largest investments a family might make, the stress involved is certainly not fun.  I’ve always taken pride in trying to keep the stress levels of my clients to a minimum during the buying and selling process, and lately it’s not an easy thing to do.   

In recent months I’ve directed a number of my clients to newly constructed homes when it became apparent that their needs, wants and budget requirements would be better satisfied in that type of situation.  However, now even new home construction availability is considerably tighter than in the recent past and with the rapidly increasing prices of lumber, concrete, copper, aluminum and more—new home prices are going up much faster than ever.

I wish I could paint a prettier picture of the current state of the market, but it’s only fair to tell it like it is. Those of you who know me well understand that in my constant state of “positivity”, I have always done whatever possible to turn a negative into a positive.  Where there’s a will, I do my utmost best to find a way.

If you’ve even considered a move, now is the time to get started.  Prices aren’t going down any time soon and mortgage rates essentially have nowhere to go but up, so today is the best time to start.  It shouldn’t take long to sell your present home and it will likely go for far more than you might imagine.  However, finding a replacement could take some time so it’s best to start in that direction first.  

The best move you can make is to call me at 593.1000 or email me at Harry@HarrySalzman.com to get any and all of your residential real estate questions answered.  I look forward to speaking with you.

 

BUYERS ARE UNDETERRED BY HOME PRICES

RealtorMag, 4.22.22, The Gazette, 4.25.21, Colorado Springs Business Journal, 4.12.21

Even with the existing-home prices surging to a record high in March and sales easing 3.7% nationally compared to February, it wasn’t due to any let-up in buyer demand, but can be blamed on the ongoing housing shortages from a lack of homes for sale.  Sales year-over-year, however, are still up 12.3% according to NAR.

“The sales for March would be been measurably higher, had there been more inventory,” according to Lawrence Yun, NAR’s chief economist.  

Properties typically sold in 18 days—a record low, NAR reported.  “Without an increase in supply, the society wealth division will widen with homeowners enjoying sizable equity gains while renters will struggle to become homeowners”, said Yun.  

With NAR making it a priority to be at the forefront of the anticipated economic revival, “We will continue pushing for an increase in housing construction and inventory, with the goal of helping qualified buyers and countless families achieve the American Dream of homeownership”, said Charlie Oppler, NAR president.  

In Colorado Springs, many homebuyers aren’t holding off on their purchases of new homes.  Through the first quarter of 2021, building permits pulled for the construction of single-family homes in El Paso County were nearly one-third higher than the same period last year, according to reports by the Pikes Peak Regional Building Department.

Despite local resale inventories plunging to their lowest level in at least 25 years, demand remains strong.  Rental rates are rising, mortgage rates are historically low, and folks are wanting to buy homes before they get priced out of the market.  This is all fueling that “new normal” I mentioned earlier.  

The increase in building materials is not simply affecting homebuilders.  Commercial real estate such as apartment buildings and storefronts are feeling the burn as well and those costs are being passed along in the form of higher rental and consumer prices.  That’s causing renters to want to become homeowners sooner than they might have and also driving up the number of those looking for investment property homes for rentals. 

It’s a never-ending merry-go-round at the moment and folks just want to get on before they can no longer afford the ride.

Another thing to add to the equation is that property values in El Paso County get reassessed every two years and guess what?  It’s that time now.  Property values have taken a huge leap since the last reappraisal period and could impact tax bills, which mail on April 30, 2021, accordingly.  

So once more…you get the gist…if you’re ready to at least talk about the possibilities that exist for your individual situation, I’m ready to help.  Just don’t wait too long as it will most definitely cost you.

 

93% OF AMERICANS BELIEVE A HOME IS A BETTER INVESTMENT THAN STOCKS

Keeping Current Matters, 4.14.21

A recent survey of Consumer Finances released by the Federal Reserve, reveals the net worth of homeowners is forty times greater than that of renters.  In case you ever wondered if homeownership is a good investment that study clearly answers your question with a huge YES.

The Federal Reserve Bank of New York noted that 93% of Americans believe buying a home is definitely or probably a better investment than buying stocks.  Here is how the results break down:

 

Bottom line?  

This data shows just how strongly Americans believe in homeownership as an investment and that belief is warranted.  The Liberty Street Economics Blog put it best by saying: 

Housing represents the largest asset owned by most households and is a major means of wealth accumulation, particularly for the middle class.”

April 8, 2021

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.

 

GREAT NEWS FOR CURRENT HOMEOWNERS AND SELLERS…A MIXED BAG FOR BUYERS…AND TOUGH NEWS FOR FIRST-TIME BUYERS

It’s been another wild month in residential real estate.  Homes are appreciating at their fastest rate in 15 years. The shortage of available homes for sale locally, as well as nationally, is creating the best seller’s market in recent years but with that comes a tough time for buyers and most especially first-time buyers.  

A recent article in The Wall Street Journal mentioned that currently there are far more licensed Realtors than there are homes for sale!  That alone tells you that if you’re in the market you need a seasoned real estate professional like me more than ever before since expert negotiation and contract writing skills are an absolute necessity.

There are numerous reasons for the continued increase in home appreciation and the lack of available homes for sale is most likely the number one.  Other reasons include the still historically low interest rates and the current pandemic which has created a number of issues—such as folks not wanting to open their homes for showings yet wanting new homes that meet the wants and needs they discovered lacking in their current homes.

Folks are staying in their homes much longer than in the recent past with homeownership now averaging over 13 years vs. just 7 ½ years a few years ago.  Some older homeowners are choosing to “age in place” rather than downsize or move to a senior living type of environment.

Lower interest rates have let current homeowners refinance their existing mortgage, giving them more disposable income.  

Others are remodeling to meet their current needs which means they intend to stay put for a longer period of time.

However, there is still a group of folks that are ready to move today.  Some of their reasons include the following:

• A decrease in family size—kids have gone off to college, married, or moved into their own homes
• Some older homeowners want to move near family, sometimes to a different city or state
• Corporate relocation
• The need for a larger home due to a growing family
• Wanting to sell and trade up to a larger or nicer home or a different part of town
• Wanting to take advantage of today’s historically low mortgage interest rates

New home construction has become a great option in today’s environment, however the cost of homebuilding materials such as lumber, aluminum, cement and copper have driven up the cost of those homes as well.  

Mortgage loan qualification is getting tighter as well, which is beginning to hurt first-time buyers harder than most.  That creates a need for rental homes and an opportunity for investment buyers.  My investment buyers are constantly on the lookout to add to their portfolios and have even purchased newly built homes in order to attract higher-end and possibly longer-term renters.

As you can see, there are all kinds of things going on.  That’s why you need someone with significant experience who can help you wade through the current residential real estate waters in order to find what you might want, need and can afford for your individual family situation.

Lucky for you—you’ve got ME.  My 48 years in the local residential real estate arena, combined with my Investment Banking background and certification in Negotiation make me especially valuable to assist you with all your residential real estate needs.

If you’ve considered a move, your present home is most likely worth more than you might imagine, and you can use that equity toward a new home.  And with the current low mortgage interest rates, you could possibly make that move without adding too much more to your monthly output.  

However, you might not know about your actual equity and other possibilities unless you ask.

And that starts with a simple phone call to 593.1000 or an email to Harry@HarrySalzman.com to get the ball rolling.  Please call me even if you are considering a move…because you won’t know until you talk it through and see it on paper if this is the right time or right decision for you.

I look forward to speaking with you soon.

 

And now for statistics…

 

MARCH 2021

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

Here are some highlights from the March 2021 PPAR report.  Remember that the new format of this report no longer provides monthly statistics for each individual neighborhood.  However, if you are interested in what’s happening in your neighborhood, I can provide you with this information through other means.

In El Paso County, the average days on the market for single family/patio homes was a very low 10.  For condo/townhomes it was 8.  

Also in El Paso County, the sales price/list price for single family/patio homes was 103.4% and for condo/townhomes it was 103.0%.  

Please click here to view the detailed 10-page report, including charts.  If you have any questions about the report or to find out how it relates to your individual situation, just give me a call.

In comparing March 2021 to March 2020 for All Homes in PPAR:

                        

                        Single Family/Patio Homes:

·       New Listings were 1,620, Down 11.0%

·       Number of Sales were 1,342, Up 5.7%

·       Average Sales Price was $472,931, Up 21.0%

·       Median Sales Price was $410,000, Up 16.3%

·       Total Active Listings are 462, Down 65.2%

·       Months Supply is 0.3, Down 11.5%

 

Condo/Townhomes:

·       New Listings were 254, Up 2% 

·       Number of Sales were 210, Up 14.1%

·       Average Sales Price was $326,829, Up 25.1%

·       Median Sales Price was $303,145, Up 18.7%

·       Total Active Listings are 93, Down 38.8%

·       Months Supply is 0.4, Down 2.7%

Now a look at more statistics…

 

MARCH 2021 MONTHLY INDICATORS AND LOCAL MARKET UPDATE ILLUSTRATE OUR LOCAL TRENDS IN DETAIL

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

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

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

• Sold Listings for All Properties were Up 5.3%
• Median Sales Price for All Properties was Up 16.7%
• Active Listings on All Properties were Down 63.4%

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

  

 

I was thinking about these statistics and decided to call Steve Schleiker, El Paso County Assessor to ask a few questions.  This is what I found out:

 

• In 2020, the total number of Single Family/Patio Home sales was 18,747.
• As of the end of 2020, the total number of Single Family/Patio Homes in El Paso County was 208,615. 
• Therefore, only 8.98% of the total homes in El Paso County were sold in 2020. 
• When compared to the typical average of 15-20% sold, it helped make better sense of all of the above statistics!   

 

RECORD HOME PRICES KEEP MOUNTING

The Gazette, 3.7.21

I’m reprinting a copy of an article Rich Laden wrote for yesterday’s Gazette where he quoted me on the current state of our residential real estate market that I thought you might enjoy.

COLORADO SPRINGS HOUSING AFFORDABILITY RANKS 58^TH AMONG TOP 100

The Colorado Springs Business Journal, 3.30.21

While our housing market is booming, homes in Colorado Springs are still more affordable than in many other U.S. cities, according to the April installment of the RealtyHop housing affordability index.

The Springs market was ranked 58^th in the index, which ranks home affordability for the average family in the 100 most populous U.S. cities.  

Cities were ranked from least affordable (Los Angeles, CA at #1) to most affordable (Detroit, MI at #100).  Colorado Springs ranks a bit below the middle.

Colorado Springs climbed five places in the rankings—in February the city placed 63^rd—which indicates that the average home was slightly less affordable in March than the month previous.

Both Denver (at #37) and Aurora (at #47) were ranked as less affordable than the Springs.

  

PACE OF LOCAL HOMEBUILDING

The Gazette, 4.3.21

As you can see below, local homebuilding is doing its best to keep up with the demand…

 

AND TO ILLUSTRATE WHAT’S GOING ON ALL OVER THE COUNTRY…

The Wall Street Journal, 3.31.21

 

MORTGAGE LENDERS TIGHTENING STANDARDS

The Wall Street Journal, 4.2.21

While the mortgage market is humming, getting approved for a home loan is as difficult as it’s been in years.

According to the Mortgage Bankers Association (MBA), mortgage credit availability, a measure of lenders’ willingness to issue mortgages, is near its lowest level since 2014.

While more home loans are being made than almost ever before, they are almost all going exclusively to borrowers with pristine credit histories and considerable down payments.

Borrowers whose qualifications fall just outside the stellar category are finding fewer lenders willing to approve their application.  This segment would have qualified for a home loan a year ago and are now out of luck, being deemed too much of a credit risk.

The availability of mortgage loans fell as much as 35% year over year in 2020, when lenders wanted to protect themselves from making loans to borrowers who might lose jobs during the pandemic.  While MBA’s mortgage credit index has drifted higher since last fall, it remained about 31% lower in February than the same time last year.

Since strict lending requirements play an important role in keeping the housing market healthy, making sure borrowers can afford mortgage payments is key to limiting defaults.  Ultraliberal lending policies along with loan approvals for people with spotty income histories or lots of debt, helped spark the 2008-09 financial crisis and lenders are not wanting a repeat performance.

With so few available homes for sale, lenders can be choosy about who they lend to and that is unlikely to change until the housing supply increases and demand is lower.

Still, credit requirements should loosen slightly this year as interest rates rise, drying up refinancings, according to Mike Fratantoini, the MBA’s chief economist.

“Since lenders aren’t being flooded with calls to refinance, more of their resources can be used to reach out to first-time buyers for purchases,” he added.

 

UCCS ECONOMIC FORUM DASHBOARD (and more!)

UCCS College of Business, updated 3.26.21

I just received the most recent economic report from the UCCS Economic Forum.  It presents both the big picture of the US as well as our local economic trends, along with charts and graphs.  Please click here to see the 9-page report and if you have any questions, please give me a call.

 

I CAN’T OVEREMPHASIZE THE “VALUE OF SOUND ADVICE” …

As we navigate through unprecedented times, the importance of having someone like me who can help you make objective decisions is invaluable.  My extensive knowledge of many sectors of the Colorado Springs economy provides valuable assistance to my clients.

I’ve been here for every kind of residential real estate cycle imaginable and work with you to establish your personal home ownership goals.  Your goals become mine and it is my greatest privilege to assist you in making one of the largest investments of your life.