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Enewsletter - May 24, 2010

by Harry Salzman

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET

THE FEDERAL TAX CREDIT FOR HOMEBUYERS INCREASED SALES …BUT, DID IT CHANGE REALITY?

On May 24, 2010, in an article by Kelly Evans, the Wall Street Journal pointed out that the recent federal Homebuyers’ tax credit did, in fact, stimulate the sale of residential real estate. Home sales in April, the last month for the tax credit, were up 5% from March. The Commerce Department was expected to say that new-home sales climbed 3% in April, after a 27% surge in March, to a 423,000 annualized pace.

On the other hand, the Mortgage Bankers Association’s latest weekly index of purchase applications plunged 27% to its lowest level since records began in 1997, despite falling borrowing rates.

Some ‘experts’ are recommending an extension of the federal tax-credit as a means of stimulating more residential home sales. They reference the federal “cash for clunkers” programs as an example of how such federal support money can stimulate activity within an industry. However, as the WSJ points out, there is a significant difference between the recent tax credit for Homebuyers and the ‘cash for clunkers’ program. In the ‘clunkers’ program, the vehicles that were turned in to obtain the “discount” on the purchase of new vehicles were scrapped and thus removed from the national inventory of vehicles. The tax credit for Homebuyers, however, although it did result in the sale of 1 million units, did not ‘scrap’ any houses and, thus, did not reduce the national inventory of houses.  Inventories of existing homes are still elevated and the rising rate of delinquencies and foreclosures ensures a steady stream of supply that will keep downward pressure on prices for some time to come. In other words, the tax credit program, rather than fixing the problem, may have only delayed the inevitable. Speaking of foreclosures and short sales, let’s consider the following.

WHY CALL THEM “SHORT SALES” WHEN IT TAKES SO LONG TO COMPLETE THEM???

During our current housing crisis, the real estate community has tried valiantly to dispose of the foreclosures and short-sale properties that have dragged down property values in most parts of the country. Only by “clearing the table” of these artificially depreciated properties as quickly as possible will real estate prices be able to again reflect their true market value. During this time of readjustment, however, it has become increasingly apparent that the biggest bottleneck in the process of selling-off these properties has been the slow reaction time of many banking institutions that postpone, delay, dither and quibble over valid offers for these properties. The result of this unnecessary delay in the selling process is that, too often, the prospective buyer gives up on the project and chooses to invest his money elsewhere.  

In an attempt to alleviate this problem, we have prepared a Press Release urging some of the more influential business journals throughout the nation to support some simple, sensible, new, federal regulations that would require Mortgage lenders and Realtors to provide a consistent level of service and reaction time to all parties involved in the sale of foreclosures and short sale properties. The basic requirements of these proposed regulations would be that:

  • Foreclosure and Short Sale offers must be completely processed within a specified time period (e.g. 45-60 days)
  • Lenders must publicize their processing time for new, foreclosure and Short Sale offers
  • Lenders must establish a standardized list of procedures, requirements and deadlines for all parties involved in an offer for new, foreclosed or short sale properties
  • Lenders must be subject to specific penalties, should they fail to meet the deadlines established in the regulations

We think these reasonable requirements for Lenders would greatly simplify and expedite the disposal of these distressed properties and would help the market to more rapidly re-establish realistic real estate prices throughout the nation.

If you would like to get involved in this effort, please give us a call.

 

MORTGAGE LOAN RATES FALL BELOW 5%

On My 24, 2010, the Wall Street Journal reported that, contrary to all expectations, home mortgage loan rates have gone down to the lowest levels of the year and back near 50 year lows.

How can this be?? We were told that the Fed’s withdrawal from mortgage-securities purchases would trigger a rise in interest rates. Instead, there seems to be plenty of money available for mortgages and, as a result, rates are falling. As one Realtor stated in the article, “It’s schizophrenic. We all had this expectation of higher interest rates and no more refinances. But I just locked in a 30 year loan with a 4.25% fixed rate …the lowest in my 24 years in the business”.

Where did all this mortgage money come from? Hold on to your hats !!! It’s from foreign investors who are pulling their money out of the shaky European economy and investing it in U.S. Treasury bonds. This massive wave of cash pushed down yields on Treasurys and, thus, pulled down mortgage yields, which are closely pegged to yields on 10 year Treasury notes.

These lower rates could widen the pool of people who qualify for a mortgage, while others may find they qualify for a slightly larger loan. “They can buy the place with the extra bedroom or the swimming pool” says Jay Brinkman, chief economist at the Mortgage Brokers Association.

Keep in mind that nearly half of all borrowers with 30-year conforming fixed-rate mortgages have mortgage rates of 5.75% or higher and could reduce their rates by a full point if they refinanced at current rates, according to investment bank Credit Suisse.

What does this all mean to prospective Homebuyers and Refinancers? Well, a 1% decline in mortgage rates for a $400,000 home can cut $250 off the monthly payment. So, if only 10 million of those 5.75% mortgage owners refinanced, it would pump an additional $2,500,000.000 back into the economy every month. What an ironic solution that would be to our economic problems !!!

Remember, although these rates are the lowest since the 1960s, they won’t last forever. Give us a call to discuss buying or refinancing your home. It might be the best opportunity you will ever have.

 

AND ANOTHER THING !!!

Colorado Springs continues to look good.

We just returned from the semi-annual meeting of the relocation Directors’ Council in Orlando, FL, where we were heartened to hear that Colorado Springs is in much better shape than most of the other major metropolitan areas in the country. After listening to reports from our colleagues from around the nation, it is obvious that the communities which are recovering the fastest from the recession are the ones which are offering incentives to attract businesses and are encouraging their businesses to offer innovative benefits to consumers. America was built on innovation and it’s time we all start expanding on that concept.

And, have you run into this before?

As we checked into the relocation Directors’ Council meeting, we were handed a FlashDisk containing a compendium of all of the meeting’s seminars. What a great learning aid. It sure was better than trying to take notes at every seminar.

Another example of Innovation in Action

We recently subscribed to Smarter Agent, an innovative new service for Realtors. This program allows us to display listing information on properties within any specified area in the country. It uses GPS to access the MLS listings and mortgage information nationwide and display them on our Blackberry. If our client wants even more detailed information, our CyberHomes program can generate a 10 page report on specific properties. The Smarter Agent program will also enable us to assist our incoming relocation clients with the sale of their homes, regardless of where they are moving from. Ten years ago, nobody dreamed that these innovative programs would be available, and now, I’ve actually turned into a full-fledged “real estate Geek”. Whooda thunk it?  

HERE’S AN OLD CHINESE PROVERB THAT WE JUST MADE UP 

“Unemployed people do not buy houses”.

Therefore, the answer to our present real estate problems is Job Creation. Local, State and Federal governments, please take note !!!

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

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

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

JOKE OF THE WEEK

15 things we wouldn’t know if it wasn’t for the movies 

  1. The ventilation system of any building is the perfect hiding place. No one will ever think of looking for you in there, and you can travel to any other part of the building you want without difficulty.
  2. You're very likely to survive any battle in any war unless you make the mistake of showing someone a picture of your sweetheart back home.
  3. Should you wish to pass yourself off as a German officer, it is not necessary to speak the language. A German accent will do.
  4. A man will show no pain while taking the most ferocious beating but will wince when a woman tries to clean his wounds.
  5. If staying in a haunted house, women must investigate any strange noises in their most diaphanous underwear, which is just what they happened to be carrying with them at the time the car broke down.
  6. If a large pane of glass is visible, someone will be thrown through it before long.
  7. If someone says, "I'll be right back", they won't.
  8. Computer monitors never display a cursor on screen but always say:
    Enter Password Now.
  9. It is not necessary to say hello or goodbye when beginning or ending phone conversations. And none of your friends have to knock when they come for a visit.
  10. Even when driving down a perfectly straight road, it is necessary to turn the steering wheel vigorously from left to right every few moments.
  11. All bombs are fitted with electronic timing devices with large red readouts so you know exactly when they're going to go off.
  12. A detective can only solve a case once he has been suspended from duty.
  13. If you decide to start dancing in the street everyone around you will automatically be able to mirror all the steps you come up with and hear the music in your head.
  14. Police departments give their officers personality tests to make sure they are deliberately assigned a partner who is their total opposite.

    And last but not least 
  15. When they are alone, all foreigners prefer to speak English to each other.

Enewsletter - May 17, 2010

by Harry Salzman

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTAIL real estate MARKET

THE LATEST STATISTICS ON HOME SALES ARE ENCOURAGING

This past week, the National Association of Realtors published their quarterly report on “Median Sales Prices of Existing, Single-Family Homes for Metropolitan Areas”. This report looks at every multiple-listing sale within 152 major metropolitan areas, or, in this case, 5.14 million sales (annually adjusted). These figures show that the Colorado Springs real estate market has outperformed most of the other markets in the country.

The bottom line is that the “Relative Strength” of the Colorado Springs housing economy looks great !!!

Some of the highlights of the report were:

·         Colorado Springs 1st Quarter 2010 vs. 2009 = +2.7%

·         91 out of 152 national areas showed higher 1st quarter median sales prices in 2010 vs. 2009

·         29 markets had double-digit increases, 3 were unchanged, while 58 had price declines

·         In the 4th quarter of 2009, 67 metro areas reported gains, while, in the 3rd quarter of 2009, only 30 showed gains

·         Distressed homes (which are discounted by 15%) accounted for 36% of total sales

·         National 1st quarter sales in 2010 were 11.4% over 2009

These figures confirm the fact that many recent Homebuyers were motivated to take advantage of the recently-expired federal tax credit and decided to get off the fence, not only here, but nationwide.

As Lawrence Yun, Chief Economist for NAR recently pointed out,” We have been seeing this flattening of home prices in all areas lately. The tax credit was very effective in drawing down excess inventory, with about 1 million additional sales resulting directly from the stimulus”.   

These numbers demonstrate that the entire nation is seeing this recovery. And, the current prospects for our local investors look even better. Our local sales in April were up 11.9% over 2009. Our average sales prices were up 4.7%. Our median sales prices were up 4.2% and our Active listings were up 2.8% over 2009…. So, what does this mean to you, a Colorado Springs Homeowner, a current or prospective investor , or someone just sitting on the fence? It means that we have more opportunities for you right here in Colorado Springs than they have in any other part of the country.

As we shared with you in previous issues, a monthly comparison of April 30, 2010 compared to April 30, 2009 shows:

·         Local sales are up 11.9%

·         Average sale prices are up 4.7%

·         Median sale prices are up 4.2%

·         Active listings are up 2.8%

With low, 30 year-fixed rates still available (4.875% for owner-occupied, 5.25% – 5.5 % for non-owner occupied) and the ability to reduce these rates even further for 15 year mortgages (typically, .25% - .375% lower), it’s a great time to buy. Give us a call.

COLORADO HAS CALIFORNIA WORRIED

The following article by Jan Norman. staff small-business columnist, was published in the Orange County Register on May 13th, 2010.

“An average of 15 to 20 companies move from other states to Colorado Springs every year and 30% are from Southern California, said Dave White, executive vice president of marketing for the Colorado Springs Regional Economic Development Corp. “ Approximately 60 Southern California companies are currently looking at Colorado Springs for a possible relocation”, he added.

A couple of the most recent California catches are Billet Racing Products that moved from Laguna Niguel in September, and Corinthian Colleges in Santa Ana that just opened an enrollment center in Colorado Springs that will employ 600.

I called White because my recent update of California companies leaving the Golden State included half a dozen that landed in Colorado Springs. Readers demanded to know why, and rightly so.

It was a softball question that White teed it up and crushed it.

‘Every state in America is focusing on California,’ he said. ‘It’s low hanging fruit’ for those assigned to develop their local economies and add jobs.

Remember, he promotes Colorado Springs for a living but, he’s a Southern California transplant and professes to love California and Disneyland. But business is business.

Here are some of his favorite selling points for California firms to move to Colorado Springs :

  • California’s top income tax is 10.55%; Colorado’s is 4.63%
  • California’s top corporate income tax is 8.84%; Colorado’s is 4.63%  based only on sales within Colorado
  • Colorado’s worker’s compensation insurance costs 25% what California businesses pay
  • Colorado Spring Utilities’ electricity rate is 4.5 cents per kilowatt hour; Southern California Edison’s is 10 cents
  • Colorado Spring’s property tax rate is 0.4% to 0.5% of real value depending on location; Orange County’s is 1% (or more for Mello Roos fees, for example)

‘My wife and I laugh that the only thing cheaper in California is the citrus,’ White said.

Colorado Springs comes looking for companies to lure away from the beaches and sun and Disneyland, he admitted.

‘We do have a campaign. We think Colorado Springs is a good match for companies seeking to relocate. We can’t compete with southern states that throw millions of dollars in incentives and tax breaks at big projects. Our sweet spot is small to mid-sized companies where the owner moves with the company. They’re driven as much by lifestyle as by incentives.’

And the city is getting ready for another California campaign, but White wouldn’t disclose details. (Nevada is preparing another campaign too, but that’s another story.)

Unlike Virginia and Texas, which have been running television commercials in Southern California, and Nevada, which regularly runs newspaper ads and billboards, Colorado Springs tends to send direct mail to company owners.

‘They did fly a plane over Los Angeles on Valentine’s Day pulling a banner that said ‘Colorado Loves LA,’ but that was Metro Denver and the state, not us,’ White said.

Colorado does offer incentives to relocating companies, but they don’t receive them until they create new jobs, White said. For example:

  • The state and city may give as much as $5,000 per job plus tax credits.
  • The city might rebate the property tax up to $800 per job.
  • The legislature just passed an additional $2,500 per job credit against the corporate income tax.

‘We also have asked private entities to provide incentives,’ he added. ‘A country club might waive the membership fee, or the health clubs might give six months free membership. We have a pass to various tourist sites. We don’t have the beaches but we do have Pikes Peak.’

And when business executives come to check out the town, the governor, mayor and civic and business leaders show up to greet them, White added.

Does Arnold do that?” (End of article)

Well we’re sorry, California, but, as you pointed out in your article, business is business. But, you still have Disneyland.

Unfortunately, California is a living example of the fact that you can’t get more eggs by killing the chicken.

Speaking of chickens, we’re not trying to be Chicken Little, dashing around screaming, “The Sky is falling, the Sky is falling”, but we thought that any of our readers who own a house, or are trying to buy or sell a house would be interested in the following article.

A LICENSE REQUIRED FOR YOUR HOUSE ???

If you think the housing market is depressed now, wait until you read the Cap and Trade Bill (H.R. 2454) that has passed the House of Representatives and is now being considered by the Senate. The Bill requires that, beginning one year after enactment of the Cap and Trade Act, you won't be able to sell your home unless you obtain a federal license and retrofit your home to comply with the energy and water efficiency standards of H.R. 2454. This will represent one of the largest tax increases any of us has ever experienced.

The Congressional Budget Office estimates that in just a few years the average cost to every family of four will be $6,800 per year. No one is excluded. 

But wait. This awful bill has many more surprises in it. Probably the worst one is this: A year from now you won't be able to sell a home without the permission of the EPA Administrator. Even pre-fabricated homes ("mobile homes") and commercial buildings are included.

To obtain this permission, you will have to have the energy efficiency of your home measured. (Sect. 202 - Building Retrofit Program). After the government notifies you what your retrofit energy efficiency requirement is, you will be required to make specified modifications to your home under the retrofit provisions of the Act. (Note also that the EPA administrator can set higher standards at any time, even above the automatic energy efficiency increases which are already built into the Act.)

After the initial inspection and retrofit, you will have to get your home measured again and get a license (called a "label" in the Act) which must be posted on your property to show what your efficiency rating is; sort of like the Energy Star efficiency rating label on your refrigerator or air conditioner. If you don't get a high enough rating, you will not be allowed to sell.

Keep in mind that the requirements in the bill have been set low initially so the bill would be able to get through Congress. After passage, however, the Administrator is permitted to set higher standards every year.

The Act also allows the government to give homeowners who meet certain energy efficiency levels a grant of several thousand dollars to comply with the retrofit program requirements. As always, the government will determine who qualifies to receive these grants. Based upon the exemptions allowed in other such government programs, we can expect these grants to be awarded only to those who “don’t have an income of more than $50K per year", or "whose home selling price is not more than $125K". Thus, low income Homeowners will get a tax refund to offset the cost of this new program and, when this happens, the $6,800 estimated cost to the average taxpayer will go even higher, in order to “bail out” those who qualify for the exemption.

Sect. 204 - Building Energy Performance Labeling Program establishes a labeling program that will identify the achieved energy efficiency performance for "at least 90 percent of the residential market within 5 years after the date of the enactment of this Act." The EPA administrator will get $50M each year to enforce the labeling program and the Secretary of the Department of Energy will get an additional $20M each year to help the EPA.

Homeowners will be required to post the BEPL label in a conspicuous location in the home and will not be allowed to sell their home without having this label. And, as with all licensing programs, the Homeowner will probably be required to obtain a new label on a regular basis, possibly every year.

 The government estimates the cost of measuring the energy efficiency of your home should only cost about $200 each time. (When the California auto smog inspections first started, they were projected to  cost only $15. The current price for that program’s inspection and certificate is $50, a 333% increase).

This bill is an absolute type of a “taking away” of private property rights of every homeowner in the U.S. We believe that any type of implementation of this bill will dramatically decrease a Homeowner’s ownership rights. We have been vested with as Americans.

Will this bill help get America back on track? Well, as we pointed out, above, you can’t get more eggs by killing the chicken.

We recommend you call or contact your friends in Washington to vote against this bill.

CHECK OUT the following relating to this new, proposed law; 

HR2454 American Clean Energy & Security Act:   http://www.govtrack.us/congress/bill.xpd?bill=h111-2454

San Francisco Examiner OpEd, May 16, 2010
http://www.sfexaminer.com/opinion/columns/oped_contributors/Cap-and-trade-is-a-license-to-cheat-and-steal-45371937.html

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 38 years of providing relocation and Real Estate services to clients throughout the country, I am uniquely qualified to assist them with the relocation process, including buying and/or selling their homes on both ends of their move. Please allow me to implement my negotiating skills on your behalf.

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

JOKE OF THE WEEK

A pollster was working outside the United Nations building in New York. He approached three men: a Texan, a Californian and a New Yorker. "Excuse me." he said. "I would like to ask your opinion on the current meat shortage." The Texan replied, "Excuse me, but what is a shortage?" The Californian asked, "Excuse me, but what is meat?" The New Yorker replied, "What is 'Excuse me'?"

Enewsletter May 10, 2010

by Harry Salzman

HARRY'S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET

SINGLE-FAMILY PERMITS UP ALMOST 70% FROM '09

 In their May 4, 2010 issue, the Gazette reported that the pace of home construction continued to improve in the Colorado Springs area, while the number of new foreclosure filings eased slightly.

Single-family building permits totaled 127 during April, a nearly 70% increase compared with the same month last year. For the first four months of this year, single-family permits totaled 535, about twice as many as the same period in 2009.

These numbers are significantly lower than those from a few years ago when monthly permits routinely totaled several hundred, but they are getting back on track and should hopefully reach 2000 permits in 2010.

Local Home sales totaled 792 in April of 2010, an increase of 11.9% over April of 2009. Median home prices rose to $187,500, an increase of 4.2% from April of 2009. This marks the sixth straight monthly rise in prices and the tenth straight monthly increase in sales. It is also encouraging to note that the sale prices for these homes averaged 98% of their listed prices.   

The inventory of local homes for sale increased 2.8% in April, however, mortgage rates remain low and the Homebuyers' tax credit will still be available to soldiers returning to Ft. Carson from Iraq and Afghanistan. Foreclosure rates are also declining. All of this is good news for Sellers. The bad news is that many homeowners who were unable to sell their houses last year and who took their homes off the market may re-list this year, thus increasing the competition. In fact, there has been a 2.8% increase in the number of listings since April, 2009.

And, don't forget, even if you're not involved with buying or selling a house, you are deeply impacted by our real estate market. As we pointed out last week, every home sale results in approximately $11,000 in new taxes. So, 2000 building permits results in $22 million income available for schools, police, firefighters, road repairs, etc.  

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. 

AND, BY THE WAY..

Wells Fargo says the recovery is clipping along

In a speech attended by about 400 Colorado Springs bank clients and business leaders at the Antlers Hilton last week, we were encouraged to hear Jim Paulsen, chief investment strategist for Wells Fargo Capital Management predict that "the worst is over". He stated that the U.S. and global economies have been recovering for several quarters and that recovery will grow faster and last longer than the average economic recovery since World War II  

Mr. Paulsen said that recovery will be stronger and more sustainable because the financial market, businesses and consumers prepared for a depression and instead were hit by a less-severe recession.

"Fear of a Depression caused businesses and consumers to stop spending. That resulted in low interest rates, massive federal spending, deep cost-cutting and the hoarding of cash by consumers. All of which are now providing fuel to keep the recovery going" Mr. Paulsen said.

So, it turns out that "Fear" is the antidote for "Greed". Whooda thunk it ??

Homeownership declines, but that's good news for investors

On May 7, 2010, the U.S. Census Bureau and the Department of Commerce reported that the nation's Homeownership rate fell to 67.1% in the first quarter. The rate has not been that low  since the first quarter of 2000. The Homeownership rate reached its peak in 2004, when it was 69.2% for both the second and fourth quarters.

A big factor in this reduction in Homeownership is the increase in Foreclosures and Short sales. As always, "One man's meat is another man's poison". This reduction in Homeownership results in an increase in potential renters looking for high-quality rentals.

Combine the increase in potential renters with the low mortgage interest rates now available for investors (the interest rates for non-occupied properties are now about 5 ¾%) and you have the receipe for a successful real estate investment. Give us a call to discuss this opportunity.  

Risk wanes for real estate price declines

The risk of home-price declines decreased in 93% of the 384 markets tracked at the end of last year by analysts with PMI Mortgage Insurance Co., although half still showed an elevated or high risk of depreciation.

Overall risk of price declines "decreased dramatically" during the final three months of 2009, PMI said, largely because of improvements in affordability, and declining foreclosure starts. Affordability was helped by falling home prices, lower mortgage rates and increasing personal income.

Risky mortgage lending practices and loan products decreased sharply in 2009 "and are hardly present at all in 2010 lending" the report said.

Although Colorado Springs was not one of the surveyed markets, we have consistently been cited as one of the cities most likely to recover quickly from the recession, as opposed to states like Florida and Nevada, which still showed a 90% or greater chance of further price declines, according to the survey.  

That $10,000 kitchen remodel might only get you $3,000 when you sell !!

When preparing to sell your home, remember that upgrading your home does not necessarily require making major "improvements". Be cautious about investing in "improvements" that will not increase the marketability of your home. For example, putting in a swimming pool in Colorado may actually reduce the market value of your home. We have even heard of Sellers who had to fill in their pool, just to get prospective Buyers to look at their property. We can give you a pretty good idea of what your proposed remodeling project will do to the price of your home. Give us a call, before you decide to remodel.

JOKE OF THE WEEK

A blonde, wanting to earn some money, decided to hire herself out as a handyman-type and started canvassing a wealthy neighborhood. She went to the front door of the first house and asked the owner if he had any jobs for her to do.

"Well, you can paint my porch. How much will you charge?"

The blonde said, "How about 50 dollars?" The man agreed and told her that the paint and ladders that she might need were in the garage. The man's wife, inside the house, heard the conversation and said to her husband, "Does she realize that the porch goes all the way around the house?"

The man replied, "She should. She was standing on the porch."

A short time later, the blonde came to the door to collect her money.
"You're finished already?" he asked. "Yes," the blonde answered, "and I had paint left over, so I gave it two coats. "Impressed, the man reached in his pocket for the $50. "And by the way," the blonde added, "that's not a Porch, it's a Ferrari."

Enewsletter - May 3, 2010

by Harry Salzman

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET

HOMEBUYERS' TAX CREDIT - THE IMPETUS FOR A RECOVERY, OR, A FLASH IN THE PAN ??

Last week’s Enewsletter article about how the government benefits from home sales generated a lot of positive feedback and a couple of questions from our readers. One question was, “How much tax money does a home sale generate?”. To answer that question, let’s look at a typical home sale to see where the money goes.

Let’s say that a Homebuilder builds a home and offers it for sale for $300,000. 

The “non-taxable sales items” built into that $300,000 selling price will total around $150,000.  e.g.:

  • Lot cost
  • Permits
  • Utility fees
  • School and park fees
  • Overhead
  • Supervision
  • Brokerages costs
  • Seller and buyer closing costs
  • Etc., etc., etc.

And, oh yeah, profit

That means that around $150,000 of the $300,000 selling price is spent on building materials, which directly generate sales tax revenues of 7.4%, or $11,000. This income alone to the government more than pays for the $8000 Homebuyers’ tax credit, and we haven’t even considered the additional income taxes paid by the carpenters, plumbers, roofers, etc. that worked on the home. All of the income taxes generated by these construction-related jobs more than balance out the tax credit “cost” to the government for resale homes (which do not generate the sales taxes on materials created by new construction).

So, the recent tax credit to Homebuyers should not be seen as money “given away by the government”, but was, in reality, a method for ‘priming the pump’ of economic growth.

Too bad it’s no longer available.

Will the demise of the Homebuyers’ tax credit mark the end of the recent surge in home sales? It’s too early to tell, but it’s no coincidence that most of the title companies are very busy processing contracts that came in right before the deadline on the tax credits. Some experts are also concerned that the traditional “summer vacation” Homebuyers simply moved their normal purchases from June and July to March and April, in order to take advantage of this program.

Time will tell whether the tax credit program actually generated more home sales or, whether it only nudged Buyers into changing the timing of their purchases.  

LENDERS HAVE A PROBLEM – THEY HAVE TOO MUCH MONEY !!!

No, we’re not kidding.  Lenders all over the nation have money to lend, but nobody is asking them for loans. That’s not a hopeful sign for the economy, but it’s a great opportunity for people who are looking to finance a new home. Prospective Buyers are finding that lenders will compete for their business. For example, we recently arranged for a home loan at 4 7/8% with no origination fee and no discount points. An FDIC commercial bank in Florida is now making loans (to Doctors only) with no-down payment, no origination fee, no discount points, for a 6% 30 year fixed or a 5% 5/1 ARM. (It would almost make it worthwhile to go to medical school, just to get one of those loans).

Right now, there seems to be an oversupply of money and an undersupply of Borrowers.  

LANDLORDS ARE SMILING – MAYBE YOU SHOULD JOIN THEM

This past week, the Gazette reported that our local vacancy rate in multi-family residences was down to 6.2%. That’s the lowest vacancy rate since 2001. The article cited the two major factors for this phenomenon, namely, the increase in the number of troops at Fort Carson and the increase in the number of renters who used to be Homeowners, but who have lost their homes to Short Sale or Foreclosure. 

The bottom line for anyone who has ever considered purchasing income property is that our present market looks great for prospective investors. Consider the following factors 

  • People who have recently lost their homes are now looking to rent
  • These same people are more responsible than typical renters
  • Prices for investment property are historically low
  • Mortgage interest rates for investment property are historically low
  • Inflation is approaching quickly, which means today’s investment property will be worth much more tomorrow

In the past, the industry considered a vacancy rate of 5% to be ‘Fully occupied” (because around 5% of rental units are always in the process of upgrading). Therefore, our present 6.2% vacancy rate is motivating investors to buy even more rental property. Maybe you should consider taking advantage of this opportunity. Give us a call to discuss the possibilities.

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

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

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

JOKE OF THE WEEK

THE FACTS OF LIFE IN THE real estate BUSINESS

If you are a Realtor,

  •  Helping train new agents is training your enemy.
  • A new agent will sell the most expensive listing in the office, then say, “Isn’t this fun?” Don’t answer.
  • If you show a prospect enough property, he will get his own real estate license.
  • If you show enough property, you may not make a sale, but you will need a new car.
  • Creative financing is followed by creative litigation.
  • Your next prospect will be a family with four children …One with a ball-point pen, one prone to car-sickness, and one who screams all the time. The fourth will be an infant overdue for a change.
  • The fussiest buyers have the least money.
  • Everyone wants the house that sold yesterday. It was on the market for two years.
  • The cat that escaped has a pedigree and is in heat. The sign says, “Don’t let Whiskers out”.
  • The house they left on the East Coast was bigger, better and cheaper. The weather is never mentioned.
  • The house they left on the West Coast was bigger, better and cheaper. The weather is always mentioned.
  • No matter how well you know the property you’re showing, they will ask you something you can’t answer.
  • If the house sells quickly, the owner will believe the price was too low.
  • If you break a date for a prospect, the prospect will stand you up.
  • The friendly dog in the yard, wagging his tail, bites.
  • The house down the street sold for more than you can get for the house up the street.
  • Your own family will list with another agent, or buy from an owner, probably both.
  • Whatever you learn in this escrow will not apply in the next.
  • If you say you’re busy, the prospects think you’re making too much money.
  • If you say you’re not, they think you’re unsuccessful.
  • If your owner re-lists with another agent, he’ll lower the price. Even if he doesn’t, his house sells the next day.

And, if you are a landlord or a property manager,

  • Tenants only lock themselves out in the middle of the night... or on Christmas.
  • At least one tenant's check will be "lost in the mail" every month.
  • A tenant's ability to see dirt and damage is much greater when they move in than when they move out.
  • Your best tenants always get job transfers during the worst rental markets.
  • The insurance inspector always shows up to take photos of the building as you are putting the evicted tenant’s possessions on the curb.
  • Tenants always swear under oath that the window was broken when they moved in.
  • If it exists, your tenant will try to flush it down the toilet.
  • If it is pouring rain, you can be sure the windows are open at one or more at your units.

But, it’s still a great way to make a living !!!

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Photo of Harry A Salzman Real Estate
Harry A Salzman
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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