Real Estate Information Archive

May 17, 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.

 

 

NOT YOUR NORMAL SPRING BUYING SEASON…

If you’ve been reading this eNewsletter for the past year or more you certainly will understand when I say once again that the typical “spring buying season” in Residential real estate is no more.  I can’t speak for future years, but for now everything is different.

With folks venturing out more, they are starting to look for the wants and needs they discovered were lacking in their present homes during the last year when they were forced to remain indoors.  Bigger and more elaborate kitchens, home offices, outdoor entertaining areas and more have become prevalent in the search for new homes. 

Even a big snowstorm hasn’t kept buyers from wanting to see homes because they are hoping others might not be out and that would give them an advantage!  I’ve seen so many different scenarios I can’t begin to list them here.  

Buyers are trying everything possible to present offers that sellers will notice and hopefully accept.  And the stress and disappointments are like nothing I’ve witnessed before.  

And that’s where I come in.

A big part of my job is working with my clients to make certain we’ve got as much information as possible right at the beginning of the search.  When we’ve figured out a strategy it’s much easier to make the quick decisions that are necessary in today’s market.  

Every family situation is different and there’s no easy “no size fits all” in Residential real estate.  Home size, location, family size and wants, needs and budget all come into play and have to be considered right from the start.  

I like to spend time getting to know my clients so that I can best represent them and make certain they are getting the most for their money.  It can get a bit frantic in these bidding wars and I’ve learned that at times, walking away is a “win” when it’s not in a buyer’s best interest to “win the bid, but lose the war” so to speak.  

My 48 years in the local Residential real estate arena have taken me through many different cycles and I’ve learned the ins and outs of making sure my clients are protected and happy with the eventual outcome of their home search.  It may be YOUR first rodeo, but it’s obviously not mine.  I know how to keep the stress levels at an even keel if at all possible and they certainly don’t call me “Mr. Negotiator” for nothing.  

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.  It WILL take longer to find your next home, so that also needs to be a consideration from the start.

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.

 

3 GRAPHS THAT SHOW WHY YOU SHOULD SELL YOUR HOUSE NOW

Keeping Current Matters, 5.17.21

As I’m sure you’ve heard more than once from others, and numerous times from me, 2021 is the year of the seller when it comes to Residential real estate.  

If you’ve been thinking of moving in order to better suit your changing needs and wants, now is the perfect time to do so.  Historically low interest rates are certainly in your favor, and high buyer demand at present presents you with the leverage to negotiate the best contract terms on the sale of your current home.  

Here’s what is driving the sellers’ advantage and why there is so much opportunity for homeowners who are ready to move this season.

1. Historically Low Inventory

The National Association of Realtors (NAR) explains it this way: “Total housing inventory at the end of March amounted to 1.07 million units, up 3.9% from February’s inventory…Unsold inventory sits at a 2.1-month supply at the current sales pace, marginally up from February’s 2.0-month supply and down from the 3.3-month supply recorded in March 2020.”

Even with the slight rise in number of homes for sale this spring, inventory remains close to an all-time low:

 

High buyer interest has created a major imbalance between supply and demand, but as the slight uptick in inventory shows, sellers are beginning to reenter the market.  Selling your home now enables you to take advantage of buyer demand before more listings come on the market later this year.

 

2. Frequent Bidding Wars

As I’ve been telling you for some time now, bidding wars are becoming the norm as a result of the supply and demand imbalance.  NAR reports that the average number of bids received on the most recently closed sales is 4.8 offers.  This number has doubled since the first quarter of 2020:

 

Buyers facing tough competition when searching for a home are more likely to be flexible and generous in their negotiations.  This gives the seller the chance to choose the best buyer for their needs and be selective about things like time to closing, contingencies, renovations and more.  Working with a seasoned professional like me who is a “certified negotiator” gives you even more leverage in navigating the bidding wars.

 

3. Days on the Market

Today’s sellers aren’t waiting very long to find a buyer for their house either, NAR reports: “Properties typically remained on the market for 18 days in March, down from 20 days in February and from 29 days in March 2020.  83% of the homes sold in March 2021 were on the market for less than a month”:

 

Lawrence Yun, NAR’s chief economist explains, “The sales for March would have been measurably higher had there been more inventory…Days-on-market are swift, multiple offers are prevalent, and buyer confidence is rising.”

 

Bottom Line?  If you’ve even been thinking about moving, you can see that it’s a great time to sell your present home.  Call me and let’s figure out the best way for you to make your current Residential real estate dreams come true.

 

COLORADO SPRINGS IS NUMBER 30 IN TOP METRO AREA PRICE INCREASE

NAR, 5.11.21, The Wall Street Journal, 5.12.21

Home prices across the country rose just about everywhere during the first quarter of 2021 and this rapid price appreciation shows little sign of fading anytime soon due to the lack of homes for sale and robust demand.  Nationwide, the median existing-home sales price rose 16.2% in the first quarter to $319,200—a record high in data going back to 1989.

For 182 of the 182 Metropolitan Statistical Areas (MSAs) tracked by NAR, the median sales price for existing single-family homes was higher in the first quarter compared to a year ago.  In 89% of those metro areas, median prices rose by more than 10% from a year earlier.  And the average national monthly mortgage payment rose to $1,067 from $995 a year ago.

“Significant price increases throughout the country simply illustrate strong demand and record-low housing supply,” said Lawrence Yun.  “The record-high home prices are happening across nearly all markets, big and small, even in those metros that have long been considered off-the-radar in prior years for many home seekers.”

Another factor coming into play is the fact that length of time U.S. homeowners are staying put has been steadily rising, some of which is due to concerns about letting potential buyers into their homes during a pandemic.  

A number of buyers are being kept out of the current market, most especially first-time buyers and those with limited budgets who are losing out to all-cash buyers.  According to Yun, “The sudden price appreciation is impacting affordability, especially among first-time buyers.  With low inventory already impacting the market, added skyrocketing costs have left many families facing the reality of being priced out entirely.”

The following chart shows the median sale price of existing single-family homes in the U.S.:

 

Colorado Springs was ranked at number 30 this quarter with median sales price increases year-over-year at 14.3%.  

To see the entire 182 MSAs in alphabetical order please click here.  To see them in order of percentage of median price increase click here.

 

RECORD HIGH COSTS OF BUILDING MATERIALS CONTINUE TO THREATEN HOUSING AFFORDABILITY

NAHBNow, 5.14.21

It’s not just lumber anymore.  The rapidly rising prices for other necessary building materials are causing widespread concerns throughout the housing industry.

While lumber prices, up more than 300% from April 2020, have been dominating the headlines for the past year, the prices for materials like steel, concrete and gypsum products all are climbing at a record pace.

“Steel mill products price volatility is greater than it has been at any time since The Great Recession,” said National Association of Home Builders’ (NAHB) Senior Economist David Logan.  “Over the past three months, prices have climbed 22%.  Perhaps more concerning than rising prices is that the pace of price changes has quickened each of the past nine months,” he added.  

“[Rising materials prices] are significantly driving up prices for single-family homes and apartments,” wrote NAHB Chief Economist Robert Dietz in his bi-weekly newsletter.  “Combined with expectations of rising interest rates, these higher prices place additional pressure on housing affordability, which continued to decline in the first quarter,” he added.

If you are considering new construction the earlier you start the better.  The lack of available homes for sale is not just an “existing home” thing.  Builders cannot keep up with the current demand and with material prices rising daily, prices on those homes are rising quickly as well.  Delivery times are much longer than even in the most recent past and interest rates are not guaranteed to stay this low.  Please call me sooner than later if this is an option you’re considering and let’s see how we can make it work for you.

 

THE MOST COMMON REASON ACTIVE BUYERS CAN’T CLOSE THE DEAL

NAHBNow, 5.11.21

A recent post in the Eye on Housing blog showed that 64% of buyers who were actively engaged in the process of finding a home in the first quarter of 2021 have spent upwards of three months searching for a home without success. 

The most common reason they have come up empty-handed is not because they can’t find a home at an affordable price (32%) but because they continue to lose out in bidding wars (45%), according to survey results from NAHB’s most recent Housing Trends Report.  

This is flipped from a year ago when 40% cited unaffordable prices and only 23% because of offers by other buyers.

 

 

When asked what they are most likely to do next if still unable to find a home in the next few months, 50% of active buyers who have searched for three-plus months will continue looking for the “right” home in the same location—about the same percentage as a year earlier.  On the other hand, 42% say they will expand their search area, an increase from the 34% willing to take that step a year earlier.

And 25% of active buyers will give up until next year or later, up from 16% a year earlier.  

 

I point all of this out for several reasons.  The first is so that your expectations are in line with the Residential real estate landscape of today’s market.  And the second is to reiterate the importance of using a seasoned professional like myself in your active search.  I can’t promise you will get your first, or sometimes even your second choice, but I can promise that I will do my very best to make the entire process one that adds as little stress as humanly possible.  

 

TIPS FOR BUYERS IN LOW-INVENTORY MARKETS

The Wall Street Journal, 5.4.21

Here are a few excellent tips that I’ve employed in recent times that can help make your offer one that stands out:

 

1. Be Flexible on Timing:  Sellers sometimes choose the bidder who is the most flexible on timing.  If the sellers want to stay in the house longer for whatever reason, they may choose the buyer who will let them do that, even if it’s not the highest offer.

 

2. Don’t Wait:  In a low-inventory market, buyers need to act quickly.  That means when a new house comes on the market, drop everything to go see it.  You can’t wait for the weekend.

 

3. Get Creative:  This means you need someone like me who knows where to look for homes that are about to come on the market as well as finding a way to write a contract that gets a second look.

 

4. Work With a Local Lender:  Getting pre-approved and not just pre-qualified is paramount in today’s bidding war environment.  And the strength and reputation of a local lender can go a long way in helping to win that war.

 

5. Pay With Cash, if Possible:  Cash buyers are far more likely to win a bidding war than those who plan to finance their purchase because a deal can close more quickly and easily without the involvement of a bank.

 

6. Consider Waiving Contingencies:  While most real estate agents don’t recommend waiving an appraisal contingency, mortgage contingency or your right to a home inspection, in many markets the practice is now widespread as buyers compete to make their offers the most attractive.

 

7. Consider an Escalation Clause:  A number of my clients have been including these clauses, which stipulate that the bidder will top any other offer up to a certain threshold.

 

HARRY’S THOUGHT OF THE DAY: 

May 6, 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.

 

 

WE INTERRUPT OUR REGULAR COLUMN FOR A WORD FROM THE EDITOR (aka WIFE)…

This was too cute a story not to share with Harry’s friends, clients and readers.

The Salzman household, like so many others during the past year or so, has been busy cleaning closets, the basement and just about everywhere else in preparation for some remodeling.  In doing so, we have come across many years’ worth of memorabilia.  When I walked into the office one day, I saw a box that had the above pictured banner sitting on top.  

I could easily ascertain from the year on it that Harry must have been all of nine years old when he won this “award” so I of course wanted the back story.  And this is what he told me:

“You know, when I was young, I knew that in order to be successful in life no one was able or going to hand anything to me on a silver platter.  I was aware quite early that any success I achieved would have to be through my own doing since my parents were not in a position to help financially. I knew that I wanted to be the first in my family to graduate college and I knew I wanted to be the best at whatever I chose to do.

When I was in the Cub Scouts, we supported the Boy Scouts in their annual revenue drive.  We were asked to sell raffle tickets in order to raise money and earn badges.  I was determined to be the best at that.  

I figured out that if I went door-to-door there would be a possibility that no one would be home, and I’d be wasting time. So, I asked my mother if I could skip school one day and go with her to her office building in downtown Phoenix and that way I could go from office to office and hit up everyone who worked in that big building.  She agreed and it was a great success.  

But of course, me being me, I couldn’t rest there.  The following Saturday I asked my mother to drop me off downtown at Walgreens, which at that time had a soda fountain in the store.  I sat at the counter and every time someone came in to eat or purchase a drink, I asked them to buy a raffle ticket from me.

And that’s how I won the “1956 Boy Scout Exposition Champ Salesman” award!”

I have known Harry since he was 13 so didn’t know him at the time he won this, but his answer did not surprise me.  He is one of the hardest working people I have ever known and has been since we first met. He was always striving to be the best and wouldn’t ever settle for less.  I could tell you many more stories of how impressed I was with his tenacity and imagination when it came to sales and you’d love them all, but it would take days.  His ingenuity, his devotion to perfection, his art of negotiation and so much more were prevalent way back then, and he continues to amaze me daily with his “ideas” of how he can do more for his clients.  

Those of you who I have not met are probably thinking, “well, of course she’s saying that because she’s his wife!”  But I’m guessing even if you don’t know me, you probably do know Harry well enough to know that his special brand of customer service is just an ingrained part of him…and now you know it went back to when he was only nine years old.

And if you haven’t yet experienced working with Harry, all I tell you is that he’s been preparing to work hard for you since 1956.  That’s better than money in the bank…but with Harry you’ll get more of that as well.

Thank you for indulging me this story…I knew it wasn’t one Harry would share himself.

 

AND NOW BACK TO OUR REGULARLY SCHEDULED COLUMN…

What can I tell you that you haven’t heard from me over the last several months?  Home values and prices are still going through the roof and interest rates are continuing to remain historically low.  And, unfortunately, there are still very few homes available for resale.  

With apartment rents continuing to rise and interest rates so low, folks are wanting to get into home ownership, many for the first time.  The shortage of available homes for sale, along with higher prices and stricter loan qualifications, especially for first-time buyers, continue to make it difficult to find a home.

Bidding wars with very creative offers are making things even hard for buyers.  Sellers, on the other hand, are oftentimes shocked at what they can get for their present home.  However, finding the next one is presenting challenges that even a few years ago might have been hard to imagine.  

New construction, an option many of my clients have considered in recent days, is booming, but there is a shortage there as well.  More and more homes are being built but builders are finding it difficult to keep up with the demand.  This is especially true in recent times when the cost of construction, including lumber, cement, aluminum, copper and more is going up almost daily.  Home builders are trying new ways to compensate for that, which I will explain later in this eNewsletter.

The Residential real estate market today, and most especially here in Colorado Springs, is not for the timid or uninformed buyer.  It’s more essential than ever to be working with a professional, seasoned broker who knows how to navigate these new waters.

Fortunately for you…you’ve got me.  And they don’t call me “Mr. Negotiator” for nothing.  I’ve been working in the local arena for 48 years this month and have seen most all cycles.  This one is tough for sure, but when you have me on your side you’ve won at least one of the battles.  And for the other battles--you’ve got me fighting them for you. 

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.

 

APRIL 2021

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

Here are some highlights from the April 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 9.  For condo/townhomes it was also 9.  

Also in El Paso County, the sales price/list price for single family/patio homes was 104.2% and for condo/townhomes it was 104.1%.  

It’s noteworthy that in April of 2020, we couldn’t show homes due to the pandemic so it is no surprise that the number of listings and sales in comparing this year to last would be up considerably.  The numbers aren’t indicative of more available homes or more home sales.

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 April 2021 to April 2020 for All Homes in PPAR:

                        

                        Single Family/Patio Homes:

·       New Listings were 1,879, Up 28.9%

·       Number of Sales were 1,489, Up 22.1%

·       Average Sales Price was $481,857, Up 21.8%

·       Median Sales Price was $425,000, Up 18.1%

·       Total Active Listings are 557, Down 64.9%

·       Months Supply is 0.4, Down 2.9%

 

Condo/Townhomes:

·       New Listings were 217, Up 11.3% 

·       Number of Sales were 221 Up 27.7%

·       Average Sales Price was $324,193, Up 20.6%

·       Median Sales Price was $305,000, Up 19.7%

·       Total Active Listings are 75, Down 62.5%

·       Months Supply is 0.3, Down 2.3%

 

Now a look at more statistics…

 

APRIL 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 21.3%

 

• Median Sales Price for All Properties was Up 19.7%

 

• Active Listings on All Properties were Down 56.3%

 

Also in El Paso County, the sales price/list price for single family/patio homes was 104.2% and for condo/townhomes it was 104.1%.  

 

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 in general:

 

PREVIOUSLY OWNED U.S. HOMES ARE NOW MORE EXPENSIVE THAN NEW ONES

Bloomberg News, 5.1.21

It’s now cheaper to buy a new home than a previously owned one for the first time in more than 15 years.

With price increases in the broader market due to the lack of available listings both locally and nationwide, the premium for newly built homes vanished last month, erasing the discount traditionally associated with older properties.

Nationally, the median sales price of a previously owned single-family home rose to $334,500 in March, the latest National Association of Realtors data show.  Meanwhile, new properties sold for a median of $330,800 according to a government report, marking a reversal in the differential for the first time since June 2005.

Prices can vary widely each month depending on the composition of properties sold and increased on a year-over-year basis—but the gains were much larger for older homes.  This is due to the lack of available existing homes for sale—with only 900,000 existing homes for sale nationally—down more than 30% from one year ago.  

On the other hand, the number of new homes sold and awaiting start of construction climbed to the highest level since September 2006. 

 

WITH LUMBER PRICES BREAKING NEW RECORDS, BUILDERS ARE OFFSETTING THOSE COSTS WITH ESCALATION CLAUSES

Realtor Mag, 4.23.21, NAHB 4.23.21, The Wall Street Journal, 5.3.21

While the escalating lumber prices are generating fabulous profits for sawmill owners, home buyers, renters and do-it-yourselfers are footing the bill.

Lumber and plywood are flying off the hardware store shelves and being bid up by home builders as prices are reaching record numbers.  On-the-spot prices for two-by-fours and other wood products have also jumped to fresh highs.

When the economy was shut down last year to slow the spread of the coronavirus, sawmills sent workers home and curtailed production.  By April 2020, 40% of North America’s sawmill capacity was shut down.  While U.S. wood product output returned to pre-pandemic levels in December, production remains about 16% lower than the 2006 peak, which is the last time so many houses were being built.

And these price increases are being passed on to consumers.  It’s not only new homes and renovations that are costing more due to lumber prices.  

New apartments being built to help with the lack of available housing for sale are charging higher rents due to the increased building costs.  

While home builders are doing their best to obtain lumber price guarantees from suppliers, they can only get them for around two months at max, and reorders are continuing to cost more.

To offset this and protect themselves from ongoing price increases in the lumber market, more home builders are adding escalation clauses to their sales or construction contracts.

According to the most recent National Association of Homebuilders and Wells Fargo housing market Index survey, 47% of builders said they were “including price escalation clauses in their sales contracts”.  Another 10% are including shared price clauses in their contracts, which are similar to price escalation clauses in that they tie the final house price to the price of building materials.  Paul Emrath, NAHB’s vice president for survey and housing policy research explained, “The difference is that, in the typical shared price clause, the home builder agrees to absorb part of the material price increase, with the home buyer covering the rest”.

 

APARTMENT RENTS RISE WITH PERKS AND DISCOUNTS FADING

The Wall Street Journal, 4.24,21

Americans are now paying more for rent again, ending a period during the pandemic when they enjoyed flat or falling rental prices.

The record low inventory of homes for sale is fueling the rental market and landlords and apartment buildings are able to increase prices nationwide.  

Rising rents add to the mounting evidence that the economy is rapidly gaining strength and analysts are forecasting that the U.S. economy could grow around 7% in 2021, which would be one of its strongest years in decades.

real estate investors believe the rental market is primed for another period of price growth, comparable to the years that followed the financial crisis, when effective rents outpaced inflation.  According to Matthew Lawton, an executive in the capital-markets division at brokerage JLL, “In some markets like Nashville and Denver, they increased more than 10% for multiple years”.

As more people are priced out of the for-sale market during the hottest home sales market in 15 years, they will search for rental properties.  

I’ve got a number of clients who are constantly on the lookout for investment properties, and while they may cost more to buy these days, the monthly rental price they can get for these homes more than compensates for the cost of the home over the long run.

If buying for investment purposes is something you have considered, please give me a call and let’s discuss whether it might be an option for you.  Of course, I recommend that you first talk with your tax and wealth advisors to see if it that’s something viable for your individual financial situation.  

 

UCCS ECONOMIC FORUM UPDATE

College of Business, UCCS, 4.30,21

As always, I’ve included the most recent economic update from the UCCS Economic Forum.  It provides data concerning all aspects of the economy, on both the National and Colorado Springs levels.  

You can click here to read the report in its entirety and if you have any questions, please give me a call.