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HARRY'S BI-WEEKLY UPDATE 7.18.16

by Harry Salzman

July 18, 2016

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 COMPLICATED PSYCHOLOGY OF BUYING AND SELLING A HOUSE

The Wall Street Journal, 6.13.16

We might often forget this, but it’s a “fact of life”—homes come with far more emotional attachment that any other investment we might make.

Homes are places were we take refuge from the rest of the world and raise a family.  They offer an investment that hopefully will provide fruitful returns over time.  And we fall in love with a home in a way that we never fall in love with an investment portfolio of stocks and bonds.

How we feel about our homes or potential homes can often blind us to the reality of the market when it comes time to buy and/or sell. 

On the buying side, we often prioritize one set of emotional needs over others that are just as strong but not as evident at first.  Ignoring those can often lead us to make poor decisions that could affect us for years to come.

When it comes to selling, there’s a whole other set of issues.  We tend to value our homes based on our “rose-colored” perceptions and expect it be valued far beyond reasonable expectations or present market conditions. 

Here are a few missteps that buyers and sellers often make as they head into the housing market.

  • Ignoring the big picture.  Buyers are often looking for features such as a long driveway or large backyard that will make them happier with their home.  What they don’t realize is that those changes may not make them happier with their life as a whole. 

“When people move to a better housing, they think they will be a lot happier overall,” says Singe Oishi, a co-author of a 2010 study on the subject in Social Indicators Research.  “When they actually move, however, their overall happiness does not often change because there are many tradeoffs in moving.”

One of the biggest tradeoffs is commuting.  Oftentimes moving to a bigger house means moving further away from work.  The commute can tend to add stress and detract from overall happiness, such as providing less “family time”.

Various studies have shown that if you move to a home far away from work or your friends, but it has nicer “stuff”, it’s not a great deal for your happiness. Therefore, it’s important to consider how the places you’re looking at will shape your social relationships.

 

  • Overlooking big expenses.  Not totaling up the cost of everything needed to fix up and furnish the home can often lead to making poor choices about how much to pay for a home, says Alex Tabarrok, a professor of economics at George Mason University.  Overspending on a down payment can leave a buyer without enough for furniture or decorations that they want. 

 

  • Weighing buying vs. renting.  The biggest budget concern is whether to rent or buy.  Research has shown that there are reasons for buying and also for opting out.  

Buying a home can provide a psychological boost, especially for a first-time buyer, since homeowners feel they have more control over their lives and are not dependent on a landlord who can change terms and conditions with each lease renewal.

However, home ownership has it’s own kind of stress since there is a certain amount of work necessary in order to maintain a home—not to mention the financial aspect of being tied to a mortgage or keeping up with repairs or other unforeseen costs.

 

  • Expecting a big return. Robert Shiller, a professor of economics at Yale University wrote a paper, which was updated in 2014 that looked at the ways recent homebuyers around the country think about the future values of their properties.

He found, among other things, that “homebuyers have extremely high long-term price expectations”.  This can cause buyers to purchase homes that aren’t a good fit in terms of location or social scene just because they seem like a good investment.  Or they may stake their plans for retirement on the possible financial returns from selling a home. 

On a much larger scale, this “over-optimism” can lead to speculative booms that warp the overall market. 

It isn’t clear why homeowners are usually so cheerful about the future value of their homes, but researchers feel it may result from the “money illusion” – a failure to take inflation into account.

 

  • Not wanting to come up short.  While people have many reasons for selling a home and for setting the prices they do, research has found that the most powerful emotion at work in a sale is loss aversion-- not wanting to sell a home for less than they paid for it.

If your home has depreciated in value it’s a fallacy to assume you’ll be able to recoup losses you’ve already incurred.  The current market price has nothing to do with how much a person actually paid for a home.  This can result in people stubbornly sticking to an asking price above market value and not selling their home at all.

With today’s market of quick decisions and high percentages of selling price to listing price, it’s still important to heed the above advice.  A home is often the most important financial investment you can make and you don’t want to miss the “warning signs” of emotional involvement.  That is just another good reason to turn to a knowledgeable, experienced real estate Professional like myself who can remain emotionally detached and help you find solutions that are based on market research and fact.  Taking your needs, wants and budget into consideration, I can help steer you in the right direction whether you are buying, selling or looking for investment properties.  Simply call me today at 598.3200 or email me at Harry@HarrySalzman.com and let’s see how I can put my 44+-year experience in the local market to work for you.

 

COLORADO SPRINGS RANKED 4TH BEST CITY TO LIVE IN…AHEAD OF DENVER

The Gazette, 7.13.16

Here’s another feather in our cap!  With all the high rankings in recent polls concerning “quality of life” and “affordability” of our city—we now add another one.  “Wallethub.com” recently named Colorado Springs “2016’s Fourth Best U.S. City in which to Live”, following the recent fifth place ranking for the same by U.S. News and World Report that I previously wrote about.  

Our city placed just above fifth-ranked Denver but below San Francisco, Seattle and Raleigh, N.C.  The top 62 largest cities in the U.S. were ranked by measuring, among others, livability, education, health, local economy and taxes. 

I’ve been living here for almost 45 years and am thrilled that the rest of the country is now discovering what I’ve always known—Colorado Springs is the BEST place to live.

 

LOW MORTGAGE LOAN RATES AREN’T LEAVING JUST YET

The Washington Post, 7.14.16, The Wall Street Journal, 7.14.16

All those predictions of higher mortgage loan interest rates that we read about after the Federal Reserve rate hike last December?   Not happening.  In fact, as I reported two weeks ago, rates are at their lowest in years.  That doesn’t mean they are never going up…it’s just not happening right now. 

Fannie Mae revised its outlook for mortgage rates last week and now predicts the 30-year rate won’t move above 3.6% this year and will be about 4% in 2017.  In the past it said that rates would reach 4.5% by the end of this year.

According to Sean Becketti, Freddie Mac chief economist, “The turbulence abroad should continue to create demand for U.S. Treasuries and keep mortgage rates near historic lows; thereby, allowing home sales to have their best year in a decade, along with a boost in refinance activity”.

And Elliot Eisenberg, the “Bowtie Economist” says this about the “Real Rate”.  “While short-term rates are extremely low, the Fed Funds rate is at 0.375%; monetary policy isn’t all that expansionary!  The real interest rate—the fed funds rate minus inflation—is roughly -1.25%, yet the rate that is neither expansionary nor contractionary is about 0%.  That’s why the Fed isn’t in a huge rush to raise rates.  I expect one quarter-point rate rise in 2016 and two in 2017”.

This is all incredible news for local buyers and sellers.  With our median sales prices at a record high and home values rising steadily, many who were “underwater” due to the housing crisis are now seeing increased equity which will enable them to enter the market at a time when interest rates are still historically low. 

Even in this fast-paced, slightly frenetic market at present there are still great values, especially compared to Colorado communities further north of us, especially Denver.  New listings become available daily and there’s a home that’s just right for you.  When it’s your time to begin the process, whether buying or selling, please give me a call and let’s get the ball rolling. 

 

SHOULD YOU WAIT UNTIL NEXT YEAR?  OR BUY NOW?...Infographic

Keeping Current Matters, 7.16.16

Some Highlights:

  • The Cost of Waiting to Buy is defined as the additional funds it would take to buy a home if prices & interest rates were to increase over a period of time.
  • Freddie Mac predicts interest rates to rise to 4.6% by next year.
  • CoreLogic predicts home prices to appreciate by 5.3% over the next 12 months.                     

If you are ready and willing to buy your dream home, it’s time to check with me and find out if you are able to!

 

SAVE THE DATE FOR THE 20TH ANNUAL SOUTHERN COLORADO ECONOMIC FORUM

Mark your calendars for what is sure to be another sold-out event.  The Southern Colorado Economic Forum, sponsored by the UCCS College of Business is celebrating 20 years and this year the Forum is changing things up a bit and having an afternoon meeting and happy hour.

The date is Friday, October 14, 2016 at The Broadmoor Hall and will be held from 1:00 p.m. to 4:30 p.m. with a Networking Happy Hour to follow.  The full agenda will be available in August and should promise to be another informative meeting.

Salzman real estate Services has been a proud sponsor of the Forum since its inception and I encourage those of you who might have missed this event in the past to be sure to calendar it in today.  Registration information will be available soon at:  www.UCCSEconomicForum.com .

 

 

 

 

HARRY'S BI-WEEKLY UPDATE 7.6.2016

by Harry Salzman

 

July 6, 2016

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.

AND THE GOOD NEWS JUST KEEPS ON COMING FOR LOCAL HOMEOWNERS

Hope you all had a wonderful Independence Day holiday.  I waited a couple of days to publish this in anticipation of sharing more good news with you on the home front and I wasn’t disappointed.  The June PPAR statistics came out yesterday and once more the Pikes Peak area has record-setting sales of previously owned homes and in median home prices which brought us to 23 consequent months of increased local Residential real estate sales,

Homes are selling at a whopping 99.8% of listing price.  Not only that—the average days on the market is a low 28.  This is such good news for both buyers and sellers. 

As you will see in the Cumulative Year to Date Summary, total sales numbers in Single Family/Patio Homes are up 17.8% over June 2015.

The Monthly Summary shows that total active listings are down 16.8% for Single Family/Patio Homes and 34.4% for Condo/Townhomes compared to a year ago.  This downward trend is continuing to be great for sellers.  However, it is more difficult, but certainly not impossible, for current buyers to find a new home. 

Median Sales Prices are up 5.0% and 12.4% for both Single Family/Patio Homes and Condo/Townhomes respectively—more wonderful news for both buyers and sellers.

The spring buying spree has turned into the summer buying spree and I don’t see the end in sight. Higher rents and better mortgage loan opportunities are an impetus for first-time buyers.  With the mortgage loan rates still historically low, many current homeowners are taking advantage by selling to trade up, downsize or move to a new neighborhood.

And worth repeating--it’s very important in today’s market to know what you want, need and can afford prior to the hunt for a new home. There’s no longer the luxury of “let me think about it for a couple of days or even a few hours” at present, as you can see from the statistics.

As an aside, we can thank “Brexit” for delivering US homebuyers with a very definable windfall:  mortgage rates are now the lowest they’ve been in three years!

More good news locally is that new listings are up—9.3% for Single Family/Patio Homes and 22.6% for Condo/Townhomes.  This indicates that local homeowners are finally realizing that it’s a good time to put their equity to work for them and others are finally seeing increased equity after having been “underwater” for a few years.  In any case, that translates to more homes for sale and hopefully a little less frenzy in the buying process.

Speaking of the buying (and selling) process…whenever the real estate market gets “hot” we find more people wanting to get into the real estate profession.  Lack of experience can be a real detriment for both a buyer and a seller in this type of market and that’s why I encourage you to use a knowledgeable, experienced real estate professional like myself in your home buying and selling transactions.  I’ve witnessed some things in recent weeks that I would never want my clients to have to experience.  So…a word to the wise…in one of the most important financial decisions of your life you need someone like me on your side. 

If you’re considering a move…either across town or across the country...give me a call at 598.3200 or email me at Harry@HarrySalzman.com and let’s get the ball rolling.  I look forward to putting my special brand of customer service to work for you, your family and friends or co-workers.

 

JUNE 2016 WAS THE 23TH STRAIGHT MONTH OF INCREASED LOCAL RESIDENTIAL real estate SALES

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

Here are some highlights from the June 2016 PPAR report.  Please click here to view the detailed 14-page report, including charts. If you have any questions, just give me a call.

In comparing June 2016 to June 2015 in PPAR:                    

                        Single Family/Patio Homes:

  • New Listings are 2,056, Up 9.3%
  • Number of Sales are 1,651, Up 17.8%
  • Average Sales Price is $294,962, Up 5.6%
  • Median Sales Price is $262,500, Up 5.0%
  • Total Active Listings are 2,639, Down 16.8%

 

                        Condo/Townhomes:

  • New Listings are 266, Up 22.6%
  • Number of Sales are 204, Down 3.8%
  • Average Sales Price is $183,237, Up 10.2%
  • Median Sales Price is $170,000, Up 12.4%
  • Total Active Listings are 191, Down 34.4%

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

                                                Median Sales Price             Median Sales Price

                                                  June 2016                              June 2015

Black Forest                            $433,500                              $418,000                     

Briargate                                  $355,500                              $342,400           

Central                                     $200,000                              $217,000

East                                          $223,000                              $190,500

Fountain Valley:                      $229,900                              $217,500

Manitou Springs:                    $347,500                              $334,500

Marksheffel:                            $279,900                              $258,000

Northeast:                               $244,450                              $239,000

Northgate:                               $397,500                              $365,999         

Northwest:                              $377,500                              $336,500           

Old Colorado City:                 $240,000                              $210,000

Powers:                                   $250,000                              $236,500

Southwest:                              $342,250                              $308,750

Tri-Lakes:                                $425,000                              $415,500

West:                                       $250,000                              $201,000

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

 

MORE REPORTS FILLED WITH GOOD NEWS

One of the reasons I like to share both local and national statistics with you is that I’ve always believed that an informed buyer or seller is a good buyer or seller.  The more information you have helps you make a better decision and when it comes to home buying and selling you need as much information as possible from multiple sources.

You can click here to see the latest report from the UCCS Economic Forum, which shows both national and local statistics for the month of May. 

The detailed reports from PPAR for May 2016 are also now available.  You can click here for the Monthly Indicators report and click here for the Local Market Update.

 

CITY COMPREHENSIVE PLAN UNDERWAY

Colorado Springs Mayor John Suthers has appointed a 15-person committee, along with Committee Chairman Merv Bennett and Vice-Chair Jill Gaebler to work together for two years. 

According to the Mayor it is our task to “Create and implement an updated land use vision for our future as Olympic City, USA.”  I am honored to represent the real estate community, and even more so because I can keep you all informed in a timely manner about future plans for our city.

Stay tuned for information as it becomes available.

 

RENTERS STILL HAVING A ROUGH TIME

RealtorMag, 6.23 & 6.27.16

About 21.3 million Americans—a record high—are devoting 30 percent or more of their income to paying rent, according to the annual State of the Nation’s Housing report from Harvard University’s Joint Center for Housing Studies.  Even more, 11 million renters in 2014 paid at lease half of their income toward housing costs, which marked another high, the report shows.  Most financial experts say consumers should not pay more then 30 percent of their monthly income for housing costs. 

Rents have been rising faster than wages for years now.  According to Dan McCue, a senior research associate at Harvard, “When you have to dedicate such a high proportion of your income to rent every month it forces you to make difficult decisions.  It means spending less on essentials like food, clothing, and health care, as well as less opportunity to save for a down payment on a home or plan for retirement.”

According to the report, the median rent for a new apartment was $1,381.  That means a renter would need to earn at least $55,000 a year to afford the rent.  Yet on average, renters earn about $34,000—which would mean an affordable rent would be closer to $850.

Affordability is another reason why renters are not yet owners, according to Lawrence Yun, NAR’s chief economist.   “We are seeing flashing yellow lights on affordability.  People who are currently renting and want to convert into ownership—major difficulty.  Home prices are rising way too fast compared to people’s income and wage growth.  We are facing housing affordability challenges already with low mortgage rates, but what happens when the rates begin to rise?”

As I’ve written before, many mortgage lenders are lowering their qualification and down payment requirements in an attempt to help first-time homebuyers.  This is certainly worth investigating if you or anyone you know is in this situation. 

This also presents an opportunity for those looking for investment property.  In either case, I am available to help you discover the best way to deal with the situation, and hopefully find solutions in either of these scenarios.  Just give me a call at 598.3200 and let’s see how to make home ownership or investment opportunities work for you. 

 

PLAN.  PREPARE.  PREVAIL.

Federal Reserve Bank of Kansas City, 6.22.16

The Federal Reserve Bank of Kansas City has a convenient way for individuals, families and small business owners to learn about what financial documents and records they need to have available in case of an emergency or disaster.

The Plan.Prepare.Prevail. is an extensive website containing disaster-preparedness information:

  • Personal and small business financial inventory forms
  • Quick checklists to identify and organize key financial records
  • Links to other valuable resources and materials

Disasters don’t take a vacation.  Make sure your financial records are ready by visiting this website today.

 

HARRY’S JOKE OF THE DAY:

Job Well Done

Seller to Agent:  You’ve done such a great job describing my house in your real estate listing that I’ve decided to keep it!

 

 

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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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