Real Estate Information Archive

August 22, 2022

 

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.

 

LOTS OF POTENTIAL CAPTIONS FOR THE ABOVE PICTURE…

 

1. Home equity is increasing monthly

 

2. Home prices are high

 

3. Mortgage rates are rising

 

4. Housing affordability is the worst since 1989

 

5. Rental prices for homes are getting higher

 

Any and all of these would be the right caption when you think of housing these days.  

There is continued good news for homeowners since they are consistently building equity, although at a somewhat more “normalized” rate than in the recent past.  

For first-time buyers and those looking to move, there are both pluses and minuses in today’s Residential real estate market.

Yes, the high prices, coupled with the rising interest rates, are hurting first-time buyers the most because mortgage loan qualification is harder for most of them.  Many of them are turning to family members for help with the down payment in order to qualify because rental prices are also higher than ever before.  

The good news for those wanting to sell and trade up is that there are now more available homes for sale, thus helping ease the “frenzy” we’ve seen the last couple of years.  There are fewer bidding wars, and buyers are finding a little more “wiggle room” in their negotiations.  

While the prices and interest rates are still increasing, the tax deductions and gains in personal net worth  are making a move worthwhile at present.  Home prices, while not rising as quickly, are still providing better returns than the stock and bond markets, and, as in the past, over the long haul should continue to do so.  

As you will read further on, economists, while predicting a recession, do not expect anything like the housing crisis in 2008, and in fact, expect home values to keep increasing.

I’ve been in the local Residential real estate arena for a little over 50 years now, and I’ve seen just about every cycle imaginable.  I know the “ins and outs” of getting my clients what they are looking for based on their individual wants, needs and budget.  

My background in Investment Banking, as well as my expertise in negotiation, make me well suited to handle most anything that most real estate agents haven’t even considered.  

When you work with me, your goals become mine, and I work tirelessly to see that together we can find the right answers for you and your family.  

After all, that’s what is most important about homeownership…the ability to have a place to call your own where you and your family members can “nest”, work, play and at the same time build equity for your financial future.

When you’re ready, I’m your guy.  Simply give me a call at 719.593.1000 or email me at Harry@HarrySalzman.com and I’m here to answer all your Residential real estate questions.

 

COLORADO SPRINGS HOME PRICES CONTINUE TO SURPASS MUCH OF THE COUNTRY IN THE SECOND QUARTER OF 2022

The National Association of Realtors, 8.11.22

In the recently published report, 80% of the 185 Metropolitan Statistical Areas (MSAs) surveyed quarterly by the National Association of Realtors (NAR) reached double-digit median home price appreciation in the second quarter of 2022, surpassing the 70% of the previous quarter.

The median price nationally rose 14.2% quarter-over-quarter to $413,500, surpassing $400,000 for the first time.

The median price of single-family homes in Colorado Springs rose 9.5% to $480,900 during the second quarter of the year, per NAR.  This price reflects detached, single-family and patio homes but not townhomes or condominiums.  

The median price in the Springs ranked 36^th highest of the 185 cities surveyed.  And once more, the good news is that while our home values are increasing, they remain less than those in the Denver, Boulder and Fort Collins areas, which makes our city more attractive to potential companies and individuals wanting to relocate to Colorado.

This graphic depicts areas with the largest percent gain:

To see all 185 metro areas in alphabetical order, please click here.  To see them in ranking order, click here.  Or click here to see what income levels are required to purchase homes based on either a 5, 10 or 20 percent down-payment.

 

WHILE THE U.S. IS INCHING CLOSER TO RECESSION, IT’S NOT THE SAME-OLD, SAME-OLD, AND ESPECIALLY IN THE RESIDENTIAL housing market

RealtorMag, Summer 2022

Yesterday I was reading an article by Lawrence Yun, Chief Economist and S.V.P. of Research for NAR, and wanted to share some of his findings with you.

According to Yun, “The U.S. gross domestic product contracted in the first quarter by 1.5%.  The stock market has been tumbling.  Inflation is stubbornly high.  The Federal Reserve plans to continue raising interest rates.  Pending home sales have fallen for six straight months and are now trending slightly below 2019 levels.  The economy, in short, is on the verge of a recession”.

However, he adds that it will not be a straightforward recession.  Despite hiring freezes at tech firms and recent job cuts among mortgage lenders as business dries up, the bigger problem for the economy is not a lack of jobs but a shortage of workers.  

He said, “Statistically, there are two job openings for each unemployed person.  That’s why wages are up an average of 5.5% from a year ago, to nearly $32 per hour nationwide.  However, inflation is gobbling up the increase with an 8% rise in the cost of living.”

The sizeable average household accumulation of housing wealth--$75,100 in the last two years and $155,400 over the past five years will go a long way to easing some of the pain.  

Yes, interest rates are higher, but we are still showing a year-over-year median price increase in local single family and patio homes of 7.2% in July and an average increase of 11.2%.  For townhomes and condos, it was a median price increase of 11.9% and an average increase of 15.2%. 

More importantly, “Colorado’s economy continues to shine even with the uncertainty at the national level and in the national economy,” according to Jena Griswold, Colorado Secretary of State.  We have new companies moving here and others expanding.  With them come lots of relocated employees and new jobs for current residents. These folks need housing and will continue to need it for the foreseeable future. 

So, even factoring in the higher interest rates, with tax deductions and appreciation it still makes sense to be a homeowner rather than a renter if possible.  

If you have any questions, please give me a call.

 

AND FOR THOSE STILL WONDERING…

KeepingCurrentMatters.com, 8.12.22

 

RENTAL CRISIS IS ATTRACTING MORE INVESTORS

Bloomberg.com, 8.10.22

With rental costs soaring across the U.S. and here in Colorado Springs as well, folks in many of those cities and in all income brackets are struggling to find new homes or to pay for the ones they already have. 

The home affordability crisis has been snowballing with the fast appreciation in values and now with the rising interest rates.  Some potential home buyers have backed out of sales due to eligibility requirements and other factors, thus putting more and more people in the market for rental properties.

Like the bidding wars and other frenzy we’ve seen in the residential real estate market during the past couple of years, supply v. demand is also ruling the rental market due to tight supplies.  This is giving landlords the leverage to hike rents at all price points.  Coupled with the end of the federal eviction moratorium, this has forced folks to make tough choices.

More renters than usual are staying put in their homes, sending apartment occupancy rates near the highest level in more than two decades and that cuts down on the number of apartments available for rent.

For those interested in purchasing investment properties, now is a great time to investigate it further.  Being a landlord is not for everyone, but if it is something you have considered, it’s worth talking to your tax accountant or investment advisors and then to me.  I’ll be happy to provide you with information based on my many years of owning these types of properties.  I can give you the pros and cons, and if you and your advisors believe this is right for you, then I can help you find the property that fits for your situation.

 

ERA SHIELDS “STAT PACK” PROVIDES A GOOD RESIDENTIAL real estate OVERVIEW

ERAShields, 7.31.22

As always, I am pleased to provide you with the most current local information.  This easy-to-understand report, along with graphs, gives you a good idea of the state of local Residential real estate.  

Below I’ve reprinted the first page of the report and you can click here to read the report in its entirety.  

 

August 4, 2022

 

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.

 

 

I COULDN’T HAVE STATED IT BETTER…

It’s a “new day” in Residential real estate...it’s been brewing for some time now…and while we are not seeing changes quite like a lot of the USA, the current recession is hitting our market somewhat as well.

The higher mortgage rates, while still on the low side, are especially affecting first-time buyers and those who might not qualify as easily in today’s market.

As you will see in the statistics below, our listings are slightly down and there are now considerably more homes for sale than in the most recent past.  However, on the bright side, our average sales price on single-family/patio homes is up 11.2% and on Condo/Townhomes it is up 15.2%.  The median sales prices on those transactions continue to rise as well.

I’ve been saying for some time now that price increases need to normalize and they are finally beginning to do so, although slowly.  I predicted an annual price appreciation of 10-12% for 2022, and we look to be on target for that.  And let’s not forget---that 10-12% is considerably higher than the returns we are seeing in stocks, bonds, and most other investments.  

Our total active listings are way up, both year-over-year as well as month-over-month.  Again, a function of Econ 101—supply and demand.  Price appreciation was not going to normalize until there were more homes for sale, and we are now starting to see an increase in inventory.

Homes are still selling briskly, but rarely in one day and not nearly as many offers as in recent times.  This is most definitely good for potential buyers, as the frenzy of the last few years has settled down a little bit.  Of course, sellers are also in a good place since home prices have not been affected very much.

real estate economists are not predicting a “housing bubble” like what occurred in 2008, and an article below helps explain that. 

All of that said, it’s still a great time to buy and/or sell if that’s what you are considering.  There are many ways to make that happen, and fortunately for you, you’ve got me, and I have has seen all housing cycles imaginable.

And speaking of me, I celebrated 50^th years in the local residential real estate arena in April.  That, combined with my Investment Banking background, gives me a heads up on understanding all types of scenarios and I am thrilled to put that experience to work for my clients.

It all starts with a call to 719.593.1000 or email to Harry@HarrySalzman.com and we can begin work to make your housing dreams come true.

 

And now for statistics…

JULY 2022

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

Here are some highlights from the July 2022 PPAR report.

In El Paso County, the average days on the market for single family/patio homes was 13.  For condo/townhomes it was 14.  

Also in El Paso County, the sales price/list price for single family/patio homes was 100.3% and for condo/townhomes it was 100.8%. 

In Teller County, the average days on the market for single family/patio homes was 19 and the sales/list price was 99.4%. 

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 July 2022 to July 2021 for All Homes in PPAR:

                        

                        Single Family/Patio Homes:

·       New Listings were 2,087, Down 4.1%

·       Number of Sales were 1,403, Down 23.9%

·       Average Sales Price was $557,250, Up 11.2%

·       Median Sales Price was $482,500, Up 7.2%

·       Total Active Listings are 2551, Up 160.0%

·       Months Supply is 1.8, Down 6.7%

 

Condo/Townhomes:

·       New Listings were 270, Down 14.8% 

·       Number of Sales were 208, Down 13.7%

·       Average Sales Price was $374,320 Up 15.2%

·       Median Sales Price was $352,500, Up 11.9%

·       Total Active Listings are 234, Up 125.0%

·       Months Supply is 1.1, Down 9.1%

 

Now a look at more statistics…

 

JULY 2022 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 Down 23.0%

 

• Median Sales Price for All Properties was Up 8.0%

 

• Active Listings on All Properties were Up 91.8%

 

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

 

THE CURRENT RESIDENTIAL real estate MARKET IS NOT A HOUSING BUBBLE

KeepingCurrentMatters, 8.2.22

As the housing market shifts, some of you may be wondering what will happen next.  Some consumers believe the market is in a housing bubble, and it’s only natural for concerns to turn to whether it could be a repeat of what took place in 2008.The good news is, there is a lot of concrete data to show why this is nothing like last time.

There’s a Shortage of Homes on the Market Today, Not a Surplus.  The supply of inventory required to sustain a normal real estate market is approximately six months.  Anything more is an overabundance and will cause prices to depreciate.  Anything less is a shortage and will lead to continued price appreciation.

For historical context, there were too many homes for sale during the housing crisis (many of which were short sales and foreclosures), and that caused prices to fall.  Today, supply is growing but there is still a shortage of available inventory, and most especially here in the Colorado Springs area.

The graph below uses data from the National Association of Realtors (NAR) to show how this time compares to the crash.  Today nationally, unsold inventory sits at just a 3.0-months’ supply at the current sales pace.

 

 

Among the reasons inventory is still low is because of sustained underbuilding.  When you couple that with ongoing buyer demand as millennials age into their peak homebuying years, it continues to put forward pressure on home prices.  That limited supply compared to demand is why experts forecast home prices won’t fall this time.

 

Mortgage Standards Were Much More Relaxed During the Crash.  It was much easier to get a home loan during the lead-up to the housing crisis than it is today.  

The graph below showcases data on the Mortgage Credit Availability Index (MCAI) from the Mortgage Bankers Association (MBA).  The higher the number, the easier it is to obtain a mortgage.

 

 

Running up to 2006, banks were creating artificial demand by lowering lending standards and making it easy for just about anyone to qualify for a home loan or refinance their current home.  Back then, lending institutions took on much greater risk in both the person and the mortgage products offered.  That led to mass defaults, foreclosures, and falling prices.

Today things are quite different, and buyers are facing much higher standards from mortgage lenders.  Mark Fleming, Chief Economist at First American, says: “Credit standards tightened in recent months due to increasing economic uncertainty and monetary policy tightening.”

The stricter standards of today help prevent the risk of a rash of foreclosures like there was last time.

 

The Foreclosure Volume Is Nothing Like It Was During the Crash.  The most obvious difference is the number of homeowners that were facing foreclosure after the housing bubble burst.  Foreclosure activity has been on a downward trend since the crash because buyers today are more qualified and less likely to default on their loans.  

The graph below uses data from ATTOM Data Solutions to help explain:

 

 

Important to note is that homeowners today are equity rich, not tapped out.  In the run-up to the housing bubble, some homeowners were using their homes as personal ATMs.  Many withdrew equity as it built up.  When home values began to fall, some found themselves in a negative equity situation where the amount they owed on their mortgage was greater than the value of their home.  Some of those homeowners decided to walk away from their homes, and that led to a wave of depressed property listings (short sales and foreclosures), which sold at considerable discounts that lowered the value of other properties in the area.

Today, prices have risen nicely over the last few years and that has given homeowners an equity boost.  According to Black Knight: “In total, mortgage holders gained $2.8 trillion in tappable equity over the past 12 months—a 34% increase that equates to more than $207,000 in equity available per borrower…”.

With the average home equity now standing at $207,000, homeowners are in a completely different position this time.

 

Bottom Line?  If you’re concerned about today being anything like the housing bubble of 2008, these graphs should help alleviate your worries.  Concrete data and expert insights clearly show why today is nothing like the last time.

If you have any questions about any of this, please give me a call.

 

UCCS ECONOMIC FORUM UPDATE

College of Business, UCCS, updated 7.29.22

Here is 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 area levels.

I’ve reproduced the first page of the graphs and you can click here to see the report in its entirety.  If you have any questions, please give me a call.

 

 

For those of you who like to plan ahead, the always informative UCCS Economic Forum Event this year will be held at the ENT Center for the Arts on Thursday, September 1, 2022, from 1:30-4:30, with a networking and happy hour to follow.  Full agenda and registration can be found at:                    

www.UCCSEconomicForum.com