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HARRY'S BI-WEEKLY UPDATE 8.24.23

Thursday, August 24, 2023

by Harry Salzman

August 24, 2023

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.

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YES, MORTGAGE RATES MAY BE RISING, BUT HOMES PRICES ARE TOO…

It’s somewhat of a mixed bag of stories about Residential real estate of late.

Yes, mortgage rates have hit their highest point in 20 years, however, compared to the not so terribly distant past, they aren’t so high.

And what does this mean to you as a potential buyer or seller?

While August was a very slow month nationally and I’m guessing here as well, you would not know it from my recent sales activity. I’ve had a very busy quarter and the inquiries keep on coming.

As I’ve said time and again, all Residential real estate must be looked at on a LOCAL level, and as you are probably aware, Colorado Springs is on a roll in attracting new employers and with them relocated employees who are looking for homes.

Plus, the relatively higher income and education levels of our folks here makes it easier for them to realize that waiting for lower interest rates or lower home prices is not necessarily the smartest move.

While interest rates are considerably higher than they were, with home prices continuing to rise, today’s buyers will be able to refinance when rates go down over the next few years.

With fewer homes for sale at present, listing your home today will afford it greater visibility than when there was a surplus of homes for sale.

It can be a bit complicated, but that’s not a problem for you, because you have me. My long-time experience in the local market, coupled with my Investment Banking background, makes me an asset to you when you are looking to buy or sell, even in this unusual market.

If you’ve even been thinking about a move, please give me a call at 719.593.1000 or email me at Harry@HarrySalzman.com and let’s get together and see how together we take your wants, needs and budget requirements to make your Residential real estate dreams come true.

HOME PRICES ARE RISING AGAIN

Keeping Current Matters, 8.11.23

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Some Highlights:

Looking at monthly home price data from six expert sources shows the worst home price declines are behind us, and they’re rising again nationally.

If you’ve waited to move on to a new home because you were worried about home prices crashing, this rebound is good news.

Call me sooner than later so we can discuss whether this is a good time for you to realize your Residential real estate dreams.

MORTGAGE RATES HIT HIGHEST LEVEL IN MORE THAN 20 YEARS

The Wall Street Journal, 7.19.23

While last week was the first time since last fall that the mortgage interest rate has risen above 7%, it is far below rates that I can still remember and in fact. One of the first homes I purchased was financed with a loan of 8.5%.

Here is a look at the average rate on a 30-year fixed mortgage since 1972:

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This news can be disconcerting for some, but as I mentioned earlier, with home prices also starting to rise once again, there are ways to make this market work for you.

It all begins with a call to me, so if you’ve even wondered how this can work give me a holler.

AND THE MAIN REASON MORTGAGE RATES ARE SO HIGH?

Keeping Current Matters, 6.7.23

Since mortgage rates are the biggest concern of most homebuyers at the moment, I thought I’d try to answer some questions I’ve been asked:

Why are Mortgage Rates so high?

When will Rates go back down?

Why Are Mortgage Rates So High?

The 30-year fixed-rate mortgage is largely influenced by the supply and demand for mortgage-backed securities (MBS). And according to Investopedia:

“Mortgage-back securities (MBS) are investment products similar to bonds. Each MBS consists of a bundle of home loans and other real estate debt bought from the banks that issue them…The investor who buys a mortgage-backed security is essentially lending money to home buyers.”

Demand for MBS helps determine the spread between the 10-Year Treasury Yield and the 30-year fixed mortgage rate. Historically, the average spread between the two is 1.72 (see chart below):

In early June of this year the mortgage rate was 6.85%. That means the spread was 3.2% which is almost 1.5% over the norm. If the spread was at its historical average, mortgage rates would have been 5.367% (3.65% 10-Year Treasury Yield + 1.72% spread).

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This large spread is unusual. As George Ratiu, Chief Economist at Keeping Current Matters explains:

“The only times the spread approached or exceeded 300 basis points were during periods of high inflation or economic volatility, like those seen in the early 1980’s or the Great Financial Crisis of 2008-09.”

The graph below uses historical data to help illustrate this point by showing the few times the spread has increased to 300 basis points or more:

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The graph shows how the spread has come down after each peak. The good news is that means there’s room for mortgage rates to improve today.

So, what’s causing the larger spread and making mortgage rates so high today?

The demand for MBS is heavily influenced by the risks associated with investing in them. Today, that risk is impacted by broader market conditions like inflation and a fear of a potential recession, the Fed’s interest rate hikes to try to bring down inflation, headlines that create unnecessarily negative narratives about home prices, and more.

Simply put—when there’s less risk, demand for MBS is high, so mortgage rates will be lower. On the other hand, if there’s more risk with MBS, demand for MBS will be low, and we’ll see higher mortgage rates as a result. Currently, demand for MBS is low, so mortgage rates are high.

When Will Mortgage Rates Go Back Down?

Odeta Kushi, Deputy Chief Economist at First American, answers that question in a recent blog:

“It’s reasonable to assume that the spread and, therefore mortgage rates will retreat in the second half of the year if the Fed takes its foot off the monetary tightening pedal and provides investors with more certainty. However, it’s unlikely that the spread will return to its historical average of 170 basis points, as some risks are here to stay.”

Bottom Line

The spread will shrink when the fear investors feel is eased. That’ll mean we should see mortgage rates moderate as the year goes on. However, when it comes to forecasting mortgage rates, no one can know for sure exactly what will happen.

And all of that said…I’m sure I lost some of you a few paragraphs back. To me, with my Investment Banking background, it’s second nature, but I do understand that it’s tough to put it in layman’s terms. If you have any questions, you know where to find me.

ERA SHIELDS MONTHLY STAT PACK

Data through July 2023, ERA Shields

Here is data from my company’s monthly “Stat Pack” that can better help you understand the local buying and selling reality. I have reproduced the first page and you can click here to get the report in its entirety.

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SAVE THE DATE FOR THE 27^TH ANNUAL UCCS ECONOMIC FORUM…

This is an always worthwhile event and registration is FREE. You can scan the above QR code for registration and more information.

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HARRY'S BI-WEEKLY UPDATE 8.7.23

Monday, August 7, 2023

by Harry Salzman

August 7, 2023

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 Residential real estate issues that will help to make you a more successful and profitable Buyer and Seller.

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THINGS ARE BEGINNING TO TURN AROUND…

Those of you who have known me for 5 minutes or 50 years can attest to the fact that if nothing else, I can be called “Mr. Positivity”.

If there’s a way of turning anything at all into a positive, I will find the way. Lucky for me, some things happening in our community are playing right into my hands.

To begin with, the best news of recent days was President Biden’s decision to keep the U.S. Space Command right here in Colorado Springs. Not only is it the best decision for our national security, it means that so many folks who were uncertain of where they might live are now making plans to stay right here.

And several tech companies who work with the DOD are looking to increase their staffing and facilities as well.

Of course, my first thought was…wow, there are going to be a bunch of folks who will be looking for housing.

And then my second thought was…hmm…the inventory shortage is going to get worse before it gets better.

But, me being me, I just figure that things will work out just fine.

And sure enough, I attended a zoom conference last week that was led by Lawrence Yun, Chief Economist for the National Association of Realtors (NAR) and he was just as positive in his outlook as I’ve been.

So, I have devoted this eNewsletter to “positivity” and have provided some infographics that show the same.

And my newest YouTube video also attests to that. Yes, if you’ve got two minutes, I’ve got some news for you.

To watch, click here:

https://youtu.be/CdnzrxL_fdU

In fact, while you’re at it, you might want to subscribe to my channel, so you won’t miss my future broadcasts. It won’t cost you anything…well, it could cost you… if you miss some of my informative musings!

And, if you want to see the charts I referred to in my talk, please click here.

Yes, things are looking up in Residential real estate and if you’ve even considered buying or selling during the past year and held back for whatever reason, NOW is the time to get with me to figure out if it’s possible to begin the process.

So, as always, if Residential real estate is among your current hopes and dreams, please give me a call at 719.593.1000 or email me at Harry@HarrySalzman.com and let me help make them come true.

And now for statistics…

JULY 2023

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

Here are some highlights from the July 2023 PPAR report.

In El Paso County, the average days on the market for single family/patio homes was a 24. For condo/townhomes it was 25.

Also in El Paso County, the sales price/list price for single family/patio homes was 99.7% and for condo/townhomes it was 99.6%.

In Teller County, the average days on the market for single family/patio homes was 31 and the sales/list price was 98.2%.

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 2023 to July 2022 for All Homes in PPAR:

Single Family/Patio Homes:

· New Listings were 1,464, Down 29.9%

· Number of Sales were 1119, Down 20.2%

· Average Sales Price was $540,443, Down 3.0%

· Median Sales Price was $472,000, Down 2.2%

· Total Active Listings are 2,254, Down 11.6%

· Months Supply is 2.0, Down 0.6%

Condo/Townhomes:

· New Listings were 224, Down 17.0%

· Number of Sales were 160, Down 23.1%

· Average Sales Price was $364,619, Down 2.6%

· Median Sales Price was $342,500, Down 2.8%

· Total Active Listings are 302, Up 29.1%

· Months Supply is 1.9, Down 1.3%

JULY 2023 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 24.9%

Median Sales Price for All Properties was Down 1.8%

Active Listings on All Properties were Down 17.9%

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 in order to get a good idea of the local pulse. As an example, here is a detailed report on the Colorado Springs area:

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housing market FORECAST FOR THE REST OF 2023…AN INFOGRAPHIC

Keeping Current Matters, 8.4.23

Some Highlights:

Want to know what experts are saying will happen in the rest of 2023? Home prices are already appreciating again in many areas. The average of the expert forecasts shows positive price growth.

Where mortgage rates go for the rest of the year will depend on inflation. Based on historical trends, rates are likely to ease as inflation continues to cool.

Even though low inventory here and in the rest of the nation continues to be a challenge, experts project 5 million homes will still sell this year. That pace should pick up if rates come down.

KEY housing market TRENDS…AN INFOGRAPHIC

Keeping Current Matters, 7.28.23

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Some Highlights:

If you’re considering buying or selling a home, you’ll want to know what’s happening in the housing market.

Housing inventory is still very low, prices are climbing back up, and homes are selling fast when priced right.

ECONOMIC & WORKFORCE DEVELOPMENT REPORT

Data-Driven Economic Strategies, July 2023

As always, I like to share the useful economic data I receive from our “local economist”, Tatiana Bailey. You will see in these charts what’s happening locally in terms of the economy as well as the most recent Workforce Progress Report.

This information is especially invaluable to business owners; however, I think you all will all find it worthwhile reading.

To access the report, please click here and if you have any questions, please give me a holler.

SAVE THE DATE FOR THE 27^TH ANNUAL UCCS ECONOMIC FORUM…

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This is an always worthwhile event and registration is FREE. You can scan the above QR code for registration and more information.

AND A PARTING REC FOR SOME INTERESTING READING…

I am almost finished reading our former Mayor John Suthers’s autobiography and I can’t put it down. The book is a fascinating look at John’s life and career trajectory, and I highly recommend it to one and all.

The book is titled “All This I Saw And Part Of It I Was” and I’m guessing you can find it at most of our local bookstores.

Bravo, Mr. Mayor.

Not only did he do a great job for Colorado Springs, but he wrote a spellbinding book as well.

HARRY’S JOKES OF THE DAY:

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