Enewsletter - May 24, 2010
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
- 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.
- 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.
- Should you wish to pass yourself off as a German officer, it is not necessary to speak the language. A German accent will do.
- A man will show no pain while taking the most ferocious beating but will wince when a woman tries to clean his wounds.
- 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.
- If a large pane of glass is visible, someone will be thrown through it before long.
- If someone says, "I'll be right back", they won't.
- Computer monitors never display a cursor on screen but always say:
Enter Password Now. - 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.
- Even when driving down a perfectly straight road, it is necessary to turn the steering wheel vigorously from left to right every few moments.
- All bombs are fitted with electronic timing devices with large red readouts so you know exactly when they're going to go off.
- A detective can only solve a case once he has been suspended from duty.
- 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.
- 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 - When they are alone, all foreigners prefer to speak English to each other.
