January 11, 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.                    

DECEMBER 2015 WAS THE 17TH STRAIGHT MONTH OF INCREASED LOCAL RESIDENTIAL real estate SALES

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

And the good news just keeps on coming for local Residential real estate Sales.  I am happy to report that prices and sales are continuing their upward climb for the Pikes Peak Region in the Residential real estate Market.

In the Cumulative Year-To-Date Summary you will see that total sales numbers in Single Family/Patio Homes is up 18.3% over the year 2014 while Condo/Townhome sales are up 29.6% over 2014. 

The number of home sales in 2015--13,250--was record-setting according to the Pikes Peak Association of REALORS®, topping the annual best record of 13,124 homes sold ten years ago—in 2005.

The Monthly Summary shows that while total active listings continue their downward trend from the same month last year, new listings in December were up 14.2% in the Single Family/Patio Homes category and just down 2.0% for Condo/Townhomes for the same period.

These numbers continue to reflect strong consumer confidence and local job growth, along with the still historically low interest rates in effect for that period.  As you know, the Federal Reserve raised their rates at their December meeting but so far this has not greatly affected the housing market.  Future rate increases and time will tell how this plays out during 2016.

Increased new listings mean more choices for those looking to buy.  However, we have less inventory available than we’ve had in many years and this is feeding a buying frenzy of sorts for those currently in the market.  With fewer homes available in all price ranges, we are finding multiple bids, some even over asking price, and at present the average days on the market is a low 59. 

What this means is that it’s more important than ever to know what you want, need and can afford prior to the hunt for a new home.  Making a quick decision can be necessary in today’s faster paced times in order to get the home you want.  With fewer listings and shorter days on the market for most homes, there’s no longer the luxury of “let me think about it for a couple of days”.

To discover the options available for you, give me a call sooner than later and let’s see what we can do to make this happen.  I can be reached at 598.3200 or by email at Harry@HarrySalzman.com. 

Here are some highlights from the December 2015 PPAR report.  Please click here to view the detailed 20-page report, including charts. If you have any questions, as always, just give me a call.

In comparing December 2015 to December 2014 in PPAR:                      

                        Single Family/Patio Homes:

  • New Listings are 772, Up 14.2%
  • Number of Sales are 1105 Up 26.6%
  • Average Sales Price is $266,553, Up 4.3%
  • Median Sales Price is $239,900 Up 6.6%
  • Total Active Listings are 2,133, Down 17.9%

                        Condo/Townhomes:

  • New Listings are 96, Down 2.0%
  • Number of Sales are 158, Up 26.4%
  • Average Sales Price is $164,540 Down 7.0%
  • Median Sales Price is $159,430, Up 6.3%
  • Total Active Listings are 187, Down 38.3%

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

                                                Median Sales Price             Median Sales Price

                                                December 2015                      December 2014

Black Forest                            $417,000                              $405,000

Briargate                                  $285,000                              $290,000          

Central                                      $172,000                              $184,000

East                                          $207,450                              $187,000

Fountain Valley:                      $215,000                              $201,249

Manitou Springs:                    $307,000                              $227,500

Marksheffel:                             $252,500                             $255,000

Northeast:                                $235,500                              $207,750

Northgate:                                $275,003                              $352,706         

Northwest:                               $310,250                              $305,000

Old Colorado City:                  $223,000                              $207,500

Powers:                                    $229,000                              $228,750

Southwest:                              $249,000                              $230,000

Tri-Lakes:                                $394,000                              $348,000

West:                                        $239,950                              $179,750

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

 

LOCAL FORECLOSURES AT 14-YEAR LOW IN 2015

The Gazette, 1.6.16

The robust housing market, along with an improving economy and job market conditions, helped foreclosures in Colorado Springs fall to a 14-year low in 2015.  Last year’s foreclosure total dropped 19.5% from 2014.

Other cities in Colorado have experienced an even greater decline in foreclosures.  However, those cities, such as Denver, have seen home prices rise very quickly which can translate to more equity that can help those who lose a job or experience financial problems. 

The fact that we have had a low foreclosure rate, coupled with a slower increase in property values, actually is a good factor because homes in Colorado Springs are still affordable and areas such as Denver are starting to price out some looking for homes there. 

In fact, I’m finding that some buyers in our area are actually commuting to jobs in Castle Rock or Denver due to our cost of living, housing, and public education, among other reasons.

 

RENTAL MARKET RATES RISING FAST

The Wall Street Journal, 1.7.16

Rental rates for apartments increased faster last year than in any time since 2007, causing concern about affordability for renters.

Rising 4.6% in 2015, average rental rates nationally had their biggest gain since before the recession according to a report by Reis, Inc., a real-estate researcher.  The average apartment rent now is nearly $1,180, up from $1,125 a year ago. 

And a report from Dallas-based apartment research firm Axiometrics, Inc. showed that rents increased 4.7% in the fourth quarter of 2015 compared with the same quarter a year earlier.  This is the strongest year-end performance since 2005.

Rents have risen steadily for six consecutive years due in part to tough lending standards for homebuyers and also because of a shortage of apartments available for middle-income renters.  Homeownership in the third quarter 2015 was 63.7%, close to a 30-year low.

Higher rents will make it difficult for young people to save for down payments and will force them to rent for longer periods of time.  According to the National Association of REALTORS®, the percentage of first time buyers is at its lowest level in three decades. 

The demand for investment property homes is increasing, especially with the volatility of the stock market and the rising median home prices.  If this is something you are considering, it’s a good time to check out your options.  Investment property and being a landlord is not for everyone, but if it’s something you have thought about, why not give me a call and let’s discuss whether this might be a good idea for you.

 

DELAYS IN CLOSINGS HURT HOME SALES SLIDE NATIONALLY

The Wall Street Journal, 12,23.16

What is “normal” nationally does not always translate to “normal” in our market, but I wanted to let you know how the “new” mortgage lending rules which took effect in October are affecting sales not only nationally but right here in our own backyard.

Nationally, home sales plummeted in November, caused by a dwindling supply and the new mortgage rules.  The NAR blamed the bulk of this decline on closing delays caused by the new rules implemented by the Consumer Financial Protection Bureau in October. 

The new rules, prompted by the 2010 Dodd-Frank financial law, are meant to help consumers better understand the terms of their mortgages before they sign.  I have explained this in detail in prior editions of this e-Newsletter.  The biggest problem I’ve seen so far has been due to the additional days added to the time it takes for a home to close. 

Whether you are buying or selling, let this be fair warning that what was “normal” in the past is no longer so—and getting to the closing table is going to take longer than it used to.  Unless it’s an all cash deal, you can expect delays because of these new regulations. 

 

FIVE real estate TRENDS THAT WILL DOMINATE 2016

RealtorMag, 12.22.2015

While 2015 may have marked the best year for housing since 2007, a recent real estate forecast by realtor.com® indicates that the market will be even better this year.  The job market is a significant driver behind this rosy picture because increased and better employment will add to consumers’ wallets and allow them to purchase a first home or sell and trade up.

Highlights from this survey:

  1. ‘Normal’ is coming.  Expect a healthy growth in home sales and prices—a slower pace than in 2015.  According to Jonathan Smoke, realtor.com®’s chief economist, “This slowdown is not an indication of a problem—it’s just a return to normalcy.  We’ve lived through 15 years of truly abnormal trends, and after working off the devastating effects of the housing bust, we’re finally seeing signs of more normal conditions.” 

 

  1. Generational buying trends shape up.  2016 may finally be the year that young adults show more presence on the housing market.  Millenials represented nearly 2 billion sales in 2015—one-third of homebuyers.  They are expected to continue to be a major buying pool in 2016 with the majority of buyers between ages 25 and 34 expected to be first-time homebuyers this year. 

 

Two other generations will also play a big part this year--financially recovering GenXers and older baby boomers who are entering retirement.  “Since most of these people are already homeowners, they’ll play a double role, boosting the market as both buyers and sellers,” Smoke notes.  “GenXers are in their prime earning years and thus able to relocate to better neighborhoods for their families.  Older boomers are approaching (or already in) retirement and seeking to downsize and lock in a lower cost of living.”

 

  1. New-home construction focuses more on affordability.  Recently builders have been faced with higher land costs and concerns about the demand of the entry-level market and have turned to constructing more higher-priced homes.  This caused new-home prices to rise significantly faster than existing-home prices.  In 2016, they will likely shift to more affordable products to cater to the entry-level market.  “We are already seeing a decline in new-home prices for new contracts signed last fall,” noted Smoke.  “In addition, credit access is improving enough to make the first-time buyer segment more attractive to builders.”

 

  1. Higher mortgage rates.  Mortgage rates will likely be volatile in 2016.  The recent move by the Federal Reserve to guide interest rates higher should push mortgage rates higher this year than the historical lows they have been at in recent years.  The 30-year fixed rate mortgage will likely end 2016 about 60 basis points higher than today’s level.  “That level of increase is manageable, as consumers will have multiple tactics to mitigate some of that increase,” Smoke says.  “However, higher rates will drive monthly payments higher, and, along with that, debt-to-income ratios will also go higher.”  Markets with the highest home prices will see the effects from the higher rates the most.

 

  1. Rents to go up even higher.  As previously discussed, rental rates are skyrocketing and are only likely to go up in 2016.  “Rents are accelerating at a more rapid pace than home prices, which are moderating,” says Smoke.  “Because of this, it is more affordable to buy in more than three-quarters of the U.S.  However, for the majority of renting households, buying is not a near-term option due to poor household credit scores, limited savings and lack of documentable stable income of the kinds necessary to qualify for a mortgage.”

 

I THOUGHT YOU MIGHT WANT TO KNOW…

Today I will be speaking before the Colorado Springs City Council.  I have been asked to address them about the “State of Housing” in our City and will be doing the same for the County Commissioners next Tuesday. 

I have gathered some very interesting material concerning what motivates folks to make a move, including cost of living, work/life balance and more.  One of the key points in this material is the fact that “access to affordable housing was the most import feature of a livable community”.  This was even more important than a potential job for those wanting to relocate. 

If you are interested, you can read several of the supporting materials below. You will no doubt find them as interesting as I did.  You can click on the titles listed to read the article

“Social Benefits of Homeownership”

“What Makes Us Happiest About The Places We Live”

“The World’s Smartest Cities”

Happy Reading…and again, I’d like to wish you a very Happy, Healthy and Prosperous 2016.

 

HARRY’S JOKE OF THE DAY

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