HARRY'S BI-WEEKLY UPDATE 6.23.20
June 23, 2020
HARRY’S BI-WEEKLY UPDATE
A Current Look at the Colorado Springs Residential real estate Market
As part of my Unique Brand of 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.
…IN COLORADO SPRINGS, JUNE 2016…
AND SO BEGINS THE “REAL” TALE OF JUST ONE OF MY CLIENTS
Yes, I wanted to tell you a story, just one of many, that illustrates the pleasure I get to see time and again when folks decide to purchase residential real estate, be it for personal use or investment purposes.
In June 2016 I sold a home to a client for $237,000, a price practically unheard of in today’s market. This month, four years later, I listed and sold that same property for my client for $323,000.
What does that mean in real dollars? Appreciation-wise, the home went up $86,000 during those four years—a 36.3% appreciation. The annual gain is equal to 9%.
But it gets better.
Consider the rate of return from the original cash down payment on the purchase price of $237,000. My client put down $75,000 cash and had approximately $5000 in closing costs for a total cash investment of $80,000.
The cost of the recent sale to my client was approximately 6.5% or $21,000. The approximate cash in pocket to my client was $59,000.
But look closer and this is what you’ll discover…
The out of pocket cost of $80,000 divided by the net receipt at closing of $59,000 = 73.75% over a 4-year period!
And 73.75% divided by 4 years = an 18.4% annual rate of return (plus annual tax deductions of interest and property taxes).
These figures do not account for the current loan balance so the actual rate of return will be even higher.
The Moral of the Story?
You probably figured it out by now. Home ownership, either for personal use or investment purposes, can provide one of the best investments you’ll ever make. The current low interest rates increase your buying power and present an appealing investment choice.
If you’ve been considering a move…now is a great time. If you’re looking…or even thinking of looking…or wanting a new place for a possible future quarantine, don’t delay. I’m ready, willing and more than able to help you get one step closer to making your residential real estate dream come true.
Just give me a call at 593.1000 or email me at Harry@HarrySalzman.com.
After all, my knowledge and implementation of your wants, needs and budget equal a great rate of return to life for you and your family.
MORTGAGE RATES DROP TO ANOTHER ALL-TIME LOW
Realtor Magazine, 6.19.20
Last week the 30-year fixed-rate mortgage set another new record as rates averaged 3.13%, the lowest average rate in Freddie Mac’s records which date back to 1971. The previous low of 3.15% was set just a couple of weeks prior.
According to Sam Khater, Freddie Mac’s chief economist, “While the rebound in the economy is uneven, one segment that is exhibiting strength is the housing market. Purchase demand activity is up over twenty percent from a year ago, the highest since January 2009. Mortgage rates have hit another record low due to declining inflationary pressures, putting many home buyers in the buying mood.”
Khater cautions that it will be difficult to sustain the momentum in demand as unsold inventory was at near record lows entering the pandemic and has dropped even lower since.
I’m finding that more folks are putting their homes on the market, but they are being bought as quickly as they become available so that the number of existing homes for sale doesn’t get a chance to increase much.
That said, there are still homes available in most price ranges and in most neighborhoods. Again, if you’re thinking of buying to trade up or move to a new neighborhood, don’t delay. Give me a call and let’s get the ball rolling.
As you will read in the next article…it’s not as easy as it once was. However, when you’ve got me and my 47 plus years of experience in the local residential real estate arena, you’re already one step ahead of the rest.
AND THAT BRINGS US TO BIDDING WARS…
Housing Wire, 6.17.20 & Realtor Magazine 6.19.20
The housing shortage that has increased even more since the pandemic began in March is demonstrating that strong demand is creating steeper competition.
A recent study from Clever real estate showed that 42% of buyers who purchased a home between January and May were in a bidding war and the brokerage Redfin reported last week that half of its agents’ offers faced competition in May, up from 44% in April.
While this is quickly becoming a national thing, I’ve been writing about the bidding wars that we in Colorado Springs have been facing for quite some time now. I’ve recently seen homes sell in an hour or less, with more than 13 offers! I expect those bidding wars to be around until there are more available homes for sale. For buyers locally, it’s becoming the “new normal”.
This chart illustrates the Redfin scenario:
The study from Clever showed some statistics deriving from the pandemic in terms of residential real estate and I thought you might find them interesting.
- 59.29% of homeowners who purchased their home before the World Health Organization declared the pandemic said that someone who typically contributes to housing costs lost their job during the pandemic.
- Those who purchased their home since March (50.48% of those surveyed) were less likely to have lost a job, while stimulus check payments contributed to down payments for 21.1% of homebuyers.
- 84% of homebuyers who purchased their home before April 28 were able to pay their mortgage in full. Of recent homebuyers, 55% said they’re paying their mortgage in full, but only 45% are able to pay if a financial contributor lost a job.
- 53.87% of those who said they were paying their mortgage in full said they were somewhat concerned and 25.14% said they were very concerned about being able to pay their mortgage in the coming months due to COVID-19 hardships. This might change a little since the FHA and FHFA both announced they would be extending eviction moratoriums.
- Additionally, 36.24% of homeowners said they are worried that the pandemic might affect their home value.
The pandemic has caused a lot of stress and upended just about everything this year and here in Colorado Springs we’ve seen some of the same. However, I’ve also witnessed a number of positive situations in the last several weeks.
Calls from those looking to move here for either professional or personal reasons are increasing. A number of folks in larger cities are finding that the stress of the pandemic there made them realize that relocating to a “smaller” more spread out city could be healthier in the long run.
Several companies have referred clients to me for help in relocation since finding homes is a big step in getting employees acclimated to a new work/life balance situation. So personally, I don’t see home values locally going down.
I do see a slowdown in annual growth since it would be almost unimaginable what the price of homes could be if their value kept increasing at the rate of the past several years. A more realistic annual increase would be good all around, most especially for first-time home buyers. Fortunately, the low interest rates are an advantage to those folks, and also for those who are looking for more home for the money. The extra square footage and amenities or larger property is certainly costing less at present.
And so, once more with emphasis…if a new home is in your future…the time to begin the search is NOW.
HARRY’S THOUGHT OF THE DAY:
