May 12, 2014

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.

               

                                       

 

LOTS OF HOUSING NEWS THIS MONTH

DSNews 5.2.14 and various other publications

As I’m sure you have seen, there’s lots of talk about the housing market in the news lately.  Some good, some not so much, but the one thing everyone seems to agree on is that as one of life’s biggest financial investments, homeownership is the way to go.  Home prices are increasing—not quite as fast as during the last couple of years—but they are still providing equity and helping those with homes that were at one time under-water. 

According to Zillow, “among positive factors for the short-term for housing are ongoing historically low interest rates.  For example, data from the Federal Housing Finance Agency (FHFA) indicate that the average contract interest rate on conventional mortgages was 4.21 percent in March.  This is higher than rates experienced for the first half of 2013 but remains low by historical standards.  On the other hand, affordability has been challenged by rising home prices.  The FHFA Housing Price Index has risen by 15 points over the last 25 months.”

Also from Zillow, a recent break-even horizon analysis came to an interesting conclusion:

  • In half the U.S. metro areas, buying a home is a better financial decision than renting for buyers intending to stay in their home at least two years.

This is based on all costs associated with buying vs. renting, including upfront payments, closing costs, anticipated monthly rent and mortgage payments, taxes, utilities, maintenance and renovation costs.

“Rents keep rising, and mortgage interest rates remain very low, which is helping to skew the rent vs. buy decision toward buying for those who can afford it.  Many renters may ask themselves why renew a lease, when you can break even on the same home in less time in many areas,” said Zillow Chief Economist Dr. Stan Humphries.

On the other hand, “some renters still have to overcome significant hurdles before they can pull the trigger on homeownership.  For those renters who can’t qualify for a mortgage, or aren’t able to save enough for a down payment on a house, renting can be a more flexible, and often far less frustrating option,” Humphries added.

Some of the hurdles faced by first time homeowners have to do with the new regulations from the Dodd-Frank legislations that took effect on January 10, 2014.  It is the first of two rules that were intended to protect consumers by strengthening underwriting standards, but some are arguing that the rules will raise costs and reduce access for consumers (see a real-life incident concerning lenders further down).

If you’re a regular reader of my eNewsletter, you know where I stand.  I’ve been telling my readers for the last couple of years that the time to Sell and Trade Up or Down or Buy for the first time or Investment purposes is NOW.  Mortgages, while now hampered by new regulations, still afford low interest rates.  These are predicted to go up before year-end so that’s something to consider. 

Also, while your present home is continuing to increase in equity, so is the new home you might be looking to purchase.  By securing the lowest interest rate possible at least you can help keep your monthly payment lower. 

There’s a lot going on, both locally and nationally, and if you are wondering how this might translate to your personal situation or that of a family member—give me a call at 598.3200 or email me at Harry@HarrySalzman.com and lets see how we might put the current housing market situation to work for you. 

With my unique background in Investment Banking and more than 40 years in the local real estate market, I do the homework and provide all my clients with personal service tailored to their individual needs, wants and budget.  This includes working with qualified mortgage lenders who understand the new regulations and can help get your home to closing. 

 

APRIL LOCAL STATISTICS BEAT MANY OTHER HOUSING MARKETS

Statistics provided by the Pikes Peak REALTORS Service Corp, or its PPMLS

The Listing and Sales Summary from PPAR was released last week.  In case you’re wondering, February and March were never published so I could not share them with you, but apparently the new MLS system is now up and operating correctly so I should be able to continue sharing these statistics with you on a monthly basis again.

While local single family and patio home sales overall have declined 1.1 percent from a year ago April, there were several factors that most likely contributed to this.  One of the coldest winters in years kept many potential buyers at home rather than out looking at homes.  And many homeowners were still wondering whether to wait for prices to rise more or for interest rates to fall again.  We now know that interest rates, while still low, ARE rising and will continue to do so and that will more than likely help increase sales during the Spring Buying season. 

Many local Realtors feel that this year will be even better than last in terms of total sales, and if my recent experience in the Spring Sales frenzy is any indication, I’m in agreement with them. 

In a similar vein, local homebuilding starts were behind 2013 for the beginning of this year, and more than likely this was due to reasons similar to those stated above.

In spite of the above, some highlights comparing April 2014 to April 2013 still show that the housing market is in good shape:

  • The number of single family/patio homes sold is only 1.1% fewer than a year ago.
  • New listings were are about the same—only a 0.4% decline over a year ago.
  • The average sales price is 2.5% higher than a year ago.
  • The median sales price is about the same—only 0.7% less than a year ago.

And now a look at the stats.  To read the complete 10-page report, click here.  If you have any questions, as always, I’d be happy to answer them for you.

In comparing April 2014 to April 2013 in PPAR:                 

                        Single Family/Patio Homes:

  • New Listings are 1719 Down 0.4%
  • Number of Sales are 922, Down 1.1%
  • Average Sales Price is $241,004, Up 2.5%
  • Median Sales Price is $213,500, Down 0.7%
  • Total Active Listings are 3,691, Up 9.3%

                        Condo/Townhomes:

  • New Listings are 197, Down 7.5%
  • Number of Sales are 94, Down 24.2%
  • Average Sales Price is $153,657, Up 1.3%
  • Median Sales Price is $136,500, Down 0.2%
  • Total Active Listings are 385, Down 3.0%

 

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

                                                Median Sales Price               Average Sales Price

Black Forest                             $356,500                             $355,605

Briargate                                   $290,000                             $304,887                    

Central                                      $175,000                              $193,195

East                                           $165,500                              $170,135

Fountain Valley:                       $199,250                              $194,602

Manitou Springs:                     $290,000                              $265,000

Marksheffel:                             $239,900                              $247,314

Northeast:                                 $211,000                              $224,065

Northgate:                                $370,750                               $360,201

Northwest:                                $324,960                              $349,732

Old Colorado City:                  $195,500                               $205,882

Powers:                                     $210,000                              $209,269

Southwest:                               $230,000                               $294,834

Tri-Lakes:                                 $420,000                              $438,344

West:                                         $207,450                              $292,648

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

 

I CAN’T SAY IT ENOUGH…PLEASE USE A REPUTABLE real estate BROKER AND MORTGAGE LENDER

Today’s real estate transactions are more complicated than ever before and the importance of using a reputable, licensed Real Estate Broker cannot be overly emphasized.  A reputable broker does the homework for you.

We all know what we “think” our home is worth and to us it may be.  However, if you want to take advantage of today’s market, it’s important to know what it’s worth in relation to many factors, including local comparables, current interior and exterior conditions of the home and what it’s going to take to present the home in its best light. 

Oftentimes you need to be creative and innovative in order to get your home to closing.

That’s where I come in.  Part of my excellent customer service is helping you do all of the above and more. If you listen to my advice on what I believe to be your best options, you will be way ahead of the game.  This includes my relationship with mortgage lenders that can help make the difference of getting a loan to closing…or not.

A recent example:

As the listing Broker on a home, my Seller was presented with an offer from a “pre-approved” Buyer that was accepted.  However, the loan officer did not fully understand the new Qualified Mortgage (QM) qualifications and the Buyer was disqualified almost a month later.

The downside of the lender’s decision was not good news for my Seller.  At the time of the acceptance, the listed home was currently rented on a month-to-month basis.  Once the acceptance was signed, the Seller gave notice to the tenant, who vacated the home at the end of that month so that the Buyer could take possession after closing.  THAT DID NOT HAPPEN because the closing didn’t take place due to the mortgage lender’s late reversed decision.

However, the Buyer really wanted to purchase this home and I had a discussion with the Buyer’s Broker about how she might better select another lender more familiar with the QM rules.  Extensions of dates are short for “loan extensions”; however, following my advice, with a new, more informed lender, the Buyer was able to secure a mortgage within two weeks.  Extra timely service from an appraiser who went to the home yesterday, on Mother’s Day, will allow the closing to take place within a few days. 

Experienced Brokers understand the new lending regulations and I cannot emphasize that importance here.  If the Broker does not get their client to a credentialed and competent mortgage originator, the result can create problems on both sides of the sale, or at best, delay the closing date.

Enough said.

 

NOW FOR NATIONAL NEWS…

Some positive, some not, and some contradictory… but all interesting enough to share with you.

 

USAToday, 4.30.14:

5 Reasons Why the Housing Recovery is Stalling:

  • Home Prices have risen more than 20% in the past two years, driven by the strong ’12 and ’13 real estate market.  They’re still about 20% below their 2006 peaks in many places.
  • Higher Mortgage Rates, which rose almost a full percentage point last spring and summer.  They’re now higher than a year ago, but remain near historic lows.
  • There’s a Low Supply of Homes for sale, which is contributing to higher prices.  That’s holding back some Buyers who can’t find homes at prices they want to pay.
  • A new generation of potential first-time home Buyers is shouldering MORE STUDENT LOAN DEBT than any previous generation, making it hard for them to qualify for mortgages with today’s tougher lending standards.
  • High unemployment, A SLOW HIRING PACE and modest economic growth are holding back the creation of new households and keeping people from Buying and Selling homes as they move for new jobs.

​​

Bloomberg Businessweek, 5.5.14:

The Housing Rebound Stalls

  • After a decade of boom-bust-boom, the U.S. housing market is going downhill just when many economists thought it would be heading upward.
  • Nationally, applications for mortgages are down 21 percent from this time last year, indicating fading demand during what is typically the busiest season for deals.
  • Housing woes are slowing the economic recovery as residental investment, including construction, accounted for 3.1 percent of gross domestic product in the fourth quarter, which is less than half the peak contribution of 6.6 percent in 2006.  This was according to an April 28 report by Capital Economics. 
  • According to Mark Palim, VP for applied economic and housing at Fannie Mae, “Now that national drivers are less significant to the market, you’re seeing reemergence of local economic factors.”
  • The National Association of Realtors’ Housing Affordability Index, which compares household incomes with home prices and mortgage rates, fell 16 percent in the 12 months through February.  Lawrence Yun, chief economist for NAR said that “prices have climbed so fast in the past two years that Buyers have sticker shock.”  He projects sales will decline 2 percent nationally this year.  “Housing is a victim of its own success,” he says.  “It’s just that the fast price growth is not healthy.”
  • Signs of a Slowdown: (change from a year earlier)
  1. March existing home sales:  -7.5%
  2. February new home sales:  -14.5%
  3. Mortgage applications for the week ended April 25:  -21%

 

DSNews, 5.8.14, RealtorMag, 5.8.14:

Fannie Mae says Americans are Optimistic About housing market

In it’s April National Housing Survey, Fannie Mae said that with concerns about employment easing, Americans are increasingly optimistic about the housing market.  This optimism may foreshadow an upswing in housing activity through the summer months.

Survey results released last Wednesday show that 42 percent of Americans believe now is a good time to Sell a home.  And 69 percent believe it’s a good time to Buy one.  This is the third straight month that the percentage of respondents saying it’s a good time to Sell has increased. 

Half the respondents to the survey believe home prices will increase in the next 12 months, while 52 percent said they expect mortgage prices to go up in the same time period.

The encouraging thing is that fewer people are concerned about losing their jobs, which, according to Fannie, may encourage potential homebuyers to enter the market.  And 90 percent said their income is either more stable or has improved in the past year.  This was tempered by rising expenses, with 39 percent saying their household expenses are “significantly higher” than 12 months ago.

Doug Duncan, senior VP and chief economist at Fannie Mae said “Concern about job loss among employed consumers has hit a record survey low” and that consumer attitudes are at the most favorable level Fannie has seen in the survey’s four-year history and “consumer confidence is moving in a positive direction.”

 

The Wall Street Journal, 5.4.14:

Home Ownership Falls to Lowest Level Since ‘90s

A recent Census release shows that despite two years of recovery in the housing market, there are still fewer homeowners than before the recession. 

Some 64.8% of American families--74.4 million households—owned the homes they lived in during the first quarter of this year, down from 65.2% at the end of 2013 according to the U.S. Census Bureau.  That was the lowest level since 1995 and a significant drop from 2006, when a peak of 76.5 million households, or 68.9% were owners.

Reasons for the steady decline were familiar.  With the housing bubble burst, many Americans lost their homes to foreclosure when prices fell and exotic mortgages took their toll.  Job loss triggered a second wave of foreclosures.

A positive sign in the data, however, indicates that more young people are moving out of their parents’ homes and into rentals—a first step toward homeownership and an eventual recovery in the ownership rate.

 

SKY SOX TICKETS AVAILABLE

Just a reminder that I have 4 front row seats to all Sky Sox games available to you on a first-come-first-served basis.  Just give me a call and I’ll be happy to put the tickets aside for you.

 

HARRY’S JOKE OF THE DAY