April 11, 2011

HARRY'S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTAIL real estate MARKET

 

HOW DOES THE FUTURE LOOK FOR COLORADO SPRINGS ??

Our city is positioned well for future growth. To cite some of the recent good news from the Gazette:

  • Wage and Salary jobs are up 0.2%
  • Initial claims for unemployment are down 11%
  • New auto and truck registrations are up 14%
  • Taxable retail sales are up 4%
  • Hotel occupancy rate is up to 50.3%
  • Foreclosure filings are down 23.4%

As further evidence of our nationally-recognized quality-of-life reputation, Colorado Springs was just named by Forbes Retirement Magazine as one of the top places in the U.S. to retire.

The bad news is:

  • The unemployment rate is up to 10.5
  • Single-family home permits are down 60.8%.

The obvious bottom-line is that we need to create more jobs to address our short-term and long-term challenges.

Historically, our city has done a good job of attracting such groups as non-profit organizations (i.e. small staff organizations) and retirees. Furthermore, we have been very fortunate in attracting military installations like the Air Force Academy, Fort Carson, Peterson Field, etc. These bases have provided much-needed economic activity and stability for our city. The happy result of their presence has been that we have not suffered the effects of the recession as badly as most other parts of the country.

Our weakness, however, is that we have failed to attract large corporations to our city. It is increasingly obvious that we must get more aggressive in attracting large corporations into our area. In fact, in recent years we have actually lost businesses to other parts of the country. Large, clean, corporations like Intel (which left Colorado Springs) hire large numbers of highly-paid, high-tech employees and greatly enhance the economy of their host cities. We need companies like that to move to Colorado Springs.

As evidence of how obvious our need for job-creation is, in the recent local elections, 5 of the 9 new members of the city council have already listed "job-creation" as their top goal.

So, since we all agree that 'job-creation' is our most pressing need, we think it's time we created a  dynamic partnership between our city government and the private sector to persuade businesses to relocate here. ..the kind of partnership that has worked so well in attracting new industries to relocate in other cities.

If the new city council is serious about going after new businesses, they should tap into our pool of successful, private sector entrepreneurs for assistance and advice about attracting new businesses to Colorado Springs. These successful entrepreneurs are business people who know what it would take to persuade other businesses to come here. They know what benefits and incentives could be offered to demonstrate to corporate leaders that, by moving to Colorado Springs, they could improve their productivity, their effectiveness and their bottom line.

These volunteer leaders would gladly serve as "sales representatives" for our city.  They could assist the city council in "pitching" Colorado Springs to the many companies that are now searching for places that are more 'business-friendly' than their present locations.

We know, from personal experience, that such input and assistance is effective in persuading businesses to move here. For example, in relocation, our specialty, there are many business incentives available that could easily persuade an out-of-state CEO that Colorado Springs could help him make his company more profitable. Tax-breaks, real estate discounts, relocation bonuses, etc. are valuable tools in the campaign to attract businesses and, we would be very happy to work with the city council as an asset in their efforts to attract new businesses.

We are all convinced we need these new businesses.  Now, all we have to do is show them that they need us.  

 

RULEMAKING COULD CRIMP THE AMERICAN DREAM:  HOMEOWNERSHIP IS ON THE LINE

RISMEDIA, April 5, 2011-Recently, the Federal Deposit Insurance Corporation adopted for public comment a proposed rule concerning risk retention on mortgage-backed securities, as required by section 941 of the Dodd Frank Act. The rule could have profound consequences for this country's housing finance system. Most at risk, perhaps, are prospective first-time HomeBuyers who have little hope of saving a 20% down payment plus closing costs.

The primary purpose of the Dodd-Frank risk-retention provision is to ensure that lenders retain a sufficient amount of risk (5%) to align their interests with those of the investors. The statute does allow exemptions to risk retention for securities backed entirely by loans meeting certain standards, as defined by the regulators. For residential mortgages, such exempted loans will be known as "qualified residential mortgages," or QRMs. However, the regulators have designed the QRM to be "conservative," in the belief that the exemption should cover only a small part of the market, leaving a "liquid, active market" for securitization of nonexempt loans.

The proposal explicitly recognizes that the proposed QRM definition is likely to exclude many prudently underwritten loans to credit worthy borrowers. The most severe limitation would make eligible only loans for which a borrower provides a 20% down payment (plus closing costs) in cash.

Other requirements that are likely to disqualify many borrowers include:

  • The maximum loan-to-value ratio of 80% for the purchase of mortgages by the issuers of mortgage-backed securities must be calculated without considering private mortgage insurance.
  • The borrower may not have been 60 days past due on any debt within the last 24 months, and
  • Tighter debt-to-income ratios than were standard long before the recent housing crisis.

As presently written, the proposal would preclude most first-time home buyers from a QRM loan.

Under the proposal, as long as Fannie and Freddie are in conservatorship, their guarantee will be deemed to have met the risk-retention requirement. But what will be the impact of any reduction in the activities of Fannie Mae and Freddie Mac (as both the Obama administration and House Republicans are now proposing)? Will there be successors to Fannie and Freddie, and how will their securitizations be treated? And what will be the impact on the Federal Housing Administration, taxpayers, and communities if in the end all low-down-payment mortgages are insured 100% by the government through FHA?

If some of the radical privatization schemes under consideration now are implemented, we will be looking at a dramatically different housing market. Homeownership could become only a dream for many of America's middle-class families. The irony of this situation is that, if the widespread concerns about bad lending and securitization had been heeded years ago, today's families would not have to depend upon a highly complex rulemaking process and an uncertain legislative future.

The rule, which contains 174 multipart questions for comment, is now up for public comment. If you would like to get more details about this proposed rule, or, if you would like to voice your concerns about it, please contact us. It is important that we're heard this time-we've got 60 days.

Give us a call at  (719) 598-3200, or, 800-677-MOVE (6683).

 

HERE'S A "FORESOME" OF RECENT UNSETTLING NEWS ITEMS:

ONE IN FOUR MORTGAGE APPLICATIONS ARE NOW BEING REJECTED

Daily real estate News, April 6, 2011

According to the latest data from the Federal reserve, nearly a quarter of people who apply for a mortgage are rejected.

"Good Borrowers with one or two blemishes on their credit, are being denied credit", says Lawrence Yun, the chief economist for the National Association of Realtord.

Lenders are now requiring higher credit scores and down payments that have kept Buyers out, experts say. For example, the median down payment to buy a home nowadays is about 15% (which will rise to 20%, if the proposed rule, described above, is adopted). During the housing boom, down payments were nearly zero.

"Tighter lending requirements and higher down payment requirements have really reduced the demand for houses", says Mike D'Alonzo, president of the National Association of Mortgage Brokers. 'It's an unbelievable Buyers' market but there hasn't been as much activity as you would expect because not as many people qualify for loans.

Indeed, Anthony Sanders, director of real estate Entrepreneurship at George Mason University, estimates that the tighter credit standards has caused as many as 30% of would-be-buyers, or even more - to sit on the sidelines.

MORTGAGE RATES EDGE UP FOR THE THIRD MONTH IN A ROW;  30-YEAR FIXED IS AT 4.87%

The Wall Street Journal  April 8, 2011

Mortgage rates mostly edged higher in the latest week, for the third consecutive week, with the average on 30-year fixed-rate mortgages rising slightly to 4.87%, according to Freddie Mac's weekly survey.

Mortgage rates generally track U.S. bond yields, which move inversely to Treasury prices. Rates have climbed this year after slumping most of last year when prices rallies on economic uncertainty.

Freddie Chief Economist Frank Nothaft noted that rates were little changed after what he called "an encouraging employment report" from the Bureau of Labor Statistics.

The 30-year fixed-rate mortgage averaged 4.87% in the week ended Thursday, up from 4.86% the prior week but down from 5.21% a year earlier. Rates on 15-year fixed-rate mortgages were 4.1%, up from 4.09% the previous week but down from 4.52% a year earlier.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 3.72%, up from the prior week's 3.7% but down from 4.25% a year earlier. One-year Treasury-indexed ARMs were 3.22%, down from 3.26% and 4.14%, respectively.

To obtain the rates, the five-year ARMs required payment of an average 0.6 point and the others required an average 0.7 point. (A point is 1% of the mortgage amount, charged as prepaid interest.)

BORROWERS RUSH TO SECURE GOVERNMENT-BACKED LOANS

Daily real estate News - April 6, 2011

Purchase applications for mortgages increased 6.7% last week, reaching its highest level of the year, according to the Mortgage Bankers Association.

The MBA reports that government loan applications reached their highest level since May, 2010, increasing 10.3% last week, compared to the week prior.

The MBA attributes the surge to borrowers who were likely motivated to apply for government loans before a scheduled increase in FHA insurance premiums.

ALL OF WHICH PROVES THAT MY GRANDPA WAS RIGHT WHEN HE SAID, "IN A RECESSION, CASH IS KING"

As a result of the credit squeeze, NAR reports that, in February, 33% of existing-home sales were made to cash Buyers. That number is projected to grow to 40% by the end of 2011. But it's not just Investors who are buying these homes. Many of these sales are to international Buyers, according to NAR.

 

SO, WHAT'S THE BOTTOM LINE FOR BUYERS, SELLERS AND INVESTORS?

The bottom line for our readers is that now, more than ever before, is the time to invest in real estate. Prices are low, interest rates are still a bargain, inventory is high and the pool of available renters is growing every day. Every mortgage application that is turned down represents a prospective renter for your investment property. Furthermore, these new regulations will soon make it even more difficult to buy.

The caution is, however, that our market is changing every day and you will need the assistance of a Realtor who understands our local money market, our local lenders and our local neighborhoods. With over 39 years of experience and a strong background in finance, we can help guide you through the confusing maze of regulations that is now turning off so many prospective Investors.

Give us a call at (719) 598-3200, or, 800-677-MOVE (6683).

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. 

 

LATEST STATISTICS

Click here for the latest Sales and Listing statistics for the Pikes Peak area

JOKE OF THE WEEK

Because football season is about to begin and Sportsbars around the country are getting ready for the big football weekends, we thought it might be helpful to address some of the more common beerdrinking problems:

BEER TROUBLESHOOTING

SYMPTOM: Feet cold and wet.
FAULT: Glass being held at incorrect angle.
ACTION: Rotate glass so that open end points toward
ceiling.

SYMPTOM: Feet warm and wet.
FAULT: Improper bladder control.
ACTION: Stand next to nearest dog, complain about house
training.

SYMPTOM: Beer unusually pale and tasteless.
FAULT: Glass empty.
ACTION: Get someone to buy you another beer.

SYMPTOM: Opposite wall covered with fluorescent lights.
FAULT: You have fallen over backward.
ACTION: Have yourself leashed to bar.

SYMPTOM: Mouth contains cigarette butts.
FAULT: You have fallen forward.
ACTION: See above.

SYMPTOM: Beer tasteless, front of your shirt is wet.
FAULT: Mouth not open, or glass applied to wrong part of
face.
ACTION: Retire to restroom, practice in mirror.

SYMPTOM: Floor blurred.
FAULT: You are looking through bottom of empty glass.
ACTION: Get someone to buy you another beer.

SYMPTOM: Floor moving.
FAULT: You are being carried out.
ACTION: Find out if you are being taken to another bar.

SYMPTOM: Room seems unusually dark.
FAULT: Bar has closed.
ACTION: Confirm home address with bartender.

SYMPTOM: Beer is crystal-clear.
FAULT: It's water. Somebody is trying to sober you up.
ACTION: Punch him.

SYMPTOM: Hands hurt, nose hurts, mind unusually clear.
FAULT: You have been in a fight.
ACTION: Apologize to everyone you see, just in case it was
them.

SYMPTOM: Don't recognize anyone, don't recognize the room
you're in.
FAULT: You've wandered into the wrong party.
ACTION: See if they have free beer.

SYMPTOM: Your singing sounds distorted.
FAULT: The beer is too weak.
ACTION: Have more beer until your voice improves.

SYMPTOM: Don't remember the words to the song.
FAULT: Beer is just right.
ACTION: Play air guitar.