November 29, 2010

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTAIL real estate MARKET

 

real estate INVESTMENTS LOOK GOOD, BUT OUR AREA STILL NEEDS JOBS TO STABILIZE THE ECONOMY

The National Association of Business Economics' latest report voices concern about federal debt, unemployment, and business regulation, causing experts to forecast only moderate growth in 2011.

The NABE also reports that "consumer spending is expected to remain modest throughout the forecast horizon due to weak job gains, persistently high unemployment, and negligible growth in household net worth."

On the bright side -- the chances of the economy slipping back into recession are considered low.

The housing market, however, continues to struggle. The National Association of Realtors reports that existing home sales fell in October after two months of gains.

Lawrence Yun, NAR chief economist, said the recent sales pattern can be expected to continue, but may improve come Springtime. "The housing market is experiencing an uneven recovery, and a temporary foreclosure stoppage in some states is likely to have held back a number of completed sales. Still, sales activity is clearly off the bottom and is attempting to settle into normal sustainable levels."

The third quarter also saw an increase in the depreciation of home values, this according to Zillow.com. Their experts report that we have seen 51 consecutive months of declines, with values now 25% below their peak. This decline in home values is comparable to the decline seen between 1928 and the end of 1933, when values fell 25.9%, at the height of the Great Depression. In addition, foreclosure liquidations rose again, to a new peak for the third quarter. More than 1.17 out of every 1,000 homes was liquidated in September.

With a more positive view, however, Frank Nothaft, vice-president and chief economist at Freddie Mac, stated, “For the first time during the housing downturn, the overall delinquency rate is lower than it was a year earlier”.The Mortgage Bankers Association also reported that the mortgage delinquency rate in the U.S. declined last quarter "amid hints of improvement in the job market." Michael Fratantoni, the MBA's vice president of research and economics reported that "although the employment report for October was relatively positive, the job market had improved only marginally through the third quarter." Therefore, the delinquency rate may have declined, but it remains high.

The National Association of Realtors echoes this sentiment, releasing a statement earlier this month noting that the housing market recovery depends on jobs, as well as access to credit.

Locally, the unemployment rate for the Colorado Springs area is now over 8% and job uncertainty is a persistent problem. According to a recent article in the Gazette, “The 8.9 percent unemployment rate in Colorado Springs is the highest since June 2009 and the 27,336 area residents unsuccessfully looking for work represented the third highest total on record, according to the Colorado Department of Labor and Employment."

Emphasizing the dependence of the housing market on jobs, NAR Chief Economist Lawrence Yun stated, "Modest changes in mortgage rates are less important to a housing market recovery than the number of people who are able to obtain mortgages,”

Or, to put it simply, unemployed people don’t buy houses.

MORTGAGE RATES STARTING TO RISE FROM AN ALL-TIME LOW

As we have been warning, 30 year fixed mortgage rates are now settling at levels significantly higher than all time lows set just weeks ago. Conforming 30 year fixed mortgage rates today are at 4.4% for well-qualified borrowers who pay a standard origination fee (points) of .07 to 1%. Current 15 year fixed mortgage rates today are at 3.77%.

FHA mortgage rates, which are driven by the same mortgage-backed securities prices as conforming fixed mortgage rates, are also up about a quarter percent higher than they were two weeks ago and are nearly identical to conforming mortgage rates today. Jumbo mortgage rates have avoided the spike that has hit conforming and FHA interest rates. Current 30 year fixed jumbo mortgage rates remain at a record low 4.875%.

It doesn’t look like rates will go back down. Call us to find out the best available current rates.

 

STARTING TO GET CABIN-FEVER?  – NOW MIGHT BE A GOOD TIME TO BUY A VACATION RENTAL

Right now, the languishing housing market offers some lingering upsides for those who have a pot of investment dollars to burn. Home prices are low, financing is cheap, inventories are bulging and vacation rentals represent a great opportunity to grab a piece of the American Dream as a solid, long-term investment.

"Vacation homes are almost always a good investment," says vacation rental guru Christine Karpinski, director of Owner Community for HomeAway.com, the global leader in vacation rentals, hosting some 540,000 vacation rental listings.

"First, if you're looking for a good long-term investment, real estate tends to be a good bet. Second, vacation properties have the ability to pay for themselves, and owners often earn a profit in rental income. Third, the investment comes with the desirable perk of having a place at the beach or in the mountains to call your own," says Karpinski, a vacation rental owner herself.

Here's why you might want to move on that vacation rental now.

Prices are as low as they are going to go.

Property prices are as low as they've been in ten years. Procrastination won't keep them low. Analysts say the housing market is scraping bottom and poised to move up.

Interest rates are likewise as low as they are likely to go.

Rates on non-owner occupied properties are only about a half a percentage point higher than residential rates-- with a virtually mandated 20 to 30 percent down payment.

Markets are flush with inventory.

The slow economy and even slower housing market has left vacation markets brimming with buying opportunities, from sellers looking to move on or up, to foreclosures that warrant careful scrutiny. “And as market demand has surged, organizations like HomeAway.com have sprung up on the Internet to help connect potential renters with your vacation rental" Karpinski said.

Buy now, beat the 2011 peak season rush.

Buy now and you've got plenty of time to prepare yourself and your property for the peak rental season. Rental fees generated during the twelve weeks between Memorial Day and Labor Day can pay your mortgage for an entire year. Most inquiries come in between January and March.

However, before you let yourself fall in love with a property, make sure it is legal to rent it out as a vacation home. “Some areas and homeowners' associations do not allow short-term rentals," Karpinski warns.

 

SOME HOLIDAY SAFETY TIPS TO PROTECT YOUR HOME

The Holiday season is upon us, and for most it is a time full of joy, fellowship, and family. But the unexpected can and does happen. So, from stopping theft to preventing fires, here are a few tips from the experts that can help keep your family safe this time of year.

  • Fire safety comes with the territory of the holidays. Trees and lighting can both be dangerous if not done correctly.
  • When selecting a real tree, be sure to buy one that is fresh. This means you should look for a fragrant tree that is a rich, deep green color. Also, the trunk should still be sticky with sap. Old trees are dry and brittle, and thus can be very flammable.
  • To keep your tree fresh throughout December, be sure to keep it immersed in water at all times. If needles start to fall off, give it more water!
  • For those with artificial trees, don't use electrical lights on metallic trees! And be sure to always turn your lights off you go to bed or leave the house.
  • Another fire hazard are those beautiful, twinkling lights. Every year's decorating should begin with checking light strands for cut or frayed wires.
  • Also, be sure that lights are used as marked. Indoor lights are for use inside only. Outdoor lights are kept outside.
  • Next, don't overload your outlets. Three sets of lights to an extension cord is plenty!
  • Another looming threat during the holidays is home burglary. Thieves prey on those that travel during this season.
  • To prevent thieves from targeting your home, you need to make your schedule unpredictable. That means keep your routine varied. Come home randomly for lunch one day a week. Leave for work at different times.
  • And to give the appearance that someone is always home, leave on a TV or use lights that are on timers.
  • Never post on social media that you'll be out of town or away from your house for extended periods of time.
  • And as added measures of security, consider installing an alarm system, or having a house-sitter stay at your home or check on it periodically during your vacation.

Use these tips to have a safe and merry holiday season!

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. 

 

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