HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTAIL real estate MARKET

 

IF THIS GUY SAYS IT’S TIME TO BUY A HOME, BUY A HOME!

“If you don’t own a home, buy one. If you own one home, buy another one. And, if you own two homes, buy a third and send your relatives the money to buy one.”

John Paulson 9/27/2010

WOW! That’s a powerful statement.

There is no question that John Paulson is a bull when it comes to residential real estate right now. Should we care what Mr. Paulson thinks? Should we listen to him? The answer to both questions is a resounding ‘YES’. Here are several reasons why.

Who is John Paulson?

Paulson is the person who made a fortune betting that the subprime mortgage mess would cause the real estate market to collapse. He understands how the housing market works and knows when to buy and when to sell. What do others think of Paulson?

According to Forbes, John Paulson is: “a multibillionaire hedge fund operator and the investment genius who made a killing going short subprime mortgages a few years ago.”

According to the Wall Street Journal, Paulson is: “a hedge fund tycoon who made his name, and a fortune, betting against subprime mortgages when no one else even knew what they were”.

What did other financial players think of his statement?

The Wall Street Journal agrees with Paulson:

“Ignore the critics. The odds have to be on his side…It isn’t just that home prices have fallen a long way. It’s also that, if you can get a mortgage, you are basically taking a reverse bet on the bond market. You could be a long-term borrower at fixed rates, instead of a long-term lender. Right now you can borrow for 30 years at around 4.3%. After the mortgage tax deduction, for some people the net effective interest rate is nearer to 3%. That’s going to prove an awesome deal if we see inflation again.”

And Forbes said: “As this is the best time in 50 years to buy homes, Paulson advised his listeners to take 30 year mortgages to buy a home as “your debt and interest payments get locked in at record lows, while the price of your home will rise.”

Are others also saying now is the time to buy? There is a growing number of people saying that NOW is the time to buy, including:

  • The Wall Street Journal
  • Professor Karl Case, founder of the Case Shiller House Pricing Index
  • The wealthiest families in the country and
  • 70% of everyone else in America

Bottom Line

Thinking of buying a home? Are you taking advice from a friend or family member telling you that now is not the time? It may be time to listen to people who better understand the opportunities that exist in real estate today.

 

……AND ANOTHER THING

In September, the Wall Street Journal commented, “Sure, there’s more pain to come in the housing market. But when Time magazine starts running covers that declare, “Owning a home may no longer make economic sense”, it’s time to say; Enough is Enough.”  WSJ went on to post ten reasons to buy a home today.

1.     You can get a good deal

2.     Mortgages are cheap

3.     You can save on taxes

4.     It will be yours

5.     You’ll get a better home

6.     It offers some inflation protection

7.     It’s risk capital

8.     It’s forced savings

9.     There is a lot to choose from

10.  Sooner or later, the market will clear

 

AND FINALLY…

 

The government is now printing money as fast as it can, so it’s obvious that inflation will soon begin to dramatically reduce the purchasing power of the dollar (In fact, the Fed has actually announced that they plan to use inflation as part of their recovery planning). For that reason alone, it’s obvious that everyone, especially those on fixed incomes, will be in real trouble if they don’t protect their purchasing power by investing in something that will grow in value, to offset inflation. (That’s why we are seeing all of the ads for gold on TV.)  A house offers that same type of protection.

 

Don’t let the purchasing power of your money go down the drain.  Call me.

 

 

THE SOUTHERN COLORADO ECONOMIC FORUM IN A NUTSHELL

The recent, annual Southern Colorado Economic Forum brought together local experts from the public, private, and academic sectors to report on our economy. Thought of by many as our region’s economic “State of the Union,” the Forum offered the community an annual snapshot of local economic activity and provided forecasts to help businesses plan for the upcoming year.

This valuable research about where our community has been and where we are headed is made possible through a cooperative effort between UCCS and local business sponsors. This long-standing partnership between the academic and business communities has produced timely, accurate, and objective economic data to guide local businesses for nearly a decade.

Featured at this year’s forum on Oct.1, were Tom Zwirlein, Professor of Finance at UCCS and founder of the Forum and Fred Crowley, Senior Economist for the Forum. Both speakers could hardly contain their enthusiasm as they reviewed the data that formed the basis for their forecast for the regional economy in 2011.

“The flavor of the Fourteenth Annual Southern Colorado Economic Forum is a lot more optimistic than the last couple of years,” Crowley said.

“Yeah, but remember we’re coming off historic lows,” Zwirlein added. “Anything is an improvement.”

Their presentation analyzed everything from unemployment rates, personal income, population, retail trade and construction activity as part of the event that drew more than 500 Colorado Springs business leaders to the Forum on Oct. 1. The forum offered a glimpse into the future, one that has proven accurate, though not always popular.

Joining Crowley and Zwirlein was Gary Schlossberg, a senior economist with Wells Fargo Capital Management who provided a national and international outlook. A panel discussion featured Norman Bellingham, chief operating officer, U.S. Olympic Committee, Tom Duening, El Pomar Chair of Business and Entrepreneurship, and Elliot Pulham, chief executive officer, U.S. Space Foundation. Steve Helbing, regional president, Wells Fargo, moderated the panel.

“There are clearly lots of indicators that southern Colorado is turning a corner, A 22 percent increase coming off a year when you saw a 15 percent drop isn’t quite as impressive as you might want to believe,” Crowley said. “But for those who anticipated a V-type recovery, that’s probably not going to happen. It’s going to be, as we have predicted, a long, bottom-feeding recovery.”

Officially, the U.S. economy was in recession from Dec. 2007 to June 2009. For Colorado Springs, the lowest point was Feb. 2009 with modest increases in major indicators for the past several months, Crowley said. Buffering the Colorado Springs economy was the strong local presence of the military. But even the military’s presence cannot balance a 55 percent loss in manufacturing jobs that occurred over the past decade. Many of the job losses occurred in complex electronics manufacturing. Nationally, manufacturing jobs are down 31 percent during the same period.

A complete copy of all of the charts and analysis presented at the Forum is available from the Colorado Springs Business Journal. http://csbj.com/2009/10/30/southern-colorado-economic-forum-report-available/

JUST LIKE THE REST OF THE NATION, OUR LOCAL ECONOMY WILL DEPEND UPON JOBS

As was expected, the Forum emphasized that the speed of our local economic recovery will depend largely upon JOBS. For that reason, it was encouraging to hear the presentation that explained how Colorado Springs is approaching the challenge of attracting new employers to our region. As Dave White, executive vice president of marketing for the Colorado Springs Regional Economic Development Corp. recently explained in an interview, “An average of 15 to 20 companies move from other states to Colorado Springs every year and 30% are from Southern California. Approximately 60 Southern California companies are currently looking at Colorado Springs for a possible relocation”, he added.

A couple of the most recent California catches are Billet Racing Products that moved from Laguna Niguel in September, and Corinthian Colleges in Santa Ana that just opened an enrollment center in Colorado Springs that will employ 600.

“Every state in America is focusing on attracting businesses from California,” Dave said.

Here are some of his favorite selling points for California firms to move to Colorado Springs :

  • California’s top income tax is 10.55%; Colorado’s is 4.63%
  • California’s top corporate income tax is 8.84%; Colorado’s is 4.63%  based only on sales within Colorado
  • Colorado’s worker’s compensation insurance costs 25% what California businesses pay
  • Colorado Spring Utilities’ electricity rate is 4.5 cents per kilowatt hour; Southern California Edison’s is 10 cents
  • Colorado Spring’s property tax rate is 0.4% to 0.5% of real value depending on location; Orange County’s is 1% (or more for Mello Roos fees, for example)

 

 ‘We do have a campaign. We think Colorado Springs is a good match for companies seeking to relocate. We can’t compete with southern states that throw millions of dollars in incentives and tax breaks at big projects. Our sweet spot is small to mid-sized companies where the owner moves with the company. They’re driven as much by lifestyle as by incentives.’

Colorado does offer incentives to relocating companies, but they don’t receive them until they create new jobs, White said. For example:

  • The state and city may give as much as $5,000 per job plus tax credits.
  • The city might rebate the property tax up to $800 per job.
  • The legislature just passed an additional $2,500 per job credit against the corporate income tax.

 

‘We also have asked private entities to provide incentives,’ he added. ‘A country club might waive the membership fee, or the health clubs might give six months free membership. We have a pass to various tourist sites. We don’t have the beaches but we do have Pikes Peak.’

“And when business executives come to check out the town, the governor, mayor and civic and business leaders show up to greet them”, White added.

 

ARE YOU AN EMPLOYER ABOUT TO RELOCATE AN EMPLOYEE – OR – ARE YOU PLANNING TO MOVE TO A NEW JOB? HERE ARE SOME STARTLING FACTS !!!

In the September issue of Mobility Magazine, the monthly publication of Worldwide ERC, the organization for relocation specialists, there was a detailed analysis of the trends and costs to a company of relocating employees. In general, the volume of employee-transfers by companies shows a recession-caused decline similar to other, similar industries, but the numbers also show a comparably-modest increase this year. However, one of the statistics that might shock the reader involves the average costs related to relocating employees.

The Mobility data chart shows that, if a company transfers a current employee who owns a home, the average cost to the employer will be $90,017. A new-hire homeowner transfer will cost the company $66,610. A current-employee renter transfer will cost the company $20,750 to relocate and a new-hire renter will cost the company $17,877.

There are several significant aspects to these numbers. First of all, it is obvious that smart employers must take into account the homeowner status of any prospective transferee when making decisions related to relocation.  Secondly, most transferees are not aware of these costs and will undoubtedly be surprised by how much their transfer will cost them or their employer.

But perhaps the most important lesson to be learned from these numbers is that moving a household from one city to another is not simply a matter of hiring a moving van. Professional relocation specialists can help reduce costs to employers and to individuals is such areas as temporary housing, vehicle rentals, moving van costs, pet housing, sale of housing on one end and locating and purchasing of housing on the other end of the move, providing reliable, reputable service-providers in the new city, etc., etc., etc..

We’ve been specializing in relocation for 37 years. If you are about to be transferred, call us.

 

LATEST STATISTICS

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

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. 

JOKE OF THE WEEK