Dec. 20, 2010

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTAIL real estate MARKET

THE NEW TAX LAW GIVES TAXPAYERS AND THE ECONOMY A SIGNIFICANT BREAK

The recently-passed extension of the “Bush Tax Cuts” will give most taxpayers a significant break on their income taxes for the next two years. Because of the 2001 tax act sunset, ordinary income tax rates were scheduled to increase for 2011. After a lot of bickering about “The Rich”, Congress finally decided that the 2010 Tax Relief act would extend the lower rates to all brackets for two years.

Now, leaving aside the details, let’s compare how much taxes were scheduled to have been paid vs how much will be paid under this new extension and see what effect this new tax bill will have on some typical taxpayers:

Single Worker - $50,000 Income, No Children              

Tax would have been  $10,680     Tax will now be $9,075

Married Couple - $150,000 Income, 2 Children in college

Tax would have been $34,753      Tax will now be $23,170

Senior Retired Couple - $100,000 Income

Tax would have been  $13,762      Tax will now be $8,590

Obviously, this tax relief will take some financial pressure off a lot of taxpayers and will allow them to spend more money in the economy, thus stimulating small businesses, new hires, consumer spending and economic activity in general. Hmmm, wait a minute. Isn't that what we call a “stimulus”?  Golly, why didn’t we think of that sooner?       

BUT WAIT, THERE’S MORE …

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, also extends and expands a wide variety of valuable tax breaks, most notably a payroll tax reduction for 2011.

Payroll tax rates

For 2011 only, the 2010 Tax Relief act reduces the employee portion of the Social Security tax on earned income from 6.2% to 4.2%. The self-employed pay both the employee and employer portions of Social Security tax, and the Tax Relief act also reduces their rate by two percentage points for 2011, from 12.4% to 10.4%.

As of this writing, the maximum taxable wage base for Social Security taxes hasn’t been established for 2011. But for 2010, it’s $106,800, and with inflation low it likely won’t increase much for 2011. So the maximum tax savings from this break will likely be between $2,100 and $2,200.

Long-term capital gains rates

Under the 2001 tax act, the 15% long-term capital gains rate was scheduled to increase to 20% in 2011. The 2010 Tax Relief act extends the 15% rate through 2012.

Qualified dividend tax rates

The 2010 Tax Relief act extends taxation of qualified dividends at the 15% long-term capital gains tax rate through 2012 (0% for those in the bottom two brackets). Without Congressional action, dividends would have gone back to being taxed at ordinary income rates in 2011, with a top rate as high as 39.6%.

Increased exclusion on small business stock gains

To make investing in certain small businesses more attractive, the Small Business Jobs Act of 2010 (SBJA), signed into law in September, temporarily increased the qualified small business (QSB) stock gain exclusion to 100% for stock acquired after Sept. 27, 2010, and before Jan. 1, 2011, that’s held for at least five years. Additionally, the SBJA eliminated the alternative minimum tax (AMT) preference item on such gain, making it tax free for AMT purposes as well.

The 2010 Tax Relief act, however, extends the acquisition deadline for 100% gain exclusion and elimination of the AMT preference item to Dec. 31, 2011.

Itemized deduction and personal exemption phaseouts

The 2001 tax act reduced the adjusted gross income (AGI)-based reductions on itemized deductions and personal exemptions for 2006 through 2009 and eliminated them for 2010. The 2010 Tax Relief act extends this elimination through 2012.

Deduction for state and local sales taxes

For the last several years, taxpayers have been allowed to take an itemized deduction for state and local sales taxes in lieu of state and local income taxes. This break can be valuable to those residing in states with no or low income tax rates or who purchase major items, such as a car or boat. But this break expired after 2009.

Now the 2010 Tax Relief act has extended it for 2010 and 2011 (but not for 2012).

Dependent care credit

The 2001 tax act increased the maximum amount of eligible expenses for the dependent care credit from $2,400 to $3,000 for one qualifying dependent and from $4,800 to $6,000 for more than one qualifying dependent through 2010. The 2010 Tax Relief act extends these higher limits through 2012.

The maximum credit is generally 20% of eligible expenses, which is $600 for one dependent and $1,200 for more than one dependent. There’s no upper AGI limit for claiming the credit, but taxpayers with AGIs of $43,000 or less are eligible for a larger maximum credit.

For 2010 and 2011, the Tax Relief act also allows you to offset your AMT liability with certain nonrefundable personal credits (such as the dependent care credit and certain energy-related credits) for which you’re otherwise eligible.

AND, IN ADDITION ….

• If you have loved ones in the middle or lower tax brackets, they may benefit from extensions of breaks that you won’t qualify for, such as various education- and child-related credits and deductions.

• If you’re interested in reducing energy consumption, you may want to take advantage of extensions of various energy-related breaks.

• If you’re currently unemployed, you may benefit from the act’s extension of unemployment benefits.

Considering all of these significant changes, we think you had better check with your tax advisor about how these changes will affect your tax liability. After all, we want you to be comfortable with your finances when it comes time for you to buy your new house from us.

MORTGAGE RATES JUMP ….WILL HOME PRICES FALL ???

Borrowing money to buy a house just got more expensive. The average rate on a 30-year mortgage rose to 4.83%, Freddie Mac said Thursday. That's an increase of about two-thirds of a percentage point in five weeks.

The rate increase means monthly payments on new mortgages will jump. Five weeks ago, a buyer with a 30-year loan would have had mortgage payments of $487 a month. Now it's $526. That's an 8% price difference – more than enough to give most shoppers pause.

Will costlier mortgages push already wobbly home prices lower? History offers some answers.

The recent rise in rates isn't nearly the sharpest in Freddie Mac's history. Between June of 1979 and April of 1980, 30-year mortgage rates rose 5%. And, our recent 8% increase in monthly payments over five weeks has nothing on the record five-week jump of 21% in 1980. In that single five-week period, monthly payments per $100,000 soared from $1.109 to $1,347.

The effect on house prices? They rose more than 15% from 1979 to 1981.

Bottom Line: Better buy now !!! Call us !!!

MORTGAGE RATES AND HOME PRICES

Inflation, to be sure, offset all of the increase and more. Subtract it, and house prices declined 9% over those two years. The nominal price increase, however, suggests that a whopper of a rate increase failed to trigger a selloff.

In 1987, following only a moderate uptick in inflation, the Fed gradual raised the core interest rate from 6% to 6.75% in late April and early May. The 30-year mortgage rate took a wilder rise, spiking nearly one and a half percentage points to 10.47% over five weeks ended May 1. Monthly payments rose 13%, to about $913 per $100,000 borrowed.

House prices soared 9% that year. Inflation averaged just 3.6%.

Mortgage payments rose nearly 11% over five weeks ending Aug. 8, 2003, to $621.58 per $100,000 borrowed. The increase signaled a broad economic recovery; growth in gross domestic product accelerated from 1.8% in 2002 to 3.6% in 2004. Immediately following the 2003 mortgage rate rise, prices shot 42% higher after inflation over three years.

It's unlikely that the recent mortgage rate increase foretells a rally of anywhere near that magnitude, but homeowners shouldn't assume that higher rates worsen the outlook for house prices. Current mortgage rates, after all, are still extraordinarily low. The 4.17% rate recorded five weeks ago is the lowest since at least 1970, when Freddie Mac was created. The average rate over the past four decades was close to 9%.

That's not to say that house prices won't dip for other reasons. Even before the recent rate increase, the Case-Shiller index of house prices fell 2% in the third quarter following a 4.7% rise in the second quarter.

Jobs, incomes and economic growth will likely decide what happens next, not a change in the 30-year mortgage rate.

The down-side, however, is that rising rates could still squeeze some housing markets because first-time home buyers may find that they’re not able to qualify for as large a loan as they could just four weeks ago. That could put pressure on home sellers to reduce prices.

Higher rates are also certain to push others completely out of the market. Analysts at Credit Suisse estimate that the recent rise in rates has the same effect as a 7% increase in home prices for prospective buyers. Assuming a 10% down payment, with rates at 4.5%, a buyer typically needs income of $84,000, to qualify for a $400,000, 30-year fixed-rate loan. At a 5.5% rate, the income requirement rises to $92,000. A general rule of thumb holds that every one-percentage-point increase in rates effectively raises home prices for buyers by roughly 10%.

Bottom line:  Rising rates certainly doesn’t make it any easier for homeowners to sell.  But how much will it hurt? Economists say the impact might not be all that bad if rates are rising, because the economy is growing. As one economist said, “For the housing market, low rates in a crummy economy are worse than higher rates in an improving economy,”

THE “QUE” SAYS WE’RE DOING BETTER AND 2011 LOOKS GOOD

The Southern Colorado Economic Forum *(SCEF) publishes the QUE, a quarterly report on the El Paso County economy. The Forum is part of the College of Business outreach to the Colorado Springs Community.

Here are several interesting facts that are contained in the latest issue of the QUE.

Fred Crowley, Chief Economist of the Forum, reports that our local Business Conditions Index (BCI) stands at 77.32. This is 12.6 percent higher than its low of 68.67 in February 2009. The current BCI lagged the anticipated levels for the third quarter by approximately 5 percent. This reflects the sideways trend in the national economy during the same period. While disappointing, this is not believed to be a precursor to a double dip recession.

Despite these quarter-to-quarter observations, the longer term pattern suggests the local economy is growing, albeit at a rather snaillike pace. The Forum believes growth will become more apparent in the 4th quarter of 2010. The BCI is expected to be in the low to mid 80’s through the first quarter of 2011.

With reference to the local housing market, despite an expected decline, single-family building permit activity has held up well. October 2010 surpassed October 2009 by 7 units.

Another factor pointing towards an improved real estate market is the decline in the number of active listings in the region. Currently, there are 5,124 active listings. This is approximately 464 fewer than there were in October over the last several years. The decline in the supply of homes for sale is expected to lead to a more stable housing market.

Last quarter, the QUE reported the rising trend in housing prices. The average price of an MLS facilitated home sale in October 2010 was 12.64 percent higher than the average price in October 2009. Sustainable price increases will depend on job/income growth, low interest rates and some semblance of a balance in the supply and demand for housing.

Further increases in housing prices are anticipated as the economy continues to recover, employment increases, foreclosures decrease and interest rates remain near record low levels. An improving local economy, rising home prices and low interest rates are expected to reduce foreclosures by 600-700 in 2010.

In general, increasing retail sales could be a harbinger for solid economic activity in the first quarter of 2011 and reduced unemployment in coming year.

All of these comments, plus many more, are contained in the latest edition of the QUE. The QUE is available free via an electronic subscription. If you would like a subscription, send an e-mail to fcrowley@uccs.edu and have the word SUBSCRIBE as the subject. To see a complete copy of the latest QUE, please click here.

*The Southern Colorado Economic Forum gathers, analyzes and disseminates information relevant to the economic health of the region. Through its efforts, the Forum has gathered a number of unique data sets. The Forum and its staff are available for fee-for-service work to analyze business situations, develop forecasts, conduct and analyze surveys and develop solutions to other business problems you may have. Examples of prior work include Small Area Forecast for the Pikes Peak Area Council of Governments, Colorado Springs Airport Passenger Survey, exit survey for La-Z-Boy, a Community Audit for the Pikes Peak Workforce Center and the Data Mining Project for the Colorado Workforce Centers. If you would like additional information about how the Forum can assist you, contact Fred Crowley at (719) 255-3531 or e-mail at fcrowley@uccs.edu.

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

December 13, 2010

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTAIL real estate MARKET

FOR TOO MANY, THE real estate MARKET HAS BEEN "GROUNDHOG DAY          

If you saw the movie, “Groundhog Day”, you’ll remember that it told the story of a not-so-smart follow who had to repeat living the same day, over and over, until he got it right. By the end of the movie, by trial and error, he had all the right answers and was making all the right choices.

Well, for the past several years, since the bottom fell out of the real estate market, it seems that many people have been living their own version of Groundhog Day. Buyers, Sellers, Investors and Realtors have begun each day by having the media inform them that “The Recession is Over”, and “We’ve Bottomed Out”, only to be told by the media later in the day that “Foreclosures are up”, “More Homeowners are Upside-Down”, and “The sky is falling”.

So, where are we now, really?  Have we reached the point where the market has stabilized enough that you can make some good choices, or, are you still in the middle of Groundhog Day?  For our part, we are convinced that there is now enough stability in our local market that Buyers and Sellers can make some wise, informed decisions and profit accordingly.

With this in mind, we thought that it might be helpful to our readers if we reviewed some current facts and some recent comments by industry experts, so that prospective Buyers, Sellers and Investors might get a better idea of where they stand.   

Here are some facts and comments about our current real estate market:

• OUR LOCAL MARKET IS BETTER THAN MOST - Remember that “All real estate is Local” and in almost every national survey, Colorado Springs comes out in the top ten cities for recovery, standard of living, opportunity for growth, etc.  Regardless of how bleak things might look in Phoenix or Las Vegas, our local market shows every sign of being poised for a rebound from the housing slump. All we need for that to happen is more jobs !!! and our new Governor has pledged to place that goal at the top of his priorities.   
• OUR LOCAL ECONOMY IS GROWING – Again in November, sales tax collections climbed. November collections were $8.94 million, for an increase of 6%. This is the 13^th straight month of year-over-year growth. This means that people are spending again and that’s great news for our local economy. 
• FALLING HOME PRICES - Nationally, price-cutting continues. The share of homes for sale that experienced at least one price reduction in November jumped 24.1 percent compared to the same month last year, (ZipRealty). As of Dec. 1, sellers had cut asking prices on 48.4% of all listings. Out of 26 national markets, 19 saw double-digit jumps in the number of discounted homes. However, Readers, please take note: In October and November, Denver (and the state of Colorado in general) had the smallest share of discounted listings, at 34.2 percent.

Now, finally, many national housing experts are saying that, "Prices seem to be stabilizing as sellers have finally figured out that they have to adjust prices to meet the market.

•  LOCAL MARKET VALUES – Our local average sales price grew from $214,062 in November of 2009 to $233,286 in November of 2010, an increase of 9%.  Median sales price grew from $187,950 in November of 2009 to $198,000 in November of 2010, for an increase of 5.3%. We’re now going in the right direction.
•  INVENTORY - Inventory typically goes down month-to-month in November, when many people decide to wait until after the holidays to sell, and November’s inventory was down 3.8 percent from October. On a year-over-year basis, however, inventory continued to trend up: In 2010, it rose 11.6%, to 629,086 properties.
•  FORECLOSURES - There are currently upwards of 11 million distressed properties on the market, including short sales and foreclosures.  Dale Stinton, CEO of The National Association of REALTORS® (Dec.12, 2010) summed up the problem when he stated,”2010 was all about the distressed market—We need to start clearing out that system before the market sees real recovery or any return to normal,”  The bottom line is that these foreclosures will slow our eventual recovery, but, for now, will make for low prices for some fortunate Buyers.
•  INTEREST RATES – The good news is that Interest rates are still a real bargain. The bad news is that they have gone up. According to the Gazette (Dec, 11, 2010), “Rising government borrowing costs have driven mortgage rates to their highest level in six months, challenging the still-shaky housing market and the Federal Reserve’s efforts to boost the U.S. economy.” 

This week, according to the Gazette, the rate for a 30 year, fixed-rate mortgage averaged 4.61%, up from 4.46% a week ago and the highest level since June 24, 2010. “This rate increase has been so sudden and so sharp that it’s almost too late for many borrowers to refinance”, said Kevin Cavin, mortgage strategist for Sterne Agee in Chicago.

 This upward trend in mortgage interest rates will likely continue and should remind us that, if you are going to buy or sell a home, there will probably not be a better time to do it than right now.  Remember,  ...“He who hesitates is lost”.

• GROWING LOCAL HOUSING NEEDS - Every year, a tremendous amount of new homeowner needs are added to the market by virtue of the population growing and reaching adulthood. There is somewhere in the neighborhood of half a million to a million new households that need shelter every year.  In Colorado Springs, in addition to this “normal” increase in demand, we are fortunate enough to benefit from the influx of troops to Fort Carson.  Many of these incoming troops enter the housing market, and they attract additional outside service companies.

THE MORAL OF THE STORY FOR SELLERS – There are still Buyers out there, but the houses that are selling are the ones that are priced right.

THE MORAL OF THE STORY FOR BUYERS – The house you postpone buying today, will cost you more tomorrow.

HERE’S SOME REASSURANCE FOR HESITANT PROSPECTIVE HOMEBUYERS –

THE JOB-LOSS PROTECTION PROGRAM 

Job-Insecurity is one reason why some prospective Buyers are reluctant to buy their new home. It’s an understandable concern, and it’s the reason why Salzman real estate Services introduced and offers the Job-Loss Protection Program.

This program, which is available only from Salzman real estate Services, will pay the Homeowner up to $1,800 per month for up to 6 months, during the 24 month coverage term of the policy, if the Homeowner becomes unemployed after 60 days of closing.

This innovative protection plan is paid for by the Seller and is, therefore, a benefit to the Seller (by making his/her listing more attractive) and to the Buyer (by removing “Employment Anxiety”).

If this Plan is of interest to you, please give us a call, to learn more about it.

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

 STATISTICS 

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

December 6, 2010

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTAIL real estate MARKET 

WHAT ARE OUR LATEST MORTGAGE INTEREST RATES ?

Effective Monday, December 6, the interest rates in the El Paso County 2009A bond program for new loan reservations are: 4.25% “Non-Assisted” Loans without DPA and 4.75% “Assisted” Loans with 3% DPA Grant

Conventional 30 year fixed rate with no origination fee or points are at 4.625% and VA & FHA 30 year fixed 0+0 are at 4.5%

As we have been warning our readers, rates continue to climb.  If you are considering buying a new home or an investment property, be aware that values have leveled out and increased rates will mean less home for the dollar. With QE2 on the governments agenda to help out the stock market, it appears highly probable that these rates, if not higher, may become the norm.

MAJORITY OF AMERICANS SAY: BUYING A HOME IS A GOOD DECISION

Despite the continuing challenges facing the U.S., nearly eight out of 10 respondents believe buying a home is a good financial decision, according to NAR's eighth annual Housing Opportunity Pulse Survey.

The survey, which measures how affordable housing issues affect consumers, also found job security concerns to be the highest in eight years of sampling, with 70 percent of Americans saying that job layoffs and unemployment are a big problem in their area; eight in 10 cite these issues as a barrier to homeownership. The telephone survey of 1,209 urban and suburban adults in the top 25 metropolitan statistical areas was conducted for NAR by American Strategies and Myers Research & Strategic Services for NAR's Housing Opportunity Program.

Some key results:

• Americans continue to believe that buying a home is a good financial decision (77 percent believe strongly or not so strongly, 68 percent strongly so).
• More than two-thirds of respondents (68 percent) say that now is a good time to buy a home.
• Job insecurity and the lack of jobs continue to be the primary obstacle to home ownership and market recovery.
• Respondents see the recession and job losses as the main reasons for the foreclosure problem, a shift from last year when they were more likely to blame homeowners who bought homes they could not afford.
• A majority of renters say that owning a home at some point in the future is either one of their highest priorities (39 percent) or a moderate priority (24 percent). Just 21 percent of renters say that owning a home is not a priority at all.
• Frustration with banks is up: now a majority worry that banks have made it too hard to qualify for a home mortgage loan.
• 51 percent of respondents say foreclosures remain a big or moderate problem in their area. While there has been a significant drop in the percentage of those surveyed who say foreclosures have increased, 51 percent say that the rate of foreclosures is about the same as it was last year.
• Most of those surveyed say that it is harder to sell a home in their neighborhood than it was a year ago.
• Looking forward, 70 percent expect real estate sales in their neighborhood to remain about the same over the next few months. A nearly identical number (69 percent), also expect home values to remain the same.
• Nearly one-quarter (23 percent) are now very concerned about the number of homes and condos for sale in their area—a number that is up 7 points from last year.
• Most respondents are more concerned about the drop in home values than they are about home costs being too high. Still, cost remains the significant barrier to many who would otherwise like to buy a home.

ONE INTERESTING REASON FOR THE HOUSING GLUT: Fewer New Households

According to RISMEDIA (December 4, 2010) and the Census Bureau, U.S. household formations are at their lowest since 1947. And that's helping to keep the supply of unsold homes at near-record levels nationwide, even though relatively few houses are being added to the inventory.

Between March 2009 and March 2010, the number of households rose just 357,000, according to the census data. In the previous 12 months, the number increased only 398,000, the third-smallest increase on record since World War II. (Between 2002 and 2007, before the economy started on its downward trajectory, household formations averaged 1.3 million a year, U.S. census data show.)

In a well-functioning economy, household formations "would be closer to 1.25 million," said Mark Zandi, chief economist of Moody's Analytics in West Chester, Pa.

"The drop in household formations is the consequence of the consumer fear of what's happening with the economy and with the job market," said Lucien Salvant, a spokesman for the National Association of Realtors.

"When people are afraid of losing their jobs or not being able to get into the job market, they are not thinking about buying a home," Salvant said. "Many opt to stay at home with parents, or to share rentals with friends."

The nation's gross vacancy rate — the proportion of housing units that are vacant — stood at 14.5 percent at the end of the second quarter of 2010, census data show. During normal times, builders need to add about 1.7 million houses a year to meet underlying demand stemming from, among other things, the need for replacement homes and the desire for second homes, as well as conversions from nonresidential to residential uses and increases in the number of households.

For example, about 250,000 new homes are needed per year to replace houses that are destroyed by fires and natural disasters or that wear out from neglect or old age. Demand for second homes combined with other miscellaneous factors accounts for 50,000 to 100,000 new houses a year.

Household growth typically requires 1.3 million to 1.4 million units.

"The sharp drop in household formation largely explains why the housing glut remains stubbornly high, despite the plunge in housing starts in recent years," said housing economist Patrick Newport, of IHS Global Insight in Lexington, Mass.

Two major sources of household formation — immigration and marriage — remain well below the averages of recent years.

The National Center for Health Statistics reports that the number of marriages per thousand population fell from 8.2 in 2000 to 6.8 in 2009. Divorces per thousand population fell from 4.0 in 2000 to 3.4 in 2009.

There are no hard data on "doubling up" — young people sharing rentals or moving in with their parents in a tight job market — though anecdotal evidence indicates the latter has become more commonplace in recent years.

Another big factor in the decline in households is the decline in immigration. During the late 1990s and in the first years of this decade, the housing industry banked on immigration for a good part of its growth.

Between 1990 and 2000, the U.S. population grew by nearly 33 million, with almost half of that gain attributable to immigration, according to data provided in 2003 by James Johnson Jr., a professor at the Kenan-Flagler Business School at the University of North Carolina-Chapel Hill.

In the 1990s, census data show, immigrants accounted for 250,000 household formations a year. Immigrants typically rent for their first few years in this country, housing economists say. Then, after becoming established, they become a major factor in the for-sale marketplace.

Newport believes that a drop in immigration might have played a greater role early in the recession than it did later on. In 2009, census data show, households headed by the native-born under age 35 fell by 338,000, indicating that doubling up was the larger contributor.

The number of households headed by those ages 15 to 24 fell 124,000 (students moving back in with parents), while households with six or more people rose 355,000, an 8 percent increase.

A common misconception, Newport said, is that foreclosures account for the oversupply of houses.

"A foreclosure or a bank taking possession of a home," he said, "does not by itself add to the housing glut. If a household vacates a home and moves into a rental unit, the housing supply is unchanged. Supply increases, however, if one household moves in with another, or if its members become homeless”, Newport said.

The moral of the story is: Don’t just move in with your patents …Do the patriotic thing. Get married and buy a house !!

COLORADO SPRINGS HOME SALES PRICES ROSE IN 2010 ..AND THAT’S BETTER THAN MOST AREAS IN THE COUNTRY

The most recent NAR report on median sales prices of existing single-family homes for metropolitan areas shows Colorado Springs prices were up 3.2% over 2009, as opposed to the national prices which were down .2% from last year. These figures emphasize that we are outperforming most other metropolitan areas of the country. (To see the complete report, click here)

In a nutshell, our local market is still very slow, with only 600 sales in November, but the outlook for Buyers looks great. Large inventories (Yes, foreclosures are still adding to the inventory), low interest rates (not as low as last month, but still a bargain), low prices and eager Sellers all add up to a wonderful opportunity for both Homebuyers and Investors. ..And, there is a growing pool of renters out there that should keep our vacancy rates low, for the foreseeable future.  

Call us and let’s discuss how these factors fit into your investment strategy.

THE ‘FIRST-TIME DEFAULTER’: the Newest Customer Segment for Banks  

Over the last two years, a new customer segment—the "first-time defaulter" (FTD)—has emerged and is presenting a new challenge for banks, according to a new survey examining the future of consumer lending by the Deloitte Center for Financial Services.

According to Deloitte's survey, 11 percent of bank customers surveyed have been hit with a negative credit experience for the first time in their lives during the past two years. Overall, 22 percent of consumers have experienced a serious negative credit situation since the peak of the crisis in September 2008, including events such as delinquency, foreclosure, bankruptcy and charge-offs.

"This is a significant new customer segment that banks should be aware of," said Andrew Freeman, executive director of the Deloitte Center for Financial Services, Deloitte LLP. "Our research shows just how sizeable the first-time defaulter group has become."

More than half of FTDs (58 percent) have been contacted by a collection agency, and 43 percent have been delinquent in their medical bills.

According to the survey, these events could be costly for financial institutions, as poor interactions and unmet customer expectations may cause the first-time defaulters to look elsewhere: 63 percent of respondents say they are not at all likely to borrow from their current institution in the future based on the lender's efforts to help resolve their issues.

"Today, retail banks are rethinking their broader lending strategies and practices," said Freeman. "As part of this reassessment, lenders are likely to be paying careful attention to how they serve this new segment. When implementing strategies to re-engage with these customers, financial institutions may want to recognize that once many of these individuals are able to regain their economic footing, they may become profitable again."

Other findings of the survey, from the full base of respondents, include:

• Almost two-thirds of consumers (65 percent) say they have the same level of satisfaction relative to two years ago with their bank.
• At the same time, most respondents have seen little change in the lending process overall, although 16 percent said they have seen higher fees associated with loans and credit.
• Only 28 percent believe the Dodd-Frank Act and other new regulations will have immediate benefits for consumers. Furthermore, a significant proportion of consumers expect higher fees, higher rates, more paperwork and fewer offers from lenders in the next 12 months.
• More than half of those surveyed (52 percent) would prefer to use a single bank for all their financial services needs. But, with consumers' interest in obtaining loan products from their primary bank surprisingly low, the survey findings indicate that banks' cross-selling efforts will likely require some fresh, creative efforts.

Unfortunately, this is just one more problem they have to face in today’s competitive market.

CHIEF ECONOMIST FOR NAR TO SPEAK IN COLORADO SPRINGS

Lawrence Yun, Chief Economist for the National Association of Realtors, will speak at the Crowne Plaza Hotel, in Colorado Springs on Wednesday, February 16, 2011, 9am-11am. Attendance will be by registration only and will be limited to 300. Registration for the event will begin at 8:30am.

Dr. Yun creates NAR’s forecasts and participates in many economic forecasting panels, including Blue Chip and Harvard University Industrial Economist Council. USA Today recently listed him among the top 10 economic forecasters in the country.

The registration fee for this event is $10. Be sure to register ASAP, to insure getting a seat to hear this outstanding speaker.

The Sponsor of this outstanding presentation is Land Title Guarantee Company.

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 monthly Sales and Listing statistics for the Pikes Peak area.

CHRISTMAS JOKE OF THE WEEK

Q: Where do polar bears vote?
A: The North Poll.

Q: How does Al Gore's household keep Christmas politically correct?
A: On Christmas morning, they give the presents TO the tree.

Q: What do you call a cat on the beach at Christmas time?
A: Sandy Claus!

Q: How do sheep in Mexico say Merry Christmas?
A: Fleece Navidad!

Q: What nationality is Santa Claus?
A: North Polish.

Q: What do you call a bunch of grandmasters of chess bragging about their games in a hotel lobby?
A: Chess nuts boasting in an open foyer!

Q: What goes Ho, Ho, Swoosh, Ho, Ho, Swoosh?
A: Santa caught in a revolving door!

Q: What do you call people who are afraid of Santa Claus?
A: Claustrophobic.

Q: How come you never hear anything about the 10th reindeer "Olive" ?
A: Yeah, you know, "Olive the other reindeer, used to laugh and call him names"

Q: Why is Christmas just like a day at the office?
A: You do all the work and the fat guy with the suit gets all the credit.

Q: What's a good holiday tip?
A: Never catch snowflakes with your tongue until all the birds have gone south for the winter.

Q: Why did they have to cancel the Nativity pageant in Washington, this year?

A: Because they couldn’t find three Wise Men or a Virgin.

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. 

LATEST STATISTICS

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

 JOKE OF THE WEEK

November 22, 2010

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTAIL real estate MARKET 

SHOULD YOU BUY YOUR DREAM HOUSE NOW?  THE NEW YORK TIMES SAYS, “YES”

The New York Times recently published an article about our present real estate market and what it should be telling prospective Buyers. Some of the more persuasive arguments cited for buying a house now were:

• Your home provides you with a return on your investment in the form of “net imputed rent from owner-occupied housing”. i.e. You live in the house and so it provides you with a real flow of valuable services. This represents about a 6% return on your investment, after maintenance and repair and it is constant over time in real terms.
• Your home will provide you with capital gains when you sell it, if it appreciates during the time you own it (and, at today’s reduced prices, it’s an excellent bet it will appreciate in the years ahead).
• You can deduct the interest you pay on the mortgage
• There is a huge inventory of homes-for-sale on the market. This results in lower prices and more choices for Buyers.
• Home prices are down by 30% on average from the peak

In real numbers, this means that four years ago, a $300,000 home with a mortgage rate of 6.6% would have cost you $1,533 a month. Today, that same home would be available for $213.000, would have a mortgage interest rate of 4.2% and would cost you approximately $833 a month.

The Census Bureau and other demographers project that the number of American households will increase by 1 to 1.5 million each year. With new construction lagging, we should soon be experiencing a tightening market with low vacancy, as has occurred in every housing cycle since WWII.

It’s true that the performance of the housing market drives the economy and the performance of the economy drives the housing market…but housing has perhaps never been a better bargain. Sooner or later, Buyers will regain faith, inventories will shrink to reasonable levels, prices and interest rates will rise and we’ll even start building again, and the price of the home you buy today will rise accordingly.

The American dream is not dead – it’s just taking a well-deserved rest.   

9 TIPS FOR PROSPECTIVE BUYERS

Here are 9 steps that you can take to make your dream home a reality!

1. Know how much you can afford. You may already know how much monthly payment you can support (experts recommend no more than 1/3 your monthly income), but the buying process will also include upfront costs, such as a downpayment and closing costs.

2. Downpayment options. Do you qualify for downpayment assistance programs? Will you be able to get an FHA loan and pay 3.5 percent down? Do you have a relative that would like to make a downpayment gift? Many financial experts recommend a downpayment of 20 percent, so be sure to explore your options!

3. Check Credit Report. Your credit report says a lot about you. Lenders use it to evaluate your risk potential and to inform themselves on how responsible of a borrower you are. They use this report and subsequent score to figure your interest rate. The more stellar your report, the better your score and thus lower your rate. Be sure to check your report for accuracy, and report any errors to the credit reporting agencies.

4. Get Prequalified. It's time to talk to a lender! Pre-qualification will give you a ballpark figure of how much the bank would be willing to lend you. Are you looking for a $100,000 house or a $300,000?

5. Get Preapproved. This is the official letter from the lender that says they will be willing to lend you money. Many sellers look for buyers who are preapproved.

6. Affordability. The bank may tell you that you can afford a home worth $300,000. This does not mean you want to borrow to your max. A more modest home may fit better in your financial plans.

7. Housing Criteria. You have a budget, now develop a list of what you need and want. This can include anything from "must have 3 bedrooms" to "hardwoods" or "granite".

8. Neighborhood choice. Location strongly affects prices. A 3,000 square foot home in Briargate costs a fraction of one in the Broadmoor area. Decide what neighborhoods and areas are the best fit for you. This will help narrow your home search. See the latest neighborhood statistics, below.

9. Call us !!!  We can help you navigate the entire process from searching, putting in offers, to where to hire an inspector or general contractors.

real estate PRICES SEEM TO HAVE BOTTOMED – BUYERS AND SELLERS TAKE NOTE

For the fourth consecutive month, price reductions increased for homes currently listed in the United States, according to Trulia.com. These reductions amount to more than $30.7 billion nationwide and are now at an all-time high of 27 percent. In a press release, Trulia.com. concludes that “Beginning in June 2010, there has been a continual and dramatic increase in price reductions in many cities. Comparatively speaking, we've found that seasonal considerations combined with a lack of urgency on the part of would-be buyers and continued job market doldrums nationwide have led to more significant reductions during this time period than during the same time frame in 2009," said Tara-Nicholle Nelson, consumer educator.

As a result of the latest reductions, Sellers have gotten much more aggressive in their pricing. "We would normally expect to see a seasonal uptick in price reductions between June and November, as motivated sellers whose homes are still on the market after the summer selling-season aggressively cut prices in an effort to get their homes sold before the holidays. This is like Christmas coming early for buyers who are hoping to capitalize on a bargain-buy before the year's end.” said Tara-Nicholle.

But many experts predict that prices and mortgage interest rates will now begin to rise. So, before the window closes, it's important to remember that if you're an ill-prepared buyer, you could lose the deal of a lifetime and the home you really want.

Here are a few tips to keep that “perfect new home” from slipping away:

• Even if you're just browsing, get your pre-qualification for your loan. You might think, you're not really ready to buy but let's go shopping any way. Know your price point. Understand how much home you can afford and browse in that market range.
• Since the mortgage crisis, getting loans and buying a home has gotten more complex and can take even longer than before. That shouldn't discourage you but rather encourage you to get everything in order to make the close of escrow simpler.
• Act now. Timing the market and waiting to see if you can get the absolute rock bottom interest rate might cause you to lose the home you love. Certainly negotiating is always part of a real estate transaction, but just keep in mind that if you're not careful you could time yourself out of the home you really want. Work with your Realtor on this.
• If you're in a situation where the purchase of your new home is dependent upon the sale of your current home, then you must stay on top of your home sale. Sometimes buyers get so busy shopping for their next home that they end up leaving their current listed home a mess. This turns off potential buyers; it happens all the time. So, keep a close eye on how appealing your present home is to a buyer, as you shop for your new dream home.

Bottom line: Unless you’re an experienced juggler, you will need the services of an experienced Realtor to guide you through the maze of selling your present home, obtaining financing, and locating and purchasing your new home. Call us !!!

UNDERWATER? MAYBE WALKING AWAY ISN’T THE BEST SOLUTION

Mortgages are "underwater" or "upside down" when the property experiences “negative equity” i.e. the mortgage is larger than the current value of the property. Negative equity is caused by a decline in property value, an increase in mortgage debt or, most likely, both. However, homeowners who are "underwater" with their home loan and are considering walking away from the debt, could still be gasping for relief years down the road.

There are occasions when walking away from your home -- and down the road to foreclosure -- is your only option, but seldom is it the best alternative. The consensus among experts is to consider the alternatives before abandoning your home, talk with your lender and seek counseling from a U.S. Department of Housing and Urban Affairs (HUD) certified counselor.

Before walking away, some of the other options that should be considered are:

• Refinancing, turning in your existing mortgage for a new one, is perhaps the toughest option to accomplish. A refinance requires meeting stiff underwriting requirements -- an excellent credit report, a high credit score of 720 or more, documented career level income and little debt, for starters. Federal programs, including the Federal Housing Administration's refinance effort, can be a good bet for those who haven't yet faced hardship and can qualify for a new loan.

• A mortgage modification reworks the terms of existing loans to get the payment down to a more affordable level. To add greater affordability, lenders lower the interest rate, lengthen the term of the loan or reduce the principal -- or do some combination of all three. Modifications can be used by qualified home owners who aren't yet struggling as well as those who are in a pinch.

• Short sales. Modifications and short sales can impact your credit, but not necessarily with the force of a foreclosure.

Bottom line, exploring all the options is a better first step than walking away. Call us.

TOP 5 STAGING TIPS FOR SELLERS

Staging is a way for your home to stand out from the competition. It's a way for a buyer to see the true potential of your home. Many real estate agents work with professional stagers. But if you don't have the money to spend for professional help, then consider these five tips to stage your own home.

1. Curb Appeal: A first impression happens only once! Prune overgrown plants and remove unnecessary clutter from your yard. For a finishing touch, consider painting your front door an attention grabbing color, like dark blue, red, or green.
2. Remove Clutter: Knickknacks, doodads, and bric-a-brac must go. When you put your home on the market, a showing could be scheduled at any point. So, for now, take a box and go from room to room collecting the extra "stuff." These baubles distract homeowners from seeing the actual room and space.
3. Edit: It's not just clutter that needs removed from counters and shelves. Editing is a way of making your rooms look bigger. In staging you need only have the bare essentials of furniture. Remove heavy pieces that make rooms look smaller. If you can, put these items into storage. As a very last resort, you can put them in the garage and cover them with a tarp.
4. Main Functions: This means that a dining room should be staged as a dining room, not a sewing room or office. A patio is a place to relax with nature, not a catch-all for outdoor items, toys, and grills.
5. Ambiance: You want to create an atmosphere that is welcoming and makes the buyer feel at home, something of paramount importance in staging. This means the home should be smell clean, be light and airy, and be a comfortable temperature. To accomplish these tasks, you can bake cookies just prior to a showing to fill the air with yummy goodness. If you are a smoker or have pets you may need to take more drastic measures, such as repainting walls or cleaning carpets and furniture. To liven-up your home, replace old and burnt out light bulbs, and have heavy curtains open or removed. If you are showing during the winter months, be sure to leave the heater set to a comfortable temperature. The same goes for the A/C during the heat of summer.

Use these simple tips to get your home ship shape for your sale!

ALSO ....SUCCESSFUL SELLERS AVOID THE FOLLOWING DEAL-KILLERS

At last count, nationwide, new home sales were down more than 12 percent and resale home sales down even more -- 27 percent. Yet many Sellers are still making some classic mistakes as they try to market their homes. To help you avoid these “deal-killers”, here are some mistakes that Sellers make:

• Pricing too high. A high listing price will cause some buyers to lose interest sight-unseen. It may also lead other buyers to expect more than what you have to offer. Overpriced homes tend to take an unusually long time to sell, ultimately selling at a lower price. Your Realtor can help you set a realistic listing price.

• Mistaking refinance appraisals for the market value. Lenders often estimate the value of homes at a higher level than it's actually worth to encourage refinancing. Ask your real estate agent for the most recent information regarding property sales (similar to yours) in your community.

• Forgetting to "showcase your home." When selling your home, make it look as pleasant and move-in-ready as possible. Make necessary repairs. Clean. De-clutter. (See the staging tips, above)

• Using the "hard sell" while showing. Don't try haggling or forcefully selling with prospects. Allow your Realtor to do the selling.

• Trying to sell to "looky-loos." A prospective buyer who shows up because they saw a for sale sign likely isn't interested in your property. Buyers who don't come through a real estate agent are, typically, six to nine months away from buying. They just want to see what's available. Chances are, they still have to sell their house, haven't been to a lender and may not be able to afford a home yet. Your real estate agent can distinguish real potential buyers from lookers because they will take the time to determine a prospective buyer's savings, credit rating, and purchasing power.

• Being ignorant of your rights and responsibilities. Understand the details of the sales contract. They are legally binding documents that can be complex and confusing. Know your responsibilities before signing the contract. Can the property be sold "as is"? How will deed restrictions and local zoning laws affect your transaction? There's much more to know. This is an area where your Realtor can really help explain the complexities of real estate Law to you.

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.

November 15, 2010 

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTAIL real estate MARKET

DOES HOME OWNERSHIP STILL MAKE SENSE ?

On November 9, 2010, Realty Times, a respected national source for information about the current real estate market, published an article titled, “Value in Homeownership”, based on  the recently released 2010 National Association of REALTORS® Profile of Home Buyers and Sellers survey. The article made several good points which are pertinent to our local market. Here are some comments that our readers might find interesting.

Is there value in owning a home? The NAR survey shows us that today’s homeowners are living in their homes longer, and after several years of price declines, are now seeing a rise in home equity gains.

Early in this decade many buyers jumped on the investment bandwagon. They bought and sold quickly, walking away with inflated profits. But as the real estate bubble burst, many speculators found they had bought at the top of the market and so, as prices fell, foreclosure rates skyrocketed. Historically, however, homeownership is a good, long-term investment, and one that brings many rewards.

NAR President Vicki Cox Golder explains, "Sellers who purchased at the top of the market and had to sell in a short time frame were hurt by the price correction, but the vast majority who were able to stay for a normal period of home ownership generally built enough equity to make a trade-up purchase. Despite swings in the housing market in recent years, the fact is most long-term owners have seen healthy gains in the value of their property. This underscores two simple facts – home ownership encourages stability, and the longer you own, the better your investment. Many of the house ‘flippings’ and quick gains which occurred during the boom period were abnormal, driven by risky, easy-money financing that should never have been allowed in the market."

"The primary exception to the disappointing ‘house-flipping’ trend was in the case of experienced investors, many of whom paid cash and who are making renovations or improvements after a careful study of properties, neighborhoods and market demand," Golder said. These savvy buyers are still making money.

However, even in its current slow state, the real estate market is far from dead. Surveys show that Americans are still buying homes, primarily because of the desire to own a home, the desire for a larger home, a change in family situation, to take advantage of the home buyer tax credit, to make a job-related move, or to take advantage of the current over-supply of affordable homes.

And today, homeowners are staying put longer. A typical seller has been in their home for 8 years, and the survey shows that first-time buyers are planning to stay for 10 years, and repeat buyers for 15 years.

Even with the recent decline in home prices, the typical homeowner who purchased a home eight years ago has experienced a median equity gain of $33,000, a 24 percent increase, while Homeowners who have been in their homes for 11 to 15 years have seen a median gain of 40 percent. So, considering these facts, it’s easy to see why the decision to buy a home for the long-term is once-again coming into favor with the public.

The bottom line is that the decision to buy or sell a home should be, as always, based upon a knowledgeable study of the local market, specific neighborhoods, current inventory, available mortgage rates, and pertinent market trends. If you are considering buying or selling your home, we stand ready to provide you with this kind of expertise. Call us.

SELLERS ….IT’S TIME TO DECK THE HALLS …BUT NOT TOO MUCH

Traditionally, the last several months of the year are pretty slow for real estate sales. However, there still are prospective Buyers out there so, Sellers, if your house is on the market, you should try to make it as attractive to them as possible. Give yourself a competitive edge. While your competition is busy going over the meadow and through the woods to Grandmother’s house, you can spend your time gift-wrapping your house in a big Christmas bow and getting it ready to sell.

November and December might discourage some prospective Buyers, but don’t give up. Many real estate experts note that if you have buyers dropping by your open house or making an appointment to view your home during the holiday season, there’s a good chance they’re serious buyers.

So, while this time of year often brings out all the holiday decorations, there is such a thing as too much holiday cheer. Remember that not all buyers celebrate the same holidays.

A good rule of thumb is to keep decor simple and subtle. If you celebrate Christmas, go ahead and put up a tree, but don’t put one up in every room. …and maybe leave Santa off the roof, this year. Make it easy for Buyers to imagine their own holiday celebrations and their own lives in your home.

Outside, settle for a nice holiday wreath and some subtle seasonal decor. Keep in mind that curb appeal is what gets buyers in the door.

Stash the gifts and just bring them out on the day you celebrate. Presents under the tree take up precious floor space and they are a distraction. Keep them out of sight, together with the family pictures, to stage your house properly.

Another nice touch is to spruce up the mantle. However, keep family and/or pets’ names off the stockings. Again, you’re trying to encourage the Buyer to imagine what the home will look like when it is “their” home.

So, with these tips in mind, have yourself a merry little Christmas.

THINGS ARE LOOKING UP

We just received a nice note from Robert August, President of S. ROBERT AUGUST & COMPANY, INC., in Centennial, Colorado. Bob is a long-time friend and an expert in housing trends. Below, we are including some encouraging information from him about our national and local and national real estate market (together with some of our own comments).

As we know, the housing recovery is dependent upon job creation and while the 317,800 jobs created in the 12 months ending September may not sound exciting, it sounds pretty impressive when you compare it with September of 2009 with 5,604,400 jobs lost over the previous year. 

Nationally, 30 states showed positive growth for over the past year.  Texas added 166,600 jobs, just shy of the next 6 top job growth states combined.  The state of California continues to lead the country in job losses (62,100) but has certainly shown improvement over the past year.

The District of Columbia added 22,500 jobs which would make it the number 10 state in job growth (if it were a state) and when added to Maryland and Virginia the job growth total for the region balloons to a healthy 76,500 jobs in the past year.  Furthermore, the Washington, DC metro area easily leads the nation in job creation with 56,100.

Hmmm …Washington seems to be doing quite well.

Bottom line: The economy, including job growth and housing, continues to improve; the problem is the improvement has been so gradual that it doesn’t feel like it.  We are moving, however, toward equilibrium in the marketplace, and as the foreclosure mess is wound down the housing industry should benefit from years of pent-up demand.

To see the complete charts on permits, click here

To see the complete chart on jobs, click here

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

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTAIL real estate MARKET 

GOOD NEWS !!! U.S. EMPLOYMENT REPORT SHOWS JOB CREATION IMPROVING - THAT'S GREAT FOR real estate

From IHS Global Insight

October's employment report was the best for months, as payrolls rose 151,000 and prior months were revised up. But the unemployment rate remained stuck at 9.6%.

The October payroll report was much better than expected, with 151,000 jobs added, a longer workweek, and positive revisions (totaling 110,000) to previous months. Private payrolls rose 159,000, and we now have four months in a row of private employment gains of more than 100,000—for the first time in this recovery. The new jobs were overwhelmingly in the private service sector, the economy's primary jobs engine. The jobs weren't enough to lower the unemployment rate, though, which remained stuck at 9.6%.

Government jobs did not move the headline number much this month. There were 8,000 federal government jobs lost in total, of which 5,000 were temporary Census workers (that leaves only 1,000 temporary Census workers still in place). State and local governments lost another 7,000 jobs (the smallest decline since April).

Manufacturing did not contribute to the jobs improvement. Manufacturing payrolls fell 7,000, their third consecutive monthly decline.

Construction helped a little, with 5,000 jobs added in October and only 8,000 lost in September (originally a 21,000 loss). There were 6,000 jobs lost in residential construction, but 6,000 gained in nonresidential construction and 4,000 added in heavy and civil engineering.

The key improvement was in private services, where 154,000 jobs were added this month, the best gain since April, and up from 111,000 in September. The sectors that did much better this month were retail trade (up 28,000, instead of up 12,000 in September), business services (up 46,000, instead of up 19,000), and education (up 19,000, instead of down 12,000). Health services added 24,000, the same as in September. Food services and drinking places added 24,000 jobs, their third straight strong month, suggesting that there has been some loosening in consumer wallets for eating out.

Within business services, the majority of the jobs added were temporary (35,000). But it is worth noting that the vast majority of jobs added this month were permanent hires.

The unemployment rate was steady at 9.6%. Household employment actually fell by 330,000, while the labor force fell by 254,000. It is pointless to try to interpret month-to-month movements in household employment (it is far more volatile than the payroll employment measure). But it is worth noting that the labor-force participation rate fell from 64.7% to 64.5%, its lowest level in this cycle, and implying that the improvement in jobs has been insufficient to attract potential workers back into the labor force.

The most comprehensive measure of underemployment (U-6)—which includes workers who would like a job but are not currently looking, plus those working part time who would rather work full time—edged down from 17.1% to 17.0%.

The payrolls report suggests that the economy has entered the fourth quarter with more momentum, so that GDP growth will beat the 1.5–2.0% pace seen in the second and third quarters. Rising employment, hours, and wages all give a welcome boost to consumer spending power as the holiday season approaches.

One upbeat employment report does not change the picture that this will be a slow, drawn-out recovery. And there were strong private employment gains back in March and April that did not continue. But today's news does further reduce the likelihood of the dreaded "double-dip" downturn, and as that risk is seen to recede, businesses and households may become more confident to hire and spend.

The report comes just two days after the Federal Reserve launched its new program of quantitative easing (QE2). If the Fed had seen this report before its decision, it probably would have moved ahead anyway, since the labor market remains too weak and the rate of inflation too low to meet the Fed's dual mandate of high employment and price stability. But it would have allayed some of the Fed's fears of the downside risks.

AND ..AS ICING ON THE CAKE….OUR NEW GOVERNOR IS ALSO FOCUSING ON JOB GROWTH

A good sign that our new Governor, John Hickenlooper, understands and agrees with the need for new jobs in our state, was the tone of his first speech as Governor. He spoke for 30 minutes to 300 civic leaders in Colorado Springs at the 13^th annual Mayor’s Breakfast at the Fine Arts Center. First of all, he emphasized the need for setting aside the traditional barriers between Denver and Colorado Springs and between our two political parties and promised that he will work to heal the political rift that has developed between our two cities. The very fact that he scheduled his first speech in Colorado Springs is a hopeful sign that he is serious about this commitment. Secondly, he spoke about the fact that our state must be managed as a business, rather than as a governmental entity.

Governor Hickenlooper emphasized that, “There is no hidden money” in the state budget and said improving Colorado’s business climate is the only way the state will overcome continued budget shortfalls that have hamstrung programs. He said he wants to launch a “bottom-up” economic development plan for the state by having all 64 counties create their own plans which would then form the backbone of the state’s plan. This is a dramatic improvement over the traditional process in which the state develops an economic development plan and then sends it down to the counties.

Governor Hickenlooper pledged to back military growth in El Paso County, to cut red tape and streamline state government. He said, “I think state government has to be smaller with fewer employees”.

He also emphasized that the key to business growth will be marketing the state.

The Governor’s speech was interrupted by 3 standing ovations, and was followed by very positive comments by attendees. “He sounded more like a successful businessman, rather than an elected bureaucrat” said one attendee.

As a matter of fact, our Governor Hickenlooper now sounds a lot like Rick Perry, the Governor of Texas, who managed to attract 90% of all new non-governmental jobs created in the U.S. in 2009, to Texas. How he accomplished this, while managing to keep existing businesses in his state, is outlined in his new book, “Fed Up”, the blueprint of how a state can succeed, in spite of Washington.

We are very encouraged by our new governor’s words and we hope he can deliver on this dramatic new approach to running our state.

SOME OTHER POSITIVE INDICATORS

On November 6, 2010, the Wall Street Journal noted the new 151,000 October jobs cited above. This represents the largest number of new private-sector jobs since April, which produced 159,000 jobs. WSJ also reported that the price of Treasuries fell. In addition, on Friday, Nov. 5, the stock market closed at a 2-year high. WSJ noted that these three indicators point to an improvement in the economy. 

Traditionally, the stock market leads the business cycle by 2 quarters, so, we should look for positive signs of business and job growth by the end of this coming June. Combine all of these factors with the recent rise in interest rates and it’s obvious that, if you are considering the purchase of a residence or an investment property, now is the time to buy. Call us.

LATEST LOCAL STATISTICS ALSO SHOW ENCOURAGING TRENDS

Click here for the latest Sales and Listing statistics for the Pikes Peak area. As you can see in the monthly PPAR statistics, in October, 2010, there were 631 sales in the Pikes Peak area, a decline of 18.4% from Oct. 2009. Total annual year-to-date sales for 2010 were 7005 as compared with 7328 in 2009. These declines can be attributed to the expiration of the Income Tax Credit for home purchasers, which expired in June.

What is very interesting about this month’s statistics is that, in spite of the declining number of sales, prices actually increased in 2010. (Average price in 2010 was $240,326 vs $213,352 in 2009, for an increase of 12.6%. Median price for sold homes in 2010 was $200,000 vs $187,995 in 2009 for an increase of 6.4%). These increases represent the twelfth straight month of sales price increases, a very good sign for the local real estate market (and a very unusual increase, compared to most other communities in the country).

The decline in the number of listings can probably be attributed to Homeowners who have removed their homes from the market until activity increases.

Note that the ratio of average selling price to listing price was 97.4%, a reflection of the fact that successful Sellers are being very realistic in establishing their asking prices. Those Sellers who are overpricing their homes are not selling in today’s tight market. You will note that the data breaks down the local area into separate neighborhoods, so you can see exactly how your home fits into the big picture.

One sad note in the data shows 3966 foreclosures so far in 2010. While this number is lower than 2009 (4540), it is still the third highest number of foreclosures since 1981. We all hope this number declines in 2011.

Bottom line: Home prices, large inventory, low mortgage rates, looming inflation and common sense all lead to one conclusion ….The time to buy your new home or investment property is now !!! Call us

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

November 1, 2010

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET

NEWS FROM THE relocation WORLD

Last week, in Seattle, we attended the Annual relocation Symposium of Worldwide ERC and the Relocation Directors’ Council. This informative meeting was attended by over 1600 people in the relocation industry and service providers from 47 countries. It was a great opportunity to hear how the recession is affecting employee relocation and to get a clear view of how employers are planning their relocations in the near-future. We were proud to be the only representative from Southern Colorado at the Symposium.

A major concern voiced by all of the employers at the meeting was that the cost of employee relocation was rising faster than they could budget for. Their major concern was to keep the employee ‘whole’, while keeping their costs within control. As we discussed in a previous eNewsletter, if a company transfers a current employee who owns a home, the average cost to the employer is $90,017. A new-hire homeowner transfer will cost the company $66,610. A current-employee renter transfer will cost the company $20,750 and a new-hire renter transfer will cost the company $17,877.

As employers are forced to cut relocation costs, some of the cost-cutting solutions they have been forced to implement range from: cancelling some of the more traditional relocation benefits such as paying closing costs on the new home and/or paying some points toward the interest rate, or, in some cases even paying nothing for relocation.

One message that relocating employers are now sending to Realtors is that they will be better utilizing the services of local Realtors in the “target” market for more accurate advice.

It’s important to realize that relocations are one of the most influential segments of the real estate industry and they represent a fairly accurate indicator of where the Real Estate market is going.

Some of the more significant issues covered at the symposium were:

•  Unless you are a Senior V.P, or the CEO of the company, based upon current equity, your “upside-down” home will probably not be subsidized by the relocating company
• Because of the increasing need for “Specialized Talent” individuals, there will probably be a rise in relocations for people in these growing fields
• Today’s Transferees feel they should be compensated for what they think their house is worth, but appraisers are using short-sale and foreclosure prices as comparables, thus reducing the market value of their homes. Educating these employees about the realities of the current market will be a challenge for employers and will require input from Realtors in the “target” location.
• Because of the frustrations and delays involved with short-sale home purchases, and the resulting reduction in employee productivity during this stressful process, one large, public utility on the West Coast will not assist transferees with short-sale purchases.
• Companies are now offering more information about the differences in local economies to their prospective Transferees, so as to reduce “surprises”. They also offer counseling regarding the effects that foreclosure and/or short-sale will have on the employee’s financial status.
• Some employers are encouraging Transferees to rent, rather than purchase, when they arrive at their new location…even offering bonuses and/or subsidies, or even ‘lump-sum’ benefits to Transferees who agree to hold on to their old house and rent, rather than buy in their new location. These employers feel this will allow the market to recover, thus allowing the Transferee to realize a better selling price for the home he/she is leaving behind. Many of these employers are offering to pay the Transferees’ property-management costs during this recovery period. The commonly quoted time-limit for these inducements seemed to be three years, indicating that industries appear to be predicting a recovery within the next three years.

As a result of these changes in companies’ relocation reimbursement policies, the percentage of Transferees who rent, rather than buy has increased from 30%, just a few years ago, to almost 70%, today.

All of these factors reinforce the arguments for buying investment properties now. These new arrivals are high-quality renters who are receiving rental assistance money from their employers for the next two to three years. Add to them the unfortunate families who have recently lost their homes to foreclosure or short-sale and we see that the pool of prospective renters is larger than ever before. When you consider the low-interest rates now available (but, scheduled to go up soon), and the current low prices for available houses, investment property looks as good as gold for the next several years.

As far as we were concerned, one of the most encouraging things to come out of the symposium was that attendees from all over the world felt that 2011 was going to be a better year.

WHAT IS TEXAS DOING RIGHT ??

A startling fact that was discussed at the relocation Symposium was that, in 2009, 90% of the non-governmental jobs created in the US were created in Texas. The attendees from Texas stated that this amazing economic boom was created by a cooperative venture by the Governor of Texas and the cities of Dallas, Austin and San Antonio working together to make Texas a “business-friendly” place to relocate. That, plus a low tax rate and no income taxes created a magnet for anyone who wanted to start or relocate a business.

Hmmm. Perhaps it’s true that a rising tide does raise all boats. Perhaps the whole economy of Colorado would benefit if we became more competitive in attracting new businesses. By offering more tax incentives and more aggressive incentives for businesses to relocate to Colorado, perhaps we could become known as a “business-friendly’ state. …Why not?

THE BAD NEWS IS – RATES ARE STARTING TO GO UP  - BUT NOT VERY FAST

How low can mortgage rates go?  Many of the ‘heavy-hitters’ in the mortgage industry were at the recent relocation Symposium and their shared opinion was that mortgage rates have hit bottom. The average 30-year, fixed-rate home-mortgage rate is expected to rise in our current quarter. By the end of 2010, the Mortgage Bankers Association predicts an average of 4.4% on a 30-year loan, increasing to 4.7% in the first quarter of 2011. In about a year from now, they expect the rate to rise to 5.1%. Now, while that is higher than our current rate of 4 1/8%, it’s still a very good deal.  

THE GOOD NEWS IS FORECLOSURES ARE DOWN

On October 31, The Gazette published the September economic indicators for Colorado Springs. The initial claims for unemployment were down 21.5%. Taxable retail sale were up 8.4%.Hotel occupancy was up to 72.6% and foreclosure filings were down 16.8%. On the down side, the unemployment rate was up to 8.7%. Single-family home permits were down 16.5% and auto registrations were down 11.9%.

All of our down-side numbers were the result of a lack of jobs and that’s a problem that doesn’t seem to have a ‘magic bullet’ solution. It’s going to be a couple of years before we see a turnaround in that segment of our economy.

Another troubling economic factor is the high inventory of unsold homes. With some lenders halting the disposal of foreclosed and short-sale properties and with many Realtors not even showing them anymore because of the unreasonable delays in obtaining acceptance for offers, the inventory of available homes grows and prices keep going down accordingly. That makes for good deals for Buyers, but a bad deal for Sellers. Furthermore, it aggravates the ‘upside-down’ home-value problem that triggers even more foreclosures.

If you have any questions about the value of your present home, call us. We keep close watch on property values in all neighborhoods in this area.

LATEST STATISTICS

Click here to see all of 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

October 25, 2010

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET

LOW INTEREST U.S. TREASURY MORTGAGE LOANS NOW AVAILABLE  

ONLY IN EL PASO COUNTY

El Paso County’s Economic Development department plans to convert $25 million in taxable mortgage bonds it issued in December to tax-exempt status, which will lower mortgage interest rates for new participants in a U.S.Treasury initiative. Converting the housing revenue bonds will lower prospective homebuyers’ interest rates to 3.99% for a 30-year, fixed-rate FHA or VA loan, according to Karen Monroe of Colorado Capital Bank.

As an alternative, Buyers will be able to obtain a loan at a 4.5% interest rate and receive a grant in the amount of 3% of the loan for closing costs.

This program has already helped 100 local low and middle-income homebuyers and financing is still available for about 150 more prospective homebuyers.

Participants in this program must be either first-time homebuyers – someone who has not owned a home in the past three years – or a qualified military veteran or a buyer who purchases a property in one of the targeted, low-income area of the region.

To be eligible, Families of one or two people cannot earn more than $71,000 annually; the maximum family income for three or more people is $81,650 and the maximum purchase price of the home is $283,000.

Call us to discuss the local areas that qualify and the local lenders who are participating in this program.

Finally, a word of congratulations to our local leaders for their vision in getting El Paso County signed up for this program. We are one of only 47 local jurisdictions in the nation and the only one in Colorado that takes part in this program.

COLORADO REALTORS AGREE – FORECLOSURES ARE A MESS

At the Annual Colorado Association of Realtors Convention which was held last week at the Broadmoor, the main topic of conversation was foreclosures and the problems they are creating. On both the national and local level, Realtors agree that the current avalanche of foreclosures has had the greatest effect on property values of any other issue in history.

As we have detailed in previous issues, slow response from lenders to offers for foreclosed and short-sale properties has been a major factor in creating the ‘logjam’ in foreclosures and the bad news is that new foreclosures are being added to the inventory faster than old foreclosures are being sold. Thus, as inventories increase, home prices continue to slide.

Because of the slow response from lenders, many Realtors are now refusing to show foreclosed properties. This is a natural response, when we consider that Realtors have a fiduciary responsibility to their clients and cannot, in good faith, waste a prospective Buyer’s time by showing properties that cannot be closed in a reasonable length of time. There are too many horror stories about Buyers that were ‘hung-out to dry’ when they couldn’t get timely responses to their offers and who had to move their families into motels as they awaited lender approval.

Some of the other unfortunate results of our current foreclosure ‘logjam’ are:

•  Interest rates and closing costs will undoubtedly go up to cover the added costs of handling foreclosures
• The resulting cost increases at lenders will be passed along to Buyers in the form of various new ‘fees’.
• Title Insurance will become more expensive as title companies raise rates to compensate for the added legal exposure they face because of increased risk and liens against foreclosed properties

All of the Realtors with whom we spoke are hoping that governmental pressure on lenders to expedite the foreclosure process will help resolve the current mess.

CSU IS BRINGING LOCAL FOCUS TO NATIONAL real estate STATISTICS

At the recent Colorado Realtors Convention, Professor John Gerhard and Dr. Sriram Villupuram from the Everitt real estate Center of Colorado State University explained how they were working to translate some of the national Real Estate indexes into a more localized, Colorado focus. They are converting such popular indexes as Case-Schiller, S&P, CoreLogic, Zillow and Trulia into localized indexes, concentrating on the Colorado RE market. Their work will assist us in giving our clients a more comprehensive view of the market and what they might expect when they buy or sell a home. To see more about this valuable new resource, click on www.realestate.colostate.edu.

In their presentation, the speakers also emphasized something that all good Realtors know, namely, that real estate values depend upon ‘location, location, location’ and so do real estate statistics. Within any region, the RE statistics for a state, a city and for individual neighborhoods can vary greatly. That’s why we feature a link to the complete Pikes Peak Association of Realtor monthly statistics in our weekly enewsletters. Click here to see the most recent statistics for all of our local neighborhoods. If you have any questions about these numbers, call us.   

THE FIRST-TIME HOMEBUYERS’ TAX CREDIT WORKED … BUT NOW COMES THE DOWNSIDE

The federal fist-time tax credit expired in June and, while it was in effect, produced a significant rise in home sales. It motivated a lot of ‘fence-sitters’ to make their move and buy a home. That’s the good news. However, since the tax-credit expired in June, an examination of home sales since June indicates that there aren’t many Buyers left in the market. Sales have really dropped off, with the result that prices have fallen and inventories have increased.

Using the PPAR report of Sales for 2010, we see that between June and September, our local median price dropped from $205,000 to $195,000 (That’s a drop of $10,000, or 4.9%) and our average price dropped from $237,318 to $230,419 (That’s a drop of $6,899, or 2.9%) since the expiration of the tax credit. Click here to see the exact numbers for your neighborhood.

These figures tell us a couple of things:

1. The tax credit did its job. It motivated first-time Buyers to buy a home.
2. Sales of available homes have fallen off since the tax-credit expired
3. Sellers have had to reduce their asking prices to compete for the Buyers that are left.
4. New Sellers are now pricing their homes more realistically
5. Because the ‘slow season’ for real estate sales is coming up in December, there will be even more pressure on Sellers to reduce their prices, if they want to make a sale.

The bottom line is: Right now, Price is King. Therefore, Sellers, call us and let us help you set the right listing price for your home. Buyers, call us and let us help you find the best deals.

Now is the time to utilize the services of a Realtor who knows how to price properly in your neighborhood, who can negotiate on your behalf, who can find the most cost-effective and cooperative lenders and who can handle all of your relocation needs.

Call us.

THE GOOD NEWS IS:  EXISTING HOME SALES IN SEPTEMBER WERE UP 10%

Published October 25, 2010 | Reuters

On Monday, the National Association of Realtors said September home sales increased 10% from August, rising for a second straight month, to an annual rate of 4.53 million units. Analysts polled by Reuters had expected existing home sales to increase by only 4% in August.

Sales of previously owned U.S. homes also rose more than expected in September, NAR reported, indicating the housing market was stabilizing at weaker levels.

LATEST STATISTICS

Click here to see the most recent Sales and Listing Statistics for the Pikes Peak region.

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

Oct.18, 2010

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET

HOW WILL THE UPCOMING CHANGES IN TAX LAW AFFECT YOU ?

In recent weeks, we have heard local business leaders, clients and friends express questions and concerns about how the upcoming changes in tax laws will affect them. In many cases, they indicated they were postponing buying decisions until they were more certain of their tax liability under the new laws. We thought the following article from Kiplinger might help clarify some of the uncertainty: 

HERE’S WHAT KIPLINGER SAYS:

Six Months to Go Until ... The Largest Tax Hikes in History

Source: Kiplinger Tax Letter - Death Panels and Taxes (The Healthcare Chimera)  Published: Aug 22, 2010. Author: Joan Pryde, Senior Tax Editor for the Kiplinger Letters

 In just six months, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2011:  

First Wave: Expiration of 2001 and 2003 Tax Relief

In 2001 and 2003, the Congress enacted several tax cuts for investors, small business owners, and families. These will all expire on January 1, 2011:

Personal income tax rates will rise. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates. The full list of marginal rate hikes is below:  

- The 10% bracket rises to an expanded 15%
- The 25% bracket rises to 28%
- The 28% bracket rises to 31%
- The 33% bracket rises to 36%
- The 35% bracket rises to 39.6%

Higher taxes on marriage and family. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care and adoption tax credits will be cut.

The return of the Death Tax. This year, there is no death tax. For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.

Higher tax rates on savers and investors. The capital gains tax will rise from 15 percent this year to 20 percent in 2011. The dividends tax will rise from 15 percent this year to 39.6 percent in 2011. These rates will rise another 3.8 percent in 2013.

Second Wave: Obamacare

There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:

The “Medicine Cabinet Tax” Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).

The “Special Needs Kids Tax” This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States , and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington , D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education.

The HSA Withdrawal Tax Hike. This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

Third Wave: The Alternative Minimum Tax and Employer Tax Hikes

When Americans prepare to file their tax returns in January of 2011, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired. The major items include:

The AMT will ensnare over 28 million families, up from 4 million last year. According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families—rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.

Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or “depreciate”) equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be “depreciated.”

Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place. The biggest is the loss of the “research and experimentation tax credit,” but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.

Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.

Charitable Contributions from IRAs no longer allowed. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual “required minimum distribution.” This ability will no longer be there.  

Health insurance is INCOME on your W2's...... One of the surprises we'll find come next year, is what follows - - a little "surprise" that 99% of us had no idea was included in the "new and improved" healthcare legislation . . . the dupes, er, dopes, who backed this administration will be astonished! Starting in 2011, (next year folks), your W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are given by the company. It does not matter if that's a private concern or governmental body of some sort. If you're retired? So what; your gross will go up by the amount of insurance you get.

You will be required to pay taxes on a large sum of money that you have never seen. Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your tax debt. That's what you'll pay next year. For many, it also puts you into a new higher bracket so it's even worse.

This is how the government is going to buy insurance for the15% that don't have insurance and it's only part of the tax increases. Not believing this??? Here is a research of the summaries.....

On page 25 of 29: TITLE IX REVENUE PROVISIONS- SUBTITLE A: REVENUE OFFSET PROVISIONS-(sec. 9001, as modified by sec. 10901) Sec.9002 "requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer sponsored group health coverage that is excludable from the employee’s gross income."

There now. Don’t you feel better?

SPRINGS AREA FINANCIAL INSTITUTION DEPOSITS JUMP 6.2%

The Gazette, October 12, 2010 4:54 PM

Colorado Springs consumers boosted savings sharply in the 12 months ended June 30 as deposits in area financial institutions grew by the greatest percentage in four years, according to the latest reports from federal regulators.

Deposits in area bank and credit union branches jumped 6.2 percent from a year earlier to $8.9 billion as of June 30, compared with 5.7 percent growth in the previous year, recently released reports from the FDIC and the National Credit Union Association said. Area bank deposits grew by 7.4 percent to $6.15 billion, while area credit union deposits were up 4.1 percent to $2.76 billion during the same period.

More than one-fourth of the area’s deposit increase was generated by a single bank. Deposits held by Colorado Capital Bank’s downtown Colorado Springs branch surged more than fivefold during the 12-month period to $174.4 million mostly because an unidentified trust company deposited more than $100 million at the branch, said John Davis the bank’s CEO. The branch also has been successful in attracting business and nonprofit deposits, he said.

Fred Crowley senior economist for the Southern Colorado Economic Forum said the area’s financial institutions benefitted both from consumers saving more of their income as well as the return of thousands of soldiers to Fort Carson from Afghanistan and Iraq. He also pointed to other economic indicators that reflected an improving Colorado Springs economy, including rising sales tax collections and new vehicle registrations.

“This is another indicator of a recovering local economy, although the recovery has tended to lag in recent months because there is nothing moving it forward right now. That probably won’t show up in the deposit numbers until next year,” Crowley said.

32% OF U.S.BUSINESSES PLAN TO HIRE ADDITIONAL STAFF IN 2011

RISMEDIA, October 13, 2010--Businesses across the globe are now looking to hire new staff, in one of the first signs that global economic recovery and growth is on a sustainable upward trajectory. This is the key finding of the bi-annual Regus Business Tracker survey that interviews more than 10,000 businesses around the world.

The fact that companies are looking to hire additional staff will be regarded as a significant indicator that the mindset of organizations has shifted toward investment in growth through human capital. Regus, a global provider of flexible workplace solutions, found that more than a third of companies surveyed said they intend to increase headcount. U.S. business was close to the global average with almost a third (32 percent net) of companies preparing to add new staff in 2011.

These findings are particularly significant, coming in the wake of recent observations from the International Monetary Fund (IMF) and International Labour Organization (ILO) that global unemployment has reached record proportions in the last three years (up to 210 million since 2007). These organizations have warned about potential problems for national economies if this trend continues. Unemployment reduces national taxation income and increases public spending. The findings of the Regus Business Tracker provide important evidence that the world unemployment situation may be set to ease in 2011.

The survey canvassed the opinions of more than 10,000 senior business people in 78 countries asking them about their current revenue performance, their profitability, their projected future revenues and their wider expectations of national economic growth. These indicators form the basis for the report's Business Optimism Index, which unusually reflects actual performance as well as near-term outlook. Globally, this edition of the index revealed a far more positive outlook, with a greater proportion of optimist countries than six months ago. For the U.S. in particular, the global index revealed a bullish rating of 87, up seven points on six months ago.

Sande Golgart, regional vice president for Regus, comments: "In spite of this optimism, our research also highlights that 41 percent of companies are still looking to reduce their overhead, through means other than reducing staff. This reveals an attitude of cautious optimism. As companies look to find economies in their own operations, we are likely to see more and more organizations offering flexible working practices to their existing or prospective employees in a bid to achieve a better work-life balance and run a leaner organization."

NEW ASSISTANCE FOR SMALL BUSINESSES 
 

KRCO Tax Alert: The Small Business Jobs Act of 2010. Daily real estate News. October 12, 2010  

On September 27, 2010 President Obama signed The Small Business Jobs Act of 2010, creating a $30 billion fund to provide capital to community banks to encourage lending to small businesses. The legislation (SBJA) also includes $12 billion in tax relief for small businesses and incentives to encourage investment in them. In addition, there are benefits for larger businesses as well as for the self-employed and individual taxpayers. If any of the following areas apply to your business, you should consult your tax advisor for more details:  

• Increased exclusion on small business stock gains
• Increased and expanded Sec. 179 expensing
• Extended bonus depreciation
• Extended carryback of general business credit
• Reduced recognition period for S corporation built-in gains tax 
• New breaks for the self-employed and individuals

Catch the breaks

Any number of the tax relief provisions listed here could apply to your situation; plus, there are others we didn’t have room to cover. To learn more about how SBJA may affect you or your business, please call (719) 630-1186.

FORECLOSURE LOGJAM THREATENS FANNIE, FREDDIE

Fannie Mae and Freddie Mae will force lenders to pay for any losses that the GSEs incur due to a breakdown in the foreclosure process. Fannie and Freddie, the mortgage giants, could lose billions of dollars in a prolonged delay because they would be unable to sell properties that have slipped into foreclosure, explains George Mason University real estate professor Anthony Sanders. Source: Washington Post, (10/12/2010).

One of the biggest reasons for the logjam is because Realtors and Buyers are no longer willing to wait for the lengthy acceptance process.  As a result, Realtors are increasingly not showing foreclosures.   Furthermore, foreclosures are no longer the “best deal in the marketplace.”  Many individual Sellers are now pricing their properties to compete with foreclosures anyway.  And, to add to the problem, some banks are not being as aggressive as they should be on list price.

Perhaps most importantly, as a result of the lawsuits filed by various states regarding “digital signers”, a new set of rules for foreclosures has been issued by the federal government.  As a result of these new rules, Buyers can expect even more delays in the acceptance process for foreclosure offers. 

The bottom line is that, unless a Buyer is willing to put up with unreasonable delays from out of town Lenders, it is probably not the time to put in an offer for a foreclosure.  In our current experience with foreclosures, it is obvious that Lenders do not respect the phrase which appears in every sales contract; “Time Is Of The Essence.”

We will keep you advised on this issue as new information comes in.

 HERE’S SOME REALLY GOOD NEWS

The Gazette advises us that, for the second year in a row, Forbes has ranked Colorado as the fourth best state for business and careers. Utah tops the annual list, followed by Virginia and North Carolina. Utah’s economy has expanded 3.5 percent annually over the past five years.

Forbes’ “Our Best States” ranking measures six key categories for businesses: costs, labor supply, regulatory environment, current economic climate, growth prospects and quality of life. Business costs, which include labor, energy and taxes, are weighted the most heavily.

Colorado ranked first among the states for labor supply, sixth for economic climate and growth prospects, ninth for quality of life, 15th for regulatory environment and 33rd for business costs.

“Today’s ranking by Forbes shows that our strategies and investments in emerging and innovative industries like clean energy, health care, aerospace, biosciences and technology are working,” Gov. Bill Ritter said in a news release.

For the full list, go to www.forbes.com.

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 

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