Are Things Looking Up? Here's a few sources that think so.
November 21, 2011
HARRY’S WEEKLY UPDATE
A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET
BREAKING NEWS …U.S. WILL REMAIN A NATION OF HOMEOWNERS
The U.S. will not become a nation of renters; there are just too many benefits, both financial and otherwise, to own versus rent. That’s according to the combined findings of several recent studies presented during the "Buyer or Renter Nation?" session held during the 2011 Realtors Conference and Expo last week and also the NAR annual survey which was released last week.
One analysis of homeowners which spanned a 31-year period compared the ownership benefits in terms of appreciation and interest deductibility and costs homeowners incur with down payment, taxes, insurance and maintenance and, in the analysis, 84% of homeowners came out ahead.
According to the most recent data from the Federal Reserve Board, a homeowner’s net worth is 45.9 times that of a renter’s.
"We knew that homeowners, on average, accumulate more wealth than renters", said Ken Johnson, editor, Journal of Housing Research at Florida International University. "These findings indicate that homeownership is a self-imposed savings plan."
"Homeownership is more affordable today than at any time over the last 30 years", Johnson said.
The NAR survey shows that 78% of recent homebuyers say their home is a good investment and 45% believe it’s better than stocks.
Another analysis conducted by Johnson, Beracha, Hilla Skiba and Mark Hirschey determined that housing affordability is at record levels.
Twenty-three states are at 30-year record levels of affordability based on price-to-income ratios, and all 50 states are at record affordability levels based on mortgage- payment-to-income ratios.
Beyond the financial advantages of homeownership, Johnson also cited several studies that have demonstrated how homeownership enhances civic pride, improves voter turnout, increases personal happiness, reduces crime, and provides a better familial environment.
Some of the other data presented in the NAR survey were:
First-time buyers who financed their purchase used a variety of resources for their down-payment. 75% tapped into savings. 26% received a gift from a friend or relative, 7% received a loan from a friend or relative. 9% sold stocks or bonds. 8% tapped into a 401(k) fund.
94% of entry-level buyers chose a fixed-rate mortgage
54% of first-time buyers financed with a low-down-payment FHA mortgage and 6% used the VA loan program which requires no down-payment.
64% of all buyers are married couples
18% are single women
10% are single men
7% are unmarried couples
The biggest factors influencing neighborhood choice were (in descending order) quality of the neighborhood, convenience to jobs, affordability, convenience to family and friends, neighborhood design, convenience to shopping, quality of school district, convenience to schools, and convenience to entertainment or leisure activities.
The typical home seller was 53 years old and their income was $101,500.
The typical seller who purchased a home nine years ago realized a median equity gain of $26,000, a 16% increase, while sellers who were in their homes for 11 to 15 years saw a median gain of $57,900, or 39%. Over time, the survey findings consistently show that the longer you own, the larger your return.
From our standpoint, it was interesting to note that home buyers thought the most important services agents provide are helping find the right house and negotiating price and sales terms.
Some other interesting facts were that 91% of buyers who used the Internet to search for a home, purchased through a real estate agent, as did 70% of non-Internet users, who were more likely to purchase directly from a builder or from an owner they already knew.
Like sellers, buyers most commonly choose an agent based upon a referral from a friend, neighbor or relative, with trustworthiness and reputation being the most important factors. That explains why, after 39 years of serving the Pikes Peak Area, we rely almost completely on referrals from our friends and past clients for our business.
Give us a call to discuss your real estate needs. We will do a great job for you…just ask our past clients. Call us at 598-3200, or, 1 800 677-6683 (MOVE).
ARE THINGS LOOKING UP? …HERE’S A FEW SOURCES THAT THINK SO
Realtor Magazine (November 18, 2011) says that the housing picture is expected to brighten in 2012. They cite a forecast by Fiserv, a financial information services firm which predicts that 95% of the 384 metro areas it tracks will see home prices rise in 2012…..and a survey by MacroMarkets of 100 economists and real estate professionals that predicts a rise in home values of .25% in the new year.
Bloomberg reports that economists at J.P.Morgan Chase & Co. now see gross domestic product rising 3% in the final quarter and Morgan Stanley & Co. is looking for a 3.5%. They also predict that the strengthening economy will help lift US stock prices. They also say the economic pick-up may also push up yields on Treasury securities.
Karen Hoguet, chief financial officer for Macy’s Inc. says, "We’ll have a spectacular Christmas".
Lawrence Yun, chief economist for the national Association of Realtors is quoted in Realtor Magazine as saying, "Housing affordability is about the best it’s ever been. Investors can anticipate strong rent returns and solid home appreciation. Nor is there any reason to believe this rent growth will cool. If annual rent gains stay near 3.5%, rents will double in 20 years. If they reach 5%, rent doubling will occur in 14 years. That means home prices could also double in 14 to 20 years."
The Gazette (November 17, 2011) reports that US manufacturing is recovering from a slump, and inflation may be peaking. Strong consumer spending helped the economy grow at an annual rate of 2.5% in the July-September quarter. Retail sales rose in October, leading economists to predict similar growth in the final three months of the year.
Finally, a report issued by the Mortgage Bankers Association shows that the share of households delinquent on their mortgage payments has fallen to the lowest level since the end of 2008, offering signs that modest job gains are stemming further damage in the US housing sector.
And you thought we were the only optimists on the planet ……SMILE !!! 2012 is going to be a great year.
NAR TO THE RESCUE
The National Association of Realtors notified us last Friday that Congress had restored the loan limits for the Federal Housing Administration (FHA) for two years. This reversal by Congress represents a victory for all prospective home Buyers, for the real estate market nationally, and for the national economy.
The National Association of Realtors (NAR) had lobbied intensely for this reversal, to help make mortgages more affordable and accessible for hard-working, middle-class families in 669 counties and 42 states and territories, where the average loan limit reduction after the reset last month was more than $68,000.
The new regulation reinstates the FHA loan limits through 2013 at 125% of local area median homes, up to a maximum of $729,750 in
the highest cost markets, the floor will remain at $271,050. However, Congress chose not to apply the loan limits restoration to Fannie Mae and Fredddie Mac. Fannie-and-Freddie-backed mortgages will remain at 115% of local area median home prices up to $625,500.
The bill also provides for a short-tern extension of the National Flood Insurance Program through December 16, 2011. NAR promised to continue to press Congress to authorize a five-year extension of the program, which ensures access to affordable flood insurance for millions of home and business owners across the country.
As the Wall Street Journal points out (Nov. 17, 2011) "Five years ago, it was too easy to get a mortgage. Today, it’s probably too hard". This reversal by Congress will help address that problem.
Good Work, NAR. We’re proud to be a member.
THE LATEST QUE IS OUT – HAVE YOU SEEN IT ???
Every quarter, the College of Business and Administration of the University of Colorado at Colorado Springs publishes the Quarterly Updates and Estimates for El Paso County. This in-depth analysis of every aspect of our local economy is a valuable tool for personal and business planning. It is full of helpful charts and graphs about the real estate market, auto sales, tax revenues, employment trends, wages and even features a measurement of the local "Misery Index".
If you would like a copy of this very informative analysis of our local economy in the third quarter of 2011, produced by Fred Crowley, chief economist for the Southern Colorado Economic Forum, CLICK HERE.
IN 2012, JUST LIKE ALWAYS, POLITICS WILL TRUMP PESSIMISM
Our annual prediction is that, because 2012 is an election year, Washington will pull out all the stops and do whatever is necessary to boost our economy, so that voters will not go to the voting booths mad. In the time-honored tradition of "Bread and Circuses", we will see steps taken to help the housing market, increase employment and put "a chicken in every pot and a car in every garage".
So, relax. 2012 should be a great year for all of 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 39 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 podcast for this month …
LATEST SALES AND LISTING STATISTICS
CLICK HERE to see the latest statistics about real estate sales and listings in the Pikes Peak area.
JOKE OF THE WEEK
Ducking into confession with a turkey in his arms, Brian said, "Forgive me, Father, for I have sinned. I stole this turkey to feed my family. Would you take it and settle my guilt?"
"Certainly not," said the Priest. "As penance, you must return it to the one from whom you stole it."
"I tried," Brian sobbed, "but he refused. Oh, Father, what should I do?"
"If what you say is true, then it is all right for you to keep it for your family."
Thanking the Priest, Brian hurried off.
When confessions were over, the Priest returned to his residence. When he walked into the kitchen, he found that someone had stolen his turkey.
