May 16, 2011

HARRY’S WEEKLY UPDATE
A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTAIL real estate MARKET


CITY SALES TAX COLLECTIONS JUMP IN APRIL

Colorado Springs sales tax collections in April rose by the largest percentage since October, increasing 7.85 percent from the same month a year earlier, the city reported Wednesday.

Sales tax collections have now posted year-over-year gains for 18 consecutive months, but gains had dwindled in recent months and were less than 1 percent in the previous month. Collections so far this year are up 4.46 percent from a year ago. But despite the April gains, collections are still down 6.74 percent from peak levels in 2007.

April collections reflect purchases made in March. The gain comes as the Springs area unemployment rate fell in March by the greatest percentage in more than 10 years, from 10.2 percent in February to 9.7 percent.


Fred Crowley, senior economist for the Southern Colorado Economic Forum, said, “The April increase is good and welcome, but may not be sustainable,” he said. “People aren’t getting raises and are spending more on gas, so they will have to cut spending elsewhere.”

 

Combined sales and use tax collections in April were up 6.83 percent from a year ago to $10.55 million and are up 1.68 percent so far this year.


Why it’s important: Sales and use tax collections fund more than half of the city’s annual budget for police and fire protection, roads and other services. Sales tax is also a primary measurement of consumer spending, making it a key barometer of the vitality of the local economy.


NATIONALLY, HOME VALUES DECLINE AS HOME SALES INCREASE ………
BUT COLORADO SPRINGS’ HOME VALUES ARE HOLDING STEADY

First, let’s talk about home values

According to Daily real estate News, May 10, 2011, in most states, Home values posted the largest decline in the first quarter since late 2008.

Home values (i.e. selling prices) fell 3% in the first quarter from the previous quarter and 1.1% in March from the previous month, pushed down by an abundance of foreclosed homes on the market, according to data released Monday. Prices have now fallen for 57 consecutive months and only 22% of metro areas showed any increase at all since 2009.

However, Lawrence Yun, NAR chief economist, pointed out that home prices are all over the map. “The reading of quarterly price data can be volatile because they are based on the types of homes that are sold during the quarter. When buyers principally purchase distressed properties in a given market, the recorded prices will be very low, which is what we’re seeing now in much of the country,” he said.

The national median existing single-family home price was $158,700 in the first quarter, down 4.6 percent from $166,400 in the first quarter of 2010. (The median is where half sold for more and half sold for less).

In the first quarter, the median existing single-family home price rose in only 34 out of 153 metropolitan statistical areas from the first quarter of 2010, including four with double-digit increases; one was unchanged and 118 areas showed price declines.

One big reason for the decline in values (i.e. selling prices) was the national inventory of Distressed Sales (i.e foreclosures and short-sales) which is forcing artificially low prices on all sales.

In the West, the median existing single-family home price fell 4.7 percent to $197,400 in the first quarter from the first quarter of 2010.

Keep in mind that, during this same period, the Colorado Springs market has shown relatively steady home values for the past four quarters, and has outperformed most other markets, according to the NAR quarterly report of the top 153 cities in the U.S.

During the past year, the national decline in home values was 4.6%, while the Colorado Springs average home value has gone from $184,800 in 2010 to $184,300 in 2011….That’s terrific. !!!

. . …….In terms of home-value, Colorado Springs is definitely better off than most other metropolitan areas in the country.


Now, let’s look at national home-sales

In spite of the national decline in home value, home sales have risen in most states

Existing-home sales continued to recover in the first quarter with gains in 49 states and the District of Columbia, while 22 percent of metropolitan areas saw prices rise from a year ago, according to the latest survey by the NATIONAL ASSOCIATION OF REALTORS®.

Total state existing-home sales, including single-family homes and condos, rose 8.3 percent to a seasonally adjusted annual rate of 5.14 million in the first quarter from 4.75 million in the fourth quarter, and are only 0.8 percent below a 5.18 million pace during the same period in 2010.

Lawrence Yun noted that lower priced homes have seen the best sales performance. “The biggest sales increase has been in the lower price ranges, which are popular with investors and cash buyers,” he said. “The preponderance of sales activity at the lower end is bringing down the median price, so what we’re seeing is the result of a change in the composition of home sales.”

“The rising sales trend in nearly all states is a part of the healing process to clear off inventory. Sales need to rise before prices can firm up,” Yun added.

Although sales are slightly below a year ago, the volume of homes sold for $100,000 or less in the first quarter was 8.9 percent higher than the first quarter of 2010, creating a downward skew on the overall median price.

Existing-home sales in the West jumped 13.5 percent in the first quarter to a level of 1.29 million and are 2.1 percent above a year ago.

The share of all-cash home purchases rose to 33 percent in the first quarter from 27 percent in the first quarter of 2010….a good indication that Investors are seriously into the market.


Who’s Buying?

First of all, there are more Investors in the national market

Investors accounted for 21 percent of first quarter transactions, up from 18 percent a year ago, while first-time buyers purchased 32 percent of homes, down from 42 percent in the first quarter of 2010 when a tax credit was in place. Repeat buyers accounted for a 47 percent market share in the first quarter, up from 40 percent a year earlier.

Some other interesting data show that First-time buyers are down (32% in the first quarter of 2011 vs 42% in 2010) …a reflection on the fact that the federal tax credit did, indeed, result in more sales last year. Repeat buyers are up from 2010 (47% in 2011 vs 40% in 2010).

In addition to the fact that Colorado Springs home values are holding steady, the bottom line for our local economy is that the Business Conditions Index …the overview of all aspects of the Colorado Springs economy issued by UCCS, has grown by 22% in April 2011 vs Feb 2009. That’s quite a leap and a good indicator that our city and our real estate market are moving in the right direction.

If you would like to discuss our local real estate market, Call us at 598-3200,or,1-800-677-MOVE(6683)


PROPOSED HOUSING FINANCE MARKET REFORM MUST ENSURE MORTGAGE AFFORDABILITY, ACCORDING TO NAR

Reforms to America’s housing finance market must ensure a reliable source of affordable mortgage lending for creditworthy consumers. That’s according to REALTORS® and other industry insiders who examined the federal government’s future role in the secondary mortgage market at the “Fannie Mae & Freddie Mac: Obama Options and Beyond” session during the National Association of REALTORS® 2011 Midyear Legislative Meetings & Trade Expo.

Some of the views expressed at the meeting about reforming the government-sponsored enterprises (GSEs) were:

• Reform is required
• Taxpayers must be protected from losses
• The federal government must continue to play a role in the secondary mortgage market to ensure a steady flow of mortgage liquidity in all markets under all economic conditions.
• Reform of the secondary mortgage market needs to be comprehensive and undertaken methodically.
• The government’s large presence in the housing finance is unhealthy and needs to be scaled back.
• Private capital needs to return to the housing finance market, but that most likely won’t happen until the market has stabilized.
• There needs to be more accountability and transparency in the secondary mortgage market so that private investors can best assess their risk and safely get back into the market.
• There should be a very limited government role in the secondary mortgage market.
• The private capital market has the funds and capacity to absorb Fannie Mae and Freddie Mac’s market share.
• Some government backstop will be essential in the future, since the housing and finance markets are sensitive to booms and busts.

Speakers reported that the government’s stated primary objective appears to be twofold: First, to lay out an immediate near-term path for reform, with steps that could be taken the next few years to reduce taxpayer risk and move the housing market to more stable footing, and second, to frame the discussion regarding the government’s long-term role in housing finance.

This topic will continue to be debated in the near-future, as the government decides the future of Fannie Mae and Freddie Mac.


MORTGAGE RATES DROP TO LOWEST LEVEL OF YEAR

According to the Wall Street Journal, May 13, 2011, Mortgage rates declined for the fourth straight week and reached their lowest levels of 2011.

The 30-year fixed-rate mortgage averaged 4.63 percent this week, reports Freddie Mac in its weekly mortgage market survey. Last week, the 30-year mortgage stood at 4.71 percent; compared to last year at this time, it averaged 4.93 percent.

Meanwhile, the 15-year fixed-rate mortgage also reached its lowest level of the year, averaging 3.82 percent this week from 3.89 percent last week. Last year at this time, the 15-year mortgage averaged 4.30 percent.

The 5-year adjustable-rate mortgage averaged 3.41 percent, down from last week’s 3.47 percent average. A year ago, it averaged 3.95 percent.

As rates continue to fall, the number of mortgage applications is increasing. Mortgage applications increased 8.2 percent this week compared to one week earlier, reports the Mortgage Bankers Association. The refinancing index increased 9 percent, the highest level since mid-March. Mortgage applications for purchase also got a boost, rising 7.1 percent compared to the previous week.

All indications point to a growing rate for home mortgages, so, if you are ever going to buy, now is the time.

Call us at 598-3200, or, 1-800-677-MOVE(6683)


VEGAS ….HERE WE COME AGAIN

This week we will be attending the Semi-Annual Conference of the relocation Industry. This meeting will feature speakers from some of the largest employers, corporations and relocation specialists in the nation and will be attended by around 2000 individuals and companies who serve the relocation industry.

It should be a unique view into what the ‘movers and shakers’ are predicting and we will provide you with some highlights next week.

Bye for now.

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 latest podcast. ….And, if you would like to learn more about our Job Loss Protection Program, please contact us.


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

 

JOKE OF THE WEEK

A businessman walked into a New York City bank and asked for the loan officer. He said he needed a loan and wanted to borrow $5000 for two weeks. The man’s credit checked out, so the loan officer said he would O.K. the loan, but the bank would need some security for such a loan.

The business man then handed over the keys to a Rolls Royce that was parked on the street in front of the bank. Everything checked out and the loan officer accepted the car as collateral for the loan. An employee then drove the Rolls into the bank’s underground garage and parked it there.

Two weeks later the businessman returned, repaid the $5,000 and the interest which came to $15.41.

The loan officer said, “We do appreciate your business and this transaction has worked out very nicely, but we are a bit puzzled. While you were away we checked and found that you are a multimillionaire. What puzzles us is why you would bother to borrow $5,000?”

The business man replied: “Where else in New York City can I park my car for two weeks for fifteen bucks?”