June 7, 2010

HARRY'S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET

THE NATIONAL ASSOCIATION OF REALTORS SAYS THINGS ARE LOOKING UP

Lawrence Yun, NAR Chief Economist, reported last week, "The second round of surging sales from the tax credit extension looks as strong as the original tax credit. Evidently, the tax stimulus, combined with the improved consumer confidence and low mortgage interest rates, are contributing to surging sales. The housing market now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs."

NAR expects a net of 1 million additional jobs in the second half of this year and about 2 million in 2011.

"The Home Buyer tax credit brought close to 1 million additional buyers into the market, which is now helping the trade-up market and has significantly improved the inventory situation. This stabilized home prices more quickly and has preserved about $900 billion in home equity. In turn, that is keeping additional households from going underwater and risking foreclosure." Yun said.

"A big concern surfacing recently is insufficient time to close the deal at the settlement table. Under normal circumstances, two months would be enough time from contract to settlement date," Yun said. "However, the recent housing cycle has brought long delays related to the short sales approval process by banks, and from ongoing appraisal issues. There could be a sizable number of Home Buyers who responded to tax credit incentives, but who may encounter problems meeting the settlement deadline by June 30."

Distressed sales, i.e. short-sales and foreclosures, account for roughly one-third of all transactions and will likely continue to represent a sizable portion for the rest of the year. Why? Because mortgage delinquencies are still very high.

This delay by banks in the settlement process is the very reason we have urged Congress to establish some reasonable deadlines for banks and why NAR has asked Congress to provide flexibility on the deadline for closing.

Surprisingly, housing inventory - despite higher sales activity - has been rising. That is because fresh listings have been rising faster than the existing inventory has been absorbed. One reason for this rise is, apparently, that Homeowners who did not want to sell during the depths of the downturn last year are now putting their homes back on the market. As proof of this, see the numbers listed in our monthly PPAR report, later in this newsletter.

OUR LOCAL real estate MARKET CONTINUES TO CLIMB AND SHOW STRENGTH

This past Thursday, the Pikes Peak Association of Realtors announced figures for May, 2010. Home sales maintained a upward climb, despite the demise of the federal tax credit for Home Buyers which expired April 30, 2010.

Last month, total single-family home sales, including resale and new construction, totaled 888. That represents an increase of 6.7% over the same month last year. Of the 888 sales, 844 were resales, a 7.9% increase over May, 2009.

The median price for all homes sold was $194,450, an increase of 2.8% over May, 2009.

The number of single-family homes on the market as of May 31, 2010 was 5550, an increase of 10.1% over May 31, 2009, an indication that reluctant Sellers are regaining confidence in market pricing and they are putting their homes back on the market. Their confidence is well placed. The statistics show that, of the 888 homes sold last month, the "selling price to listing price" ratio was 97.6%, which means that Sellers received only 2.4% less than their asking prices. .and better yet, "sold" homes were on the market for only 77 days, on average.

We hate to tell Realtors in most other parts of the country how well our local market is doing. They always get so depressed.

MORE GOOD NEWS - BUILDING PERMITS ARE UP !!!

On June 2, 2010, the Pikes Peak Regional Building Department published their monthly report showing the number of new home building permits. In May, 2010, single-family permits in El Paso County totaled 135, an increase of 25% over the108 permits issued in May of 2009. Furthermore, during the first 5 months of 2010, single-family permits showed an increase of 79.6% over 2009 (670 vs. 373).

Those figures represent an increase in single-family building permits for 11 of the past 12 months.  

WSJ SAYS RETAILERS ARE ALSO DOING WELL

Last Friday, the Wall Street Journal published figures showing that the major retailers are also feeling the growth in consumer confidence and loosening their purse-strings. Some of the retail outlets tracked in May showed the following increases over May of 2009:

  • Target + 1.3%
  • Macy's + 1.4%
  • Kohl's +3.5%
  • Nordstrom +3.7%
  • Costco + 5%
  • Saks + 5.8%

Overall, in May, the 28 retailers tracked by Thomson Reuters posted "same store sales growth" of 2.5% over 2009. It looks like we are on our way back to normal.

MORTGAGE RATES - HOW LOW CAN THEY GO ???

We still can't believe it. Last week, we were able to negotiate a mortgage for a transferee coming to Colorado Springs that should make him happy for the next 30 years. How's this for a deal? The Buyer qualified for a VA Jumbo loan. The sales price was $439,900. Down payment on the 30 year fixed-rate mortgage was only $5,725, with no origination fee and no discount points and the rate was locked in at 4.75%. Wow !!! Things can't stay this good forever. Call me .  

THE PIKES PEAK REGION IS THE BEST PLACE TO BUY YOUR HOME

The Colorado Springs Regional Economic Development Corporation is promoting our area nationwide, but especially in those troubled areas of the country where businesses are fleeing from excessively high taxes. These overtaxed businesses are looking to relocate and the CSREDC is "selling" our area as the best place to live and work. We are linking here to their latest promotional piece, "The Top Ten Reasons to Locate Your Company in Colorado Springs and the Pikes Peak Region", to assist them in their efforts to attract businesses, but also to encourage any of our readers who are considering relocating here to buy now, while home prices and mortgage interest rates are low and inventories are high. It's a great place to live !!!   

GREECE AND OIL COULD BE BIG FACTORS IN THE housing market

The domino theory is at work again. If Greece is unable to raise money to pay for government spending, they could go bankrupt. (Hey, hold on, there! You mean countries actually have to pay for the programs their legislators pass. Bummer!!! With our luck, that might even happen here). However, Greece's traditional sources for borrowing are asking if they will ever get their loaned funds back from the Greek treasury. Germany, in particular, is irate that its citizens, who typically retire at a much older age than do Greeks, are being asked to provide pension money for Greek citizens.

If Greece defaults, then German banks will see their capital evaporate. That, in turn, will make it difficult for them to lend to other countries like Portugal or Spain to finance their budget deficits. If these countries also default as a result, then another major credit crisis will hit us. (Ireland would have been on this list of endangered countries, but they decided to reduce their unsustainable government debt by cutting government salaries, furloughing many government employees and convincing its investors that it will repay the loans. Where do those crazy Irish get these strange ideas?)

The bottom line for the U.S. would be that, because of our global linkages, our banks would also take a hit. This would make it very difficult to obtain Jumbo loans and second-home financing. So, if you're thinking of getting a Jumbo loan, or buying a second-home, it would be prudent to make your move right now.

The other source for concern is the oil-spill in the Gulf of Mexico. Obviously, the local economies that will be directly affected by the spill will have a hard time recovering from the effects of the spill. For the rest of us, the price of oil will rise measurably - or more oil will have to be imported. Either way, our cost of living will go up and the recovery from the recession will slow down. Slower economic growth will mean slower job expansion and a higher U.S. budget deficit.

Oh, for the days when worrying about Greece and oil just meant making an appointment to have the car serviced.

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

At a recent computer expo (COMDEX), Bill Gates reportedly compared the computer industry with the auto industry and stated "If GM had kept up with technology like the computer industry has, we would all be driving twenty-five dollar cars that got 1000 mpg."

Recently General Motors addressed this comment by releasing the statement: "Yes, but would you want your car to crash twice a day?"

Not only that, but....

  • Every time they repainted the lines on the road you would have to buy a new car.
  • Occasionally your car would die on the freeway for no reason, and you would just accept this, restart and drive on.
  • Occasionally, executing a maneuver would cause your car to stop and fail and you would have to re-install the engine. For some strange reason, you would accept this too.
  • You could only have one person in the car at a time, unless you bought "Car95" or "CarNT". But, then you would have to buy more seats.
  • Macintosh would make a car that was powered by the sun, was reliable, five times as fast, twice as easy to drive, but would only run on five percent of the roads.
  • The Macintosh car owners would get expensive Microsoft upgrades to their cars, which would make their cars run much slower.
  • The oil, gas and alternator warning lights would be replaced by a single "general car default" warning light.
  • New seats would force everyone to have the same size butt.
    The airbag system would say "are you sure?" before going off.
  • If you were involved in a crash, you would have no idea what happened.