August 30, 2010

HARRY'S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET

 

THE BIG PICTURE

First time buyers deserted the market in July, according to the latest Campbell/Inside Mortgage Finance Monthly Survey of real estate Market Conditions. In March and April, First-Time Buyers accounted for 48.2% of all Homebuyers, whereas in July, they accounted for only 39.1%, the lowest level in at least a year.

Thomas Popik, the research director for Campbell Surveys said that " We expect a further decline in first-time Buyers, perhaps as low as 30-35% by the fall months. The end of the tax credit for first-time Homebuyers clearly had an effect". Interestingly, first-time Homebuyers made up a healthy 46.4% of short sale purchasers last month.

The most frustrating aspect of short sales continues to be the timeframes required between offers and acceptance. Even though lenders have somewhat reduced the time required for acceptance (One major financial institution proudly announced that their timetable is now down to 4 months for approvals - down from 11-12 months), the process still takes too long. Prospective Buyers often tend to get frustrated with the delay and choose to buy elsewhere. This is obviously the reason that, as of July, foreclosed properties (REOs) averaged more offers than short sale properties.

 

VOICEAMERICA IS CALLING AGAIN

Speaking of short sales, we have been invited back to speak about this topic and about foreclosures on VoiceAmerica. The Host/Interviewer will again be Deborah Hoskins, JD, CFP, on her show, "The Wise and The Wary". The topic will be "The Realtor's Role in Assisting Clients with Foreclosures and Short Sales". Tune in on October 13, 2010 and listen to what promises to be an interesting show. We will give more details as we get closer to the air date. In the meantime, you can learn more about VoiceAmerica by clicking on this link.

 

WHERE ARE THE BUYERS??

In July, existing-home sales were sharply lower, but median home prices continued to rise, according to the National Association of Realtors. Sales showed a drop of 27% to the lowest figure in 15 years and represented the largest monthly drop on record, dating back to 1968.

On the other hand, mortgage interest rates also continued to drop. Last week, there were times when we could obtain 30 year, fixed-rate home mortgages for as low as 4.0%.

So, why aren't more people buying homes? One of the big reasons is that there aren't many Buyers out there right now and, the ones that eventually will buy are holding back, thinking that the market hasn't bottomed out yet. That looks like a risky gamble in today's market as statistics indicate median home prices are on the rise.

Unfortunately, inventories are also growing. One reason for that fact is that prospective buyers and realtors are both growing leery of dealing with short sale properties, because of the length of time required to obtain final approval from lenders. This problem has gotten so bad that many Realtors will not even show short sale properties. The result is that, as these properties are dumped into the market by lenders, they simply sit there and, along with new foreclosures, increase the size of the inventory of available homes. This creates even more pressure to lower prices. Conservative estimates indicate that these properties account for 20%-30% of the market.

The bottom line for Buyers is that, with large inventories of homes for sale (which pushes prices down), and with low mortgage rates (which pushes costs down) and with looming federal increases in fees on the horizon, there will probably never be a better time to buy. 

Call us.

 

WHERE WOULD YOU RATHER BE ??

The late comedian/actor W.C. Fields was famous for hating Philadelphia, PA. (probably because of the bad reviews he received there). His dislike for "The City of Brotherly Love" was so intense, that he selected the following epitaph for his tombstone. "All things considered, I'd rather be here than in Philadelphia".

Now, we don't share W.C. Field's dislike for Philadelphia, but the latest economic data about Colorado Springs leads us to feel that, "All things considered, we'd rather be here than anywhere else".

In a speech on August 25th, Fred Crowley, PhD, chief economist for the Southern Colorado Economic Forum gave us a preview of the report on our local economy which he and Tom Zwirlein, PhD,, will present at the upcoming Southern Colorado Economic Forum. In a nutshell, Fred's summary of our local economy is that, "We've fared so much better than the national market that it's absolutely mind-boggling".

To cite a few of the encouraging facts from their upcoming presentation: 

  • Our year-to-Date residential home sales are up 8%, compared with a 22% decline nationally
  • Our average home price has increased 3% and the median price is up 5%
  • Our foreclosures are 14%-15% lower than one year ago
  • Our new car registrations have nearly doubled from June-July 2009
  • The Business Condition Index for El Paso County is up in 6 of the 10 indicators

(The BCI is a measure of 10 economic indicators, including emplanements, city sales and use tax collections, local employment rate, etc.)

  • Our BCI bottomed out in February, 2010 and has increased 20% since then
  • Our initial unemployment claims are down 27.3%
  • Taxable retail sales are up 8%

To hear more about this very interesting report and to attend great seminars by other national experts, we encourage you to attend the upcoming 2010-2011 Southern Colorado Economic Forum, on October 1, 2010, at the Antlers Hotel in downtown Colorado Springs. To register, visit the Southern Colorado Economic Forum website. This annual event has become a sellout, so put it on your calendar, today.

 

NEW FEDERAL REGULATIONS WILL MEAN HIGHER COSTS FOR HOMEBUYERS

Although there are no specific Rules and Regulations currently available from the 2300-page Dodd-Frank Financial Overhaul, we do know that there will be new fees created for federally-insured mortgage borrowers. (i.e. Fannie Mae, Freddie Mac, FHA and VA mortgages account for about 90% of all new home loans). We do know that, beginning in October, 2010, FHA will raise their annual insurance premiums to as high as .9% of the loan amount (up from .55%). At the same time, the up-front premiums due at closing will drop to 1% from the current 2.25%.

The Dodd-Frank recommendations are intended to increase the reserves of Fannie Mae and Freddie Mac, so that these agencies do not repeat their near-collapse caused by the recent housing crisis. Whatever final regulations are adopted, we can be sure that they will make it cost more to buy your new home after October 1, 2010.

This is just one more reason to buy today!! Call us  

 

TIDBITS FROM HERE AND THERE

The following two items from Daily real estate News, August 30, 2010, caught our attention.

5 Reasons Homeownership Trumps Renting

The seemingly endless run of bad housing news is discouraging some potential home buyers from considering a purchase. But the truth is that the advantages of homeownership have very little to do with investment gains. The best things about owning a home have a lot more to do with personal comfort and satisfaction. Here are five of them:

Be your own landlord. The bank can only kick you out if you don't pay; a landlord can be much less dependable - deciding to sell the property or choosing to live there themselves.

Paying the principal is forced savings. Yes, it's possible that home prices will fall further. It is also possible that your 401(k) will lose value. But over the long haul, both are likely to enjoy modest gains in value.

Fixed-rate mortgages never rise - and eventually you pay them off. With mortgage rates at record lows, people who buy now are locking in real bargains.

Good schools. Family-sized rentals are harder to come by in areas with excellent public schools.

Spacious properties in pleasant neighborhoods. Sizable homes in attractive communities are almost always owned - not rented.

  

 

Administration Undecided about Another Tax Credit

Housing and Urban Development Secretary Shaun Donovan said Sunday on CNN's "State of the Union" that the administration would "do everything we can" to stabilize the U.S. housing market.

Whether it will resurrect the first-time home buyer tax credit is up in the air. Donovan said that the drop in home sales in July was worse than the administration expected.

Donovan also said that the Federal Housing Administration will launch an emergency loan program to help unemployed borrowers stay in their homes and a program to help underwater borrowers refinance.

 

LATEST STATISTICS

To see the most recent Sales and Listing statistics from the Pikes Peak area, 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. 

 

JOKE OF THE WEEK

A small-business operator, a tax accountant and a government economist apply for the same job.

The interviewer calls in the small business operator and asks "What do two plus two equal?" The small business operator replies "Four." The interviewer asks "Four, exactly?" The small business operator looks at the interviewer incredulously and says "Yes, four, exactly."

Then the interviewer calls in the tax accountant and asks the same question "What do two plus two equal?" The accountant says "On average, four - give or take ten percent, but on average, four."

Then the interviewer calls in the government economist and poses the same question "What do two plus two equal?" The economist gets up, locks the door, closes the shade, sits down next to the interviewer and says, "What do you want it to equal"?