HARRY'S BI-WEEKLY UPDATE 11.19.20
November 19, 2020
HARRY’S BI-WEEKLY UPDATE
A Current Look at the Colorado Springs Residential real estate Market
As part of my Personal Service, it is my desire to share current real estate issues that will help to make you a more successful and profitable buyer or seller.
CONGRATULATIONS TO ALL HOMEOWNERS IN THE COLORADO SPRINGS AREA…BUT REMEMBER…EVERYTHING COMES WITH A PRICE
A recent report from the National Association of Realtors (NAR) concerning Home Buyers by Metropolitan Statistical Area (MSA) shows that Colorado Springs is the number one city with the highest concentration of buyers.
Good News? Well, in some ways, yes. And in others, maybe not so much.
It’s certainly great for all current homeowners because obviously, greater demand is creating higher home appreciation. However, a little slower appreciation would be more realistic, as I’ve been saying for quite some time now.
For first-time homebuyers and those looking to relocate here for professional or personal reasons, it’s not quite as welcome news.
Like the rest of the country, the Colorado Springs area has been faced with a shortage of available homes for sale, and in our case, we have the lowest number of existing homes for sale ever. This shortage is one of the factors in the unrealistically high home appreciation which will likely continue until there are more homes for sale.
Our once comparatively “quiet” city is growing by leaps and bounds and there’s no end in sight. Companies are realizing the “work-life balance” is importance for today’s employees and their families, and this pandemic has driven that fact home even harder.
If you are able to work from home (WFH), wouldn’t you rather be in Colorado Springs than in some crowded city? A rhetorical question to be sure, however, one that obviously many folks across the nation are asking themselves.
The current pandemic has also forced folks into rethinking home “need and want “priorities and many are looking to add larger kitchens, quiet office space, home schooling and outdoor recreational and dining areas.
Our downtown is thriving with the opening of the U S. Olympic and Paralympic Museum, numerous new apartment complexes, the new sports complex currently under construction, and more. Hopefully it won’t be too long before we can put some of the restrictions due to COVID-19 behind us and restaurants and stores will be thriving again as well.
Southwest Airlines has just added Colorado Springs as one of their destination cities and that promises to bring even more vacation travelers to our locale, as well as increasing traffic to and from COS.
Mayor John Suthers, along with the City Council and Chamber/EDC and others have worked so hard to see these dreams become realities and a big shout out goes to all concerned. There was a time in the not-so-distant past when none of these things seemed possible, and certainly not in the time frame in which they have.
If you’ve even thought about selling to trade up or move to a new neighborhood, NOW is the time. It will likely take a bit longer to find what you want, and you may want to consider new construction as a viable option as well. This is something a number of my clients have looked at in recent times and I’ve helped them find just the right solution for their individual situation.
This is all part of my special brand of customer service and help with new home construction options comes at no additional cost to you. In fact, it could save you money in the long run since I can not only help in site and home selection, but also in finding the right lender for you.
Homes are not likely to get any cheaper, interest rates are still historically low and the equity in your present home is likely more than you might imagine—so don’t delay. Give me a call at 593.1000 or email me at Harry@HarrySalzman.com and together we can make all your residential real estate dreams come true.
METRO HOME PRICES INCREASE IN ALL AREAS IN THIRD QUARTER 2020
Realtor Mag, 11.12.20
Just like we are seeing in the local statistics, home prices all across the country are seeing greater gains due to the limited number of homes for sale, record low interest rates and high buyer demand. The majority of major metro markets posted double-digit price gains in the third quarter and single-family existing home prices increased in all 181 metro areas tracked in NAR’s latest quarterly report.
According to Lawrence Yun, NAR’s chief economist, “Favorable mortgage rates continue to bring fresh buyers to the market. However, the affordability situation will not improve even with low interest rates because housing prices are increasing much too fast.”
He added that, “In light of the pandemic, prices jumped in a number of metros that contain larger properties and open space—where families could find extra rooms, including areas for an at-home office”.
Colorado Springs ranked 28th with a 13.6% increase, in comparison with the U.S. as a whole at 12.%.
Click here to see the entire list of 181 MSAs in numerical order or to view them in alphabetical order, click here. If you have any questions, please give me a call.
FOUR REASONS WHY THE ELECTION WON’T DAMPEN THE housing market
Keeping Current Matters, 11.2.20
Interestingly enough, I read this article the day before the election and here we are two weeks out and we still don’t have the final results. However, the thoughts concerning the housing market aren’t likely to change—the housing market has been and will continue to be—the driving force in the U.S. economy.
Here are four reasons why:
- Demand is Strong Among Millennials. The national’s largest generation began entering the housing market last year as they reached the age to marry and have children—two key drivers of homeownership. According to an article in The Wall Street Journal, “Millennials, long viewed as perennial home renters who were reluctant or unable to buy, are now emerging as a driving force in the U.S. housing market’s recent recovery.”
- Mortgage Rates Are Historically Low. Rates are driving demand across all generations. Strong demand created by this low rate has countered other economic disruptions (i.e. the pandemic, recession, record unemployment.) Freddie Mac has forecasted mortgage rates to remain low through next year: “One of the main drivers of the strong housing recovery is historically low mortgage rates…Given weakness in the broader economy, the Federal Reserve’s signal that its policy rate will remain low until inflation picks up, and no signs of inflation, we forecast mortgage rates to remain flat over the next year. From the third quarter of 2020 through the end of 2021, we forecast mortgage rates to remain unchanged at 3%.”
- Prices Continue to Appreciate. The continued lack of supply of existing homes for sale, along with buyer demand has experts forecasting strong price appreciation over the next twelve months.
- History Says So. Normally the market slows slightly in November when it’s a Presidential election year, and the pace quickly returns. Here’s an explanation as to why from the Homebuilding Industry Report: “This may indicate that potential homebuyers may become more cautious in the face of national elections uncertainty. This caution is temporary and ultimately results in deferred sales, as the economy, jobs, interest rates and consumer confidence all have far more meaningful roles in the home purchase decision than a Presidential election result in the months that follow.”
Ali Wolf, chief economist for Meyers Research, also notes: “History suggests that the slowdown is largely concentrated in the month of November. In fact, the year after a presidential election is the best of the four-year cycle. This suggests that demand for new housing is not lost because of election uncertainty, rather it gets pushed out to the following year as long as the economy stays on track.”
Bottom Line: There’s no question that this has been one of the most contentious presidential elections in our nation’s history and will have a major impact on many sectors of the economy. However, as Matthew Speakman, an economist at Zillow explained several weeks ago:
“While the path of the overall economy is likely to be most directly dictated by coronavirus-related and political developments in the coming months, recent trends suggest that the housing market—which has basically withstood every pandemic-related challenge to this point—will continue its strong momentum in the months to come.”
So…once more with feeling…if you’re in the market…give me a call sooner than later.
METRO AREA WEALTH GAINS FROM HOMEOWNERSHIP AS OF 2020 Q2
National Association of Realtors, 10.30.20
Homeownership is the key to building wealth. Among all families, the ownership of a primary residence typically accounts for 90% of total wealth, based on the 2019 Survey of Consumer Finance data. Among those in the bottom 20% of the income percentile, the median value of holdings for a primary residence accounts for 99% of total family assets, but only 42% for families in the top 10% of the income bracket.
Housing wealth accumulation takes take and is built up by paying off mortgage debt and by home price appreciation. And while home prices can fall, they tend to recover and go up over the longer term. As of September 2020, the median sales price of existing home sales in the U.S. was $311,800, a 35% gain since July 2006, when prices peaked at $230,000.
Nationally, a person who bought a typical home 30 years ago would have typically gained about $283,000 as of the second quarter of 2020. Of the total wealth gain, 67% is from the price appreciation of 3.7% annually. Over a 10-year period, the wealth accumulation is $144,490, of which $114,233 or 80% are from the price appreciation.
Once again…homeowners accrue housing wealth or equity over time from the principal payments to reduce the mortgage debt and from the appreciation of home prices:
Housing Wealth Gains = Principal Payments + Price Appreciation Gains
Here is a look at Wealth Gains from Homeownership in Colorado Springs:
Note: The calculations show the housing wealth gains accumulated for a typical home purchased 5, 10 and 15 years ago and sold at the median sales price as of 2020 Q2. The calculations assume a 30-year fixed mortgage plus points and fees and 10% down payment.
These calculations are illustrative of the wealth gains from homeownership in Colorado Springs. The actual home equity gains accrued over time will vary by property and will depend on home improvements undertaken over time. These home improvement costs are not taken into account in the calculations.
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As you can see, these charts illustrate what I’ve been telling you time and again for many, many years. Homeownership over time far outshines gains from traditional stocks and bonds while providing you shelter and comfort along the way.
If you have any questions, please give me a holler.
