HARRY'S BI-WEEKLY UPDATE 1.25.21
January 25, 2021
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.
LOTS TO THINK ABOUT IN TODAY’S HOUSING ARENA
I’ve been a fixture in the local residential real estate community for going on 48 years now and have gone through a lot of different cycles, and this past year has certainly reconfirmed to me that change is not only inevitable…it’s a constant in the business of buying and selling homes.
The housing industry in general has been seeing new trends, most related to the current pandemic, and it appears that as we rethink the ways in which we work, live, educate and entertain, home needs and wants are also rethought.
As you might imagine, working from home (), home schooling and eating “in” more than in the past has created the need for more home office space, larger kitchens, more “privacy”, and greater outdoor entertainment areas. Some folks have been busy with home renovations while others have been looking for properties to better suit their current needs and wants.
With record lows in existing homes listed for sale, home price appreciation is continuing its upward trend. When coupled with the unimaginably low interest rates we are currently witnessing and rental prices also trending upward, it’s no surprise that homes are selling as soon as they hit the market—and creating bidding wars and selling prices considerably over listing price as well.
What to do in this kind of market becomes the question if you are considering a move. The answer is simple. Call me! For each individual situation—wants, needs, and budget—there is an personalized solution—and I am here to get you through the current residential real estate “maze”.
Since it’s obviously still a seller’s market, one option is selling your present home and buying one that fits your needs today and for the foreseeable future. As you might imagine, it’s imperative to know where you want to move because your present home will undoubtedly sell much quicker than you could even imagine. Sometimes it’s possible to lease it back from the buyer until you are able to make your move, but that is not always an option. Timing is everything when it comes to moving in today’s market.
New home construction was strong in 2020, looks to continue that way into the foreseeable future with new home prices continuing to rise as well. This has been a viable option for a number of my clients and my good working relationship with a number of local homebuilders helps a lot. I can assist with site and home selection, as well as making certain that you can get the best financing to fit your individual needs.
And speaking of new construction, this has also become an option for some of my “investor” clients who have faced the same lack of available homes for purchase as rental properties. Let me give you a recent example of a home that in the past might not have been considered for a rental property.
My clients purchased a newly constructed home at a price of $507,000 with a down payment of 25%. They were able to get an amazing 30-year fixed-rate mortgage (and non-owner occupied at that) for 2.75%. They were also able to include landscaping front and back yards, rear fencing and window coverings in the loan amount. That gave them a total monthly payment (PITI) of less than $2000.
Their property manager has indicated that the home should be able to rent for $2500-$2600 a month, thus giving them an immediate positive cash flow. Of course, being a new home, they also have the reassurance of little or no maintenance for some years to come.
At this rental price point my clients should be able to find a great tenant who will not only take good care of the home but might choose to live there for a longer time period. A win-win for all.
With many new companies moving to Colorado Springs, there are going to be lots of folks relocating and wanting a place to call home. Most will be in the rental market until there are more homes for sale since new construction can’t happen overnight, and apartment living is not practical for some.
Where is this narrative going?
If you are looking to purchase a home for investment purposes, I’m your guy. Not only do I put my own money where my mouth is and have owned investment properties for many, many years, I am able to help you figure out the best way for your situation. However, since I do have an investment banking background, I am NOT a tax advisor. So please know that you should always talk to your tax advisor prior to investing in residential real estate—or making any investment that could affect your individual tax situation.
For those of you with children or friends looking to buy for the first time, here’s an example of what happened to me just yesterday. A client was referred to me by her father. She has always been a renter and wanted to buy but needed a starter home. She was pre-approved for a loan up to $240,000, and as you might guess, that put her (and I) in an especially tough situation considering how few homes there are in general, let alone in that price range. We looked at four homes and waited in line to even get in to see the homes. After making an offer on a townhome listed at $185,000, I found out that we were offer number 43. The accepted offer was $240,000, and although our offer was considerably over list price, we weren’t even in the ballpark.
In cases such as these, sometimes it helps if a parent or other co-applicant can step up so that the buyer is able to qualify for homes in a higher price range. Oftentimes the current rental payment of the potential buyer would allow them to buy more home for the money and not increase their monthly output, but on their own they might not qualify for the higher loan amount.
An important reminder: No matter if you’re buying for you and your family or for investment purposes, don’t let the price point of a home get in the way of your decision. The current low interest rates mean your monthly payment will likely be far less than you might imagine.
There you have it.
While the market is tight and homes are not so easy to come by, I’m the guy who can steer you in the right direction to achieve your personal residential real estate needs and wants. And it starts with a simple phone call.
I can be reached at 593.1000 or by email at Harry@HarrySalzman.com and I look forward to speaking with you. Remember—the sooner you contact me, the sooner you will be on your way to a new future in residential real estate. As the sign above my desk says, I’ll get it done:
And as my clients can attest…if it’s at all possible…I WILL get it done!
DECEMBER 2020 LOCAL MARKET UPDATE
Colorado Association of REALTORS® , Pikes Peak REALTORS Service Corp, or it’s PPMLS
Here is the December 2020 Local Market Update for both El Paso and Teller counties that wasn’t available when the last eNewsletter was published.
You can click here to get specific information on the geographical area of your choice from the 18-page Local Market Update. I recommend that you check out your own area or one that you are considering, to get a good idea of the local pulse. As an example, here is a detailed report on the Colorado Springs area:
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NOW MAY BE THE RIGHT TIME TO SELL YOUR HOUSE
Keeping current matters, 1.19.21
The housing market made an amazing recovery last year and is now positioned for an even stronger 2021. Record low interest rates are definitely a driving factor and buyer demand across the USA is incredibly strong, and even more so in Colorado Springs.
I mentioned earlier, this is NOT the case on the supply side. Here is a breakdown by states and you can see just how strong the demand is right here in Colorado:
As the maps show, buyer traffic is high, but seller traffic is low. With so few homes for sale right now, record-low inventory is creating a mismatch between supply and demand.
What does all this mean for buyers and sellers?
Buyers need to remain patient in the search process and be ready to act immediately once they find the right home since bidding wars and offers over list price are becoming the norm in this type of market.
Sellers may not want to wait until spring to put their houses on the market this year. With such high buyer demand and such a low supply, now is the perfect time to sell a house on optimal terms.
Bottom Line? If you’ve even considered a move, NOW is a great time to begin the process. Call me today and let’s see how we can make your residential real estate dreams come true.
SOME REASONS WHY THE housing market IS SO TIGHT AT PRESENT
The Wall Street Journal, 1.22.21
The current shortage of available listings began more than a year ago and while it was not helped by the pandemic, there are a number reasons that have contributed to this.
Americans are staying in their homes longer than in the past, with the typical homeowner in 2020 having remained in place for 13 years. This is in contrast to the 8.7 years that was typical in 2010. About one in four U.S. homeowners have lived in the same home for more than 20 years according to a new study by Redfin Corporation.
Homes sales across the country soared last year, reaching their highest level in 14 years, as Americans were looking for a larger home where they could work remotely more easily.
But Covid-19 concerns had the opposite effect among potential sellers as a fear of strangers entering homes prompted some to cancel or delay plans to list their homes.
Others were concerned about finding a new home in a competitive market or refinanced at the considerably lower interest rates available.
Many baby boomers are staying in their homes and older folks are finding that they can “age in place” rather than move to “senior living” communities.
All in all, this is creating not only the housing shortage, but contributing to the faster increase in home appreciation and resulting higher sales prices.
Once again…with feeling…if you are even simply dreaming of a new home—NOW is the time. Waiting will cost you more in the long run and interest rates are not likely to remain this low forever.
2021’S SEVEN BIGGEST HOUSING ISSUES ACCORDING TO real estate PROS
Realtor Mag, 1.20.21
- Inventory shortages. Throughout the U.S. and most especially here in Colorado Springs.
- Widely distributed vaccines to boost consumer confidence. This should encourage more sellers to list their homes and help offset the inventory challenges. It could also help businesses reopen fully and give more Americans added job security and the confidence to enter the housing market.
- Some homes will be lost to foreclosure. While there is likely to be an increase in foreclosures due to an end of forbearance and stimulus plans, growing home equity may help homeowners sell in a strong market if they are facing foreclosure.
- Low mortgage rates will continue to drive demand. The low interest rates are causing renters to speed up their plans to purchase a home, current homeowners are opting to trade up faster and older adults are downsizing sooner—all due to the low interest rates. Mortgage rates will likely increase as soon as more people get the vaccine and the economy improves, so folks are wanting to take advantage of the low rates available now.
- A permanent shift to remote work could encourage more moves. Larger home offices and more private space will be a concern as many employers are considering at least a partial WFH situation for employees.
- Virus surges won’t lead to further market panic. The surprise element of the pandemic has passed, and the real estate market is better prepared for virtual showings and are able to transact business while being socially distanced.
- Affordability challenges persist and tax credits may help. As affordability issues mount, lawmakers are working to come up with solutions, most especially for first-time buyers. The proposed $15,000 down payment tax credit for first-time buyers, which, as proposed, will be able to be used at the time of purchase, has been proposed as an extension of the Recovery Act’s temporary tax credit.
