January 26, 2015

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.

                                      

     

THE AMERICAN DREAM OF HOME OWNERSHIP IS ALIVE AND WELL

The housing news, both on a national and local front, has been very positive and from the looks of it, more and more folks will be able to afford the home of their dreams.  Many will see greater appreciation in their current homes and first-time buyers are being afforded a number of options to make it easier to switch from renting.

All sources I’ve seen are predicting a strong housing market for 2015.  From NAR Chief Economist, Lawrence Yun...to Freddie Mac…to our local Southern California Economic Forum’s Director, Tatiana Bailey...the news that’s coming my way has all been positive. 

This is not “wishful thinking” from an eternally positive Broker/Owner—namely me.  This is reality—with all the respected industry economists agreeing.  There’s no better time than now to get off that fence and make your personal dreams a reality. 

With interest rates remaining at historic lows and current home appreciation on the rise, it’s time to put the equity you’ve built to work for you.  There are too many options to go into here, but why not give me a call at 598.3200 or email me at Harry@HarrySalzman.com and let me help you figure out what is the best plan for your particular wants, needs and budget. 

 

A LOOK AT SOME OF THE HOUSING EXPECTATIONS FOR 2015, LOCAL AND NATIONAL

From UCCS, College of Business and the Southern Colorado Economic Forum:

I’d like to share with you a presentation by Tatiana Bailey, Ph.D., Director of the Southern Colorado Economic Forum.  She spoke to the Pikes Peak Area Realtors (PPAR) on January 9, 2015 and I asked her permission to share the slide overview with you.  

The presentation includes information on both the national level, some of which I’ve shared with you previously, and a look at the local Pikes Peak area real estate market. 

Please click here for a look at some exciting statistics and projections.  If you have any questions, please give me a call.

 

From the National Association of Realtors:

The infographic below is from a video of NAR’s Lawrence Yun talking about his 2015 housing market expectations.  He expects existing-home sales to rise about 7 percent in 2015 behind a strengthening economy, solid job gains and a healthy increase in home prices.

 

                       

 

From Freddie Mac’s “2015 U.S. Economic and housing market Outlook for January”:

Realtor Mag, 1.21.15,  DS News, 1.21.15

Freddie Mac economists note that mortgage rates continue to remain below expectations, and they predict that mortgage rates will remain low at the beginning of 2015, staying around 4 percent for at least the first two quarters of the year.  Last week, mortgage rates dipped to a 20-month low, with the 30-year fixed-rate mortgage rate plunging to a 3.66 percent national average and the 15-year fixed-rate mortgage dropping to 2.98 percent.

“We…expect these low mortgage rates to help the growing purchase market continue to expand and reach the highest levels we’ve seen since 2006,” the economists noted.

But, as mentioned earlier, NAR’s Lawrence Yun predicts that mortgage interest rates could average around 5 percent—or higher—by the end of this year.

Buyers who have been sidelined due to high monthly rents preventing them from saving for a down payment on a home should be in a better position with new programs aimed to assist them in becoming homeowners.

Freddie Mac, along with Fannie Mae, believe its new announcement of offering mortgages with down payments as little as 3 percent, along with the FHA’s recent announcement that it will cut its premiums for new and refinancing borrowers by a half percentage point will help increase mortgage availability to first-time home buyers.

Economists also note in this report that home prices will likely rise by 3.5 percent this year.  Increased wages in the labor market will give consumers greater confidence.  The National Federation’s Independent Business Index for December showed that small businesses expect to raise employee compensation to the highest level since 2006.

In concluding, Frank Nothaft, Freddie Mac’s Chief Economist said, “On balance there are a lot of positive opportunities in the U.S. economy at the start of the year, and the real question is whether or not households and businesses will be able to seize these opportunities and make the most of them.  The reprieve in interest rates and drop in gas prices should help to spur economic growth.  Until rates start to rise later in the year, housing markets should respond positively, and we anticipate increases in home sales and continued improvement in construction activity.”

 

Down Payments Get Smaller

The Wall Street Journal, 1.25.15

More lenders are lowering down-payment requirements, allowing borrowers to commit 3 percent—or less—of a home’s purchase price to get a mortgage.  Many had been requiring at least 20 percent since the recession began. 

Some lenders are also waiving mortgage-related fees, and more are allowing down payments to be made by other parties, such as the borrower’s family. 

These deals are aimed at buyers with good credit scores and a steady income who have been unable to save enough for a sizable down payment.   In some cases, to qualify, borrowers will need a higher credit score and less debt relative to their income than is usually required, as well as having savings after the home purchase equal to at least 12 months of mortgage payments. 

Borrowers who want to get a mortgage with a particular lender could ask if they would allow a lower down payment than what is officially offered. 

In looking for loans, borrowers need to compare costs, including the interest rate, whether they have to pay any upfront fees to get that rate and what their total costs to get the loan will be.  A lower interest rate might not be such a good deal if it requires a larger out-of-pocket upfront expense.

So… what does all this mean to you?  To begin with, NOW is a great time to sell and trade up or buy for the first-time or investment purposes.  However, with all the options available in mortgage lending and in deciding what is best for your particular situation—it’s more important than ever to seek the advice of a reputable, knowledgeable real estate Professional. 

That’s where I come in.  As you can see from this eNewsletter, I do the homework so that you don’t have to.  I can help you determine the best housing situation and best lender for YOU.  As stated in the Freddie Mac report, it’s up to you to seize the possibly once-in-a-lifetime opportunities in the housing market.  In order not to miss out, give me a call and let’s see if we can make this positive market work for you.

 

5 FINANCIAL REASONS TO BUY A HOME

keeping current matters, 1.21.15

Eric Belsky, the Managing Director of the Joint Center of Housing Studies at Harvard University presented the top five financial benefits of homeownership in his paper entitled “The Dream Lives On:  the Future of Homeownership in America”.

I’ve mentioned these before, but with the market heading in such a good direction, I felt it important to reemphasize their importance. 

Here are the five reasons, each with an excerpt from the study:

  1. Housing is typically the one leveraged investment available.  “Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money.  As a result, homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor.  Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity.  With many buyers putting 10 percent or less down, their leverage factor is 10 or more.”

 

  1. You’re paying for housing whether you own or rent.  “Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord.”

 

  1. Owning is usually a form of “forced savings”.  “Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

 

  1. There are substantial tax benefits to owning.  “Homeowners are able to deduct mortgage interest and property taxes from income.  On top of all this, capital gains up to $250,000 are excluded from income for single filers and up to $500,000 for married couples if they sell their homes for a gain.”

 

  1. Owning is a hedge against inflation.  “Housing costs and rents have tended over most time periods to go up at or higher than the rate of inflation, making owning an attractive proposition.”

 

Bottom line?  Homeownership not only makes sense from a social or family reason, it also makes good financial sense.

 

HARRY’S JOKE OF THE DAY  (courtesy of Tatiana Bailey, Ph.D.)