HARRY'S BI-WEEKLY UPDATE
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October 21, 2013
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.
HOMES FOR SALE---EXTRAS INCLUDED
As I’m negotiating to purchase a home on your behalf, I always look for financial “carrots” to help offset some of the buying costs. And, on the other hand, for many years my listing presentations have had some choice incentives that a Seller might offer to help attract a Buyer.
When working as a Buyer’s Broker, I believe it is my duty to see that the Buyer is aware that they have received a good to a possibly “great” deal.
An article in last Monday’s Wall Street Journal addressed this practice in talking about the “Freebies” that are now being offered to help boost home sales. They indicated that “home builders have boosted cash incentives and upgrades to lure Buyers…due to rising prices and higher mortgage rates.”
In a booming market, these incentives practically go away, but the “increasing use of incentives underscores the fickle nature of the housing market, which has been gaining steam over the past two years but remains well below the pre-crash peak and often is buffeted by economic shift.”
I am of the opinion that incentives almost always help make everyone feel good about either buying or selling. Obviously, the types of incentives vary based on the current market. However, some type of bonus is definitely worth considering, whether you are looking to either buy a new or resale home or looking to sell your present home.
These motivations can include incentives for extras such as wooden floors rather than standard carpeting or an offer to split or pay closing costs. These “extras” are what I look for when working with my clients. In today’s market I’m finding those same “extras” are what it might take to get to a closing table.
So if you are looking to sell and trade up, or buy for the first time or for investment purposes, now is a great time to be in the Residential Market here in Colorado Springs. Along with low interest rates at the present time, you might see some of these “freebies” come your way, too. Call me at 598.3200 or email me at Harry@HarrySalzman.com so we can discuss your personal situation and see if any of this can work for you.
HOMEOWNERSHIP STILL THE AMERICAN DREAM keepingcurrentmatters.com, 10.18.13
The big question facing the real estate community over the last few years has been how the housing crisis might impact the American public’s belief that homeownership is part of “The American Dream”.
A recent study at Harvard University’s Joint Center for Housing Studies addressed this in a paper titled “Reexamining the Social Benefits of Homeownership after the Housing Crisis.” Some of the findings revealed:
So, “even after one of the most difficult decades in this country’s real estate history, the belief that homeownership is a part of the American Dream still lives on.”
This has been my philosophy forever—I have always believed that there is “never” a bad time to buy real estate as long as it’s considered a personal investment. In the long run, it will appreciate and as I’ve shown you many times in past eNewsletters, you’ll most often get a better run for your money in real estate than in the stock market or mutual funds over time.
NOTE TO BUYERS: YOUR WINDOW OF OPPORTUNITY IS STILL OPEN
I have been forecasting the potential 5% mortgage rate for 2014 since this past summer and we heard these same forecasts at the Southern Colorado Economic Forum on September 26, 2013.
While The Fed recently announced that they would continue their current bond purchasing pace until the economy gets stronger, mortgage rates actually went back down. This was great news for any Buyer who is in the process of purchasing a home. However, this window of opportunity is expected to close in the very near future, as Ben Bernanke, Chairman of the Fed suggested that the Fed could still scale back the stimulus this year.
The Mortgage Bankers Association, Fannie Mae and Freddie Mac and the NAR have all projected what I’ve been saying—the 30 year fixed rate mortgage will be in excess of 5% by this time next year. The average of their projections is 5.3%.
“The payment difference in a $250,000 mortgage today and next year figuring 4.37% today and 5.3% next year would be $140.78 a month. And today’s rates are often lower than that and next year could be even higher than projected AND home prices will more than likely be higher next year than now, so…the savings by buying today are definitely worth it to you.”
ANOTHER BIG REASON TO BUY NOW… Inman.com, 10.17.13
Effective January 1, 2014, a new provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act goes into effect and the “qualified residential mortgage” (QRM) will possibly have far reaching effects that might ultimately lower the number of people who can obtain mortgage loans.
An article on inman.com explained briefly that “QRM was designed to set the bar for residential mortgages and to minimize the risk that borrowers may default. It requires that debt ratios be limited to 43 percent and loan fees limited to 3 percent, and interest-only loans and negative amortization are not allowed in most cases.
The Dodd-Frank bill also requires the lender to retain 5 percent of any mortgages they make. In other words, if they make a $100,000 loan they must retain $5,000 to secure the loan.”
For the first time in history, lending decisions after January 1, 2014 will be based on compliance issues rather than Buyer credit issues.
Imagine that a mistake was made on a purchase agreement. The Buyer and Seller want to change the agreement to correct the mistake, except the law prohibits you from doing so.
“If a lender makes a mistake with any part of the compliance, here’s what will happen:
What this means for agents, brokers and you, my clients:
This is already having an effect on mortgage lenders all over the country. Wells Fargo just this week announced a significant layoff of mortgage lending employees due to lower volume and fewer qualified buyers forecast in the months to come.
So, BOTTOM LINE…if you are sitting on the fence about either Buying or Selling, it’s time to make a move before the end of the year. No one knows, not even me, what will happen after January 1, 2014 but it doesn’t appear to be in anyone’s best interest to keep sitting on the fence.
AND NOW A WORD FOR THE SELLERS…
My last eNewsletter showed how in the past 12 months our local Colorado Springs market has had a 9.8% gain in Median Sales Price as of September 30, 2013. Hopefully you now have an additional amount of equity available in your home—maybe even more than you think.
Here are some excellent reasons why you might consider selling your home now:
Let’s get together soon to discuss some or all of these things so I can assist you in making the decisions that make the most sense for you financially and personally. As you have been reading here, it isn’t going to pay to wait, and it probably will end up costing you to do so.
PHILOSOPHY OF THE DAY
---Karl Eller, April 1999, Eller College of Business, The University of Arizona
“When you are looking at the characteristics on how to build your personal life, first comes integrity; second, motivation; third, capacity; fourth, understanding; fifth, knowledge; and last and least, experience.
Without integrity, motivation is dangerous; without motivation, capacity is impotent; without capacity, understanding is limited; without understanding, knowledge is meaningless; without knowledge, experience is blind. Experience is easy to provide and quickly put to good use by people with all other qualities.
Make absolute integrity the compass that guides you in everything you do. And surround yourself only with people of flawless integrity.”
FEATURED LISTING
Harry A. Salzman. CRS, CRP, CNE email: Harry@HarrySalzman.com Serving: Colorado Springs, Monument. Air Force Academy, Fountain,
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