HARRY'S BI-WEEKLY UPDATE 3.14.16
March 14, 2016
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.
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FEBRUARY 2016 WAS THE 19TH STRAIGHT MONTH OF INCREASED LOCAL RESIDENTIAL real estate SALES
Statistics provided by the Pikes Peak REALTORS Service Corp, or it’s PPMLS
And one more time…I am happy to report that prices and sales are continuing their upward climb for the Pikes Peak Region in the Residential real estate Market.
In the Cumulative Year-To-Date Summary you will see that total sales numbers in Single Family/Patio Homes is up 31.0% over February 2015 while Condo/Townhome sales are up 8.1% over 2015. I believe these numbers would have even been higher if there had been more homes available for sale.
The Monthly Summary shows that total active listings continue their downward trend from the same month last year. In fact, the total active listings for Single Family/Patio Homes are 1,762—again setting the record for the lowest number of active listings since PPAR began record-keeping.
New listings in February were up 10.9% over the same month least year in the Single Family/Patio Homes category. Condo/Townhomes for the same period were significantly down in total active listings and new listings saw an increase of 6.3%.
We are still experiencing low mortgage interest rates, which is apparently reflected in these numbers. The stock market volatility and low oil prices have helped keep mortgage rates low and people are taking advantage of this before things change. This has also caused some of my clients to purchase more investment properties to take advantage of the rental shortage and higher rental rates they can get to offset stock market losses.
There are fewer homes available in most neighborhoods and most price ranges, with the current average days on the market a low 59, and those in the low and mid-range tend to go quickly. These are the homes that are receiving competing bids, some over asking price. Making a quick decision is now the rule in order to secure the home you want.
The spring buying season has not yet really begun but you wouldn’t know if from all the recent activity. If you are considering selling to trade up or move to a new neighborhood, the sooner you start the better. There will be more buyers competing for homes during the spring buying season, so starting your search now could not only save you money, buy could afford you a “head start” in the home buying search.
According to Lawrence Yun, chief economist for NAR, buyers are anticipated to outnumber sellers this spring, creating an even greater shortfall of inventory that is driving up asking prices. “Given that prices are rising, more people will be pushed on the borderline of conventional mortgage limits and may need a large down payment or a jumbo mortgage,” says Yun. Jumbo mortgages have limits higher than conforming loan limits of $417,000 and up to $625,500 in some high-prices areas.
One silver lining in jumbo mortgages is that lender confidence in jumbo mortgages is leading to looser credit qualification says Bob Walters, chief economist for Quicken Loans. Some lenders are accepting credit scores of 700, and sometimes lower, while accepting a down payment of less than the usual 20%.
Most jumbo borrowers are locking in low fixed rates. However, if you are planning to stay in your home for only five to ten years, it might be cheaper to go with a lower adjustable rate. And, while the typical lock-in time for rates is 45 days, for some pre-approved borrowers who are still looking many lenders will lock longer for a slight premium says Walter.
However, as I’ve said in the past few editions, it’s more important than ever to know what you want, need and can afford prior to the hunt for a new home. There’s no longer the luxury of “let me think about it for a couple of days or even a few hours” at this time.
Another factor to consider is that with homes selling so quickly you need to be have a good idea of where you might want to move because you more than likely won’t have the luxury of time on your side to search for a replacement home.
To discover the options available for you, give me a call sooner than later and let’s see what we can do to make this happen. I can be reached at 598.3200 or by email at Harry@HarrySalzman.com.
Here are some highlights from the February 2016 PPAR report. Please click here to view the detailed 14-page report, including charts. If you have any questions, as always, just give me a call.
In comparing February 2016 to February 2015 in PPAR:
Single Family/Patio Homes:
- New Listings are 1,250, Up 10.9%
- Number of Sales are 870, Up 21.3%
- Average Sales Price is $270,377 Up 8.9%
- Median Sales Price is $240,000, Up 6.7%
- Total Active Listings are 1,762, Down 27.5%
Condo/Townhomes:
- New Listings are 152, Up 6.3%
- Number of Sales are 131, Up 31.0%
- Average Sales Price is $171,198, Up 18.8%
- Median Sales Price is $154,900, Up 12.2%
- Total Active Listings are 145, Down 46.7%
COLORADO SPRINGS AREA MONTHLY SINGLE FAMILY/PATIO HOME SALES ANALYSIS*
Median Sales Price Median Sales Price
February 2016 February 2015
Black Forest $405,000 $377,838
Briargate $317,250 $279,000
Central $179,900 $154,000
East $192,000 $172,500
Fountain Valley: $222,000 $197,950
Manitou Springs: $267,500 $290,000
Marksheffel: $270,000 $236,000
Northeast: $247,400 $211,500
Northgate: $360,000 $365,000
Northwest: $319,500 $310,500
Old Colorado City: $191,000 $205,000
Powers: $233,000 $220,000
Southwest: $162,000 $250,225
Tri-Lakes: $450,000 $427,000
West: $262,450 $201,500
*Statistics provided by the Pikes Peak REALTORS Services Corp,or its PPMLS.
SOUTHERN COLORADO ECONOMIC FORUM’S QUARTERLY UPDATES & ESTIMATES
College of Business and Administration, UCCS, Southern Colorado Economic Forum, February 2016
The Fourth Quarter 2015 Update on the El Paso County Economy, including housing trends, was published last week and you can click here to read the full 9-page report. Much of the section on Housing mirrors the PPAR report and includes:
- The single family permit activity continues its upward trend
- Rental rates continue to climb steeply and vacancy rates fall
- Active listings were down 17.9% year over year, average days on the market are considerably down from last year and median price is up
- Foreclosures are down by 19.4% in 2015 from 2014
Other sections of the report include:
- The Big Picture
- Employment
- Commercial real estate and Airport
- Sales Tax and Car Registration
Salzman real estate Services is proud to have been a supporter of the Southern Colorado Economic Forum since its inception in 1996 and I will continue to provide you with access to this report quarterly as soon as it is made available to me.
AS WE ENTER DAYLIGHT SAVINGS TIME, SOMETHING TO REMEMBER…
U.S. NEWS & WORLD REPORT NAMES COLORADO SPRINGS ONE OF TOP BEST PLACES TO LIVE
The Gazette, 3.2.16
According to a report this month by U.S. News & World Report, Colorado Springs is the fifth-best place in the U. S. to live and Denver topped the rankings, adding to the appeal of Colorado living that those of us fortunate enough to live here already experience on a daily basis.
The magazine’s profile of our City said, “This Colorado city, which is filled with natural wonders of its own, has the additional allure of proximity to ski resorts like Aspen and Vail without the associated steep costs of living and high levels of traffic.”
To come up with it’s list, the magazine analyzed 100 cities in the U.S. to find the best places to live based on quality of life and the job market in each city, as well as the value of living there and people’s desire to live there. Colorado Springs ranked fifth with an overall score of 7.4 out of 10.
THINKING OF BUYING A HOME? WHAT ARE YOU WAITING FOR?
Keeping Current Matters, 3.10.16
With the spring buying season approaching, many of you may be wondering if you should wait before entering the housing market. If the reasons I gave up in previous articles isn’t enough to convince you otherwise, here are four more reasons to consider.
- Prices will continue to rise.
Home prices are continuing to rise as indicated above and CoreLogic’s Home Price Index predicts that prices will continue to increase at a rate of 5.4% over the next year.
A survey of over 100 economists, investment strategists and housing market analysts by The Home Price Expectation Survey reported that home values are projected to appreciate by more than 3.2% a year for the next 5 years. The “bottom line” in home prices has come and gone and prices will continue to rise. Waiting no longer makes financial sense.
- Mortgage interest rates are projected to increase.
While Freddie Mac’s Primary Mortgage Market Survey indicates that interest rates for a 30-year mortgage have remained below 4%, most experts predict that they will begin to rise over the next 12 months, possibly up almost three-quarters of a percentage point by this time next year. An increase will impact your monthly payment and your housing expense will be more a year from now with higher mortgage rates on top of higher prices.
- Either way you are paying a mortgage.
According to a paper from the Joint Center for Housing Studies at Harvard University:
“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down the principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”
An aside here—according to John Paulson, a billionaire hedge fund manager, those looking for the best possible investment need to look toward home ownership. In an article published in July 2014 he said: “I still think, from an individual perspective, the best-deal investment you can make is to buy a primary residence that you’re the owner-occupier of. Today, financing costs are extraordinarily low. You can get a 30-year mortgage for somewhere around 4 percent. And if you put down, let’s say, 10 percent and the house is up 5 percent, which is the latest data, then you would be up 50 percent on your investment. And you’ve locked in the cost over the next 30 years. And today the cost of owning is somewhat less than the cost of renting. If you rent, the rent goes up every year. But if you buy a 30-year mortgage, the cost is fixed.”
Good advice in 2014 and just as good today!
- It’s time to move on with your life.
The “cost” of a home is determined by two major components: the price of a home and the current mortgage rate. It appears that both are on the rise.
But what if they weren’t? Would you wait? Look at the actual reason you are buying and decide whether it is worth waiting.
Consider all the above factors and if it’s the right time, then do it sooner than later as it could lead to substantial savings over time.
Just a reminder-it’s more important than ever to have “all your ducks in a row” PRIOR to entering the current housing market.
Give me a call and I can help answer any questions you may have BEFORE you enter the housing market—either for the first time or to sell and trade up or purchase for investment reasons. Together we can make your housing dreams a reality.
HOME EQUITY AT PRE-CRISIS THRESHOLD
The Wall Street Journal, 3.11.16
According to a report from the Federal Reserve last Thursday, U.S. households ended 2015 with their home equity at the highest level in a decade, a housing-recovery milestone that could help shield many Americans that were pinched by financial-market volatility early this year.
This report underscores the extent to which the housing crisis is fading from view, with the value of U.S. real estate climbing to $25 trillion, against $9.5 trillion in mortgages, which translates to home equity of over $15 trillion. This report combines both households and nonprofits together, but the vast majority of this real estate is held by households.
“It provides a cushion for these homeowners,” said Frank Nothaft, chief economist of CoreLogic. “Even if they face some setbacks in the stock market and are looking to access some cash without selling at a loss, they could do so with a home equity loan.”
According to CoreLogic, today about 4.4 million homes still have negative equity. By contrast, in 2009, over 12 million homes were underwater.
Good news indeed.
SOUTHERN COLORADO ECONOMIC FORUM LUNCHEON TO FOCUS ON SMALL BUSINESS
A first time event has been added to The Southern Colorado Economic Forum’s yearly agenda. On April 12 at The Pinery on the Hill, a luncheon meeting will feature local and national economic forecasts and presentations on the role and economics of Small Business in the Colorado Springs area and the state.
Hosted by the Forum, which is a part of the UCCS College of Business, and the Pikes Peak Small Business Development Center, the sponsors include Wells Fargo Bank and the Colorado Springs Business Journal.
The keynote speaker will be Alison Felix, vice president and Denver branch executive of the Federal Reserve Bank, who will be joined by Forum director Tatiana Bailey, Aikta Marcoulier, director the small business center, and Kelly Manning, director of the Colorado Small Business Development Center Network and deputy director of the Colorado Office of Economic Development and International Trade.
To get more information and/or register please call 719.667.3803
