HARRY'S BI-WEEKLY UPDATE 4.19.22
April 19, 2022
HARRY’S BI-WEEKLY UPDATE
A Current Look at the Colorado Springs Residential real estate Market
As part of my Special Brand of Customer 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.
IT SEEMS THE ONLY WAY IS UP WHEN IT COMES TO HOME APPRECIATION…AND NOW FOR MORTGAGE INTEREST RATES AS WELL…
As you are aware, home prices are continuing their upward trend with no realistic end in sight until there are more available homes for sale. However, now there’s a wrinkle in the equation, and just in time for the “normally” busy spring buying season.
With mortgage interest rates rising their fastest in 35 years, and now at a more than 10-year high of over 5% as of last Thursday, this can increase a homeowner’s monthly borrowing costs by hundreds of dollars at a time when everything from gasoline to groceries are also increasing.
Most mortgage economists are saying that if this results in a decrease in buyer activity over the next few months, it will only moderately cool the market. According to the National Association of Realtors (NAR), about 25% of existing homes bought in February nationwide were bought with cash. And households that are moving from high-cost areas to more affordable ones might be less affected by rising mortgage rates.
According to a broker in Westminster, a suburb of Denver, “If half our buyers got priced out of the market, we would still have eight buyers for every listing”.
A number of buyers are still actively looking and wanting to buy before interest rates rise any higher. Lawrence Yun, chief economist of NAR recently said, “The early months of the rising rates don’t see much of a change in the buyer intensity, but inevitably there will be a reduction in the buyer pool”. He said even as higher rates slow demand, it can take months for sellers to cut prices as their homes linger on the market.
I’ve been telling you for some time that if you’ve been sitting on the fence, NOW is the time to get the ball rolling. If you are waiting for prices to drop you might be waiting a very long time. And during that time, it’s likely that interest rates will continue to rise.
Experts who have said that the days of 3% mortgage rates are gone are now beginning to wonder if possibly the days of 4% mortgage rates are a thing of the past as well.
The competition for available homes is still high and the equity in your present home is likely higher than you might know, but if you’ve even considered a move, now is the time to find out what your wants, needs and budget requirements dictate for your next home.
That’s where I can help. Together we can develop a plan that could work for your individual family situation, but don’t wait too long. The search isn’t getting much easier even with the higher interest rates and the competition for homes in the Colorado Springs area continues to heat up.
My 50 years in the local arena give me a distinct advantage over many other brokers. I’ve witnessed every cycle possible during that time and know the ins and outs of home buying and selling. My background in Investment Banking, coupled with my expertise in negotiation, go to work in your favor.
Give me a call sooner than later at 719.593.1000 or email me at Harry@HarrySalzman.com and let’s see how we can help make your Residential real estate dreams come true.
MARCH 2022 MONTHLY INDICATORS AND LOCAL MARKET UPDATE ILLUSTRATE OUR LOCAL TRENDS IN DETAIL
Colorado Association of REALTORS® , Pikes Peak REALTORS Service Corp, or it’s PPMLS
These are usually published in the first eNewsletter of the month and were not available at press time two weeks ago, so I am including them here.
Providing greater detail than the above report, this contains information on both El Paso and Teller counties for Residential real estate.
The “Activity Snapshot” for all residential properties in El Paso and Teller counties shows the Year to Date one-year change:
- Sold Listings for All Properties were Up 1.2%
- Median Sales Price for All Properties was Up 15.6%
- Active Listings on All Properties were Up 0.9%
You can click here to read the 16-page Monthly Indicators or click here to get specific information on the geographical are of your choice from the 18-page Local Market Update. It’s a good idea to check out your own area or one that you might be considering to get a good idea of the local pulse. As an example, here is a detailed report on the Colorado Springs area:
MARCH 2022 PPAR STATISTICS LINK
Some readers had trouble opening the link in the last eNewsletter showing the full PPAR report for March 2022. I’ve included it again here in case you missed it. As stated:
Please click here to view the detailed 10-page report, including charts. If you have any questions about the report or to find out how it relates to your individual situation, just give me a call.
THE FUTURE OF HOME PRICE APPRECIATION AND WHAT IT MEANS TO YOU
KeepingCurrentMatters, 4.7.22
Some consumers are wondering how the recent run-up in home prices will affect them and if it will lead to a similar situation to the housing crash 15 years ago.
However, experts continue to say the market is totally different today—just as I’ve been telling you for the past couple of years.
According to Odeta Kushi, Deputy Chief Economist at First American, “…we do need price appreciation to slow today (it is not sustainable over the long run), but high price growth today is supported by fundamentals—short supply, lower rates and demographic demand. And we are in a much different and safer place: better credit quality, low debt-to-income ratio, and tons of equity. Hence, a crash in prices is very unlikely.”
To return to a more realistic market, appreciation does need to slow down. In the latest Home Price Expectation Survey—a survey of a national panel of over 100 economists, real estate experts and investment and market strategists, it forecasts that home prices will continue appreciating over the next five years. Here are the expected year-over-year rates of home price appreciation on the average of all 100+ projections (keep in mind that this is a national forecast, and as you’ve seen in my monthly reports, the Colorado Springs area has shown higher home appreciation than the national average):
- 2022: 9% (my personal forecast for the local market is estimated to be between 10-12% for 2022)
- 2023: 4.74%
- 2034: 3.67%
- 2025: 3.41%
- 2026: 3.57%
What does this mean for you as a buyer? With limited homes available for sale and mortgage rates on the rise, it can still be a challenging market to navigate as a buyer. But buying a new home sooner than later has its benefits—if you wait to buy, you’ll pay more in the future. And if you buy now, you’ll actually be in the position to make future price increases work for you. Once you own the home, the rising home prices will help you build equity, and by extension, your own household wealth will increase.
Here’s an example based on a home purchased in January of this year at $360,000 (the median price nationallyaccording to NAR, rounded up to the nearest $10k). If you factor in the forecast for appreciation from the Home Price Expectation Survey, you could accumulate over $96,000 in household wealth over the next five years:
(Once again, keep in mind this is a national average and the Colorado Springs area will be both higher in price as well as percentage of appreciation)
The key to trying to decide if now is the time to buy is knowing where home prices are heading. With experts saying that prices will continue to climb in the years ahead, although at a more sustainable rate, if you’re ready to buy…NOW is the time.
