April 20, 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 CAN BECOME A REALITY, EVEN WITH FINANCIAL SETBACKS OR LIMITED INCOME

The Wall Street Journal, 4.15

While Colorado Springs fared better than a lot of the country, a number of folks still found themselves forced into foreclosure or a short sale during the recession because of negative home equity or loss of income.  With the economy still in recovery, many people are finding that they can again qualify for a mortgage loan. 

Foreclosures and most negative credit events can stay on your credit report for as long as seven years.  Since the majority of the homes were lost to foreclosure between October 2007 and October 2008, many of those events will not show up on current credit reports.  As long as those affected have worked to keep their credit in good standing, borrowing for a home should become easier from here on. 

According to Mark Zandi, chief economist at Moody’s Analytics, “The dark shadow of the foreclosure crisis is finally beginning to fade.  That should be a positive for single-family housing and, by extension, for the broader economy.”

Some previously foreclosed homeowners have also been able to obtain new mortgages without waiting seven years.  The FHA allows borrowers who went through a full foreclosure and have repaired their credit to become eligible for an FHA-insured home loan just three years after a foreclosure is completed and even in as little as one year in rare circumstances.

Fannie Mae and Freddie Mac—which typically guarantee loans that have higher credit quality and lower costs for borrowers than those backed by the FHA—will back loans as little as two years after a short sale under certain circumstances such as a job loss.

The Wall Street Journal recently featured a column about a 30-year-old who is working to become a first-time homeowner.  Even thought he had a full-time position running the technology department of a Catholic high school and teaching classes there, he decided to get a second job at Starbucks in order to save faster for his family’s dream of homeownership.  While this is not an easy situation at present, he’s focused on knowing that eventually owning a home will be a vehicle to provide long-term equity.  It will also likely provide him with deductions that rent paying does not. 

I’ve told you about the new regulations now in effect for first-time homebuyers that require as little as 3% down and the allowance of down payments to come from family members.  These are other vehicles available to those who are finding the ability to move out of their parents’ homes for the first time.  With rents continuing an upward climb and vacancies down, it’s probably a good time to consider all the options available.

It appears that the Federal Reserve is not sold on raising rates in June, which is a plus for those who have not yet taken advantage of the historically low mortgage interest rates.  The raise WILL happen, but probably not quite as soon as we expected, more than likely in September according to predictions from Fannie Mae’s chief economist, Doug Duncan.     

Now is the time to act.  If you or any family member, co-worker or friend has shied away from homeownership due to a previous short sale or foreclosure, looking for a first-time buy, or simply looking for the “right” home to trade up or invest in, please call me at 598.3200 or email me at Harry@HarrySalzman.com and let’s get together to see what we can do to help you realize your residential real estate dreams. 

 

NEW REGULATIONS FOR WATER HEATERS 

American Home Shield 4.15.15

New federal energy efficiency standards went into effect on 4.16.15 for the replacement and manufacturing of water heaters.  I attended a session explaining these regulations and feel it important to share them with you.

Key points of the new standards are:

  • Gas, oil fired, electric, tabletop (low boy) and instant (tank-less) water heaters are included
  • Existing functioning units do not require replacement
  • Existing inventory can be sold and installed
  • 55-gallon and larger gas units will implement condensing technology—impacting cost of unit, installation & new venting requirements.  This may require added electrical supply.  There is a required efficiency gain of about 30 percent.
  • 55-gallon and larger electric units will implement heat pump technology—which will also impact costs.  Efficiency gains of 40 percent plus are required.
  • “Standard” 40-50 gallon units will see moderate price increases.  Technology will remain the same in many instances.  Energy efficiency will largely be achieved through increased insulation.
  • All water heaters are expected to be larger (1” x 3” for most, more for some).
  • Structural modifications may be required for units located in small, tight spaces—crawl spaces, closets, under stairs, etc.

What does this mean to you? 

To begin, with, water heaters are one of the “big 3” when it comes to replacement so this could eventually result in higher costs for homeowners who have not “upgraded” any existing home warranties to provide for this possibility. Today’s 40-gallon water heater costs approximately $1500-$1600.  We have been told that to replace it, a new 40-gallon water heater could cost upwards of $4000.

It will also mean that when selling your home, or buying a new one, home inspectors will be looking at the water heater to specifically determine if it’s up to standards.

For those with a current home warranty, I would recommend you check with your warranty company to see if and how these new regulations affect you and your home.  Better to “be safe than sorry”.

If you are planning to Buy or Sell, I would suggest that you offer or ask for the “upgraded” level of Home Warranty coverage to help cover any unexpected events.  The additional cost, probably less than $50 for the higher coverage, will be a PLUS in both Buying and Selling a home.

 

BUYING V. RENTING?  A SMART DECISION IN MOST CASES

Realtor Mag, 4.13.15

Homeownership tends to be a smarter decision than renting for many Americans according to new research by Realty Trac.  This is particularly true when rental costs are skyrocketing and in many cases are higher than what a mortgage payment might be.

While homeownership is not for everyone, it makes good sense for many.

Lawrence Yun, NAR’s chief economist, says that families with homeownership tend to have a much higher net worth overall than renters.  Homeowners have the benefit from equity and long-term price appreciation.

NAR’s Economists’ Outlook Blog used the chart below to respond to Buyers’ concerns over “I can’t afford to Buy”.

                          

Over 30 years, a homeowner with a 30-year mortgage payment has a paid-off home while a renter has a stack of 360 rental receipts, analysts noted on the Blog.  The Blog also notes that the lifestyle and social benefits to homeownership show better education achievement by children and an increase in community involvement by homeowners. 

Think you or someone you know can’t afford to own a home?  Maybe you should think again, or at least check it out.  Give me a call and let me run the numbers to see if there is a way to turn a renter into a homeowner and help increase their net worth at the same time.

 

5 HOUSING TRENDS TO WATCH NOW

Ris Media, 4.18.15

While Spring tends to be the “perfect time” for Buying and Selling, don’t expect this year to be perfect--especially if you are a Buyer. 

Limited inventory of homes for sale is starting to increase competition among Buyers—with multiple offers on homes—even those in the high sales brackets. 

On the bright side, though, credit standards are looser than a year ago so you might find it a bit easier to obtain a mortgage.

Trending now:

  1. Still Not Enough Homes.   Get ready to compete with other Buyers due to low inventories, which will likely continue.  The situation might worsen when interest rates finally go up, as homeowners may want to hold on to their lower interest rate mortgages. 

 

  1. Possible Uptick in Mortgage Rates.  Probably not going to happen just yet, but Buyers and Sellers need to be prepared for this possibility by early Fall.

 

  1. A Rise In Home Sales.  Home sales of previously owned homes are expected to rise about 8 percent this year, according to Jonathan Smoke, chief economist at realtor.com.  Home prices should also continue to increase, forecasted to go up 5 percent, Smoke added.  New homes should also rise, with the Mortgage Bankers Association (MBA) expecting a jump of 13 percent in sales in 2015.

 

  1. An Increase In Credit Availability.  Credit availability is expected to continue to increase through the Spring, says Mike Fratantoni, chief economist for the MBA.  “I expect that credit availability will continue to slowly improve over the next couple of years….and another beneficial change is that FHA reduced mortgage insurance premiums in time for the Spring season,” he added. 

 

  1. A Rise In High End Homes.  If you are looking for a vacation home or looking for a high end home, the market has heated up fast.  Sales of homes in the $750,000 to $1 million range grew 12.6 percent in February, compared with the previous February, according to NAR.  Baby Boomers and international Buyers are driving this surge, but the trend is also attributed to the threat of higher interest rates later this year.  Some lenders are saying that they tend to get a pickup in business when rates go up a bit because folks are worried they are about to lose the opportunity that’s been prevalent for while.

My advice?  There are still homes available in most price ranges and neighborhoods, although less than there were.  If you are in the market, don’t wait too long.  The above trends are proving realistic and things are sure to tighten up once the rates start rising.

 

MORE SPRING BUYING STRATEGIES

Realtor mag. 3.24.15

Just a few suggestions that will help in the Spring Buying Frenzy:

  1. Step Away From The Computer.  Approximately 90% of home Buyers start their search on the computer, but Buyers should also consider going outside and canvassing their desired neighborhoods.  In today’s situation of low inventory, if you waste too much time the home you want may no longer be on the market.  You will need to be in a position to make a decision quickly.

 

  1. Get To Know The Current housing market.  Every market and neighborhood is different so it’s important to do research on the area where you are thinking of buying.  Knowing market values is important so you will know when the right situation presents itself.  The more educated you are, the better you can make an informed decision.

 

  1. Grab Those Low Mortgage Rate—Before It’s Too Late.  Mortgage rates are still hovering below 4% but it’s not realistic to assume they will stay that way as I mentioned several times earlier.  These low rates can make a difference in the home price-range you desire, so do not delay as time may not be on your side.

 

  1. Create A Dynamic Team.  I cannot over-emphasize making certain you have a competent, knowledgeable real estate Professional by your side.  Before considering any move, it’s important to ensure you have someone working for you who can help you 1) do the necessary research, 2) get you pre-approved for the mortgage lending best for you and 3) who works with a competent home inspector.  With all of this in place, you are ready to make a move the minute you’ve found the “right” property. 

 

  1. Be Prepared For Bidding Wars.  As mentioned earlier, this is a distinct possibility.  With a good team on your side, you will be more aware of the pros and cons of getting into a bidding war.  It’s often possible to “win the battle, but lose the war”, so to speak.  Having a competent real estate Professional on your team can make a big difference in these circumstances, especially when common sense oftentimes give way to desire for what you want.  It’s important to consider all options and your Real Estate Professional can be more objective than you might be in this situation.

What can I add?  Again, while it’s not the “Perfect Spring” for Buyers, having someone like me there for you will make all the difference and help alleviate a lot of the stress. 

 

HARRY’S JOKE OF THE DAY