HARRY'S BI-WEEKLY UPDATE 5.18.15
May 18, 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.
COLORADO SPRINGS’ MEDIAN HOME PRICES SHOW HIGHEST INCREASE IN MANY YEARS
NAR 5.15
After reading the most recent “Median Sale Price of Existing Single-Family Homes for Metropolitan Areas”, I could hardly wait to share the exciting news with you. I frankly have been concerned in recent quarters that Colorado Springs wasn’t keeping pace with the rest of the country in terms of increase in Median Sales Prices. I’m happy to now report that in a first quarter 2015 comparison to the same period in 2014, our Median Sales Price is up 9.4%, compared to a 7.4% increase nationally. Wow! We are 2% over the national average in Median Sales Price-that’s better than 27% higher.
Since there are 129,822 single family properties in Colorado Springs (based on the tax bills sent by the Treasurer’s Office for the 2014 tax year), that’s a whole lot of folks who are going to be just as thrilled as me.
To view the 3-page report, showing the results of 174 metropolitan areas, please click here.
The quote at the beginning of the e-Newsletter reminded me of meeting Barbara Corcoran at a relocation Conference a number of years ago. Most of you probably know her from “The Shark Tank”, but I know her as the past owner of one of the largest and most successful real estate companies in the USA. She sold The Corcoran Group in NYC a few years ago.
It is also an absolute description of what’s now taking place in the Pikes Peak region, as well as in many areas of the country. While we didn’t dip quite as low as a number of cities more directly hit by foreclosures, we did see our share of home market value decline during the recession.
Lawrence Yun, NAR chief economist, says after moderating to healthier levels of growth at the end of 2014, prices picked up in several metro areas during the first quarter. “Sales activity to start the year was notably higher than a year ago, as steady hiring and low interest rates encouraged more buyers to enter the market,” he said. “However strong demand without increasing supply led to faster price growth in many markets.”
Some of our local Median Sales Price increase can be attributed to this supply and demand. Like many of our counterparts in the survey, we are experiencing a shortage of homes for sale, most especially in the under $300,000 range. The reasons for this are many. Rental rates are rising, the mortgage interest rates are due to rise in the next quarter, and first-time homebuyers are getting special consideration by FHA, Fannie and Freddie.
Add this to the fact that many are thinking this is their “last chance” to capitalize on present home equity and historically low interest rates and boom—the number of homes for sale drop. And those that are for sale are seeing multiple offers and record low days on the market. Yes, folks, it’s definitely heading toward the Seller’s Market.
This doesn’t necessarily mean that if you’ve been sitting on the fence trying to decide what to do that you’re going to be stuck there. What it does mean is that now is the time for action if you still want to take advantage of the present circumstances in the real estate Market.
I truly believe that the American Dream of homeownership can be realized in most situations. Buyers need to work closely with their Broker to discover all available options, but there are choices available in most every price range and neighborhood.
Sometimes the alternative can be new home construction. Many folks don’t realize the importance of having a real estate Broker with them when looking at new construction. Brokers are familiar with the ins and outs of new home purchasing and financing and can bring valuable assistance to the process. If this is an option for you, please give me a call BEFORE you begin the new home search so that I can save you a lot of time and stress in the long run.
If you or a family member are looking to sell and trade up, or buy for the first time or investment purposes, please call me at 598.3200 or email me at Harry@HarrySalzman.com and let’s get the ball rolling. Time is NOT on your side, but the good thing is that it hasn’t yet run out. Let’s run the numbers and see what we can find that fits your individual needs, wants and budget.
NEW SALZMAN real estate SERVICES WEBSITE IS UP AND RUNNING
More good news. Our website, www.SalzmanRealEstateServices.com , has been totally revamped and is waiting for you to visit. It’s now interactive, both on the computer and mobile devices. You can look up home prices by area, have access to MLS listings and sign up for Listing Alerts for properties you might be interested in, and even read our bi-weekly e-Newsletter if you missed it.
We are constantly trying to make it as simple as possible for you to buy and sell your home and this is just another feature that contributes to that goal. Check back frequently as it is constantly being updated.
30-YEAR MORTGAGE RATE RISES FOR THIRD CONSECUTIVE WEEK
Realtor Mag, 5.16.15
Mortgage rates on 30-year fixed-rate loans have risen to a 2-month high of 3.85% and are nearing the highest level for 2015, according to Freddie Mac in its weekly mortgage market survey.
While rates in the 30-year and 15-year fixed-rate, as well as the 1-year ARM categories rose, the 5-year hybrid adjustable-rate dropped just a slight bit. All of these, except for the 1-year ARMs are still lower than a year ago.
What does this mean? Mortgage rates are STILL historically low despite starting to rise. No one knows what the Federal Reserve is going to do at the June meeting, but most economists are saying that by year end the mortgage interest rates WILL rise in accordance with a rate hike by the Fed.
I don’t have a crystal ball, so the best advice I can give you is to ACT NOW if you’ve been waiting. The rates we’ve seen for the last few years are going to end…it’s just a matter of when.
FOUR FACTORS THAT AFFECT HOME PRICES
Rismedia, 5.14.15
Housing is on a steady path to recovery as I’ve just mentioned and home prices nationally have risen approximately 20% in the last three years, according to the Federal Housing Finance Agency (FHFA) and Standard & Poor’s (S & P) Case-Shiller house price indices—and both consumer and industry professionals expect this upward trend to continue through 2015.
The anticipated increase is the result of intersecting economic factors that make up the big picture that is today’s housing market.
What’s impacting prices now?
- Wages and inflation. A recent study by RealtyTrac illustrates a disconnect between home price growth and wage growth, despite the improved economy. Between 2012 and 2014 home prices increased by 17% while wages increased only 1.3%--a 13 to 1 disparity. Also, home prices continue to outpace inflation rates according to S & P, growing twice as fast in 2014.
According to Nobel Laureate Robert Shiller, inflation rates likely affect home prices only indirectly. Because pay increases often boost perceptions of buying power, inflation may have a greater impact on consumer confidence, which, in turn, could also boost housing activity.
- Interest Rates and Inventory. Interest rates do tend to be influenced by inflation rates. Mark Palim, Fannie Mae V.P., Economic & Strategic Research Group, says that while it’s reasonable to assume rising mortgage-interest rates equal falling house prices, there’s little evidence of a casual relationship between the two. In fact, higher mortgage rates have a tendency to predicate a decrease in purchases rather than a dip in prices.
Interest rates DO play a role in overall affordability. Today’s rates have significantly accelerated demand in many markets.
“The biggest factor in price gains has been the current low interest rates spurring demand,” says Gabe Sanders of BlueWater real estate in Stuart, FL. “And our low inventory, which makes buyers willing to spend more, since they can’t find enough available in lower-priced properties.”
In Sanders’ market, prices on the lower end have risen much more than those of mid-range, similar to those price increases in the Pikes Peak area. This demonstrates what’s being experienced nationwide—escalating prices, due to a shortage of affordable listings—which have adversely tipped the scale, especially for first-time homebuyers.
The solution? According to Lawrence Yun, new construction gains are essential to counter the lack of inventory and rise in prices. He says that post-crash, single-family construction has been slow to pick up steam, primarily because of construction costs that fail to meet buyer expectations.
- Demographics. Generational shifts have historically affected demand and caused price increases in the housing market. Today this is due to baby boomers and millenials, although some of the latter have been priced out of the market due to statistically lower incomes and sluggish wage and job growth. Too few first-time buyers are also hurting those seeking to sell and trade up or relocate.
In some areas, such as Beverly Hills, international buyers are driving up prices to an all time high due to the area’s high-end status and temperate climate. Hint to Pikes Peak area homeowners—let’s not tell them about all the wonderful reasons they might want to relocate here!
- Oil Prices. Home prices in the near future could be affected by another distinct market trend. With the decline in oil prices, markets with oil economies may see home prices drop at the end of the year into 2016, according to a report by Trulia. On the other hand, non oil-producing markets, may see a boost in prices. These findings are similar to oil and home price fluctuations since the 1980’s.
While many factors go into the home pricing scenario, these large-scale influencers play a predominant role. Home prices in the Pikes Peak area are affected by decisions of the Department of Defense (DOD) and other factors that might not affect the country in general.
As I’ve said time and again, there is a housing solution for most all who are looking. That’s why it is so important to find a knowledgeable, competent real estate Professional to help you navigate through the home Buying and Selling waters.
We do the homework, know the area and can help you price your current home right. Too high won’t get potential buyers, and too low will leave money on the table—neither one a good option. And most importantly, we work for you. Your goals become ours and since we are not as emotionally involved, we can help keep you on track when you possibly find yourself in a bidding war when buying a home. “Winning the battle but losing the war” is NOT the outcome a good real estate Professional advocates for you.
FIVE MISTAKES PEOPLE MAKE WHEN SELLING A HOME
Cheatsheet.com 4.13.15, Realtor mag, 4.13.15
A survey by the NAR found that 83% of people view their home as a good financial investment. Not only is it a good investment, but it’s also filled with tons of personal memories since the average homeowner has lived in his or her home for a decade or more. Therefore, when it’s time to sell, no matter the reason, it’s easy to become more than a little emotional. Another reason to consult a knowledgeable, competent real estate Professional.
Letting emotions, rather than knowledge, drive home selling decisions can make it difficult to find a buyer or force you into accepting a lower price than you might like.
The best news is that the market is tight and it’s a Seller’s Market at the moment. That’s pushing up prices and the NAR says that “the typical seller receives 97% of his final asking price and the home was on the market for about a month.”
That doesn’t mean every home sells quickly or every seller gets the price they wanted, but the chances are much better if you avoid these five mistakes when listing your home.
- Not being realistic about your home’s value. What you think your home is worth and what you can actually sell it for are often two very different numbers. Unfortunately nobody cares what you paid for it nor what you put into it. All that matters is what you can realistically sell it for today.
Even in a Seller’s Market you need to be careful to price your home realistically. Properties that are overpriced at the outset tend to eventually sell at a lower price than they would if they had been appropriately priced in the first place.
Choose a price based on factors like comparables and appraised value. If you’re not getting any interest, adjust your strategy. According to an article by a Realtor in The Washington Post, “no offers within a 30-day period means the price is too high”.
- Not making your home looks its best. Simply from watching HGTV and the like, we now know that good staging and curb appeal help to sell homes. “At a minimum, homeowners should conduct a thorough cleaning, haul out clutter, make sure the home is well-lit and fix any major aesthetic issues,” said Chris Polychron, President of NAR, in a statement about the value of home staging. Simply repainting with neutral colors, sprucing up landscaping or purchasing new furniture can help. According to the real estate Staging Association, “Overall, professionally staged homes can sell five to seven times faster than non-staged homes”.
- Refusing to negotiate. When setting a fair and reasonable price for your home you should build in some “wiggle room”, especially if you need to sell quickly. Many buyers want to feel they are getting the best deal on what is probably the biggest purchase of their lives. Therefore, most will make an offer considerably below your asking price, particularly if they think it’s a buyer’s market.
You can make your buyers happy while also getting the price you need by being willing to accept slightly less than asking price for your home. Alternately, you might agree to concessions like paying the closing costs, throwing in extra appliances or making certain repairs to the property in order to sweeten the deal. An experienced Broker like me can help you negotiate the tricky dance of getting the price you want without scaring off a potential buyer.
- Hiding the truth about your home. Trying to cover up or hide problems with the home from potential buyers is not a good idea. Serious flaws, like foundation problems, leaky roofs, or mold, could come to haunt you later. If you aren’t upfront about the problems at the start, the buyer will likely find them out during the home inspection. This could result in the buyer withdrawing his offer or asking you to fix the problem. If the issue is serious enough and isn’t discovered until after the sale, this could result in costly litigation.
Zillow, the real estate website, recommends being upfront with both your listing Broker and your buyer about any potential issues with your home. You can then price the home accordingly and document the problems you’re aware of and have the buyer sign off on them to avoid legal issues later.
- Not having a backup plan. In a perfect world, you sell your current home and buy a new one without any difficulty. In reality, that’s not always the case, especially in a Seller’s Market. Smart sellers have contingency plans in place to avoid either getting stuck with two mortgages at once or not having a place to live, or to protect them if a deal falls through.
You may want to be prepared to find temporary housing, like a rental or staying with family if your home sells too quickly. If you must move before selling your current home, make sure you’ve budgeted enough to afford carrying the cost of the old home. And lastly, if there are multiple people interested in your home, you may be able to accept backup offers, which involve agreeing to sell to a second buyer if the first one backs out.
Planning ahead can most certainly help when it comes to selling your home. Today’s market, with faster turnaround times, makes it even more crucial that you have a good idea of your next move and be ready to carry though on it. A little forethought can save you a lot of potential headaches down the stretch.
SKY SOX TICKETS ARE YOURS FOR THE ASKING
Just a reminder that baseball season is in full swing and Salzman real estate Services has four first row seats, right behind the Sky Sox dugout. These are available for free on a first-come, first served basis. They go quickly, so please call 598.3200 and let me know what game you’d like tickets for and I will put them aside for you to pickup prior to the game.
HARRY’S JOKES OF THE DAY
A real-estate agent, had difficulty getting a listing from a customer whose theory was that "there is no substitute for experience." After he asked her a third time how many years she had been in the business, she told him: "Sir, there is a little-known historical fact that Moses brought three tablets down from the mountain-two were the Ten Commandments and the other was my real-estate license!" She got the listing.
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A broker was dismayed when a brand new real estate office much like his own opened up next door and erected a huge sign which read 'BEST AGENTS.'
He was horrified when another competitor opened up on his right, and announced its arrival with an even larger sign, reading 'LOWEST COMMISSIONS.'
The broker panicked, until he got an idea. He put the biggest sign of all over his own real estate office. It read: 'MAIN ENTRANCE'.
