September 15, 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.

                                

As most of you are aware, I’ve always advocated the importance of home ownership in a person’s financial portfolio.  My background in Investment Banking and 43 years in the real estate arena has consistently shown this to be a correct position in most situations.  For example, the average long- term appreciation during my 43 years in the Colorado Springs market has been 5.7%. You will see that this is even better than the national long-term appreciation projected in the article below. 

There have been a number of articles in recent days highlighting reasons to buy a home, either for personal use or for investment purposes and I’d like to share some of this knowledge with you in this issue. 

With the Federal Reserve scheduled this week to discuss the possibility of the first rate increase in nine years, it bodes well to keep this in mind when making housing decisions.  We’ve seen historically low interest rates for quite some time now but it’s likely they will slowly start to rise in the near future. 

Lenders are now easing their qualifications for obtaining mortgage financing and Fannie and Freddie are making it considerably easier for first time buyers to obtain a loan, by lowering and/or changing down payment and credit requirements.

If you or any family members have been waiting to make a home buying and/or selling decision, it would behoove you to wait no longer.  Based on your individual wants, needs and budget, I can help steer you in the right direction when it comes to all your real estate transactions and refer you to competent lenders that can best handle your mortgage needs. 

Just give me a call at 598.3200 or email me at Harry@HarrySalzman.com today and let’s see what we can do for you.

 

THINKING OF BUYING A HOME?  HERE’S 3 QUESTIONS FOR YOU.

Keeping Current Matters, 9.10.15

Friends and family are often full of great advice when it comes to home ownership, but in reality they may not be fully aware of your individual needs or know what’s going on in the local real estate market.  That’s why it’s essential to use a competent, knowledgeable Real Estate Broker in any housing transaction to be assured of an honest assessment of your personal situation.

Here are three great questions to ask yourself when considering purchasing a new home.

  1. Why am I buying a home in the first place?

This is by far the most important question.  Forgetting finances, why did you begin to consider purchasing a new home?  A study by the “Joint Center for Housing Studies” at Harvard University reveals that the four major reasons people buy a home have nothing to do with money:

  • A good place to raise children and for them to get a good education
  • A place where you and your family feel safe
  • More space for you and your family
  • Control of that space

The non-financial benefits of buying a home should be the biggest reason you decide to purchase or not.

  1. Where are home values headed?

The “Home Price Expectation Survey,” published quarterly by Pulsenomics, surveys a nationwide panel of over 100 economists, real estate experts and investment and market strategists about where prices are headed over the next five years.  Those projections are then averaged into a single number.

Here are the projections from the recent 3rd Quarter 2015 Survey:

  • Home values will appreciate by 4.1% in 2015.
  • The cumulative appreciation will be 18.1% by 2019.
  • Even the experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of over 10.5% by 2019.

The chart below was made using these predictions:

                   

Assuming the experts are right, if you were to purchase a home by January 2016 for $250,000, that home would appreciate by over $34,000 over the next four years. 

As I’ve told you time and again, homeownership is one of the best ways to help build your family’s wealth and this is a perfect illustration of that.

  1. Where are the mortgage interest rates headed?

As a buyer, you must be concerned about more than just home prices.  The “long term” cost of a home can be highly impacted by an increase in mortgage rates.

The Mortgage Bankers Association , the National Association of Realtors (NAR) and Freddie Mac have all projected that mortgage interest rates will increase by approximately one full percentage point over the next 12 months, as illustrated in the chart below:

               

Bottom line?

Once you and your family have decided for certain that it’s time to buy or sell and trade up, answering these questions will be of great help. 

Any further questions you may have in consideration of your particular situation, please call me and I’ll be happy to provide you with the best answers available.

 

AND IN THE SAME VEIN…HOMEOWNERSHIP IS THE BEST WAY TO BUILD WEALTH

Keeping Current Matters, 8.31.15

Along with the strong recovery in sales and prices, the housing market has increased in the confidence of consumers and experts as an investment, as was also illustrated in the previous charts.  A New York Times editorial entitled “Homeownership and Wealth Creation” explains:        

“Homeownership long as been central to Americans’ ability to amass wealth; even with the substantial decline in wealth after the housing bust, the net worth of homeowners over time has significantly outpaced that of renters, who tend as a group to accumulate little if any wealth.”

Facts in this editorial were right on track with the research done by the Federal Reserve in their Survey of Consumer Finances.  That study found that the average net worth of a homeowner ($194,500) is 36x greater than that of a renter ($5,400).

The NAR expanded on that research and projected that by the end of 2015 the average homeowner will have nearly 41x the net worth of a renter.  Their findings are shown here:

                         

It has been suggested that one reason for this large discrepancy in net worth is the “forced savings” created by having a mortgage payment.  The Times explained it as follows:

“Homeownership require potential buyers to save for a down payment, and forces them to continue to save by paying down a portion of the mortgage principal each month.”

“Even in instances where renters have excess cash, saving a substantial amount is difficult without a near-term goal, like a down payment.  It is also difficult to systematically invest each month in stocks, bonds or other assets without being compelled to do so.”

“As a means to building wealth, there is no practical substitute for homeownership.”

 

HOWEVER...YOUNG BUYERS ARE BEING SQUEEZED OUT OF THE MARKET

The Wall Street Journal, 9.14.15, RealtorMag, 9.10.15

Even with credit and down payment qualifications easing, first-time buyers are having a difficult time in getting into homeownership.

Student loan debt is at an all time high and delinquencies are common.  Yesterday’s Wall Street Journal reported that according to Federal data released last week, “more than half of students at 347 colleges and vocational schools defaulted on their loans or failed to pay down even a single dollar of their debt after seven years.”

That burden, along with increasing home prices, find young potential buyers being kept out of the housing market and forced to rent or live at home with their families. 

According to Lawrence Yun, chief economist for NAR, “One can say that we are having a nationwide housing cost problem” as housing’s affordability remains a barrier for first-time buyers wanting to enter the market.

The latest “Existing Homes Sales Report” shows that the share of first-time buyers was 28 percent in July, down from 30 percent in June. 

“Home prices are rising anywhere from 3-4 times as fast as people’s income,” says Yun.  “Rents are double the income growth rate.  This is unhealthy, unsustainable.  The only way to tame the housing costs is to have more supply.  So, maybe relaxing the regulations on small-size banks so they can lend to homebuilders is an answer.  We have a mismatch, a dramatic shortage, of owner-occupant homes that are available for sale.”

Locally, I am finding that with new down payment and mortgage qualification requirements along with a slight increase in listings, there are definite possibilities for first-time buyers.  Rental rates are going sky high and you have to pay a mortgage whether or not it’s yours or someone else’s.  It’s certainly worth exploring whether the possibility of homeownership exists for first-time buyers.  Why not give me a call at 598.3200 and let’s see if we can make that happen. 

As an aside to those looking for investment property—there are a lot of folks who are in the rental market due to situations like those mentioned above.  Rental rates are rising sharply and the equity in your investment home will continue to increase over time.  It’s a “win-win” for those with interest in this area and now is a great time to get into the market.

 

SOUTHERN COLORADO ECONOMIC FORUM SET FOR OCTOBER 23RD

                                            

The 19th Annual Southern Colorado Economic Forum is being held at The Broadmoor next month and it’s sure to be another sell-out event. 

The Keynote Speaker is Brian Beaulieu, CEO of ITR Economics & Chief Economist for Vistage International.  Following his speech, Tatiana Bailey, Forum Director, will address the” Economic Conditions and Outlook for the Pikes Peak Region”.  There will be an audience question and answer with the economists.

A Panel Discussion concerning “Workforce and the Skills Gap” will also be followed by questions and answers of the panelists.

This is a “must” event for anyone in the business community in the Pikes Peak region and Salzman real estate Services, LTD is proud to have been a sponsor since the Forum’s inception.  

For more information and/or to register, please go to:  www.SouthernColoradoEconomicForum.com

I hope to see you there.

 

HAPPY NEW YEAR…

The Jewish Year 5776 is just starting and I’d like to take a moment to wish all my Jewish readers a heartfelt “L’Shana Tova” (Happy New Year). 

To all my readers, Jewish or not, I wish you a year filled with much good health, happiness, success, love and most importantly...Peace. 

 

HARRY’S JOKES OF THE DAY