Feb.14, 2011

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTAIL real estate MARKET 

 

HOUSING AFFORDABILITY IN COLORADO SPRINGS IS GREAT !!!!

In 2010, home prices for lower-priced homes in Colorado Springs appreciated, but the prices for higher-priced homes remained fairly steady. The good news is that, according to the recently-released NAR report on nationwide residential sales for 2010, Colorado Springs real estate is appreciating faster than the national average.

In the fourth quarter of 2010, the median existing single-family home price rose in 78 out of 152 metropolitan statistical areas. Lawrence Yun, NAR Chief Economist, is encouraged by the trend. “Home sales clearly recovered in the latter part of 2010 and are helping to absorb the inventory, including many distressed properties. Even with foreclosures continuing to enter the inventory pipeline, they’ve been selling well and housing supplies have trended down”, he said. “A recovery to normalcy requires steady trimming of the inventories”. Yun also noted that housing growth and jobs growth feed on each other. When one goes up, so does the other.

To be specific, the report shows that, out of the 152 major metropolitan areas included in the survey, our city showed a significant increase in median home prices. …better than almost any other city in the U.S.

Here are some impressive figures:

             Colorado Springs median home price in 2009 was $189,800

            Colorado Springs median home price in 2010 was $199,600

            The national  median home price in 2010 was $170,600

Translation: Our home prices appreciated more than the national average and, in 2010, they went up 5.2%. That’s outstanding. If you would like to see the complete report, CLICK HERE.

To bring these numbers down to our local market, if you’re a Buyer or a Seller, you should be aware that, in 2010, 82% of Colorado Springs home sales involved homes priced under $299,000. That’s a significant figure.

For Sellers, it means that, if your home is priced over $299,000, you are facing a slow market. There are few Buyers out there, but there are thousands of Sellers in your price range and they are all trying to attract the attention of those few Buyers. Concentrate on making your home outshine your competition and be ready to aggressively negotiate your price.

If your home is priced under $299,000, be aware that there are lots of Buyers out there, but you have lots of competition for their attention. Today’s “savvy” Buyers are looking for “deals”. Again, make your home as attractive as possible and be ready to negotiate your price.

For Buyers, the bottom line is – It’s your market. Even with the recent rise in interest rates, you can make some great deals, regardless of the price range.

Even with the recent rise in interest rates to over 5%, there are wonderful deals still available out there. You should think about buying an investment property.

Call us.

 

SPEAKING OF OUR LOCAL real estate MARKET, LAWRENCE YUN, CHIEF ECONOMIST OF THE NATIONAL ASSOCIATION OF REALTORS WILL DO JUST THAT

On Wednesday, Feb. 16, 2011, the Chief Economist of the National Association of Realtors will speak at the Crowne Plaza Hotel in Colorado Springs, from 9am to 11am and we will be there. Mr. Yun appears frequently on financial news shows and at real estate conferences. USA Today recently listed him among the top 10 economic forecasters.

Mr. Yun will undoubtedly address the outstanding performance of our local real estate market over the past year. We will give you a report on his presentation in next week’s enewsletter.

 

AS RATES RISE, SHOULD THE GOVERNMENT GET OUT OF THE MORTGAGE-BACKING BUSINESS ?

WSJ Fri. Feb 11, 2011 – Rates rise above 5% for the first time since last spring. The latest rate for 30-year, fixed-rate mortgages is 5.05%.

This rate increase reflects positive news: Rates are rising because there are signs that the recovery is strengthening. As the economy gains steam, investors demand higher rates to compensate for an expected uptick in inflation. And, if the economy can generate stronger job and wage growth, higher rates may not be a problem for housing. By at least one measure, housing affordability has returned to its levels before the housing boom collapsed. The run-up has been unusually swift. The national average mortgage rate has jumped to more than 5% from a record low of 4.17% in just three months, according to Freddie Mac data. The rise should kick people who have been sitting on the fence into some immediate action.

In response to these developments, on Feb. 11, 2011, the administration unveiled a plan to wind down mortgage giants Fannie Mae and Freddie Mac. This would result in higher borrowing costs and more limited access to home loans for consumers.

Treasury Secretary Timothy Geitner stated that establishing a new system could take five to seven years. “This is a plan for fundamental reform of the housing market”, Geitner said.

The government took over Fannie Mae and Freddie Mac 2 ½ years ago. So far taxpayers are on the hook for $134 billion, and the bailout is likely to be the most expensive legacy from the 2008 financial crisis. Last year, the two agencies accounted for nine in ten new loans.

The political debate regarding the phase-out of Fannie Mae and Freddie Mac has generated three main options for what would replace the two programs: 

  1. The first option would place the vast majority of the mortgage market in the hands of the private sector, with no government backing.
  2. The second option would also place the mortgage market in the hands of the private sector, but with limited government backstop.
  3. The third option would be to create new, privately-owned companies to buy mortgages from banks and sell them as securities.

The discussions that these options will generate will help the administration build consensus around one option and may help build the case for some kind of continued government backstop for mortgages.

The proposed administration plan also calls for:

  • Gradual increases in minimum down payments to 10%
  • Mortgage-guarantee maximums would reduce to $625,500 from $729,750
  • Banks would be required to hold more capital and establish more conservative underwriting standards that require homeowners to hold more equity in their homes
  • Reduce the role of FHA and increase fees.

The bottom line for the public is that Washington seems to agree the present system doesn’t work very well and it is willing to discuss establishing a new system that would protect the homebuyer, the taxpayers and the economy from another mortgage crisis.

 

HOLD ON, PARDNER ! MAYBE THE GOVERNMENT SHOULDN’T GET OUT OF THE MORTGAGE-BACKING BUSINESS. …AN OPPOSING VIEW

On Feb. 9, 2011, in the NAR blog, “Voices of real estate”, Ron Phipps, 2011 NAR President, posted the following comments:

“Later this week, the Treasury Department will issue a report recommending changes to the structure of Fannie Mae and Freddie Mac.  This is the latest development in a years-long debate over what the government’s role in housing should be.

As REALTORS®, we know better than anyone else just how vital housing is to families and to our nation.

Fact:  For every additional 1,000 home sales, about 500 jobs are added to the economy.  Those are real jobs that give our families, friends and neighbors a chance to work.

Fact:  Every home purchase pumps $60,000 into the economy.

Fact:  Housing accounts for more than 15 percent of the national gross domestic product.

Fact:  Home owners pay 80 to 90 percent of ALL federal income taxes.

We need to change the dialog.   Critics say housing is a drain on federal resources.  We know better.  Housing is the engine that drives our national economy. Eight of the last ten recessions have ended as a result of robust housing markets.  The other two ended as a result of war spending.  The choice is easy.  America needs a healthy housing market to thrive. 

In the days ahead, NAR will be reaching out to Congress and the White House to emphasize the clear connection between housing, jobs and the economy.  Rather than limit support for housing, and the availability of credit, NAR is calling on Congress and the White House to advance policies that will move the housing market back to a healthy 5.5 million sales, where it SHOULD be. 

We will be asking lawmakers to:

  • Preserve the mortgage interest deduction at current levels.
  • Move the credit pendulum to equilibrium, defined by a median credit score of 720.
  • Maintain government backing in the mortgage market as part of GSE Reform.

These three steps would help bring the housing market back to a normal level, possibly generating an additional 1 million home sales and 500,000 jobs.   

As the voice for real estate, we hope that Congress and White House gets the message:  Real Estate is all about jobs.”

Signed,

Ron Phillips, NAR 2011 President

 

O.K., readers. What do you think??

 

MORTGAGE –SHMORTGAGE ….SOME PEOPLE ARE PAYING CASH !!

The Wall Street Journal (Tues. Feb. 8, 2011) reports on an interesting phenomenon that is occurring in real estate markets around the country ….the rise of all-cash deals. In some of the country’s most troubled housing markets, cash-buyers are accounting for more than half of the transactions. (In 2006, all-cash deals represented only 13% of sales).

Obviously, Investors with cash are seeing great opportunities to acquire income properties at low prices. They are figuring that they can refinance later, when the market improves.

For some time now, this “Buy low and Rent” opportunity is something we have been urging our clients to consider. With the rise in foreclosures, the pool of new renters has expanded and occupancy rates have risen.

Call us.

 

GOOD NEWS – LOCAL SALES TAX COLLECTIONS ARE UP AGAIN !!!

The Gazette reports (Friday, Feb. 11, 2011) that Colorado Springs sales tax collections in January rose 2.77%. It was the 15th consecutive month of year-over-year gains. Sales tax collections ended 2010 up 6.07 percent over the year before.

According to Fred Crowley, Chief Economist for the Southern Colorado Economic Forum, this rise in collections is one sign that people are feeling more comfortable with their job status. He also stated, ““Since use tax collections and sales of business equipment are strong, it is clear that businesses are investing in equipment, rather than people”.

The bottom line is that our local economy is recovering from the recession, but slowly.

As we have said so often in previous eNewsletters, our full recovery will depend upon jobs, jobs, jobs, so be sure to vote in the upcoming city elections. Jobs depend upon leadership and leadership starts at the top.

And, please remember, I would be honored to serve as your Broker for all of your residential real estate needs. I want to help you, my reader, make the most prudent and accurate Real Estate business decision.

Also if you know of anyone who desires to buy or sell local real estate, or, who is moving in or out of the Pikes Peak region, remember that, with over 37 years of providing relocation and Real Estate services to clients throughout the country, I am uniquely qualified to assist them with the relocation process, including buying and/or selling their homes on both ends of their move. Please allow me to implement my negotiating skills on your behalf.

Just click on the icon at the top of this email to listen to my latest podcast. ….And, if you would like to learn more about our Job Loss Protection Program, or, about our CyberHomes Complete Market Analysis of a property, please contact us. 

LATEST STATISTICS

Click here for the latest Sales and Listing statistics for the Pikes Peak area

 

JOKE OF THE WEEK

For those of you who remember Henny Youngman, here’s a few of his one-liners that still ring true:

  • real estate people always try to put the best light on everything. One of them tried to sell me a “Robin Hood” house. I asked him what that was and he said, ”It has a Little John”.
  • But, I do have to admit my house is in a very lovely area. It’s two feet from the water ….in any direction.
  • I’ll say one thing for the recession. It’s bringing the generations together. Junior still won’t get a haircut,  …and now I can’t afford one.
  • And a recession brings out the compassion and the deep human feelings within us all. For instance, I now do something with my old clothes that I never did before …I wear them.
  • But, my brother says there’s no recession, if you have the right business in the right place. He owns a carwash in Capistrano.
  • Trying to make a profit today is like being a pickpocket in a nudist colony.
  • I’ll tell you how bad things are getting. Bankruptcy court just applied for an unlisted number.

 And of course, we couldn’t leave out Henny’s classic line

  •  Now, take my wife ….Please   (Just kidding, Dear.)