Harry's Bi-Weekly Update 1.12.15

Monday, January 12, 2015

by Harry Salzman

January 12, 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 NEW YEAR IS STARTING OFF VERY POSITIVE FOR THE housing market

I hope everyone had a happy, healthy holiday season. From everything I’ve been reading it appears that the housing market is off to a great start. And as you will read, 2014 ended on a strong not and predictions for 2015 remain very positive. This is great news for both Buyers and Sellers, and I’m happy to share some of the news with you. As always, I’ll keep you abreast of all the happenings in real estate during 2015, both on local and national fronts. So let’s get started.

DECEMBER LOCAL STATISTICS ARE POSITIVE

Statistics provided by the Pikes Peak REALTORS Service Corp, or it’s PPMLS

Despite the unusually cold weather and the busy holiday season, December still proved that the housing recovery is continuing to remain strong in our area. The total number of Single Family/Patio Homes sold in the Pikes Peak area during 2014 was 11,197 for a 3.8% increase year over year from 2013. This represents the highest number of single family/patio homes sold since 2006—before the recession. Sales of Condo/Townhomes were 1,474 in 2014, for a 6.6% increase from 2013.

These numbers indicate that the combination of historically low mortgage rates and homes priced to sell are helping fuel this growth. The number of listings in both categories continues to dwindle as many renters are finding a way to become homeowners, some for the first time.

Here are some highlights from the monthly PPAR report. Please click here to view the detailed 18-pages which includes both the monthly and annual reports. If you have any questions, please give me a call.

In comparing December 2014 to December 2013 in PPAR:

Single Family/Patio Homes:

New Listings are 676, Down 9.1%
Number of Sales are 873, Up 28.4%
Average Sales Price is $255,652, Up 7.3%
Median Sales Price is $225,000, Up 6.5%
Total Active Listings are 2,599, Down 19.4%

Condo/Townhomes:

New Listings are 98, Up 18.1%
Number of Sales are 125, Up 26.3%
Average Sales Price is $176,950, Up 18.8%
Median Sales Price is $150,000, Up 15.4%
Total Active Listings are 303, Down 12.9%

SPRINGS AREA MONTHLY SINGLE FAMILY/PATIO HOME SALES ANALYSIS*

Median Sales Price Average Sales Price

Black Forest $405,000 $487,052

Briargate $290,000 $312,823

Central $184,000 $208,810

East $187,000 $193,603

Fountain Valley: $201,249 $204,179

Manitou Springs: $227,500 $227,500

Marksheffel: $255,000 $273,664

Northeast: $207,750 $227,881

Northgate: $352,706 $360,356

Northwest: $305,000 $333,365

Old Colorado City: $207,500 $235,432

Powers: $228,750 $232,899

Southwest: $230,000 $285,060

Tri-Lakes: $348,000 $400,549

West: $179,750 $212,500

*Statistics provided by the Pikes Peak REALTORS Services Corp,or its PPMLS.

2014: A YEAR OF JOBS, RECORD-LOW INTEREST AND TIGHT INVENTORY SETS THE STAGE FOR 2015 GROWTH

RisMedia,, 12.24.14, Realtor.com, 12.24.14, Relator Mag,, 12.24.14, 1.8.15, & 1.9.15

Realtor.com’s “Top 10 real estate Trends of 2014” nationally:

Improving economic fundamental. Strong consumer confidence returning with higher GDP (Gross Domestic Product) and an influx of new jobs during the latter half of the year.

Historically low mortgage rates continue. Mortgage rates declined despite the end of quantitative easing.

Deceleration of abnormal home price gains or return to normal price. After several years of abnormally high levels of home price appreciation, price increases in 2014 moderated and we are now experiencing increases consistent with long-term historical performance.

Decline of distressed sales. Foreclosures and short sales declined throughout the year and while total home sales decreased in 2014, normal (non-distressed) home sales increased over 2013.

End of the era of major investors active in purchases. Large scale purchase activity by major investors declined as the number of distressed properties dropped. This enabled more room for traditional first-time home buyers.

And, “Factors Holding Back Recovery”:

Tight credit standards and limited mortgage availability. Despite historically low rates, many households were prevented from capitalizing on mortgage access due to new lending and qualification regulations that took effect in January 2014.

Tight supply of inventory. While total inventories increased as the year progressed, supply did not outpace demand. Monthly supply of new homes and existing homes remained beneath normal levels and days on the market was down year over year.

Depressed levels of first-time buyers. The share of first-time buyers fell to the lowest level in over twenty years according to NAR. “But the first-time buyer share is showing signs of modest improvement by the year-end,” said Lawrence Yun, NAR Chief Economist. Federal policy actions, such as revised regulations for lenders and new low down-payment programs introduced in December are anticipated to have a positive impact in 2015.

Record levels of renters and ever-increasing rent prices. Continued decline in home ownership rates resulted in record numbers of renting households. Rent increases became an inflationary concern in 2014, and looking ahead, the pace of these increases are not slowing down.

Lack of recovery in homebuilding and low share of new home sales. Single family starts barely increased in 2014 over 2013. New home prices increased substantially again in 2014, revealing that higher priced product is limiting the demand.

Housing Forecast from NAR: “HOME SALES ONLY GOING UP FROM HERE”

NAR is predicting that existing home sales will likely rise about 7 percent this year, as a strengthening economy and job growth leads to a healthier market.

Lawrence Yun said, “Home prices have risen for the past three years cumulatively about 25 percent, which boosts confidence in the market and traditionally gives current home owners the ability to use their equity buildup as a down payment towards their next home purchase. Furthermore, first-time buyers are expected to slowly return as the economy improves and new mortgage products are made available in the marketplace with low down payments and private mortgage insurance.”

Several “speed bumps” that could still jeopardize the pace of the housing markets recovery include the anticipated rise in mortgage interest rates that are expected this year, Yun added. And the fact that many homeowners have now locked in some of the lowest mortgage rates in history in recent years and may be hesitant to give up their low financing rate to move. Also, lenders are being slow to ease underwriting standards to more normalized levels.

Yun is forecasting a growth in home prices, but at a more moderate pace than seen in recent years. He expects it to moderate between 4 percent and 5 percent growth in 2015.

Realtor.com’s “2015 Housing Forecast: Stage Set for the Return of First-Time Home Buyers”

Among the key developments forecasted is that first time buyers are set to return to the market in 2015. “In 2015, increases in employment opportunities will empower younger buyers to return to the market and fuel the continued housing recovery,” said Jonathan Smoke, chief economist for realtor.com. “If access to credit improves, we could see substantially large numbers of young buyers in the market.”

Realtor.com’s “Top 5 Housing Predictions for 2015”:

Millennials will drive household formation. Households headed by millennials will see significant growth as a reflection of economic gains. They will also drive two-thirds of household formations over the next five years. Additional jobs and household formations will be the two key factors driving first-time home buyer sales.

Existing home sales will increase +8%. Existing home sales will grow as more buyers enter the market motivated by a clear belief that both rates and prices will continue to rise. While the majority of housing activity in 2015 will be driven by baby boomers preparing for retirement, millennials will account for 65 percent of first-time buyer sales.

Home prices will gain +4-5%. Low inventory levels and demand by improved employment opportunities will push home prices up in 2015. While first-time buyers have many economic factors working in their favor, increasing home prices will make it more difficult to get into high priced markets.

Mortgage rates will end the year at 5%. Rates will increase in the middle of 2015, as the Federal Reserve increases its target rate by at least 50 basis points before the end of the year. 30-year fixed-rate mortgages will reach 5 percent by the end of 2015. One year adjustable rate mortgages (ARMs) will rise minimally. While still at historic lows, rate increases will affect housing affordability for first-timers trying to break into the housing market and will be another factor pushing them to less expensive locales.

Home affordability will decrease 5-10%. Affordability will decline in 2015 based on home price appreciation and increasing mortgage interest rates. This decline will be somewhat offset by increasing incomes. When considering historical norms, housing affordability will continue to remain strong next year.

MORTGAGE RATES KICK OFF 2015 AT A 20-MONTH LOW

Borrowing rates moved even lower last week, with the 30-year fixed-rate mortgage averaging 3.73 percent, its lowest average since May 2013.

According to Frank Nothaft, Freddie Mac’s chief economist, “Mortgage rates fell to begin the year as 10-year Treasury yields slid beneath 2 percent for the first time in three months.”

Again, many economists have predicted that mortgage rates will rise sometime this year, with the 30-year fixed-rate mortgage likely reaching the upper 4 percent or 5 percent range by the end of the year.

So, what does all this mean to you? Well, once again, now is the time to sell and trade up or buy for the first time or for investment purposes.

If you’ve been waiting for the holiday season to be over and wondering what 2015 has in store for the real estate Market, my suggestion is to wait no longer. Inventories are not getting any larger which is a plus for Sellers, but could hamper your buying expectations. However, there are always homes available to suit most of a Buyer’s needs and wants. If you are considering a move and wondering what’s available, please give me a call at 598-3200 or email me at Harry@HarrySalzman.com and let’s get the ball rolling. I’ll be happy to help you determine if indeed, the time is “right” for your personal family situation.

FHA LOWERS ITS MORTGAGE COSTS

Realtor.mag, 1.8.15

The Federal Housing Administration is reducing its annual mortgage insurance premiums by 0.5% in a move to “expand responsible lending to creditworthy borrowers,” the While House said in a statement last Wednesday.

FHA also said it would take added steps over the next few months to “cut read tape and clarify lending standards” in reducing mortgage costs for hundreds of thousands of creditworthy borrowers, according to the White House.

This move comes after several calls from industry trade groups, associations and members of Congress urging the agency to lower its insurance premiums, which were increasingly blamed for sidelining thousands of would-be buyers. FHA-backed loans allow buyers to put down as little as 3.5 percent on the purchase price, and they are a major financing resource for first-time buyers.

FHA’s mortgage insurance premiums will be reduced from 1.35 percent to 0.85 percent. The reduction in premiums on mortgages could save an average borrower $1,000 a year on a $200,000 loan, approximately $83 monthly.

This is a big deal for hundreds of thousands of buyers and I will keep abreast of the status on this and let you know as soon as it takes affect. Anyone wishing additional information, please feel free to call me to discuss how it might affect you on a home purchase and loan.

HARRY’S RESOLUTIONS FOR 2015 (Feel free to make them yours)

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