Real Estate Information

June 14, 2010

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET 

MORTGAGE RATES HIT LOW FOR YEAR

Rates on 30-year fixed mortgages fell this week to the lowest level of the year and were barely shy of the all-time low. Mortgage finance company Freddie Mac says the average rate sank to 4.72 percent, down from 4.79 percent last week. It was just above the record of 4.71 set last December.

The average rate on a 15-year fixed-rate mortgage hit 4.17 percent, down from 4.2 percent last week and the lowest on records dating back to August 1991.

Though mortgage rates are at attractive levels, the housing market hasn’t benefited. The number of customers applying for a mortgage to purchase a property fell to the lowest level in 13 years last week and was down 35 percent from a month ago, according to the Mortgage Bankers Association. That’s a sign the market is struggling without a tax credit of up to $8,000 for first-time buyers, which expired at the end of April.

The government has taken massive steps to help the housing market recover. A campaign by the Federal Reserve to reduce borrowing costs for consumers pushed rates down to extraordinarily low levels last year. Rates were expected to rise after the program ended this spring, but have fallen instead over the past two months.

Investors, wary of the European debt crisis and the turbulent stock market, have shifted money into the safety of U.S. Treasury bonds. That has pushed down the interest rate, or yield, on U.S. Treasury debt. Fixed mortgage rates tend to track that yield.

More recently, the latest report on the U.S. employment picture showed that few private-sector jobs are being created. That made investors nervous about the stock market and pushed up bond prices, which pulls down rates.

“Following a relatively weak employment report, bond yields fell this week and mortgage rates followed,” said Frank Nothaft, Freddie Mac’s chief economist.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day. Rates on five-year, adjustable-rate mortgages averaged 3.92 percent, down from 3.94 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 3.91 percent from 3.95 percent. That was the lowest average since May 2004.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount.

The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 a point for 30-year, 15-year and 5-year loans. The average fee for 1-year loans was 0.6 of a point.

Source: Associated Press/AP Online 

NAHB SAYS, “NOW’S THE TIME TO BUY A HOME”

David Crowe, Chief Economist of the National Association of Homebuilders, has made a video explaining why buying a home makes sense. In this video, NAHB Chief Economist David Crowe explains the positive factors for home buyers in today's marketplace. Although the popular home buyer tax credit program has ended, he explains, there are still plenty of good reasons to consider homeownership -- including mortgage rates that are near historic lows, attractive home prices that appear to have stabilized in many markets, and an excellent selection of new and existing homes on the market. Click here to view this video.

And, keep in mind that Mr. Crowe is speaking to a national audience, so, if buying a house is a good idea for anyone in the U.S., it’s an even better idea for anyone in our local area. Our market numbers continue to outpace almost every other market in the country. Call us !!!

HOME REPAIR PROJECTS THAT MAKE SENSE

 If you are planning to remodel or add-on because it will increase your enjoyment of your home, that’s great. However, if your goal is to increase the resale price or marketability of your home, please give us a call to discuss it. It is not fun when you realize that a home repair project you just finished — and spent your savings and time on — either isn't going to save you money or wasn't even necessary to begin with.

Here are some of the more common repair/remodeling projects that we are asked about by our clients: 

• roof change
• deck change (increase size, replace with redwood or synthetic material)
• landscaping
• appliances
• kitchen cabinets
• bathroom cabinets
• bathroom fixtures
• new windows
• new furnace/AC
• fireplace change from wood to gas, etc.
• insulation upgrade
• wallpaper?
• replace formica tops with corian or granite
• upgrade exterior with stucco
• new paint
• new carpeting/floor covering
• adding outbuildings (barn, workshop, etc.)

Some of these projects make sense from a ‘return-on-investment’ standpoint, but some don’t. We will be happy to discuss the benefits and/or disadvantages of your proposed project, from the perspective of our local market.

A good resource for evaluating the ‘return value’ of many remodeling projects is the book, "Green Sense for the Home: Rating the Real Payoff From 50 Green Home Projects" (The Taunton Press; $21.95) by Eric Corey Freed and Kevin Daum. This book examines the issue and helps homeowners determine what projects make financial sense. Covering 16 projects you can do today (changing light bulbs or using less toilet water), 21 you can do tomorrow (adding solar power or installing a whole-house fan) and 13 you can do when building a new home (reclaiming your water and building with reclaimed or recycled materials), the book offers two different and sometimes opposing perspectives on each. An in-depth analysis breaks projects down according to their impact on the environment and, of course, your wallet.

Give us a call and let’s talk about the real market value of your project.

PROPOSED NEW TAX COULD CREATE MORE HARD TIMES FOR real estate

We try to remain ‘apolitical’ in our newsletters, but the following major issue could have a significant effect on everyone’s private property rights and we felt it should be brought to the attention of our readers. The following is excerpted from a June 8, 2010 article byJeffrey D. DeBoer, the President and CEO of The real estate Roundtable.

“Congress is seriously considering raising taxes on real estate at the exact moment that real estate is headed toward recovery. In a desperate search of revenue to pay for new government spending, the House last week passed an “Extender Package” that included a “carried interest” provision that would more than double the tax rate on a broad range of commercial and multi-family real estate owners of all sizes and property types.

real estate is a significant contributor to jobs and gross domestic product. This tax hike is being proposed at perhaps the worst possible time, as the industry and the economy continue to struggle to recover. Property values are down by at least 40 percent; the weak economy continues to hammer rents and occupancy rates in many markets; net operating incomes have fallen by 25-30 percent; and transaction volume is down by some 90 percent.

real estate makes up nearly 50 percent of all partnerships in America. While some will claim carried interest is a loophole, the carried interest tax hike now making its way toward the Senate floor is, more than anything, a tax on real estate partnerships large and small. It is not a tax on hedge funds that tangentially affects real estate; it is a real estate tax hike that tangentially affects hedge, venture capital and private equity.

The proposed increase to carried interest taxation would represent the largest tax increase for real estate in more than 20 years – since the Tax Reform Act of 1986, when property values plunged, pressure increased on savings and loan associations, there were forced government closures and ultimately the taxpayer was stuck paying to reset the system.

According to the IRS, these real estate partnerships hold over $1.5 trillion of commercial real estate assets throughout America, including: rental housing, office buildings, shopping centers, medical facilities, hotels, senior housing and industrial properties. The carried interest tax proposal would change the taxation of all these partnerships – for past and future investments.

This tax increase means fewer jobs to repair and upgrade buildings, when more than 2 million – or 25 percent – of Americans from the construction and building trades are out of work. It means reduced revenues to local governments for teachers, firefighters, roads and safe communities. It is impossible to understand how more than doubling the tax on the decision maker in a real estate partnership, as this proposal would do, will encourage any new business, put anyone back to work in construction, or shore up property values to help dig local budgets out of their deep holes.

In addition to hurting economic recovery and jobs, raising taxes on real estate hurts community banks. By most estimates, over $1 trillion in new equity capital is required to fill the equity gap. Now is not the time to destroy capital formation.

As Elizabeth Warren warns in the February Congressional Oversight Panel Report, today bank losses on commercial real estate loans could reach $300 billion, potentially wiping out "hundreds more community and midsize banks" and drying up the credit needed to restore the economy to health. Approximately $1.4 trillion in U.S. real estate loans will come due between 2010 and 2014, with nearly half of those loans currently "underwater." As defaults, foreclosures and mortgage losses continue to rise, a “significant wave of commercial mortgage defaults would trigger economic damage that could touch the lives of nearly every American.”

This proposal is a tax on real estate that is not only short sighted but is also coming at the worst possible time for the economy, jobs and the banking system. The Senate should reject this ill-conceived proposal.

Now is not the time to hit real estate because it is so important to the economy, jobs and the banking system.”

Our sources indicate that this proposed tax could happen with this congress.

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. 

JOKE OF THE WEEK 

June 7, 2010

HARRY'S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET

THE NATIONAL ASSOCIATION OF REALTORS SAYS THINGS ARE LOOKING UP

Lawrence Yun, NAR Chief Economist, reported last week, "The second round of surging sales from the tax credit extension looks as strong as the original tax credit. Evidently, the tax stimulus, combined with the improved consumer confidence and low mortgage interest rates, are contributing to surging sales. The housing market now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs."

NAR expects a net of 1 million additional jobs in the second half of this year and about 2 million in 2011.

"The Home Buyer tax credit brought close to 1 million additional buyers into the market, which is now helping the trade-up market and has significantly improved the inventory situation. This stabilized home prices more quickly and has preserved about $900 billion in home equity. In turn, that is keeping additional households from going underwater and risking foreclosure." Yun said.

"A big concern surfacing recently is insufficient time to close the deal at the settlement table. Under normal circumstances, two months would be enough time from contract to settlement date," Yun said. "However, the recent housing cycle has brought long delays related to the short sales approval process by banks, and from ongoing appraisal issues. There could be a sizable number of Home Buyers who responded to tax credit incentives, but who may encounter problems meeting the settlement deadline by June 30."

Distressed sales, i.e. short-sales and foreclosures, account for roughly one-third of all transactions and will likely continue to represent a sizable portion for the rest of the year. Why? Because mortgage delinquencies are still very high.

This delay by banks in the settlement process is the very reason we have urged Congress to establish some reasonable deadlines for banks and why NAR has asked Congress to provide flexibility on the deadline for closing.

Surprisingly, housing inventory - despite higher sales activity - has been rising. That is because fresh listings have been rising faster than the existing inventory has been absorbed. One reason for this rise is, apparently, that Homeowners who did not want to sell during the depths of the downturn last year are now putting their homes back on the market. As proof of this, see the numbers listed in our monthly PPAR report, later in this newsletter.

OUR LOCAL real estate MARKET CONTINUES TO CLIMB AND SHOW STRENGTH

This past Thursday, the Pikes Peak Association of Realtors announced figures for May, 2010. Home sales maintained a upward climb, despite the demise of the federal tax credit for Home Buyers which expired April 30, 2010.

Last month, total single-family home sales, including resale and new construction, totaled 888. That represents an increase of 6.7% over the same month last year. Of the 888 sales, 844 were resales, a 7.9% increase over May, 2009.

The median price for all homes sold was $194,450, an increase of 2.8% over May, 2009.

The number of single-family homes on the market as of May 31, 2010 was 5550, an increase of 10.1% over May 31, 2009, an indication that reluctant Sellers are regaining confidence in market pricing and they are putting their homes back on the market. Their confidence is well placed. The statistics show that, of the 888 homes sold last month, the "selling price to listing price" ratio was 97.6%, which means that Sellers received only 2.4% less than their asking prices. .and better yet, "sold" homes were on the market for only 77 days, on average.

We hate to tell Realtors in most other parts of the country how well our local market is doing. They always get so depressed.

MORE GOOD NEWS - BUILDING PERMITS ARE UP !!!

On June 2, 2010, the Pikes Peak Regional Building Department published their monthly report showing the number of new home building permits. In May, 2010, single-family permits in El Paso County totaled 135, an increase of 25% over the108 permits issued in May of 2009. Furthermore, during the first 5 months of 2010, single-family permits showed an increase of 79.6% over 2009 (670 vs. 373).

Those figures represent an increase in single-family building permits for 11 of the past 12 months.  

WSJ SAYS RETAILERS ARE ALSO DOING WELL

Last Friday, the Wall Street Journal published figures showing that the major retailers are also feeling the growth in consumer confidence and loosening their purse-strings. Some of the retail outlets tracked in May showed the following increases over May of 2009:

• Target + 1.3%
• Macy's + 1.4%
• Kohl's +3.5%
• Nordstrom +3.7%
• Costco + 5%
• Saks + 5.8%

Overall, in May, the 28 retailers tracked by Thomson Reuters posted "same store sales growth" of 2.5% over 2009. It looks like we are on our way back to normal.

MORTGAGE RATES - HOW LOW CAN THEY GO ???

We still can't believe it. Last week, we were able to negotiate a mortgage for a transferee coming to Colorado Springs that should make him happy for the next 30 years. How's this for a deal? The Buyer qualified for a VA Jumbo loan. The sales price was $439,900. Down payment on the 30 year fixed-rate mortgage was only $5,725, with no origination fee and no discount points and the rate was locked in at 4.75%. Wow !!! Things can't stay this good forever. Call me .  

THE PIKES PEAK REGION IS THE BEST PLACE TO BUY YOUR HOME

The Colorado Springs Regional Economic Development Corporation is promoting our area nationwide, but especially in those troubled areas of the country where businesses are fleeing from excessively high taxes. These overtaxed businesses are looking to relocate and the CSREDC is "selling" our area as the best place to live and work. We are linking here to their latest promotional piece, "The Top Ten Reasons to Locate Your Company in Colorado Springs and the Pikes Peak Region", to assist them in their efforts to attract businesses, but also to encourage any of our readers who are considering relocating here to buy now, while home prices and mortgage interest rates are low and inventories are high. It's a great place to live !!!   

GREECE AND OIL COULD BE BIG FACTORS IN THE housing market

The domino theory is at work again. If Greece is unable to raise money to pay for government spending, they could go bankrupt. (Hey, hold on, there! You mean countries actually have to pay for the programs their legislators pass. Bummer!!! With our luck, that might even happen here). However, Greece's traditional sources for borrowing are asking if they will ever get their loaned funds back from the Greek treasury. Germany, in particular, is irate that its citizens, who typically retire at a much older age than do Greeks, are being asked to provide pension money for Greek citizens.

If Greece defaults, then German banks will see their capital evaporate. That, in turn, will make it difficult for them to lend to other countries like Portugal or Spain to finance their budget deficits. If these countries also default as a result, then another major credit crisis will hit us. (Ireland would have been on this list of endangered countries, but they decided to reduce their unsustainable government debt by cutting government salaries, furloughing many government employees and convincing its investors that it will repay the loans. Where do those crazy Irish get these strange ideas?)

The bottom line for the U.S. would be that, because of our global linkages, our banks would also take a hit. This would make it very difficult to obtain Jumbo loans and second-home financing. So, if you're thinking of getting a Jumbo loan, or buying a second-home, it would be prudent to make your move right now.

The other source for concern is the oil-spill in the Gulf of Mexico. Obviously, the local economies that will be directly affected by the spill will have a hard time recovering from the effects of the spill. For the rest of us, the price of oil will rise measurably - or more oil will have to be imported. Either way, our cost of living will go up and the recovery from the recession will slow down. Slower economic growth will mean slower job expansion and a higher U.S. budget deficit.

Oh, for the days when worrying about Greece and oil just meant making an appointment to have the car serviced.

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. 

JOKE OF THE WEEK

At a recent computer expo (COMDEX), Bill Gates reportedly compared the computer industry with the auto industry and stated "If GM had kept up with technology like the computer industry has, we would all be driving twenty-five dollar cars that got 1000 mpg."

Recently General Motors addressed this comment by releasing the statement: "Yes, but would you want your car to crash twice a day?"

Not only that, but....

• Every time they repainted the lines on the road you would have to buy a new car.
• Occasionally your car would die on the freeway for no reason, and you would just accept this, restart and drive on.
• Occasionally, executing a maneuver would cause your car to stop and fail and you would have to re-install the engine. For some strange reason, you would accept this too.
• You could only have one person in the car at a time, unless you bought "Car95" or "CarNT". But, then you would have to buy more seats.
• Macintosh would make a car that was powered by the sun, was reliable, five times as fast, twice as easy to drive, but would only run on five percent of the roads.
• The Macintosh car owners would get expensive Microsoft upgrades to their cars, which would make their cars run much slower.
• The oil, gas and alternator warning lights would be replaced by a single "general car default" warning light.
• New seats would force everyone to have the same size butt.
  The airbag system would say "are you sure?" before going off.
• If you were involved in a crash, you would have no idea what happened.

• June 1, 2010

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET

 HOW DOES “THE QUE” SAY WE ARE DOING ??

The “QUE” is the Quarterly Update and Estimates Report that is published by the Southern Colorado Economic Forum of the College of Business and Administration of the University of Colorado at Colorado Springs. Salzman real estate Services, Ltd. has been a supporter of this important and informative project from its inception and we thought some of our readers might want to study the complete First Quarter Report for 2010, so we are linking here to it here.  

One of the significant sections of the latest report is the Business Conditions Index (BCI) which reports on such areas as:

•            Single-family and Townhouse permits
•             New car sales
•             Employment rate
•             Foreclosures
•             Wages and Salaries
•             Sales and use tax collections
•             Airport emplanements

The encouraging “bottom-line” news is that the first quarter of 2010 in El Paso County shows a 15.7% increase in activity over the first quarter of 2009. Further, the report states that “The current flow information suggests the second quarter of 2010 will see modest gains in the BCI”. This re-emphasizes our previous observation that the Colorado Springs area is coming out of the Recession.

The “QUE” also has data derived from another project created by UCCS, namely, the Renewable Energy Survey. This survey contains such questions as:

•             What is your monthly utilities bill?
•             What is your household income?
•             Are you willing to pay higher prices for renewable energy?
•             Do you currently have renewable energy?
•             Do you plan to install renewable energy?
•             Would you pay extra for a residence/business whish uses renewable energy?

These data are reported and grouped by household income, sex, education, etc.

Some of the interesting highlights of the report findings are:

1. Only 21.9% of the respondents were willing to pay higher prices for electricity from   renewable energy.
2. Another 43.6% indicated they might be willing to pay higher prices for electricity from renewable energy.
3. Lower income respondents were more willing than higher income respondents to pay higher prices for electricity from renewable energy. (Whooda thunk it?)
4. Only 6.4% of respondents think solar panels are attractive. (Surprise, surprise)
5. 20.4% of respondents think wind farms are attractive. (Are you kidding?)

To help promote the Southern Colorado Economic Forum, you can receive a free subscription to the “QUE” by sending an email to fcrowley@uccs.edu and entering the word “subscribe” in the Subject line.

As always, the University is always prepared to accept any donation you would care to make.

THE VIEW FROM THE SUMMIT

Last week, the Gazette published some encouraging information about the economy of Colorado Springs. The data, provided by Summit Economics, Llc., compared April 2010 to April 2009 and  showed:

• Initial claims for unemployment went down 22.7%
• Single-family home permits were up 69.3%
• New car and truck registrations were up 14.4%
• Taxable retail sales were up 5.5%
• Hotel occupancy rates were up 56%
• Foreclosure filings were down 11.5%
• The unemployment rate was unchanged at 8.4%, but was still better than most other U.S. cities.

To add to the good news, the most comprehensive quarterly analysis of median selling prices for homes is the National Association of Realtors report. This report analyzes data from 153 of the largest multiple listing services in the nation. The most recent NAR report shows that existing-home sales in April 2010 were 22.8% higher than April of 2009.

And, on a personal note, when we have occasion to attend national meetings and conferences, we have the opportunity to compare our local conditions with other Realtors and relocation experts from around the country. During these discussions, we are consistently impressed with how well Colorado Springs is doing, compared to almost every other part of the U.S. We are the envy of almost everyone else at the meeting.

We are lucky to live here !!!

LET’S TALK ABOUT MORTGAGE RATES

Did you know that last week you could have obtained a 30 year, fixed-rate home mortgage for 4.5%?  The rates have not been this low since Dwight Eisenhower was president. What accounts for these low mortgage rates?

Well, the most commonly cited reason for our current low mortgage rates is the sad state of the European Money Markets. The sinking value of the European markets is pushing global investors to put their money into U.S. Treasury Bonds, which are viewed as a more secure investment. As a result, Treasury yields have fallen, which has taken our mortgage rates down, as well.

How long can this influx of foreign money into Treasury Bonds continue? ..Probably not much longer. Sooner or later, the European crisis will end and the big investors will probably move from bonds into stocks. When that happens, our mortgage rates will begin to rise.

As a prospective Homeowner or Investor, what does all of this mean to you? The bottom line is that you may never have a better opportunity to buy a home or an investment property. Give us a call and let’s discuss it.

WHAT SHOULD YOU LOOK FOR IN A REALTOR?

Today, there are approximately 3400 Realtors in the Pikes Peak area. …and every one of them is willing to put a sign in your front yard. But, if you really want to sell (or buy) a home in the Pikes Peak area as quickly as possible, you should utilize the services of an effective, proven Realtor who knows how to negotiate the best deal possible for you. Here are some of the things you should look for:

•  Does your Realtor know what you should do to your house in order to make it more saleable? There are some “improvements” you might make that would actually reduce the price of your home (e.g. adding a swimming pool). Other improvements might only allow you to recoup the actual price of the improvement, but would make your house more interesting to prospective Buyers. Some improvements will actually net you more money than the improvement cost. A good Realtor can also advise you whether you should actually make improvements, or, adjust your sales contract with ‘allowances”. There are some improvements like painting, that influence Buyers more than a simple ‘allowance’ at closing.
• Does your Realtor know how to negotiate? Many contracts fall apart because of problems that a good Realtor can resolve. Tax implications, aggressive terms, allowances, are all specific items that can be negotiated in order to make the contract more appealing to both parties.
• Does your Realtor have good relationships with lending institutions? All banks are not alike. Just last week, we developed a good working relationship with a bank on the East Coast that will offer mortgage loans to our clients who work in specific professions. These loans require no down payment and waive several normal loan requirements.
• Does your Realtor know neighborhoods? Your Realtor should be able to give you a comprehensive view of the value of surrounding homes, tax histories, improvement histories, school systems, planned developments, etc.
• Does you Realtor have relationships with local suppliers to obtain special pricing? As with many areas of our lives, it’s not a matter of “what you know”, as it is “who you know”. We have special pricing worked out with many local service and product suppliers in order to make the most effective deals for Buyers and Sellers. Some of our ‘preferred pricing’ relationships are with Lowe’s, LazyBoy Furniture, Floorcraft. Sherwin-Williams, Staging companies, etc.   

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. 

JOKE OF THE WEEK

Three contractors are bidding to repair some minor damage to the basement of the White House, one from Texas, one from Boston and one from Chicago. They go with a Secret Service official to examine the basement.

The Boston contractor takes out a tape measure and does some measuring, then works some figures with a pencil. "Well," he says, "I figure the job will run about $100,000: $40,000 for materials, $40,000 for my crew, $10,000 for the union boss and $10,000 profit for me."

The Texas contractor also does some measuring and figuring, and then says “I can do this job for $70,000: $30,000 for materials, $30,000 for my crew and $10,000 profit for me."

The Chicago contractor doesn't measure or figure, but leans over to the Secret Service official and whispers, "$72,000."

The official, incredulous, says, "You didn't even measure like the other guys! How did you come up with your bid?"

The Chicago contractor whispers back, "$1,000 for me, $1,000 for you, and we hire the guy from Texas to fix the basement." 

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET

THE FEDERAL TAX CREDIT FOR HOMEBUYERS INCREASED SALES …BUT, DID IT CHANGE REALITY?

On May 24, 2010, in an article by Kelly Evans, the Wall Street Journal pointed out that the recent federal Homebuyers’ tax credit did, in fact, stimulate the sale of residential real estate. Home sales in April, the last month for the tax credit, were up 5% from March. The Commerce Department was expected to say that new-home sales climbed 3% in April, after a 27% surge in March, to a 423,000 annualized pace.

On the other hand, the Mortgage Bankers Association’s latest weekly index of purchase applications plunged 27% to its lowest level since records began in 1997, despite falling borrowing rates.

Some ‘experts’ are recommending an extension of the federal tax-credit as a means of stimulating more residential home sales. They reference the federal “cash for clunkers” programs as an example of how such federal support money can stimulate activity within an industry. However, as the WSJ points out, there is a significant difference between the recent tax credit for Homebuyers and the ‘cash for clunkers’ program. In the ‘clunkers’ program, the vehicles that were turned in to obtain the “discount” on the purchase of new vehicles were scrapped and thus removed from the national inventory of vehicles. The tax credit for Homebuyers, however, although it did result in the sale of 1 million units, did not ‘scrap’ any houses and, thus, did not reduce the national inventory of houses.  Inventories of existing homes are still elevated and the rising rate of delinquencies and foreclosures ensures a steady stream of supply that will keep downward pressure on prices for some time to come. In other words, the tax credit program, rather than fixing the problem, may have only delayed the inevitable. Speaking of foreclosures and short sales, let’s consider the following.

WHY CALL THEM “SHORT SALES” WHEN IT TAKES SO LONG TO COMPLETE THEM???

During our current housing crisis, the real estate community has tried valiantly to dispose of the foreclosures and short-sale properties that have dragged down property values in most parts of the country. Only by “clearing the table” of these artificially depreciated properties as quickly as possible will real estate prices be able to again reflect their true market value. During this time of readjustment, however, it has become increasingly apparent that the biggest bottleneck in the process of selling-off these properties has been the slow reaction time of many banking institutions that postpone, delay, dither and quibble over valid offers for these properties. The result of this unnecessary delay in the selling process is that, too often, the prospective buyer gives up on the project and chooses to invest his money elsewhere.  

In an attempt to alleviate this problem, we have prepared a Press Release urging some of the more influential business journals throughout the nation to support some simple, sensible, new, federal regulations that would require Mortgage lenders and Realtors to provide a consistent level of service and reaction time to all parties involved in the sale of foreclosures and short sale properties. The basic requirements of these proposed regulations would be that:

• Foreclosure and Short Sale offers must be completely processed within a specified time period (e.g. 45-60 days)
• Lenders must publicize their processing time for new, foreclosure and Short Sale offers
• Lenders must establish a standardized list of procedures, requirements and deadlines for all parties involved in an offer for new, foreclosed or short sale properties
• Lenders must be subject to specific penalties, should they fail to meet the deadlines established in the regulations

We think these reasonable requirements for Lenders would greatly simplify and expedite the disposal of these distressed properties and would help the market to more rapidly re-establish realistic real estate prices throughout the nation.

If you would like to get involved in this effort, please give us a call.

MORTGAGE LOAN RATES FALL BELOW 5%

On My 24, 2010, the Wall Street Journal reported that, contrary to all expectations, home mortgage loan rates have gone down to the lowest levels of the year and back near 50 year lows.

How can this be?? We were told that the Fed’s withdrawal from mortgage-securities purchases would trigger a rise in interest rates. Instead, there seems to be plenty of money available for mortgages and, as a result, rates are falling. As one Realtor stated in the article, “It’s schizophrenic. We all had this expectation of higher interest rates and no more refinances. But I just locked in a 30 year loan with a 4.25% fixed rate …the lowest in my 24 years in the business”.

Where did all this mortgage money come from? Hold on to your hats !!! It’s from foreign investors who are pulling their money out of the shaky European economy and investing it in U.S. Treasury bonds. This massive wave of cash pushed down yields on Treasurys and, thus, pulled down mortgage yields, which are closely pegged to yields on 10 year Treasury notes.

These lower rates could widen the pool of people who qualify for a mortgage, while others may find they qualify for a slightly larger loan. “They can buy the place with the extra bedroom or the swimming pool” says Jay Brinkman, chief economist at the Mortgage Brokers Association.

Keep in mind that nearly half of all borrowers with 30-year conforming fixed-rate mortgages have mortgage rates of 5.75% or higher and could reduce their rates by a full point if they refinanced at current rates, according to investment bank Credit Suisse.

What does this all mean to prospective Homebuyers and Refinancers? Well, a 1% decline in mortgage rates for a $400,000 home can cut $250 off the monthly payment. So, if only 10 million of those 5.75% mortgage owners refinanced, it would pump an additional $2,500,000.000 back into the economy every month. What an ironic solution that would be to our economic problems !!!

Remember, although these rates are the lowest since the 1960s, they won’t last forever. Give us a call to discuss buying or refinancing your home. It might be the best opportunity you will ever have.

AND ANOTHER THING !!!

Colorado Springs continues to look good.

We just returned from the semi-annual meeting of the relocation Directors’ Council in Orlando, FL, where we were heartened to hear that Colorado Springs is in much better shape than most of the other major metropolitan areas in the country. After listening to reports from our colleagues from around the nation, it is obvious that the communities which are recovering the fastest from the recession are the ones which are offering incentives to attract businesses and are encouraging their businesses to offer innovative benefits to consumers. America was built on innovation and it’s time we all start expanding on that concept.

And, have you run into this before?

As we checked into the relocation Directors’ Council meeting, we were handed a FlashDisk containing a compendium of all of the meeting’s seminars. What a great learning aid. It sure was better than trying to take notes at every seminar.

Another example of Innovation in Action

We recently subscribed to Smarter Agent, an innovative new service for Realtors. This program allows us to display listing information on properties within any specified area in the country. It uses GPS to access the MLS listings and mortgage information nationwide and display them on our Blackberry. If our client wants even more detailed information, our CyberHomes program can generate a 10 page report on specific properties. The Smarter Agent program will also enable us to assist our incoming relocation clients with the sale of their homes, regardless of where they are moving from. Ten years ago, nobody dreamed that these innovative programs would be available, and now, I’ve actually turned into a full-fledged “real estate Geek”. Whooda thunk it?  

HERE’S AN OLD CHINESE PROVERB THAT WE JUST MADE UP 

“Unemployed people do not buy houses”.

Therefore, the answer to our present real estate problems is Job Creation. Local, State and Federal governments, please take note !!!

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. 

JOKE OF THE WEEK

15 things we wouldn’t know if it wasn’t for the movies 

1. The ventilation system of any building is the perfect hiding place. No one will ever think of looking for you in there, and you can travel to any other part of the building you want without difficulty.
2. You're very likely to survive any battle in any war unless you make the mistake of showing someone a picture of your sweetheart back home.
3. Should you wish to pass yourself off as a German officer, it is not necessary to speak the language. A German accent will do.
4. A man will show no pain while taking the most ferocious beating but will wince when a woman tries to clean his wounds.
5. If staying in a haunted house, women must investigate any strange noises in their most diaphanous underwear, which is just what they happened to be carrying with them at the time the car broke down.
6. If a large pane of glass is visible, someone will be thrown through it before long.
7. If someone says, "I'll be right back", they won't.
8. Computer monitors never display a cursor on screen but always say:
   Enter Password Now.
9. It is not necessary to say hello or goodbye when beginning or ending phone conversations. And none of your friends have to knock when they come for a visit.
10. Even when driving down a perfectly straight road, it is necessary to turn the steering wheel vigorously from left to right every few moments.
11. All bombs are fitted with electronic timing devices with large red readouts so you know exactly when they're going to go off.
12. A detective can only solve a case once he has been suspended from duty.
13. If you decide to start dancing in the street everyone around you will automatically be able to mirror all the steps you come up with and hear the music in your head.
14. Police departments give their officers personality tests to make sure they are deliberately assigned a partner who is their total opposite.
    
    And last but not least 
15. When they are alone, all foreigners prefer to speak English to each other.

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTAIL real estate MARKET

THE LATEST STATISTICS ON HOME SALES ARE ENCOURAGING

This past week, the National Association of Realtors published their quarterly report on “Median Sales Prices of Existing, Single-Family Homes for Metropolitan Areas”. This report looks at every multiple-listing sale within 152 major metropolitan areas, or, in this case, 5.14 million sales (annually adjusted). These figures show that the Colorado Springs real estate market has outperformed most of the other markets in the country.

The bottom line is that the “Relative Strength” of the Colorado Springs housing economy looks great !!!

Some of the highlights of the report were:

·         Colorado Springs 1^st Quarter 2010 vs. 2009 = +2.7%

·         91 out of 152 national areas showed higher 1^st quarter median sales prices in 2010 vs. 2009

·         29 markets had double-digit increases, 3 were unchanged, while 58 had price declines

·         In the 4^th quarter of 2009, 67 metro areas reported gains, while, in the 3^rd quarter of 2009, only 30 showed gains

·         Distressed homes (which are discounted by 15%) accounted for 36% of total sales

·         National 1^st quarter sales in 2010 were 11.4% over 2009

These figures confirm the fact that many recent Homebuyers were motivated to take advantage of the recently-expired federal tax credit and decided to get off the fence, not only here, but nationwide.

As Lawrence Yun, Chief Economist for NAR recently pointed out,” We have been seeing this flattening of home prices in all areas lately. The tax credit was very effective in drawing down excess inventory, with about 1 million additional sales resulting directly from the stimulus”.   

These numbers demonstrate that the entire nation is seeing this recovery. And, the current prospects for our local investors look even better. Our local sales in April were up 11.9% over 2009. Our average sales prices were up 4.7%. Our median sales prices were up 4.2% and our Active listings were up 2.8% over 2009…. So, what does this mean to you, a Colorado Springs Homeowner, a current or prospective investor , or someone just sitting on the fence? It means that we have more opportunities for you right here in Colorado Springs than they have in any other part of the country.

As we shared with you in previous issues, a monthly comparison of April 30, 2010 compared to April 30, 2009 shows:

·         Local sales are up 11.9%

·         Average sale prices are up 4.7%

·         Median sale prices are up 4.2%

·         Active listings are up 2.8%

With low, 30 year-fixed rates still available (4.875% for owner-occupied, 5.25% – 5.5 % for non-owner occupied) and the ability to reduce these rates even further for 15 year mortgages (typically, .25% - .375% lower), it’s a great time to buy. Give us a call.

COLORADO HAS CALIFORNIA WORRIED

The following article by Jan Norman. staff small-business columnist, was published in the Orange County Register on May 13th, 2010.

“An average of 15 to 20 companies move from other states to Colorado Springs every year and 30% are from Southern California, said Dave White, executive vice president of marketing for the Colorado Springs Regional Economic Development Corp. “ Approximately 60 Southern California companies are currently looking at Colorado Springs for a possible relocation”, he added.

A couple of the most recent California catches are Billet Racing Products that moved from Laguna Niguel in September, and Corinthian Colleges in Santa Ana that just opened an enrollment center in Colorado Springs that will employ 600.

I called White because my recent update of California companies leaving the Golden State included half a dozen that landed in Colorado Springs. Readers demanded to know why, and rightly so.

It was a softball question that White teed it up and crushed it.

‘Every state in America is focusing on California,’ he said. ‘It’s low hanging fruit’ for those assigned to develop their local economies and add jobs.

Remember, he promotes Colorado Springs for a living but, he’s a Southern California transplant and professes to love California and Disneyland. But business is business.

Here are some of his favorite selling points for California firms to move to Colorado Springs :

• California’s top income tax is 10.55%; Colorado’s is 4.63%
• California’s top corporate income tax is 8.84%; Colorado’s is 4.63%  based only on sales within Colorado
• Colorado’s worker’s compensation insurance costs 25% what California businesses pay
• Colorado Spring Utilities’ electricity rate is 4.5 cents per kilowatt hour; Southern California Edison’s is 10 cents
• Colorado Spring’s property tax rate is 0.4% to 0.5% of real value depending on location; Orange County’s is 1% (or more for Mello Roos fees, for example)

‘My wife and I laugh that the only thing cheaper in California is the citrus,’ White said.

Colorado Springs comes looking for companies to lure away from the beaches and sun and Disneyland, he admitted.

‘We do have a campaign. We think Colorado Springs is a good match for companies seeking to relocate. We can’t compete with southern states that throw millions of dollars in incentives and tax breaks at big projects. Our sweet spot is small to mid-sized companies where the owner moves with the company. They’re driven as much by lifestyle as by incentives.’

And the city is getting ready for another California campaign, but White wouldn’t disclose details. (Nevada is preparing another campaign too, but that’s another story.)

Unlike Virginia and Texas, which have been running television commercials in Southern California, and Nevada, which regularly runs newspaper ads and billboards, Colorado Springs tends to send direct mail to company owners.

‘They did fly a plane over Los Angeles on Valentine’s Day pulling a banner that said ‘Colorado Loves LA,’ but that was Metro Denver and the state, not us,’ White said.

Colorado does offer incentives to relocating companies, but they don’t receive them until they create new jobs, White said. For example:

• The state and city may give as much as $5,000 per job plus tax credits.
• The city might rebate the property tax up to $800 per job.
• The legislature just passed an additional $2,500 per job credit against the corporate income tax.

‘We also have asked private entities to provide incentives,’ he added. ‘A country club might waive the membership fee, or the health clubs might give six months free membership. We have a pass to various tourist sites. We don’t have the beaches but we do have Pikes Peak.’

And when business executives come to check out the town, the governor, mayor and civic and business leaders show up to greet them, White added.

Does Arnold do that?” (End of article)

Well we’re sorry, California, but, as you pointed out in your article, business is business. But, you still have Disneyland.

Unfortunately, California is a living example of the fact that you can’t get more eggs by killing the chicken.

Speaking of chickens, we’re not trying to be Chicken Little, dashing around screaming, “The Sky is falling, the Sky is falling”, but we thought that any of our readers who own a house, or are trying to buy or sell a house would be interested in the following article.

A LICENSE REQUIRED FOR YOUR HOUSE ???

If you think the housing market is depressed now, wait until you read the Cap and Trade Bill (H.R. 2454) that has passed the House of Representatives and is now being considered by the Senate. The Bill requires that, beginning one year after enactment of the Cap and Trade Act, you won't be able to sell your home unless you obtain a federal license and retrofit your home to comply with the energy and water efficiency standards of H.R. 2454. This will represent one of the largest tax increases any of us has ever experienced.

The Congressional Budget Office estimates that in just a few years the average cost to every family of four will be $6,800 per year. No one is excluded. 

But wait. This awful bill has many more surprises in it. Probably the worst one is this: A year from now you won't be able to sell a home without the permission of the EPA Administrator. Even pre-fabricated homes ("mobile homes") and commercial buildings are included.

To obtain this permission, you will have to have the energy efficiency of your home measured. (Sect. 202 - Building Retrofit Program). After the government notifies you what your retrofit energy efficiency requirement is, you will be required to make specified modifications to your home under the retrofit provisions of the Act. (Note also that the EPA administrator can set higher standards at any time, even above the automatic energy efficiency increases which are already built into the Act.)

After the initial inspection and retrofit, you will have to get your home measured again and get a license (called a "label" in the Act) which must be posted on your property to show what your efficiency rating is; sort of like the Energy Star efficiency rating label on your refrigerator or air conditioner. If you don't get a high enough rating, you will not be allowed to sell.

Keep in mind that the requirements in the bill have been set low initially so the bill would be able to get through Congress. After passage, however, the Administrator is permitted to set higher standards every year.

The Act also allows the government to give homeowners who meet certain energy efficiency levels a grant of several thousand dollars to comply with the retrofit program requirements. As always, the government will determine who qualifies to receive these grants. Based upon the exemptions allowed in other such government programs, we can expect these grants to be awarded only to those who “don’t have an income of more than $50K per year", or "whose home selling price is not more than $125K". Thus, low income Homeowners will get a tax refund to offset the cost of this new program and, when this happens, the $6,800 estimated cost to the average taxpayer will go even higher, in order to “bail out” those who qualify for the exemption.

Sect. 204 - Building Energy Performance Labeling Program establishes a labeling program that will identify the achieved energy efficiency performance for "at least 90 percent of the residential market within 5 years after the date of the enactment of this Act." The EPA administrator will get $50M each year to enforce the labeling program and the Secretary of the Department of Energy will get an additional $20M each year to help the EPA.

Homeowners will be required to post the BEPL label in a conspicuous location in the home and will not be allowed to sell their home without having this label. And, as with all licensing programs, the Homeowner will probably be required to obtain a new label on a regular basis, possibly every year.

 The government estimates the cost of measuring the energy efficiency of your home should only cost about $200 each time. (When the California auto smog inspections first started, they were projected to  cost only $15. The current price for that program’s inspection and certificate is $50, a 333% increase).

This bill is an absolute type of a “taking away” of private property rights of every homeowner in the U.S. We believe that any type of implementation of this bill will dramatically decrease a Homeowner’s ownership rights. We have been vested with as Americans.

Will this bill help get America back on track? Well, as we pointed out, above, you can’t get more eggs by killing the chicken.

We recommend you call or contact your friends in Washington to vote against this bill.

CHECK OUT the following relating to this new, proposed law; 

HR2454 American Clean Energy & Security Act:   http://www.govtrack.us/congress/bill.xpd?bill=h111-2454

San Francisco Examiner OpEd, May 16, 2010
http://www.sfexaminer.com/opinion/columns/oped_contributors/Cap-and-trade-is-a-license-to-cheat-and-steal-45371937.html

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 38 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. 

JOKE OF THE WEEK

A pollster was working outside the United Nations building in New York. He approached three men: a Texan, a Californian and a New Yorker. "Excuse me." he said. "I would like to ask your opinion on the current meat shortage." The Texan replied, "Excuse me, but what is a shortage?" The Californian asked, "Excuse me, but what is meat?" The New Yorker replied, "What is 'Excuse me'?"

HARRY'S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET

SINGLE-FAMILY PERMITS UP ALMOST 70% FROM '09

 In their May 4, 2010 issue, the Gazette reported that the pace of home construction continued to improve in the Colorado Springs area, while the number of new foreclosure filings eased slightly.

Single-family building permits totaled 127 during April, a nearly 70% increase compared with the same month last year. For the first four months of this year, single-family permits totaled 535, about twice as many as the same period in 2009.

These numbers are significantly lower than those from a few years ago when monthly permits routinely totaled several hundred, but they are getting back on track and should hopefully reach 2000 permits in 2010.

Local Home sales totaled 792 in April of 2010, an increase of 11.9% over April of 2009. Median home prices rose to $187,500, an increase of 4.2% from April of 2009. This marks the sixth straight monthly rise in prices and the tenth straight monthly increase in sales. It is also encouraging to note that the sale prices for these homes averaged 98% of their listed prices.   

The inventory of local homes for sale increased 2.8% in April, however, mortgage rates remain low and the Homebuyers' tax credit will still be available to soldiers returning to Ft. Carson from Iraq and Afghanistan. Foreclosure rates are also declining. All of this is good news for Sellers. The bad news is that many homeowners who were unable to sell their houses last year and who took their homes off the market may re-list this year, thus increasing the competition. In fact, there has been a 2.8% increase in the number of listings since April, 2009.

And, don't forget, even if you're not involved with buying or selling a house, you are deeply impacted by our real estate market. As we pointed out last week, every home sale results in approximately $11,000 in new taxes. So, 2000 building permits results in $22 million income available for schools, police, firefighters, road repairs, etc.  

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. 

AND, BY THE WAY..

Wells Fargo says the recovery is clipping along

In a speech attended by about 400 Colorado Springs bank clients and business leaders at the Antlers Hilton last week, we were encouraged to hear Jim Paulsen, chief investment strategist for Wells Fargo Capital Management predict that "the worst is over". He stated that the U.S. and global economies have been recovering for several quarters and that recovery will grow faster and last longer than the average economic recovery since World War II  

Mr. Paulsen said that recovery will be stronger and more sustainable because the financial market, businesses and consumers prepared for a depression and instead were hit by a less-severe recession.

"Fear of a Depression caused businesses and consumers to stop spending. That resulted in low interest rates, massive federal spending, deep cost-cutting and the hoarding of cash by consumers. All of which are now providing fuel to keep the recovery going" Mr. Paulsen said.

So, it turns out that "Fear" is the antidote for "Greed". Whooda thunk it ??

Homeownership declines, but that's good news for investors

On May 7, 2010, the U.S. Census Bureau and the Department of Commerce reported that the nation's Homeownership rate fell to 67.1% in the first quarter. The rate has not been that low  since the first quarter of 2000. The Homeownership rate reached its peak in 2004, when it was 69.2% for both the second and fourth quarters.

A big factor in this reduction in Homeownership is the increase in Foreclosures and Short sales. As always, "One man's meat is another man's poison". This reduction in Homeownership results in an increase in potential renters looking for high-quality rentals.

Combine the increase in potential renters with the low mortgage interest rates now available for investors (the interest rates for non-occupied properties are now about 5 ¾%) and you have the receipe for a successful real estate investment. Give us a call to discuss this opportunity.  

Risk wanes for real estate price declines

The risk of home-price declines decreased in 93% of the 384 markets tracked at the end of last year by analysts with PMI Mortgage Insurance Co., although half still showed an elevated or high risk of depreciation.

Overall risk of price declines "decreased dramatically" during the final three months of 2009, PMI said, largely because of improvements in affordability, and declining foreclosure starts. Affordability was helped by falling home prices, lower mortgage rates and increasing personal income.

Risky mortgage lending practices and loan products decreased sharply in 2009 "and are hardly present at all in 2010 lending" the report said.

Although Colorado Springs was not one of the surveyed markets, we have consistently been cited as one of the cities most likely to recover quickly from the recession, as opposed to states like Florida and Nevada, which still showed a 90% or greater chance of further price declines, according to the survey.  

That $10,000 kitchen remodel might only get you $3,000 when you sell !!

When preparing to sell your home, remember that upgrading your home does not necessarily require making major "improvements". Be cautious about investing in "improvements" that will not increase the marketability of your home. For example, putting in a swimming pool in Colorado may actually reduce the market value of your home. We have even heard of Sellers who had to fill in their pool, just to get prospective Buyers to look at their property. We can give you a pretty good idea of what your proposed remodeling project will do to the price of your home. Give us a call, before you decide to remodel.

JOKE OF THE WEEK

A blonde, wanting to earn some money, decided to hire herself out as a handyman-type and started canvassing a wealthy neighborhood. She went to the front door of the first house and asked the owner if he had any jobs for her to do.

"Well, you can paint my porch. How much will you charge?"

The blonde said, "How about 50 dollars?" The man agreed and told her that the paint and ladders that she might need were in the garage. The man's wife, inside the house, heard the conversation and said to her husband, "Does she realize that the porch goes all the way around the house?"

The man replied, "She should. She was standing on the porch."

A short time later, the blonde came to the door to collect her money.
"You're finished already?" he asked. "Yes," the blonde answered, "and I had paint left over, so I gave it two coats. "Impressed, the man reached in his pocket for the $50. "And by the way," the blonde added, "that's not a Porch, it's a Ferrari."

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET

HOMEBUYERS' TAX CREDIT - THE IMPETUS FOR A RECOVERY, OR, A FLASH IN THE PAN ??

Last week’s Enewsletter article about how the government benefits from home sales generated a lot of positive feedback and a couple of questions from our readers. One question was, “How much tax money does a home sale generate?”. To answer that question, let’s look at a typical home sale to see where the money goes.

Let’s say that a Homebuilder builds a home and offers it for sale for $300,000. 

The “non-taxable sales items” built into that $300,000 selling price will total around $150,000.  e.g.:

• Lot cost
• Permits
• Utility fees
• School and park fees
• Overhead
• Supervision
• Brokerages costs
• Seller and buyer closing costs
• Etc., etc., etc.

And, oh yeah, profit

That means that around $150,000 of the $300,000 selling price is spent on building materials, which directly generate sales tax revenues of 7.4%, or $11,000. This income alone to the government more than pays for the $8000 Homebuyers’ tax credit, and we haven’t even considered the additional income taxes paid by the carpenters, plumbers, roofers, etc. that worked on the home. All of the income taxes generated by these construction-related jobs more than balance out the tax credit “cost” to the government for resale homes (which do not generate the sales taxes on materials created by new construction).

So, the recent tax credit to Homebuyers should not be seen as money “given away by the government”, but was, in reality, a method for ‘priming the pump’ of economic growth.

Too bad it’s no longer available.

Will the demise of the Homebuyers’ tax credit mark the end of the recent surge in home sales? It’s too early to tell, but it’s no coincidence that most of the title companies are very busy processing contracts that came in right before the deadline on the tax credits. Some experts are also concerned that the traditional “summer vacation” Homebuyers simply moved their normal purchases from June and July to March and April, in order to take advantage of this program.

Time will tell whether the tax credit program actually generated more home sales or, whether it only nudged Buyers into changing the timing of their purchases.  

LENDERS HAVE A PROBLEM – THEY HAVE TOO MUCH MONEY !!!

No, we’re not kidding.  Lenders all over the nation have money to lend, but nobody is asking them for loans. That’s not a hopeful sign for the economy, but it’s a great opportunity for people who are looking to finance a new home. Prospective Buyers are finding that lenders will compete for their business. For example, we recently arranged for a home loan at 4 7/8% with no origination fee and no discount points. An FDIC commercial bank in Florida is now making loans (to Doctors only) with no-down payment, no origination fee, no discount points, for a 6% 30 year fixed or a 5% 5/1 ARM. (It would almost make it worthwhile to go to medical school, just to get one of those loans).

Right now, there seems to be an oversupply of money and an undersupply of Borrowers.  

LANDLORDS ARE SMILING – MAYBE YOU SHOULD JOIN THEM

This past week, the Gazette reported that our local vacancy rate in multi-family residences was down to 6.2%. That’s the lowest vacancy rate since 2001. The article cited the two major factors for this phenomenon, namely, the increase in the number of troops at Fort Carson and the increase in the number of renters who used to be Homeowners, but who have lost their homes to Short Sale or Foreclosure. 

The bottom line for anyone who has ever considered purchasing income property is that our present market looks great for prospective investors. Consider the following factors 

• People who have recently lost their homes are now looking to rent
• These same people are more responsible than typical renters
• Prices for investment property are historically low
• Mortgage interest rates for investment property are historically low
• Inflation is approaching quickly, which means today’s investment property will be worth much more tomorrow

In the past, the industry considered a vacancy rate of 5% to be ‘Fully occupied” (because around 5% of rental units are always in the process of upgrading). Therefore, our present 6.2% vacancy rate is motivating investors to buy even more rental property. Maybe you should consider taking advantage of this opportunity. Give us a call to discuss the possibilities.

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. 

JOKE OF THE WEEK

THE FACTS OF LIFE IN THE real estate BUSINESS

If you are a Realtor,

•  Helping train new agents is training your enemy.
• A new agent will sell the most expensive listing in the office, then say, “Isn’t this fun?” Don’t answer.
• If you show a prospect enough property, he will get his own real estate license.
• If you show enough property, you may not make a sale, but you will need a new car.
• Creative financing is followed by creative litigation.
• Your next prospect will be a family with four children …One with a ball-point pen, one prone to car-sickness, and one who screams all the time. The fourth will be an infant overdue for a change.
• The fussiest buyers have the least money.
• Everyone wants the house that sold yesterday. It was on the market for two years.
• The cat that escaped has a pedigree and is in heat. The sign says, “Don’t let Whiskers out”.
• The house they left on the East Coast was bigger, better and cheaper. The weather is never mentioned.
• The house they left on the West Coast was bigger, better and cheaper. The weather is always mentioned.
• No matter how well you know the property you’re showing, they will ask you something you can’t answer.
• If the house sells quickly, the owner will believe the price was too low.
• If you break a date for a prospect, the prospect will stand you up.
• The friendly dog in the yard, wagging his tail, bites.
• The house down the street sold for more than you can get for the house up the street.
• Your own family will list with another agent, or buy from an owner, probably both.
• Whatever you learn in this escrow will not apply in the next.
• If you say you’re busy, the prospects think you’re making too much money.
• If you say you’re not, they think you’re unsuccessful.
• If your owner re-lists with another agent, he’ll lower the price. Even if he doesn’t, his house sells the next day.

And, if you are a landlord or a property manager,

• Tenants only lock themselves out in the middle of the night... or on Christmas.
• At least one tenant's check will be "lost in the mail" every month.
• A tenant's ability to see dirt and damage is much greater when they move in than when they move out.
• Your best tenants always get job transfers during the worst rental markets.
• The insurance inspector always shows up to take photos of the building as you are putting the evicted tenant’s possessions on the curb.
• Tenants always swear under oath that the window was broken when they moved in.
• If it exists, your tenant will try to flush it down the toilet.
• If it is pouring rain, you can be sure the windows are open at one or more at your units.

But, it’s still a great way to make a living !!!

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET

DOES THE HOMEBUYERS’ TAX CREDIT ‘COST’ THE GOVERNMENT TOO MUCH ???

As we approach the end of the federal tax credit for Homebuyers (April 30 will be the deadline for signing a contract under this program), the explanation given by the government for not extending the program is, “Continuing this program would cost us too much money.”

This glib explanation sounds reasonable to people who don’t understand how the free market economy works. i.e. people who don’t understand who pays taxes and where they get the money to pay them. Let’s look at some of the various types of benefits to the government that are generated by the sale of a home:

1.  Federal income taxes
2. State income taxes
3. Capital gains taxes
4. Local Sales taxes
5. And, last, but certainly not least, JOBS, JOBS, JOBS

The following is a partial list of individuals and companies that typically receive income (and thus become liable for additional tax revenues) whenever someone buys a home:

• The Seller of the home
• The companies that the Seller hires to prepare the home for resale. E.g. the decorator, the stager, the remodeler, the landscaper, etc.
• The companies from whom the people named above purchase their supplies
• The Moving company
• The appliance stores
• The providers of services that the Buyer will hire. E.g. internet, TV, alarm services, etc.
• The Mortgage broker
• The Lender
• The Accountant
• The Realtor.
• Etc., etc., etc.

In other words, because this program produces more tax revenues to local, state and federal governments than it ‘costs’ , the Homebuyers’ tax-credit program should not be looked at as a “loss” to the government, rather, it should be viewed as a method for ‘priming the pump’  for additional tax revenues for all levels of government.

If this way of evaluating the benefits of the Homebuyers’ tax credit seems revolutionary, consider that the state of California has now passed similar tax-credit legislation that offers $10,000 to Homebuyers. Their legislature has recognized that the best way to increase tax revenues is to offer incentives to taxpayers. (Golly. It almost seems like Reagan was right. ..The best way to increase income to the government is to lower taxes. Whooda thunk it ?!!! )

Colorado, take note.   

HERE’S ANOTHER EXAMPLE OF HOW GOVERNMENT CAN STIMULATE THE ECONOMY

During the first week of the Governor’s Energy Office’s new rebate program, more than 22,000 Coloradans signed up to receive energy rebates. The office’s phone lines were overwhelmed on April 19, when the program launched and there are now waiting lists for rebates for dishwashers, refrigerators and tankless water heaters.

The rebates are available for energy-efficient appliances and energy-efficient improvements, such as insulation. Here’s a sample of the available rebates:

• Clothes washer              $75
• Furnaces                       $500
• Hot Water heaters          $200-$300
• Insulation and sealing    Up to $400
• Duct sealing                  Up to $75
• Energy audit                 Up to $100

We encourage our readers to take advantage of these rebates for several reasons. First of all, the result of these home improvements will be that your utilities bills will go down. Secondly, the energy-efficient upgrades to your home will improve the eventual marketability of your home. Prospective Buyers are often persuaded to buy because of low utility bills or a shiny new refrigerator. Keep in mind, however, that, if you are interested in applying for these rebates, be sure you register with the program before you make the purchase. They are not retroactive.

Again, the benefits of this type of program to the state of Colorado in terms of increased tax revenues and jobs are similar to the benefits from the Homebuyers’ tax credit program discussed above. This program was funded by $18 million from the American Recovery and Reinvestment Act

Let’s hope that our legislators are learning the lesson that when they let us have more of our money, their revenues go up.

THE COLORADO SPRINGS ECONOMY, LIKE THE ANNUAL HOT-AIR BALLOON FESTIVAL, IS SINGING, “UP, UP AND AWAY”

On Sunday, April 25, 2010, the Gazette reported the following encouraging data about our local economy:

• Hotel occupancy moved up to 51.7%
• Initial unemployment claims were down 43.3%
• Single-family home permits were up 111.3%
• Taxable retail sales were up 3.4%
• Foreclosure filings were down by 33%.

It’s good news like this that keeps our spirits up as we dig ourselves out from under our annual April blizzards. But, look at it this way. At least the chiropractors are getting rich.

NEW HIRING INCENTIVE SIGNED INTO LAW

Under the Hiring Incentives to Restore Employment Act of 2010 which was signed into law on March 17, 2010, employers that hire new workers after February 3, 2010, and any time during the rest of 2010, will be exempted from the employer’s 6.2% share of FICA for those workers, provided the workers were unemployed for the 60 days before starting work or worked less that full time (40 hours per week) for someone else during that period.

The IRS will be providing necessary forms and instructions within the next few weeks but, in the meantime, employers should obtain from each new employee a statement indicating that he/she meets the requirements of the Act.  

To learn more about this new law, visit the Government Relations section of the Worldwide ERC® website.

YOU ONLY HAVE UNTIL APRIL 30^TH TO SIGN YOUR CONTRACT TO BUY

If you want to take advantage of the Federal tax Homebuyer’s tax credit, you must be under contract by April 30, 2010. Give us a call today, or you will miss out on this terrific opportunity to put money in your pocket !!!

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. 

JOKE OF THE WEEK

The difference between the short and long income tax forms is simple. If you use the short form, the government gets your money. If you use the long form, your accountant gets your money.

A fine is a tax for doing something wrong.
A tax is a fine for doing something right.

A couple of weeks after hearing a sermon on Psalms 51:2-4 [knowing my own hidden secrets] and Psalm 52:3-4 [lies and deceit], a man wrote the following letter to the IRS:

'I have been unable to sleep, knowing that I have cheated on my income tax. I understated my taxable income, and have enclosed a check for $150.
If I still can't sleep, I will send the rest.'

Making sausage and making tax laws have much in common. They both involve bloody processes, they both require that an innocent animal be slaughtered, and those of a squeamish disposition should not get involved in the making of either. Anonymous

The avoidance of taxes is the only intellectual pursuit that carries any reward. John Maynard Keynes

My problem lies in reconciling my gross habits with my net income.  Errol Flynn

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET

IT’S MY ANNIVERSARY, SO PLEASE PARDON MY NOSTALGIA

Last week marked my 38^th year of selling real estate in Colorado Springs, and I couldn’t help but think back on what our local market looked like in those prehistoric times.

In 1972, I started selling model homes for American Builders, the developers of Southborough and Eastborough. The price range for these homes was $18,000-$19,000. (We also had resale homes for sale at slightly lower prices for those people who could not afford the new models). Mortgage interest rates for a 30 year, fixed-rate mortgage were running at 8%. (ARMs didn’t even exist yet).

At our first sales meeting in 1973, we were all dismayed to hear that our available inventory of $18,000-$19,000 homes was sold out and the builder was announcing a price increase. From that point on, $20,000 would be our minimum price for homes in the development. I remember thinking, “Where in the world will we find people who can afford to spend $20,000 for a home?”….

Flash forward to the present … Yesterday, I was driving on Academy Boulevard and spotted one  of the first homes I sold, back in 1972. The home recently sold for $145,000. What a dramatic example of the benefits of investing in real estate. That home, which the original owner bought for a $500-$1000 down payment, has shown a 600% increase in value since 1972. That’s an average annual rate of return (or appreciation) of approximately 16%. That doesn’t even take into consideration such other benefits as tax deductions, etc.

But the dramatic growth in the value of that house doesn’t even tell the whole story. Let’s look at what “leverage” does for a homeowner. If the original buyer of that home put $1000 down and lived in the home for 7 years (That’s the average length of homeownership, according to NAR statistics), the selling price (using the 16% appreciation figure) would have been approximately $42,210, or 110.5% over the original purchase price. Or, to look at it another way, in seven years, the home realized a gain of just over 22 times the original investment of a $500- $1000 down payment. Eat your heart out, Warren Buffett !!

It’s also obvious that, even if you do not plan to move out of your family home, you should seriously consider purchasing rental property. Our present economic crisis has dramatically expanded the pool of high-quality, potential renters. Combine that with the fact that interest rates are as low as they are going to get and the result is that Investors may never see such great investment opportunities again.   

The bottom line is, now is the time for you to do yourself a favor. Take advantage of today’s low interest rates of 5 – 5.25% for a 30 year fixed-rate loan and make the best investment you will ever make. Call us, right now, and let us help you buy your new home.

DON’T BE LEFT ON THE DOCK, WATCHING THE BOAT LEAVE WITHOUT YOU !!!

The federal tax credit for Homebuyers is just about to expire. If you wait until May 1, 2010 to sign a contract to buy your new home, you will have missed out on the Federal Tax Credit for Homebuyers. That will mean that, if you are a potential first-time Homebuyer, you just threw away $8000. (or, $6500, if this would be a trade-up home). Call us today to avoid losing out on this free gift from your Uncle Sam. They are starting to cast off the lines and the ship’s propellers are turning, but there’s still time to get on board. Call us today !!!

IF YOU LIVE IN COLORADO SPRINGS, YOU’RE VERY FORTUNATE !!

At the April Economic Development Luncheon, the speaker was Dr. Tom Duening, the new El Pomar Chair for Business and Entrepreneurship at the College of Business at UCCS. He came here last August from Arizona State University, my Alma Mater. As a relative newcomer to the region, he is very enthusiastic about Colorado Springs and very correctly describes our city as a place “where people want to create their own community and life. People can find their own pathway here. The honesty, transparency and creativity of the business community of Colorado Springs far exceeds that of the larger cities I’ve lived in for the past 25 years”.

In support of this positive view of our city, the April 18^th issue of the Gazette featured an open letter to the citizens of Colorado Springs from the Greater Colorado Springs Chamber of Commerce, the City of Colorado Springs, the Colorado Springs Regional Economic Development Corporation, El Paso County and the Colorado Springs Convention and Visitors Bureau.  The message of this open letter was to point out that “We are a community to be envied”.

The letter goes on to list the various areas in which Colorado Springs stands out. To list a few of their observations:

We are a city of accountability: We have adapted to the fiscal challenges which face all cities across the nation and we are solving our problems in a cooperative manner.

We are a city ready for the future: As Dr. Duening points out, “We are the leading edge of the Lifestyle Belt – and the Gateway to new expansion into the West”.

Our assets and resources are unmatched in communities our size: The Brookings Institute asserts that Colorado’s Front Range is uniquely empowered with all the essential ingredients for major economic growth and identifies Colorado Springs as a leading factor.

We are a city of scholarship: Our four universities, complimented by a cast of high-caliber educational institutions for adult learners, provide a complete suite of educational opportunities for the regions labor force.

We are a city of welcome and innovation: For example, we host the National Space Symposium, the largest symposium in the space industry, with over 9000 participants. This is just one of the meetings, seminars and conventions hosted by our local, world-famous local Tourism industry.

We are a city safeguarding the nation: The continued and growing presence of our military installations and commands, defense and national security enterprises has insulated our economy and, in addition, our almost 2000 non-profit organizations work to help and serve those in need in our community, across the nation and around the world.

We are a city of encouragement: We are a community of excellence for amateur sports and proud home to the United States Olympic Committee and Training Center. We have been rated the fittest city in the US and are home to a vibrant arts community. We are truly the “America the Beautiful” city.

We are a city working together: For example, The Southern Colorado Business Partnership has been formed to give businesses in three counties a voice at the state level. Twelve organizations from Castle Rock to Pueblo are working together on behalf of the region. Operation 60ThirtyFive outlines our region’s economic strategic plan and Dream City 2020 is a citizen-led effort to craft a vision for our city’s future, and work to turn the Dream into reality.

We are a city to be envied: We are proud that we own our own destiny and we are working diligently to make Colorado Springs a world-class community.

The open letter goes on to list some of the most recent recognitions that our city has received at the national level:

Best Place to Live – 2009 Outside, Online

Fittest City – 2010 (#4) Gallup

Best Places for Business and Careers – 2010 (#12) Forbes.com

National Winner “Cultural Diversity” – 2010 National Black Caucus of Local Elected Officials

Top 60 U.S. Hotspots for Young, Talented Workers - 2009 (#3)  Next Cities

Mid-Sized U.S. City Art Destination – 2009 (#25) American Style

Most Sports Obsessed Town in America – 2008 (#3) Men’s Health Magazine

America’s Best Midsize Metropolitan Areas – 2010 (#9) MSNBC

Best City to Raise an Outdoor Kid – 2009 (#7) Boy’s Life

America’s Best Bang For The Buck Cities – 2009 (#9) Forbes.com

Cities Ranked and Rated – 2007 (#4) Frommer’s Travel Guide

Fittest City in America – 2009 (#2) Men’s Fitness Magazine

Best City to Find a Fresh Start – 2009 (#8) Business Week.com

Most Wired City – 2010 (#6) Forbes.com

Friendliest Bike City – 2010 (#18) Bicycling Magazine

Best Cities for a Housing Recovery – 2009 (#3) Forbes.com

Cleanest Air – 2009 (#14) American Lung Association

Best Place to be a Woman – 2009 (#10) Women’s Health Magazine

Best City to Live in the U.S. -2008 (#3) MSNBC

UCCS – Best Regional Public Universities – 2010 (#6) U.S. News and World Report

Best Place to Raise a Family- 2008 (#9) BestLife Magazine

Best Cities to Work and Play – 2008 (#5) Kiplinger’s Personal Finance

Smartest Metro Areas – 2008 (#10) Bizjournals

National Undergraduate Programs – 2009 (#6) U.S. News and World Report

Come, join us.

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. 

JOKE OF THE WEEK

A plane was taking off from Kennedy Airport. After it reached a comfortable cruising altitude, the captain made an announcement over the intercom, "Ladies and gentlemen, this is your captain speaking. Welcome to Flight Number 293, non-stop from New York to Los Angeles. The weather ahead is good and, therefore, we should have a smooth and uneventful flight. Now sit back and relax - OH, MY G-D!"

Silence followed, and after a few minutes the captain came back on the intercom and said, "Ladies and Gentlemen, I am so sorry if I scared you earlier; but, while I was talking, the flight attendant brought me a cup of coffee and spilled the hot coffee in my lap. You should see the front of my pants!"

In unison, all of the passengers shouted back, “You should see ours!" 

HARRY’S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET

UP, UP AND AWAY !!!  LOCAL SALES ARE LOOKING GOOD

Our local Residential real estate market experienced another solid gain through March 31, 2010. The 723 residential sales in March, 2010, represent an increase of 27.7% over March, 2009 and 26.4% over February, 2010. Our average sales price is now $215,625, an increase of 4% from February, 2010. Our median sales price is now $189,900, an increase of 4.3% from February, 2010. These increases represent 9 consecutive monthly increases in local residential sales. How many other communities can say that??

In addition to the rise in home sales, another significant indicator of our local economy’s strength is the income derived from sales taxes. Sales tax revenues were up 3.38% from March, 2009. This was the fifth consecutive month of increases and demonstrates our citizens’ confidence in our economy.

ONE MAN’S TRASH IS ANOTHER MAN’S TREASURE – OR – TO PUT IT ANOTHER WAY, ONE MAN’S FORECLOSURE IS ANOTHER MAN’S OPPORTUNITY

Even if you already own your home and don’t intend to sell, the real estate market has some opportunities that you should explore. First, let’s quote from some recent headlines: “Home Resales Continue to Streak” (The Gazette). “Check the Real Estate: It Is Time to Dive In” (The Wall Street Journal). “Homebuyers Scramble as Rates Jump” (Associated Press).

Are these headlines accurate? Well, all we can say is that we have negotiated more contracts in the past four weeks than we have in the last six months. Obviously, home prices are trending upward and people are jumping into the market, before they get priced out of it.

In addition to the rise in basic home prices, mortgage rates are also rising. On April 9, the Wall Street Journal reported the published mortgage rate from Freddie Mac was 5.21% and the Associated Press reported, “more than 5.3% in the past week”. These rates represent an 8 month high for 30 year, fixed-mortgages. This rise in rates can be traced to several factors e.g. An improving economy, the end of the government’s push to make mortgages cheaper by means of mortgage-backed securities, the beginnings of inflation, etc.

What do these trends mean to prospective homebuyers? Well, for every 1% rise in rates,300,000 to 400,000 “would-be-buyers” are priced out of the market. The rule of thumb is that, with every 1 percentage point increase in rates, a buyer’s purchasing power is reduced by about 10%. This means that the buyer who can qualify for a $300,000 home today, will only qualify for a $268,500 home when interest rates go from 5% to 6%.

Is this news bad for everyone? Well, for prospective buyers, it could represent bad news. It means they might have to settle for a less expensive home, or, if they are near the bottom of the ladder, they might have to defer purchasing in favor of renting. For investors, however, the current upward trend in prices and rates means that their pool of prospective renters will increase. To put it another way, for every buyer who is lost, another renter enters the market.

If you would like to explore the benefits of owning rental property, please give us a call. The time is right to consider this opportunity.

NEGOTIATING MEANS – “EVERYBODY WINS”

Since we announced our certification by CNE as a Certified Negotiation Expert, we have been asked by several of our clients and fellow Realtors why we are so strongly emphasizing the Realtor’s role as a negotiator in today’s real estate market. The answer is simple. When we consider that all Realtors, as well as their clients, now have access to all of the same internet sources of information about properties on the market, it’s obvious that the role of the Realtor must change.

In today’s market, the Realtor cannot remain merely the conveyor of data from the Buyer to the Seller, but must become, rather, the facilitator for resolving differences between the Buyer and the Seller. If Realtors cannot or will not serve as that facilitator, they really have nothing of value to contribute to the process. I was reminded of that fact just last week, when another Realtor submitted an offer on one of our listings.

Our client, the Seller, had ‘dug their heels in’ with an “absolute minimum” selling price of $319,000. The prospective Buyer had ‘dug their heels in’ with an offer of $315,000. At this point, the only options were to call off the deal, or, to negotiate. i.e. to make winners of both the Buyer and the Seller.

So, after reviewing the current market data with the Buyer’s agent, as a facilitator, we took the opportunity to point out several significant factors:

• The market has taken a turn for the better and, based upon the most recent sales data from all national and local sources, the experts say that it does not appear that prices will go down any further. In fact, prices have now started to rise
• Last month, properties in the neighborhood involved sold for 99.2% of their listed price, indicating that the Seller’s asking price was appropriate and reasonable.
• The difference between the two parties was only $4000. That translates into an increase in the monthly mortgage payment of only $22.08, or $1324 over the five-year period that the Buyer will probably own the house.
• When the income tax deduction on the loan interest is factored in, the actual difference between offer and demand is closer to $1000 over the five-year ownership period.
• The federal tax credit expires at the end of this month
• Through our preferred lenders, we had access to a better interest rate for the mortgage than the Buyer did. (That, alone, should have sealed the deal)

Considering all of these factors, the Buyer chose to sign the contract and both parties left the table happy. That’s the goal of negotiation and demonstrates the new role of the Realtor.

Today’s Realtor must know and understand the latest statistics and must be familiar with the local market. He/she must have developed good local resources for funding and services and must be willing to serve as a negotiator and facilitator. That way, “Everybody Wins”.

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. 

JOKE OF THE WEEK

We don’t know why the following joke seems, somehow, timely.

The photographer for a national magazine was assigned to get photos of an enormous forest fire. Smoke at the scene was too thick to get any good shots, so he frantically called his office to ask them to hire a plane.

"It will be waiting for you at the airport" his editor assured him. 

As soon as he got to the small, rural airport, sure enough, a plane was warming up near the runway. He jumped in with his equipment and yelled, "Let's go! Let's go!" The pilot swung the plane into the wind and soon they were in the air.

"Fly over the north side of the fire," said the photographer, "and make three or four low level passes." 

"Why?" asked the pilot.

"Because I'm going to take pictures! I'm a photographer, and photographers take pictures!"  the photographer replied impatiently.

After a long pause the pilot said, "You mean you're not the instructor?" 

AND BY THE WAY

Aoccdrnig to a rscheearch at Cmabrigde Uinervtisy, it deosn’t mttaer in waht oredr the ltteers in a wrod are, the olny iprmoetnt tihng is taht the frist and lsat ltteer be at the rghit pclae. The rset can be a total mses and you can sitll raed it wouthit porbelm. Tihs is bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe. Pettry amzanig huh?