April 4, 2011

HARRY'S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTAIL real estate MARKET

 

NATIONAL housing market SHIVERS .BUT COLORADO CONTINUES TO LOOK GOOD

According to the Wall Street Journal, the Case-Shiller home-price index reports that housing prices across the U.S. continued falling in January, fueling concerns about a "double-dip" recession. However, Colorado Springs home prices are actually rising. Furthermore, our local foreclosure filings and sales are dropping, indicating that our local housing market has stabilized.

In March, our local foreclosure filings amounted to only 272. This represents the lowest figure since September, 2008, and a 42.1% drop from March of last year, when 471 filings were registered. The first quarter of 2011 saw 971 filings, down nearly 20% from 2010.

Local housing-sales figures are also looking good. According to the latest PPAR statistics, March saw 776 sales of single-family homes, which is a big jump from sales in January and February, which registered only about 400 sales in each month. There were additional sales of 80 condos/townhouses.

All of this data gives us good reason to be encouraged by the progress our local real estate market is showing.

For your information, the breakdown of sales by price shows

  •  Up to $199,999              412 sales
  • $200,000 - $299,999       183 sales
  • $300,000 - $399,000       70 sales
  • $400,000 plus                49 sales

These numbers show that sales of homes under $300,000 accounted for 83.3% of total sales.

To review all of the Sales and Listing statistics for March, CLICK HERE.

 

AND IT'S NOT JUST THE real estate NUMBERS THAT ARE LOOKING GOOD !!

The Gazette reports that several new businesses will be relocating to Colorado Springs. Olson Motor & Control, Inc. will locate a manufacturing facility in Colorado Springs.

Additional companies and organizations that have announced plans to relocate or expand since January 1 include Space Foundation, Outreach, Inc., Xiotech Corporation, Cosmic Advanced Engineering Solutions, Howell Precision Machine & Engineering, Inc.

Looks like the EDC is doing a good job of selling Colorado Springs.

And, more good news for our community, Fort Carson will be getting a new combat aviation brigade. The new 113-helicopter unit will be the Army's 13th combat aviation brigade and will push the post's population of soldiers to nearly 30,000.

According to post officials, $750 million will be spent to house the new helicopter brigade with construction cash starting to flow as soon as this fall. This influx of new Colorado Springs residents will definitely help reduce our inventory of available homes.

If that's not enough, Colorado Springs and the state continue to rank well in important categories: 

  • Colorado was ranked 3rd Smartest State by CNNMoney.com.
  • Colorado Springs ranked 8th in Housing Markets for Best Recovery Bet by CNNMoney.com.

OK, that's the good news. The following article describes what most people would see as 'bad' news

 

REGULATORS UNVEIL NEW MORTGAGE-LENDING RULES

Federal regulators have proposed far-reaching changes to lending rules that eventually will raise the cost of borrowing for most homeowners, kicking off what is likely to be a furious effort by the housing and banking industries to soften the proposal.

Tighter Standards are on the horizon

Mortgages that aren't subject to costly 'risk-retention' rules must meet certain requirements:

  • 20% down payment for new mortgages; a 75% loan-to-value ratio for refinances, and a 70% ratio for 'cash-out' refinances
  • Borrower hasn't missed two consecutive payments on any consumer debt within two years
  • Mortgage-related debt is no more than 28% of income, and total debt doesn't exceed 36% of income
  • Fully amortizing loans

Source: FDIC

"With the way this proposal is drafted, very few loans are going to qualify" says Lewis Ranieri, the pioneer of the home-mortgage-bond market.

Furthermore, the Dodd-Frank financial-overhaul law requires banks to hold 5% of the credit risk for mortgages and other loans that are bundled together and sold off as securities. The idea is that banks and other issuers of securitized loans will do a better job ensuring the quality of those loans if they are required to have more "skin in the game."

The real-estate industry and consumer-advocate groups already have forged an unlikely alliance to push for less-restrictive rules. They say the rules could substantially raise borrowing costs, particularly for first-time home buyers. "You're clearly creating a nation of have and have-nots when it comes to housing," said Jerry Howard, president of the National Association of Home Builders.

Critics of the rule say relatively few borrowers will be able to obtain the less costly, gold-standard mortgages. Around 46% of all homeowners with a mortgage had less than 20% equity in their homes at the end of 2010, according to CoreLogic Inc., a real-estate data firm.

"A rigid 20% down payment requirement is going to unnecessarily prevent the middle-class, first-time home buyers from getting affordable mortgages," Sen. Kay Hagan (D., N.C.) said in an interview.

 

SO, WHAT DO ALL OF THESE CHANGES MEAN TO YOU ???

Well, if you are a Buyer or a Seller, these new rules will make it more difficult for you to buy or sell your home. Taken collectively, they make it harder for Buyers to obtain financing and for Lenders to stay in business. In fact, one of our preferred Lenders has already advised us that, because of the profit-squeeze that these new rules establish, they will be going out of business at the end of the month.

Understandably, most Buyers and Sellers do not appreciate the intricacies of arranging for a "good" mortgage. However, the foreclosure crisis that has faced us in the last several years is a dramatic example of what happens when "bad" mortgages are allowed to enter the market. Many of these foreclosures are the result of overbuying, poor negotiation, excessive fees, and poor choice of lenders.

That is why it is more important than ever that Buyers and Sellers be guided by experienced, ethical Realtors, as they negotiate the maze of governmental regulations and market variables that are a part of the selling process.

When we work with our clients, we make sure that:

  • the Client ends up with the best possible price for the home (through knowledgeable negotiation)
  • the  Buyer can actually afford his/her choice of home
  • the best mortgage interest rate is obtained for the client
  • the Lender does not load the deal with excessive fees (This alone can save the Buyer between $2000 - $4000)

We feel confident that we can provide these services because of our 39 years of experience in the local market, our intimate knowledge of every financial aspect of the process and our close, working relationships with the most ethical local lenders and suppliers.

As a matter of fact, as we look back at all of the clients we have served over the years, we are not aware of even one of our clients that has gone into foreclosure. That's probably the best measure of a Realtor's professionalism.

Call us to discuss these issues at 800 677-MOVE (6683) or 719 598-3200  

 

WHY NEW HOMES AREN'T SELLING 

Once a common home buyer's dream, new homes have lost some of their appeal. Instead, it's fixer-uppers and foreclosures that have been capturing buyers' attention, creating a window of opportunity for those still looking for new construction.

While the real estate market has struggled across the board, new homes have been hit harder than ever before. Existing home sales are down about 3% in the last year, according to the latest data from the National Association of Realtors. That's peanuts compared to new home sales, which have fallen a whopping 28%, according to the U.S. Census.

To some extent, existing homes have always recovered before new construction, but analysts say this situation is so extreme that it could delay a meaningful recovery for the new-home market by two more years. "It's not looking promising for new housing," says John Vogel, adjunct professor of real estate at Dartmouth's Tuck School of Business.

The reason for the discrepancy is clear, experts say: New homes are currently 29% more expensive than existing homes, about double the typical margin, according to the NAR. At the same time, there are some radical discounts in the existing home market, foreclosures and short sales specifically, which accounted for nearly 40% of all sales in February. (In 2010, they accounted for 25% of all sales, according to RealtyTrac.com.)

But a shift in consumer psychology has also hurt new home sales. Pre-recession, buyers expected high-end appliances and fancy countertops, and builders delivered. Now consumers are more enthusiastic about a home that's easier and cheaper to maintain, says Vogel.

For many buyers, that even includes smaller rooms - a rarity in homes built during the real estate boom - that are more affordable to heat or cool. More buyers are also looking to live in or near a city - where relatively fewer new homes exist - to be closer to their job and to spend less on gasoline costs.

The trend doesn't seem to be reversing itself any time soon. In spite of the lagging sales, new home prices are still expected to rise by nearly 1% this year, according to the NAR: Builders have all but stopped building, says David Crowe, chief economist at the National Association of Home Builders, and supply is dwindling.

Nationally, there are around 186,000 new homes on the market right now, the lowest since 1967. And even builders who want to build may not be able to get financing. Just 20% of builders are shopping for loans, down from 80% pre recession, Crowe says.

But there are also bright spots for buyers: Eager to sell, some builders are unloading homes for less than the cost of building the house. Though limited in number, that's mostly happening in the hardest hit states of Arizona, California, Florida and Nevada, says Crowe, and often because the builder's loan for that property has come due. Buyers in these markets could end up with a new home for a price close to that of the fixer-upper down the street.

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, please contact us. 

 

JOKE OF THE WEEK

A winter statistic:
 
98% OF AMERICANS SCREAM BEFORE GOING IN THE DITCH ON A SLIPPERY ROAD.

THE OTHER 2% ARE FROM COLORADO AND THEY SAY, "HOLD MY BEER AND WATCH THIS." 
  
Now, you're from Colorado if.........
 
You'll eat ice cream in the winter.

It snows a foot and you don't expect school to be cancelled.

You'll wear flip flops every day of the year, regardless of temperature.

You have no accent at all, but can hear other people's. And then you make fun of them.

"Humid" is over 10%.

Your sense of direction is: Toward the mountains and Away from the mountains.

You say "the interstate" and everybody knows which one.

You think that May is a totally normal month for a blizzard.

You buy your flowers to set out on Mother's day, but try and hold off planting them until just before  Father's day.

You grew up planning your Halloween costumes around your coat.

You know what the Continental Divide is.

You don't think Coors beer is that big a deal.

You went to Casa Bonita as a kid, AND as an adult.

You've gone off-roading in a vehicle that was never intended for such activities.

You always know the elevation of where you are.

You wake up to a beautiful, 70 degree day and you wonder if it's gonna snow tomorrow.

You don't care that some company renamed it, the Broncos still play at Mile High Stadium!!

Everybody wears jeans to church.

You actually know that **South Park** is a real place not just a show on TV.

You know what a 'trust fund hippy' is, and you know its natural habitat is Boulder.

You know you're talking to a fellow Coloradoan when they call it "Elitches," not ""Six Flags."

A bear on your front porch doesn't bother you.

Your two favorite football teams are the Broncos and whoever is beating the crap out of the Raiders.

When people back East tell you they have mountains in their state too, you just laugh.

You go anywhere else on the planet and the air feels "sticky" and you notice the sky is no longer blue.