It's Still a Buyers' Market
September 27, 2010
HARRY'S WEEKLY UPDATE
A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET
IT'S STILL A BUYERS MARKET - BUT YOU HAVE TO HAVE PATIENCE
The Colorado Springs Business Journal (Sept. 24, 2010) reports that it's still a Buyers' market, but Buyers will need plenty of patience, a willingness to compromise and, more than ever, good credit. They may also be surprised to find that Sellers are unwilling to budge too far from their asking prices.
As one Realtor put it, "Buyers come into this market looking for blood in the water. They expect to get fabulous homes for huge discounts". And, for many Buyers, this is still possible, but they might have to recalibrate their expectations. In many cases, however, Sellers have already discounted their original asking price two or three times by the time a Buyer comes along. That means there is not as much room to negotiate down.
There are also other sorts of complications that can sour the deal. For example, one prospective Buyer made a full-price offer on a short sale, only to be turned down by the bank because they said the Seller had "priced the property too low". This Buyer then made an offer on another short sale property, but had to wait three months before the lender approved the offer. Such delays are common in today's market.
Another Buyer, who had to wait three months for a response from a lender, complained, "The lenders are just not motivated. They don't want to negotiate with you"
Still another problem that prospective Buyers might encounter is reluctance on the part of the owner of a short sale property to make repairs on the property prior to closing.
All of these problems being true, however, it is still possible to get some great deals, especially at the top end of the market. It is estimated that, in some areas of Colorado Springs, higher-priced homes will probably sell for around 30% less than their listed prices.
But, if you are a Seller, the outlook is not really that bleak. Remember that the "loss" you take on your present home when you sell, will be offset by the "deal" you get on the purchase of your replacement home.
Finally, a note of caution to both Buyers and Sellers. Interest rates are going up and it looks like prices may not go down much further, so, unless you pay all cash for your next home, higher interest rates and inflation could eat up any savings you might make by gambling on a further decline in prices.
Bottom line: Better make your move now. Call us !!!
SPEAKING OF WHICH ----H.R.6133 MAY SPEED UP THE LENDING PROCESS
On September 15, 2010, U.S. Representatives Robert Andrews (D-NJ) and Tom Rooney (R-FL) introduced H.R.6133, "Prompt Decision for Qualification of Short Sale Act of 2010". The bill would require lenders to respond to consumer short sale requests within 45 days.
If this bill passes, it would be a tremendous boost to the housing market, since short sale properties represent between 20% -30% of inventory in many parts of the country. The unnecessary lender-delays in processing offers for short-sale properties have turned many prospective Buyers away from the market. In fact, in many cases, lenders have not even responded to their offers.
This bill has the potential to increase market demand, stabilize prices and, unfortunately, put pressure on lenders to increase mortgage rates. So, call me to discuss your options.
The introduction of this bill is noteworthy in several respects. First of all, it is a sensible solution to a real problem that real people are having. Secondly, it shows that Democrats and Republicans can actually work together. Finally, it's a bill that won't cost us anything.
Maybe the world isn't actually coming to an end, after all.
HAVE EXISTING-HOME SALES - AND PRICES - HIT BOTTOM?
According to a report by economists at mortgage insurers, The PMI Group, existing-home sales will show "some modest gains" in August, September and even October.
After hitting a low for the first half of July, purchase mortgage applications have edged up slightly, the report noted, citing statistics gathered by the Mortgage Bankers Association. (Because it takes time to approve a loan and close a home sale, loan applications submitted in August might not show up in statistics on existing-home sales until October, or maybe as late as 2012, if HR 6133 doesn't pass)).
Another leading indicator, the National Association of Realtors' pending sales index, shows that the number of homebuyers who have entered into purchase contracts was up 5.2% in July.
"This is consistent with the increase in the MBA's purchase applications, and the two of them together strongly suggest that sales have bottomed out, at least for now", PMI economists said.
The housing market index published by the National Association of Homebuilders slid in August, but that's probably an indication that a rebound in new-home sales will lag sales of existing homes, the report said, with Buyers likely to bargain-hunt for distressed properties.
"The leading indicators for housing demand suggest that the drop in home sales is probably over and that some modest gains may be in store for the period (August through October)", the report said. "Beyond that, the underlying determinants of housing demand will have to strengthen in order for more home sales to rise appreciably. Those factors include job growth, affordability, demographics and consumer sentiment".
Other forecasts from the report include:
- Unemployment will surge to 9.8% in the fourth quarter of 2010, before gradually falling to 8% in 2012
- Economic growth is unlikely to accelerate until mid-2011
- Affordability is close to record highs, which should drive housing demand
- Consumers might delay home purchases, in the hope that prices will continue to fall
- Because nearly one in four homeowners have mortgages which put them "upside down", these homeowners will not be inclined to buy their next house in the near future.
- In the second half of 2011, there should be a pickup in job gains and stronger household formation and thus, a stronger, but historically modest, rise in home sales
- Existing-home sales should rebound from a projected 4.96 million this year to 5.5 million in 2011 and 5.67 million in 2012
- New-home sales are expected to total 342,000 this year, 485,000 next year and 590,000 in 2012
Bottom line: We are lucky to be living in a city which has relatively low unemployment, a large segment of Department of Defense spending and which is a popular target for retirees and businesses fleeing the high taxes in other parts of the country. In fact, most of our local problems could be cured simply by CREATING MORE JOBS. More about that, later.
DID YOU KNOW THAT IT COSTS YOU $100 A WEEK TO LOOK AT PIKES PEAK?
Years ago, we used to joke about the fact that Colorado Springs paid lower wages than did other parts of the country, but that people still wanted to come here to live. We used to say that "It costs everybody $100 a week to look at the Peak".
Well, The Gazette just reported (Sept. 27, 2010) that things haven't changed much. In a recent Denver Post study of unemployment insurance claims in Colorado, of the 12 industries that added the most jobs, eight paid below the average annual wage of $46,813 for private-sector workers in the state.
"We have seen an across-the-board drop in wages", said Alexandra Hall, the state's chief labor economist.
Telemarketing centers generated the most new jobs in Colorado for the past two years (4,650 jobs). The average annual wage was $28,609, or, 61% of the state's average last year.
Firms that care for elderly and disabled added 2,381 net new jobs. The average annual wage was $18,023.
General hospitals were the third-largest source of jobs, adding 1,948 new positions, with an average annual wage of $52,150.
Discount and warehouse stores added 1,935 new positions and paid an average annual wage of $23,834
Economists disagree on whether the growth of lower-paying jobs reflects caution by employers after the recession or a more fundamental loss of income for US workers.
But we know the answer, don't we?. It's the "Look at that view" fee that we all pay, every time we look at Pikes Peak..(but, it's worth it.)
BITS AND PIECES
The Recession Is Officially Over: On Monday, Sept 20, 2010, the National Bureau of Economic Research announced the recession that began in December 2007 officially ended roughly 18 months later in June 2009. This announcement is significant for several reasons
- We completely missed the celebration and the parade.
- If these same people will now be providing me with my healthcare, I just hope I never need an emergency appendectomy. First of all, they won't know what an appendix looks like and secondly, they'll have to dig me up to perform the operation.
SAY WHAT?: The Fed announced this week that it is "prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate." Translation:
- "We are going to provide more liquidity by printing more money"
- If history is any guide, this excess liquidity will artificially prop up asset prices and ultimately lead to substantial inflation.
On the other hand, maybe the world is actually coming to an end. !!
LATEST STATISTICS
Click here to see the latest Sales and Listing statistics for the Pikes Peak area.
LAST CALL FOR THE SOUTHERN COLORADO ECONOMIC FORUM
This Friday is the day !!! If you've ever wondered what our local economic future looks like, don't miss attending the Southern Colorado Economic Forum on October 1, 2010. Make your reservations now, for this "sell-out" event.
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
Let's talk about economists
An economist is a trained professional paid to guess wrong about the economy. An econometrician is a trained professional paid to use computers to guess wrong about the economy.
Three economists went out hunting, and came across a large deer. The first economist fired, but missed, by a foot to the left. The second economist fired, but also missed, by a foot to the right. The third economist didn't fire, but shouted in triumph, "We got it! We got it!"
Q: What do economists and computers have in common?
A: You need to punch information into both of them.
Q: Did you hear of the economist who dove into his swimming pool and broke his neck?
A: He forgot to seasonally adjust his pool.
Q: How many economists does it take to change a light bulb?
A: Seven, plus or minus ten.
Q: What's the difference between an economist and a befuddled old man with Alzheimer's?
A: The economist is the one with the calculator.
Q: Why did God create economists?
A: In order to make weather forecasters look good.
Two economists meet on the street.
One inquires, "How's your wife?"
The other responds, "Relative to what?"
But, don't forget, economists have forecasted nine out of the last five recessions.
When an economist says the evidence is "mixed," he or she means that theory says one thing and data says the opposite.
Q: Why was astrology invented?
A: So that economics could be called an accurate science.
"ACCEPTABLE" LEVEL OF UNEMPLOYMENT: An "acceptable" level of unemployment means that the government economist to whom it is acceptable still has a job.
