June 13, 2011

HARRY'S WEEKLY UPDATE

A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTAIL real estate MARKET 

GROWING RENTAL MARKET BENEFITS LANDLORDS ..PROSPECTIVE INVESTORS, TAKE NOTE

Millions of foreclosures have turned former homeowners into renters. In fact, there's been a nearly 34 percent increase in rentals over the last decade, according to a USA Today analysis of U.S. Census data. That means that in 2010, nearly 35 percent of occupied homes were rented.

This data supports our advice to our readers that it's time to consider buying investment property, or renting out their present homes while the purchasing opportunities are still hot. If you're interested in discussing this opportunity, give us a call at 598-3200, or, 800-677-MOVE (6683).

And, before you make your decision, consider the following tips:

• Understand how debt affects your ability to qualify for a loan. First, if you're just getting started and are looking to purchase a property to later rent, consider that Freddie Mac guidelines typically require a maximum debt-to-income ratio of 45 percent.
• Be prepared to put more money down. Owner-occupied properties have the advantage of requiring a smaller down-payment (VA=0%, FHA=3.5%) than investor mortgages which sometimes require as much as 20 percent. Also keep in mind that when buying a property for investment purposes, the down payment and/or the closing costs cannot be from gift money.
• Know your market and ability to rent your property. Overall rental growth is increasing while homeownership is declining. According to the Census data, The number of renter households has grown, on average, by nearly 700,000 a year since the housing peak in 2006 and the number of owner households is shrinking, on average, by just over 200,000 a year.
• This could be good news if you're planning to rent your home. But supply and demand are key. So call us to discuss your local rental market carefully before you buy or place your home for rent.
• Rents may rise if the market doesn't get too saturated. As more homeowners decide to hang on to their homes and list them for rent instead of for sale, they're finding that it can be beneficial for them.
• Some experts still say that there will be a boost in rental growth for at least the next couple of years due to foreclosures, housing prices being uncertain and causing people to wait to buy, and government homeownership subsidies being cut.
• Set your rent at the right price. Experts advise that if a rental home is listed for longer than about 30 to 45 days, it might be time to reduce the rent. Also, keep in mind that rental properties are just like other for-sale properties, needing to be kept in good condition and have their upgraded amenities showcased. Let us help you highlight your property, arrange for proper management  and get it rented quickly.

However, surveys show that owning a home is still preferred. Regardless of the growth in renters, the idea of homeownership is still the American dream; 74 percent of renters think owning is superior to renting, according to a recent survey by mortgage giant Fannie Mae.

In fact, the following article supports the idea that homeownership is still a vital part of the American dream, especially in the Colorado Springs area, where we have consistently outperformed almost every other city in the U.S. Please give us a call to discuss our record as compared to the other 154 major metropolitan areas surveyed.

OWNING A HOME ESSENTIAL TO THE AMERICAN DREAM, SURVEY SHOWS

Despite the ups and downs of the housing market, home owners and non-owners alike consider owning a home essential to the American Dream.

That's the key finding of a recent survey of 2000 people likely to vote in 2012 that was conducted on behalf of the National Association of Home Builders (NAHB) by Public Opinion Strategies of Alexandria, Va., and Lake Research Partners of Washington, D.C.

"The survey results show that Americans see beyond the immediate housing market to the enduring value of homeownership," says NAHB Chairman Bob Nielsen "An overwhelming 75 percent of the people who were polled said that owning a home is worth the risk of the fluctuations in the market, and 95 percent of the home owners said they are happy with their decision to own a home," Nielsen says.

"Homeownership is worth the risk, pure and simple," says Neil Newhouse, a partner and co-founder of Public Opinion Strategies. "Even though the market is weak, people who don't own say they want to buy a house. Almost three-quarters of those who do not currently own a home, 73 percent, said owning a home is one of their goals. And among younger voters who are most likely to be in the market for a home in the next few years, the percentages are even higher," Newhouse says.

One of the more striking aspects of the survey results is the intensity of sentiment among potential voters, according to Celinda Lake, president of Lake Research Partners. "People believe overwhelmingly that owning a home is an anchor to the American Dream," she says. "It's an anchor to your retirement, and it's an anchor to your personal economic well-being."

Among the other survey results:

• Homeownership and a retirement savings program are considered by voters to be their best investments.
• 80 percent of home owners would advise a close friend or family member just starting out to buy a home.
• Saving for a down payment and closing costs is the biggest barrier to homeownership.
• Americans believe that owning their own home is as important as being successful at their job or being able to pay for a family member's education.

"Owning a home isn't just a policy to people," says Lake. "It isn't just a commodity to people. It is a core value."

And ..just to sweeten the pot, the Colorado Springs housing market has consistently outperformed almost every other major metropolitan area in the country.

9 REASONS TO BUY A HOUSE RIGHT NOW ...ACCORDING TO FORBES MAGAZINE

If you're planning to buy a house right now, the next few months may be the best time to buy. Waiting for both housing prices and interest rates to fall may not be a good strategy for potential homebuyers since analysts don't expect any significant declines in these two most important home-buying factors. Here's nine real estate trends that suggest you should get into the housing market sooner than later.

1. Lowest Housing Prices in Years
Nobody knows when the housing market will hit bottom, but prices are at their lowest in several years and may soon start inching back up again. So buying now or in the near future may be the right time. An abundance of bargain-priced housing is now available because of foreclosures and falling prices.

2. Interest Rates at a 50-Year Low
Interest rates are near a 50-year low, according to housing analysts. By the second week of May, 2011, 30-year fixed mortgage rates had fallen to their lowest rates of the year at 4.49%. Although mortgage rates vary from day to day, the 30-year rate at this level is an attractive inducement to first-time buyers, or buyers who want to either move up to larger residences, or others, including many empty-nesters wanting to sell and move to smaller houses or condos. (For a complete breakdown of mortgage rates, see below).

3. Interest Rates Expected to Go Up
As the economic recovery gains momentum, interest rates are expected to increase, making mortgages more expensive. Even a half-percent increase in mortgage interest can add a hundred dollars or more to your monthly payments, depending on the amount of your loan.

4. Adjustable Rate Mortgages at Record Lows
Adjustable Rate Mortgages (ARMs) are also lower now. For new buyers who are sure they'll have enough income to meet payment obligations, an ARM may be the best way to buy a house.

5. Low Down Payment Mortgages Available
Low-down-payment financing through Federal Housing Administration-insured mortgages is available as an additional inducement to buy a house now. Down payment minimum requirements may increase as the market heats up, so potential buyers with less cash to consummate a deal may be well-advised to buy now. 

6. Easy to Qualify, Easy to Borrow
Lending standards have become less rigid recently, so qualifying for a mortgage may be easier. Experts advise that a potential buyer become pre-approved for a loan by a lending institution - meaning that a lender guarantees to make the loan contingent on an appraisal of the property. But the good news in seeking pre-approval is that lenders are now willing to let a potential buyer take on more debt than the previous formula allowed - a percentage of monthly income.

7. Lenders Offer No-Fee Mortgages
Many banks and other lending institutions are waiving mortgage loan generation and other fees and points (each point represents 1% of the loan amount), thereby reducing the cost of buying.

8. Home Builders Eager to Sell, Offer Incentives
Home builders, competing with the resale market, are offering incentives to potential buyers to reduce their inventory of unsold new homes. Incentives may include cash for furniture or free refrigerators, washers and dryers. Specific demographic groups, including military personnel, police, firefighters and health-care workers, have been targeted by builders for special offers. But virtually anyone who can qualify for a mortgage is likely to get a good deal from a homebuilder who is eager to sell.  

9. Motivated Home Owners Desperate to Sell
Desperate sellers of existing homes have also been offering attractive inducements to potential home buyers, including warranties on appliances, air conditioners and furnaces. Some sellers are even offering cash or have included furnishings, refrigerators, washers and dryers as a bonus to potential buyers. With so many existing homes in foreclosure or underwater - bargain prices are abound in this depressed market. 

The Bottom Line
With a convergence of the factors above, all of which are favorable to the prospective home buyer, there may not be a better time to buy than right now. It's a buyer's market, but like everything else in life, the bargain deals won't last.

And, if it's true for the whole USA, the statistics demonstrate that it's even more true in Colorado Springs.

WAITING TO BUY YOUR NEW HOME ??? PLEASE NOTE: HOME LISTING PRICES ARE RISING IN MAJOR U.S. CITIES

According to the Movoto search engine, home listing prices are starting to rise in major cities. Their report says that the median listing price in 16 major metropolitan areas rose in May, leading analysts to believe the market may be hitting bottom.

Movoto compiles data from multiple listing services in 16 major cities around the country. They found the median listing price increased 2.5% from April to May. The Standard & Poor's/Case-Shiller index, on the other hand, reported the median home sales price fell during the first quarter.

Standard and Poor's sale price figure, when compared to Movoto's listing price figure indicate that house sellers are asking for more, while buyers want to pay less. No surprise there.

Analysts state that these figures indicate the real estate market has bottomed out. Just as list prices increased in May, so did the amount of inventory on the market. Homes for sale for less than $100,000 - usually distressed or real estate owned - fell to 28.1% of market inventory in May. This is the first time all year those homes did not comprise the majority of homes on the market.

Homes in the $250,000 to $500,000 range make up the largest share of inventory at 29.3%. Almost 24% of market inventory is attributable to homes between $150,00 and $250,000, while homes more than $500,000 account for 18% of the sale market.

The biggest challenge now is to clear the inventory of these foreclosed properties which are skewing the prices.  

HERE'S THREE STORIES THAT GIVE US REASSURANCE THAT OUR LOCAL ECONOMY IS ON THE MEND

COLORADO SPRINGS SALES TAX COLLECTIONS RISE

Colorado Springs sales tax collections rose a strong 8.92% in May from a year before, led by a gain in auto sales, the city reported Friday. May collections reflect purchases in April.

Sales tax collections have now posted year-over-year gains for 19 consecutive months, though gains had dwindled early in the year- down to less than 1% in March. April's collections, however were up 7.85%, and May's gains were the strongest since May of last year.  Sales tax collections so far this year are up 5.6% from the same point last year.

U.S.HOUSEHOLD NET WORTH CLIMBS 1.2%

Wall Street Journal, Friday, June 10, 2011

The Federal Reserve said Thursday that average household wealth - stocks, bonds, homes and other assets, minus mortgages and other debts - rose 1.2% to $58.1 trillion in the first quarter.

The increase should bolster the U.S. economy, because as individuals' net worth rises, they tend to become more confident about their financial future and willing to spend. Notwithstanding the recent decline in stock prices, "in general, financial wealth has been increasing, which would tend to increase consumer spending", said Goldman Sachs economist Andrew Tilton.

MORTGAGE RATES MOVE EVEN LOWER THIS WEEK

According to Freddie Mac (June 9, 2011), fixed and adjustable-rate mortgages sank to new lows for the year, continuing a downward spiral for the eighth straight week, following a weak jobs report.

Here's a closer look at how rates fared for the week:

• 30-year fixed-rate mortgages averaged 4.49 percent this week, down from last week's 4.55 percent average. A year ago at this time, 30-year rates averaged 4.72 percent.
• 15-year fixed-rate mortgage rates averaged 3.68 percent--its lowest level since November 2010. A year ago at this time, the 15-year rate averaged 4.17 percent.
• 5-year adjustable-rate mortgages averaged 3.28 percent this week, slipping from last week's 3.41 percent average. A year ago at this time, the 5-year ARM averaged 3.92 percent.

It's a great time to buy. Call us at 598-3200, or, 800-677-MOVE (6683).

HARVARD ISSUES REPORT ON HOUSING

The Joint Center for Housing Studies of Harvard University recently published an extensive report on "The State of the Nations' Housing". If you would like to see the complete report, CLICK HERE.

http://www.jchs.harvard.edu/publications/markets/son2011/son2011.pdf

 LOCAL REALTORS RECEIVE AN UPDATE ON THE NATIONAL AND LOCAL ECONOMIES

On June 3, 2011, Fred Crowley, chief economist for the University of Colorado at Colorado Springs gave an extensive update  on the national and local economy to the Pikes Peak Association of Realtors.

If you would like to see a complete copy of Mr. Crowley's very interesting presentation, Click here.

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 39 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.

LATEST STATISTICS

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

JOKE OF THE WEEK

Murphy's Lesser Known Laws

Light travels faster than sound. This is why some people appear bright until you hear them speak.

He who laughs last, thinks slowest.

Change is inevitable, except from a vending machine.

Those who live by the sword get shot by those who don't.

Nothing is foolproof to a sufficiently talented fool.

If you lined up all the cars in the world end to end, someone would be stupid enough to try to pass them, five or six at a time, on a hill, in the fog

The things that come to those who wait will be the things left by those who got there first.

Give a man a fish and he will eat for a day. Teach a man to fish and he will sit in a boat all day drinking beer.

A fine is a tax for doing wrong. A tax is a fine for doing well.

When you go into court, you are putting yourself in the hands of 12 people who weren't smart enough to get out of jury duty.