February 21, 2011

HARRY’S WEEKLY UPDATE

 A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET

  

NAR CHIEF ECONOMIST IS BULLISH ON COLORADO SPRINGS

  

Harry Salzman and Lawrence Yun at the PPAR meeting

On Wednesday, Feb.16, 2011, Lawrence Yun, chief economist of the National Association of Realtors, spoke to a PPAR meeting of about 325 local real estate agents and business leaders at the Crowne Plaza Hotel. His main message was that businesses that are now sitting on loads of cash need to start spending money and creating jobs to help the now-stabilized housing market continue to improve.

In a wide-ranging overview of the nation’s economic problems, the state of the economy and his outlook for 2011 and beyond, Yun said:

• For now, the housing market is “bouncing along the bottom,” a term economists use to describe market conditions that have reached their low point and are poised for a rebound.

• National prices have stabilized and there should be no “meaningful change” in home values in 2011 or the next few years.

• Long-term mortgage rates will rise to 5.5 percent this year and tick upward to 6 percent in 2012.

• Some homebuilders have had difficulty obtaining financing, and a lack of new construction could actually lead to a housing shortage in the next few years.

• Rising apartment rents will prompt many renters to consider, considering the tax deductions available to property owners, whether they might be better off purchasing a home, rather than renting.

• Some 2 million jobs will be created in the next few years, yet unemployment will remain at 9 percent this year and won’t decline to 6 percent until 2015.

• Doing away with the homeowner mortgage tax deduction would deal a major blow to the housing industry — slowing sales and reducing values. The Obama administration again proposed this week to curtail the deduction; Yun expects Congress to reject the proposal.

• Loose lending standards and exotic loans were the primary cause of the national housing downturn. Traditionally, homebuyers moved into so-called starter homes and established equity before moving up. But before the recession, underwriters only wanted to know if a buyer “had a heartbeat” before approving half-million-dollar home purchases. Now, however, the pendulum has swung too far the other way, Yun said, and homeowners are having difficulty obtaining loans.

Dr. Yun stated that there are several basic reasons why Colorado Springs has shown so much strength in the recovery from the recession:

  1. The housing bubble that burst in Colorado Springs was much more moderate than other cities.  
  2. A large percentage of our local economy is strengthened by salaried military and governmental workers.
  3. We have a large available pool of high-tech workers
  4. Local businesses are empowered to make their own business decisions
  5. The economic recovery of the entire state has helped our local recovery
  6. Compared with other regions, the educational level of our entire local population is way-above average.

CLICK HERE If you would like to view a short slide presentation of Mr Yun’s comments about Colorado Springs. If you would like to see a video of Mr. Yun’s entire presentation, or view a PowerPoint presentation of his entire talk, simply click here 

 

EL PASO COUNTY PROPERTY TAXES WILL BE LOWER IN 2011, CAUSING A DECLINE IN TAX REVENUES (From the Gazette)

Declines in real estate values mean tax relief is on the way for El Paso County property owners. But so are financial headaches for the various government entities — cities, school districts, the county and others — that rely on revenues generated by property taxes.

For the first time in 20 years, property values in El Paso County have fallen in all categories, said County Assessor Mark Lowderman. By the end of this month, his office will finish conducting property reappraisals of 260,000 parcels, including homes, apartment buildings, vacant land, office space, industrial buildings and retail sites.

2011 property taxes aren’t due until next year, but around May 1, property owners will receive notices of valuation from this reassessment cycle. The assessed value of residential property is based on home sales in the county from July 1, 2008 to June 30, 2010, a period of turmoil for the real estate industry. 

“We’re finally starting to address the declining market, and in May, people will get notices to that effect,” Lowderman said.

Overall, he predicts an average 15 percent reduction in value among all categories of properties.

The fact that property values have fallen isn’t news — it’s been known for years that, because property taxes lag current market conditions, reduced values, and thus revenue losses, were coming.

“These are things that were projected,” said Fred Crowley, a researcher and professor at the University of Colorado at Colorado Springs and director of the Southern Colorado Economic Forum. 

“It’s unfortunate that everyone is losing economic value as a consequence to bad loans that originated on Wall Street. This is not a people problem; it’s something the financial markets caused,” he said.

But preliminary findings indicate the next several years could be even more difficult for public entities than imagined. 

The assessor’s office reappraises property every other year. Since the early 1990s, local residential property values have experienced double-digit increases, Lowderman said, with an average increase of 10 percent to 12 percent over each two-year assessment cycle.

This year is what Lowderman describes as “attention getting.” Early results for the 2011 reassessment show that residential property has dropped in value 5 percent to 25 percent since the last reappraisal in 2009.

Some pockets, primarily areas on the eastern plains with manufactured and mobile homes, are experiencing dramatic decreases of 40 percent or more, Lowderman said.

Crowley calls that number “startling,” and said school districts on the eastern plains could face serious financial issues in the coming years.

School districts rely heavily on property tax revenue, Crowley said; for some it constitutes up to 65 percent of their revenue. Of the $461 million being collected this year for 2010 property taxes, local school districts will collectively receive $318 million, or 69 percent of the total revenue.

The highest property value declines are in neighborhoods with the largest amounts of foreclosures and short sales, which discount property prices at sale time. But Lowderman said his office takes into account conditions of properties, so as to not unfairly skew a neighborhood assessment.

The southeast portion of Colorado Springs is one of the hardest hit, Lowderman said, in neighborhoods such as Stratton Meadows, Park Hill and Deer Field Hills, along with starter-home neighborhoods, such as Stetson Hills, in the northeast. But high-end developments aren’t immune. For example, Cedar Heights, to the west, is showing sizable declines in home values, he said.

Property owners will benefit with lower tax bills in 2011, and likely through 2015 because reappraisals done in 2013 will reflect the market conditions of the latter half of 2010 and 2011. Crowley said he doesn’t expect much commercial or industrial construction for the next several years, and Lowderman predicts a wave of commercial foreclosures, both of which will lower property values.

“So many people are out of work or underemployed, so some relief on their property taxes is going to be very welcome,” Lowderman said.

If a property owner has a 25 percent reduction in property value, and the mill levy assessed remains constant, that will equate to a 25 percent reduction in property taxes due next year.

Property owners can appeal their valuations May 2 through June 1, by phone, fax, e-mail or in person at the assessor’s office. The assessor’s office typically receives 5,000 to 6,000 appeals, Lowderman said, and adjusts about half of them. But in 2009, his office fielded 10,000 appeals, primarily because property values were not reflecting current market conditions.

“We had to explain that we weren’t nuts and that there’s a two-year time lag,” he said. “I don’t know what to expect this year — we haven’t been down this road in so long.”

Using actual data from our MLS, Salzman real estate Services, Ltd. has established that the local, average home sales price dropped from $256,829 in 2008 to $237,318 in 2010. (-7.6%) The median home sales price dropped from $223,000 in 2008 to $205,000 in 2010. (-8%). Keep in mind, however, that different neighborhoods and areas within the county can vary much more than 7-8%.

When you receive your new assessment from the county (around May 1), please give us a call to discuss it. We may be able to assist you in filing for a lower assessment, based upon MLS records for your neighborhood. In past years, we have assisted many of our clients and friends by providing documentation which resulted in lowering their assessments. We would be pleased to help you with this process. Call us.

 

WHY YOU SHOULD BUY THAT HOME NOW

  • The Colorado Springs real estate market is already starting to appreciate. (+5.2% last year, as compared to the national average of .02%).
  • Mortgage interest rates are starting to go up
  • In October, the maximum size of mortgages backed by Fannie Mae and Freddie Mac will shrink
  • Mortgages backed by Freddie and Fannie will get more expensiveby 0.25% to 0.50%
  • Later this summmer,The Consumer Financial Protection Bureau could make the process of originating mortgages more expensive for the lender by requiring, for example, more personnel to check documentation. These costs will be passed along to borrowers.
  • Premiums for FHA-insured loans will be going up by 25 basis points in April. The hike comes out to an extra $250 per $100,000 of mortgage per year. Additional increases have been proposed.
  • Down payment requirements for Fannie and Freddie could rise from 5% to 10% if current proposals from the government are approved. Some officials are even calling for 20% down payments.
  • Credit scores required for mortgages are getting tougher

As Barry Zigas, director of housing policy at the Consumer Federation of America points out, "In most markets, there's no reason to delay waiting for something better to coma along - It probably won't".

Call us !!!

 

LATEST STATISTICS

Click here for the latest Sales and Listing statistics for the Pikes Peak Region.

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

Hello?"   "Hi honey. This is Daddy. Is Mommy near the phone?

"No Daddy. She's upstairs in the bedroom with Uncle Paul."

After a brief pause, Daddy says, "But honey, you haven't got an Uncle Paul."

 "Oh yes I do, and he's upstairs in the bedroom with Mommy, right now."

Brief Pause. "Uh, okay then, this is what I want you to do. Put the phone down on the table, run upstairs and knock on the bedroom door and shout to Mommy that Daddy's car just pulled into the driveway."

"Okay Daddy, just a minute."

A few minutes later the little girl comes back to the phone. "I did it Daddy."

"And what happened honey?" he asked.

"Well, Mommy got all scared, jumped out of bed and ran around screaming. Then she tripped over the rug, hit her head on the dresser and now she isn't moving at all!"

"Oh my God!!! What about your Uncle Paul?"

"He jumped out of the bed , too. He was all scared and he jumped out of the back window and into the swimming pool. But I guess he didn't know that you took out the water last week to clean it. So he hit the bottom of the pool and I think he's dead."

***Long Pause*** ***Longer Pause*** ***Even Longer Pause***

Then Daddy says, "Swimming pool? ............Is this 486-5731?"