The Real American Idol--HOMEOWNERSHIP!

Simon Cowell would have to be considered congenial compared to the critics of real estate in the last few years. But like the popular TV show, where the ultimate winner is not chosen by a select few but instead by the vote of the nation, homeownership again has proven to be the choice of the people. There have been numerous survey’s and polls done in the past 90 days that confirm this.

American Attitudes About Homeownership is a new survey conducted by Harris Interactive for the National Association of Realtors. The findings of this survey combined with the findings of Fannie Mae’s November National Housing Survey and last week’s Gallup Poll paint a clear picture that the majority of Americans still value homeownership and believe in its benefits. In the latest survey, America’s belief in owning a home came through loud and clear.

Here are a few of the findings:

Homeowners and renters agree that owning a home is a positive choice. A majority of homeowners and a sizable percentage of renters agree or strongly agree that owning a home provides a healthy and stable environment for raising a family (87 percent among homeowners and 64 percent among renters), that it helps them meet long-term financial goals (77 percent among homeowners and 55 percent among renters) and it helps them realize the American Dream (70 percent among homeowners and 48 percent among renters).

Most homeowners (95 percent) and renters (72 percent) believe that over a period of several years, it makes more sense to own a home than to rent.

More than 8 in 10 homeowners (82 percent) and half of renters (50 percent) would prefer to buy a home if they had to move in the next six months. Furthermore, 78 percent of homeowners consider now a good time to buy as do 58 percent of renters.

Homeownership is viewed as a positive experience while less so for renting. Eighty-eight percent of current homeowners report that owning a home has been a positive or very positive experience. About half of renters (51 percent) consider their experience as positive or very positive.

Many renters aspire to homeownership. More than 6 in 10 renters are at least somewhat likely to purchase a home in the future and 24 percent indicate that they are extremely likely. Among young adult renters, 74 percent say they are likely to buy at some point in the future. About one-third (35 percent) of renters plan to purchase a home in the next 3 to 5 years (43 percent among young adult renters).

More about the non-financial benefits of homeownership

We have argued for some time that the benefits of homeownership are more than just financial. This survey addressed this point and reported:

A larger share of homeowners than renters describe their communities as safe and stable. Homeowners also report that they are more satisfied with their community and family life. While many factors contribute to a positive community environment, a large percentage of homeowners and renters believe a high rate of homeownership is one factor. Homeowners generally feel more connected to their communities, participate in community and civic activities more frequently and are more likely to know their neighbors well.

Bottom Line

Owning a home has both financial and social benefits for your family. Today, you can buy a home at a discounted price and at an historically low interest rate. Why wait?

For More Information on Purchasing a Home For Sale in Colorado Springs, Contact Mike MacGuire, your Colorado Springs Real Estate Expert! Curious about the Real Estate Market in Colorado Springs, Contact Mike Today!

Does It Make Sense to Buy A Home?

The financial turmoil we have experienced over the last five years has definitely taken it’s toll. It has especially been a difficult time for real estate. Nationally, values have fallen over 25% and there may be more softening in prices to come. We realize that this has caused difficulty, and in some cases, heartbreak for many families. People unable to make their mortgage payments have been forced to sell or, even worse, have faced foreclosure.

However, the thing that has continued to amaze us is the country’s steadfast belief in the benefits of homeownership even in these most difficult of times. The vast majority of Americans still realize that the value of a family owning a home goes far beyond just the financial considerations.

There have been three major surveys done in the last 75 days delving into Americans’ current belief in the value of owning a home:

1. The National Housing Survey by Fannie Mae this past November.
2. The Housing Survey by the Gallup Organization completed last month.
3. The American’s Attitudes About Homeownership (AAAH) study completed by Harris Interactive for the National Association of Realtors.


Each showed the country still believes that buying a home makes all the sense in the world. Let’s consider some of the findings:

Is owning a home good for a family?

In the AAAH study, 87% of homeowners and 64% of renters believed that “owning a home provides a healthy and stable environment for raising a family”.

The Fannie Mae study showed that the main reason people gave for buying a home is that “it is a good place to raise children and provide a good education”.

Has owning a home been a positive experience?

AAAH: The study shows that an astonishing 88% say it has been “a positive or very positive experience”. An overwhelming majority of home owners are happy with their decision to own a home. A full 93% of owners surveyed would buy again.

Fannie Mae: The study shows that 95% see homeownership as a “positive experience” for them and their families.

Do renters aspire to own a home?

AAAH: Most renters aspire to home ownership. The majority of renters (63%) say they are at least somewhat likely to purchase a home at some point in the future. Among them, young adults (18- to 24-years-old) have the strongest aspirations for home ownership.

Fannie Mae: 67% of renters plan to purchase a home in the future.

Is now a good time to buy a home?

AAAH: 78% of homeowners and 58% of renters believe now is a good time to buy.
Fannie Mae: 64% of those surveyed said it is a good time to buy a home.
Gallup Poll: 67% of Americans think now is a good time to purchase a home.

Bottom Line

Survey after survey report Americans believe two things: that there is a value in owning a home and that now is the time to buy!! What are you waiting for?

Interested in Buying a Home in Colorado Springs? Curious about Selling a Home in Colorado Springs? Contact Mike MacGuire Today, your Colorado Springs Real Estate Expert for More Information on Purchasing a Home for Sale in Colorado Springs, Selling a Home in Colorado Springs and also the Colorado Springs Real Estate Market!

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Is the Housing Market Starting to Come Back?

It seems that the housing market is finally showing signs of a recovery. We are not suggesting that it will come roaring back and we will see 2006 numbers again. However, the National Association of Realtors released their December Existing Home Sales Report yesterday. The report showed a 12.3% increase in closed transactions over the month before. Earlier in the week the Census Bureau reported that:

Privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 635,000. This is 16.7 percent above the revised November rate of 544,000.

Should we believe that real estate is starting to make a comeback? To some degree, we think yes. Both of the above reports are promising.

However, not all the news in the reports was positive. Existing home sales were slightly down from the same month last year. Housing completions were down 22.2% from last year’s numbers. Yet, we must also factor in that the numbers from the end of last year were artificially inflated by the Homebuyer Tax Credit. Any correlation between these numbers is not an apple-to-apple comparison.

These reports, coupled with anecdotal information we are receiving from the agents we coach all across the country, seem to suggest that we may have bottomed out in regard to the number of transactions being completed. That can only be a positive for the industry.

Bottom Line
Even though there is a huge amount of visible and shadow inventory which will continue to put downward pressure on prices, it seems that buyers are beginning to realize that there are tremendous opportunities in the market.

For More Information on the Colorado Springs Real Estate Market, contact Mike MacGuire, your Colorado Springs Real Estate Expert. Interested in Purchasing a Home for Sale in Colorado Springs or Selling a Home in Colorado Springs? Contact Mike MacGuire Today!

What IS Risk Retention & How Will it Effect You?

The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law by President Barack Obama on July 21, 2010. The law’s far reaching impact will take years to understand, but as professionals we do know that Title IX (Risk Retention) will have a dramatic impact on consumers and the mortgage industry.

What is Risk Retention?

Risk Retention is a new burden for those who securitize mortgages- those entities that bundle closed loans into pools and sell them in the secondary market. These are typically Wall Street style entities. They have little to no direct impact with the consumer, but play a vital role in maintaining liquidity in the housing market. Their role is to replenish the cash available for lenders to lend by buying closed loans from lenders (thereby providing new cash for lenders to lend again). As intermediaries between lenders and long term investors, securitizers perform a much needed function.

While it seems that loans guaranteed by the government (FHA, VA, USDA, etc) will have their securities exempt, there is still a huge number of conventional loans (including loans slated for Fannie and Freddie) that will be impacted.

As a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act, these securitizers will be required to retain an interest in many of the loans. Up-to-now they mostly have just been a pass-through entity. That adds costs to their operations; costs that will have to be passed on to the consumer.

What will be the cost?

Good question! Although this is slated for enactment and enforcement in April, there is no clear definition or direction from the government. The bill talks about retention of 5% of the risk, but what is the risk? We are confident in saying it’s not 5% of the loan amount because typically a lender doesn’t lose all their money in a foreclosure and not every loan gets foreclosed on. There is some sentiment that “risk” might be defined as 2% of the loan amount; and 5% of that would only be 10 basis points, but that would likely mean a 10 basis point hike in mortgage interest rates to capture the additional cost from the consumer. That hurts home buyers, sales prices, and slows recovery.

Understand that everyone is taking educated guesses. We can see scenarios where lender would be almost forced to avoid lower loan amounts which would have an even bigger impact on the areas that fuel recovery- neighborhoods for first-time buyers. If it lowers the number of first timers who become home buyers, it will hurt those sellers who are looking to move up. Higher rates coupled with lenders shying away from lower cost neighborhoods…..bad recipe.

A lack of clarity and a lingering start date are forcing some of the major securitizers to start implementing strategies to protect themselves from a compliance prospective. Many lenders have focused on lobbying for a narrow definition of “risky” loans and have promoted eliminating convention loans that are fully documented with certain credit scores or income documentation, for example.

But, NOT Wells Fargo….

Wells Fargo is on record as proposing that anyone who buys a home utilizing conventional financing with less than a 30% down payment should be required to get Private Mortgage Insurance- a significant increase from the 20% now required. (Having that PMI, would make the loan virtually risk-less for the securitizer.) Of course, that PMI would bring with it additional costs for borrowers and, once again, make buying a home more expensive (in this case for many of the “A Borrowers”).

I want to point out that we are 90 days away from SOMETHING that is going to make home buying more costly and force some renters to stay put. If you are looking to buy, GET MOVING! If you are looking to sell, PRICE YOUR HOME TO COMPEL BUYERS TO MAKE OFFERS. Time is running out. Tick Tock!

For More Information on the Colorado Springs Real Estate, contact Mike MacGuire, your Colorado Springs Real Estate Expert. He can also answer any questions you may have on being a First Time Home Buyer, Purchasing a Home for Sale in Colorado Springs or Selling a Home in Colorado Springs.

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Most Americans Say It Is a Good Time to Buy A Home

We have been making two major points for several months. If you are selling a house, you must do it now AND if you are buying one, you must also do it now. This sounds crazy – but it is true. PRICE is the most important thing to a seller. With prices projected to fall through the first half of 2011, if you want to sell, do it now. The alternative might be to wait over a year just for prices to recover to current values.

The second point revolves around the fact that buyers are more concerned about COST (price AND interest rate). Fannie Mae, the National Association of Realtors, the Mortgage Bankers Association and the PMI Company are all projecting interest rates to rise this year. If you want to buy, your best time to purchase could be right now.

We have had people question us on the second point. We truly believe it is a good time to buy however. And a new survey says that the majority of Americans agree with us. Gallup just released a poll showing that 67% of Americans think this is a good time to purchase a home. The interesting thing is that the same poll showed that more people believed that prices would decrease (27%) than increase (21%). Most people realize that this is a opportune time to purchase even if prices continue to soften.

Even the Gallup people weighed in on the subject:

Overall, there is good reason for most Americans to think now is a good time to buy a house. Interest rates remain near historic lows. Home prices are down sharply, providing many incredible buys.

Bottom Line

There may be people advising you to use caution before buying a home right now. That is probably good advice. However, there is a difference between caution and fear. Fear could paralyze you and prevent you from making a good decision. Caution will make sure you make the right decision. And remember: if you do think it makes sense to buy your home today, 2 out of 3 people agree with you.

For More Information on Purchasing a Home for Sale in Colorado Springs or Selling a Home in Colorado Springs, contact Mike MacGuire, your Colorado Springs Real Estate Expert.

Buy or Rent? Play Chess, Not Checkers

A number of pundits are saying that now is NOT the time to buy a home. They look at how prices have fallen over the last four years and claim that investing in real estate is too risky. However, we must also look at the gamble one takes in not buying to determine which is the riskier of the propositions. The cost of renting today verses the cost of purchasing a home today must be compared. We must also consider probable future costs in order to fully calculate the risk. We must think a few moves ahead.

We must play chess, not checkers.

There is much to consider in the rent/buy decision. If you own a home, your mobility is curtailed to some degree. If you rent, there is less stability in the household as the landlord, not the tenant, determines if or when the house must be vacated. For the sake of today’s debate, we will only look at the financial aspects of this decision.

Renting
In a growing number of regions, homeownership is already less expensive than renting. And, it looks like rents are headed even higher. The WSJ, in an article on their online resource Market Watch, titled Double Digit Rent Hikes Are on the Way reported:

Apartment dwellers could be facing double-digit rent increases in the coming years as a shortage of new multifamily units coupled with a rise in prime renter-age households gives landlords clout they haven’t see since the mid-1990s.

“Demand pressures are building. It’s not bad today because rents have been down the last two years,” said William McLaughlin, an executive vice president with Avalon Bay Communities.

“But it feels a lot like 1992, when we were coming out of a deep recession … and we ended up seeing double-digit rent increases after that,” he said.

…Already there are signs the apartment market is tightening and in some cities rents are already going up 7% or 8% per year.

Does it make sense to pick a form of housing that will dramatically increase in cost over the next several years? You may think you are being forced to pick the ‘lesser of two evils’ knowing that house prices are still falling. Realize, even with prices still softening, the cost of purchasing a home is determined by both the price and the financing.

Buying
Although prices are falling, interest rates are on the rise and that can have a huge impact on your cost. The monthly mortgage payment (COST) you can negotiate today may be the lowest it will ever be in your lifetime.

John Paulson, one of the smartest housing analysts in the country, recently made it a point to say that if you don’t own a home – BUY ONE! Stan Humphries, chief economist of Zillow, explains that Paulson is talking about COST NOT PRICE.

Paulson is not just betting on house prices, but also on the ability to lock in low financing now with the expectation that it will be easier to pay it back in the future because of inflation.

Bottom Line
Don’t play checkers! If you want to make the best financial decision regarding your housing, think ahead a few moves. Play chess by considering future costs.

If you are considering Purchasing a Home For Sale in Colorado Springs or needing to Sell a Home in Colorado Springs, contact Mike MacGuire Today, your Colorado Springs Real Estate Expert. He will walk you thru the process of Purchasing a Home for Sale in Colorado Springs or Selling a Home in Colorado Springs. He will also discuss with you your options in the Colorado Springs Real Estate Market.

Tips for Interviewing a Realtor

Whether you’re buying or selling a home, ask your REALTOR®:

Can you explain in detail the process from contract to closing?
Specifically describe how you will represent my interests above yours throughout the process?
What is the process you use to negotiate on my behalf?
What is your real estate background and experience? How will it help me?
Are you a REALTOR®?
Do you work in real estate full-time? How accessible are you? How can I reach you?
For which aspects of the home buying process are you available? If you are unavailable, will someone else be available to work in your place? (presenting offers, inspections, closings, etc.)
How will you assure that deadlines are meticulously met?


Planning to buy a Colorado Springs home?

Tell me in detail the type of information you can gather for me about a home listed for sale that may be of interest to me.
What type of assistance do you provide in finding a mortgage lender?
Do you have any financial affiliations with mortgage lenders, and is that a conflict of interest?
What role do you play in the mortgage lending, title and closing processes?
How will you assist me in the inspection process?
How can you assist me in dealing with a ‘‘for sale by owner?’’
What are the on-going services you provide after closing?

Planning to sell a Colorado Springs home?

Tell me in detail how you plan to market my property.
What responsibilities do I have as the seller?
How long does this process usually take?
How do you determine if buyers are qualified and will make it through closing?
Describe how you will help me in properly presenting my home for sale.
What is your role in pricing, showing and taking offers on my home?
How frequently and in what way will you contact me with feedback on those who have expressed interest in or viewed my home?

For More Information on Selling a Home in Colorado Springs or Purchasing a Home in Colorado Springs, Contact Mike MacGuire, your Colorado Springs Real Estate Expert!

Why Prices Will Soften in the 1st Half of 2011

The big question facing real estate in 2011 is which direction are home prices headed. We agree with most experts who believe prices will continue to soften for the first half of the year. Supply and demand will determine this. Let’s look at where real estate sits entering this year compared to the beginning of 2010.

Demand

1.) Last year, The Home Buyers Tax Credit was both extended to the end of April and expanded to include move-up buyers. This increased demand to some degree. However, most now believe that the tax credit simply dragged demand forward from later in the year. What took place was a surge in sales prior to the deadline and then a dramatic fall off after April.

This year, there is no such tax credit in place to drive demand. It also seems that there is no political will to revisit a homebuyers’ tax credit at this time.

2.) Last year, the Fed’s purchase of mortgage-backed-securities was extended to the end of March. That increased demand by guaranteeing low interest rates through the first quarter. And economic conditions forced interest rates to new lows even after the Fed backed off the purchases. There was a full six months of historically low rates to bolster demand.

This year, interest rates are rising as we enter January and are projected to continue their upward climb. The National Association of Realtors, the Mortgage Bankers’ Assoc and PMI are all calling for rates to continue to rise through the first half of 2011.

Supply

1.) Last year, the administration was taking the initial steps in implementing a comprehensive loan modification program. This program limited the number of foreclosures coming to the market at discounted prices. It also delayed the entrance to the market of many more distressed properties. According to the OCC and OTS Mortgage Metrics Report, we enter 2011 with “newly initiated home retention actions” down 32.4% from the same time last year.

This year, the administration is touting their new ‘short sale’ program. This will increase the number of distressed properties hitting the market.

2.) Last year, state and local governments were declaring foreclosure moratoriums thereby limiting the number of foreclosures entering their markets. There doesn’t seem to be the same political will to revisit moratoriums in 2011.

This year, though the robo-signing mess will initially delay the entrance of some distressed properties to the market, most believe there will be a wave of discounted properties coming in the first quarter.

CNBC reported on economist Nouriel Roubini’s predictions on this issue:

“There has been an effective moratorium on foreclosure,” said Roubini.

And the beginning of the end of that moratorium means more housing supply is about to become available on the market.

“The shadow inventory of not-yet-foreclosed homes—due to the moratorium—will surge in the next year,” Roubini says.

Bottom Line

Without the programs that encouraged buyers last year, we see a steady but slow growth in demand. Without a strong commitment to limiting distressed properties, we believe that there will be a wave of discounted real estate entering the market in the form of ‘short sales’ and foreclosures. A limited increase in demand and a surge in supply will equate to lower home prices as we move into the year.


For More Information on the Colorado Springs Real Estate Market, Contact Mike MacGuire, your Colorado Springs Real Estate Expert for information on Purchasing a Home for Sale in Colorado Springs or Selling a Home in Colorado Springs.

Oswald Acted Alone and We Did Land on the Moon

We believe that things are usually as they seem. We are not the type of organization that believes in conspiracies. However, there is something interesting in some of the housing price studies we are seeing in our research. It seems that some of the groups making the predictions are the same ones that have the greatest power to affect the prices they are projecting.

Most housing analysts warn that the heaviest downward pressure on prices will be created by distressed properties and the speed at which they will be released to the market. Research shows that ‘short sales’ sell at a 20% discount and foreclosures sell at a whopping 40% discount. Obviously, when and how much discounted real estate enters the market will have a major impact on prices of surrounding properties.

Back to our research

We are now seeing that a certain segment of those projecting future pricing have two things in common:

1. They believe prices will fall rather dramatically in the first half of 2011
2. They have control of the flow of discounted properties to the market

Predictions for the first half of 2011 by firms that fall in the above category:

Bank of America projects that prices will fall 3.7%
Fannie Mae predicts that median prices will drop $12,500
Wells Fargo reported that they feel home prices will drop 8%

Not a coincidence

We are beginning to realize this is not a coincidence. The organizations which should best know when the surge of foreclosures will be released are saying house prices will be hit the hardest in the first half of the year. We are not asserting that there is anything devious in what we have found. We are just reporting that those who have control over the flow of distressed properties must think/know that inventory is about to be released. Why else would so many of them be predicting a sharp decline in home values in the next 120 days?

Bottom Line

If you currently have your house on the market and are hoping that you will see a better price after the snow melts or the temperature warms up (aka Spring), BE CAREFUL! Those in the know are warning you the best price might be attained TODAY!

For More Information on Selling a Home in Colorado Springs, Purchasing a Home in Colorado Springs or the Colorado Springs Real Estate Market, contact Mike MacGuire, your Colorado Springs Real Estate Expert.

Are Short Sales the BIG Solution?

My blog yesterday discussed the challenge that banks are facing in their attempt to complete foreclosures. Some courts are attempting to void the foreclosure if the bank did not properly transfer the mortgage from one bank to another. The courts are claiming that, if you didn’t ‘legally’ transfer ownership of the loan documents, then you don’t ‘legally’ own it. If you don’t own the debt instruments, you can’t foreclose on them. What does this mean to banks when they handle future foreclosures?

One possibility is that banks may start favoring ‘short sales’ over foreclosures in more cases. The ‘short sale’ option has already been gaining momentum. The OCC and OTS Mortgage Metrics Report shows foreclosures are up 57.5 % year over year; ‘short sales’ are up 82.9%.

Now, with courts scrutinizing the foreclosure process, it may make more sense for banks to work with the current homeowner to sell the home even if it is at a price less than the amount owed on the mortgage. Adding to this possibility is that banks could lose less in a ‘short sale’ than a foreclosure. A ‘short sale’ sells for 81% of what a similar, non-distressed property would sell. A foreclosure sells for 59% of full value.

In the past, banks weren’t concerned with the difference because mortgage insurance companies had the legal requirement to cover the majority of the additional loss. However, insurance companies are now fighting these payments claiming that the original mortgage application might have been fraduantly written. This all adds up to the liklihood that banks will look more favorably at the ‘short sale’ process.

To this point, an article in Housing Wire quoted John Vella, the chief operating officer at technology provider Equator:

“Investors usually see a 20% to 30% better execution on a short sale versus an REO sale when it comes to loss severity. With the foreclosure volume, current and pending REO inventories, servicers will be pressed to do more short sales in 2011…they could see an increase of at least 25% over 2010 in completed short sales.”

Bottom Line
For the reasons mentioned above, the banks will probably lean more toward ‘short sales’. If you are a homeowner not able to pay your mortgage, this may be a much better option then allowing the home to go to foreclosure.

For More Information on the Colorado Springs Real Estate Market, Selling Your Home in Colorado Springs or Purchasing a Home in Colorado Springs, Contact your Colorado Springs Real Estate Expert, Mike MacGuire.

Will Foreclosures Be Erased?

A court in Massachusetts voided two bank foreclosures this past Friday. The decision has already created a ripple effect across the banking community. Will other courts also decide to void local foreclosures? Does this put an added burden on banks when they are trying to complete a foreclosure process? What will it mean to the real estate market? Let’s take a look.

What actually happened?

Though the challenges addressed yesterday might have been brought to light by the robo-signing mess, that situation was not involved in this ruling. The question addressed here was much deeper than someone not checking paperwork. The question was whether the bank could prove they owned the mortgages they were foreclosing on.

There are set legal procedures that must be taken to transfer a mortgage from one person/entity to another. It seems that these requirements were not fulfilled by many banks over the last several years when mortgages were transferred quickly and often.

The court decided that, since proper procedures were not followed, there was no legal transfer of the mortgage to the new bank. If the new bank didn’t legally own the loan, they had no right to foreclose on it.

What does that mean to other foreclosures?

That’s the million dollar question! No one knows for sure. Will every foreclosure be voided? No. Will many? That depends on how the courts rule and how the banks react.

Bloomberg reported:

Joshua Rosner, an analyst at the New York-based research firm Graham Fisher & Co., called the decision “a landmark ruling” showing that at least in Massachusetts a mortgage “must name the assignee to be valid.”

“This is likely to open the floodgates to more suits in Massachusetts and strengthens cases in other states,” Rosner said…

Although the decision was issued by a Massachusetts state court, it will be used by homeowners in foreclosure cases in other states, said Matthew Weidner, a St. Petersburg, Florida, lawyer who represents such homeowners.

“This is a very detailed, very specific indictment of an entire industry’s practices and procedures, and it’s an indictment that is going to send shockwaves throughout the entire mortgage, foreclosure, real-estate servicing industry,” he said.

Couldn’t this cost banks millions of dollars to correct?

Actually, it could cost billions. Market Watch reported:

Bank stocks fell sharply Friday as the highest court in Massachusetts reportedly ruled that two foreclosures were invalid because banks didn’t show they owned the mortgages.

The decision is the latest setback for banks after some lenders halted foreclosures in 2010 following claims they didn’t have proper documentation.

… “These cases fall generally into the class of mortgages where origination paperwork was mishandled or poorly documented,” Mitchell said, estimating that U.S. banks face between $80 billion and $120 billion of potential liability.

What does this mean to real estate?

If you are in the market to buy or sell a home, realize that the inventory of foreclosed properties that had been scheduled to hit the market in the first half of 2011 may be delayed. The New York Times reported:

An array of federal and state investigations into the way banks foreclose on delinquent homeowners has contributed to a sharp slowdown in foreclosures across the country…

The pace of foreclosures could be curtailed further by courts. In a closely watched case, the highest court in Massachusetts invalidated two foreclosures in that state on Friday…

If the slowdown continued through this month and into the spring, it could be a boost for the economy. Reducing foreclosures in a meaningful way would act to stabilize the housing market, real estate experts say.

Bottom Line

If you are in the foreclosure process and think your rights have been impaired in any way, you should perhaps get legal counsel.

If you are thinking of selling, this has increased the window of opportunity you have to sell before this ‘discounted’ inventory comes to market.

If you are buying, prices may not soften any further to later in the year. Many are predicting that interest rates will rise as we go through the year. If you are thinking of buying in the next six months, now might be an opportune time.

For more information on Purchasing a Home For Sale in Colorado Springs or Selling a Home in Colorado Springs, contact your Colorado Springs Real Estate Expert, Mike MacGuire for more information on the Colorado Springs Real Estate Market.

Rent vs. Buy: Do the Math and Then Ask Mom

A growing number of purchasers are young adults being persuaded to buy now.... who are the people selling them on the American Dream? Their parents! It seems that parents of some adult children are strongly suggesting that their children take advantage of the low cost of homeownership available today. Some moms and dads are helping financially and are even co-signing for the mortgage.

At first, we found this to be rather surprising. However, after thinking about it, it made complete sense. Here are the reasons why.

Do the Math

Let’s look at the financial aspects of renting vs. buying. With house prices falling and rental prices rising in many markets, the possibility that owning a home could cost less than renting one is growing.

In an article from CNN Money earlier this week, they looked at this issue as we move into 2011:

Perhaps not surprisingly, it makes more financial sense to rent than buy today in many U.S. cities…

But that may finally be about to change. Moody’s chief economist Mark Zandi expects the trend to reverse this year in many major cities.

“By mid 2011 and certainly by end of 2011, buying will be superior to renting in most parts of the country,” Zandi says.

As one person said to us recently: “Rents are like adjustable rate mortgages. They adjust often and most times they adjust upward!”

Talk to Mom

Middle age parents who have owned a home understand its true value. A home has always been a good long term financial investment. However, homeownership also has many other benefits.

As a matter of fact, Fannie Mae just came out with their National Housing Survey which asked the question directly: Is this a major reason to buy a home?

The study broke up the answers into financial and non-financial reasons. The top four reasons and six of the top ten reasons were NON-FINANCIAL. The top four are below:

1. It means having a good place to raise children and provide a good education.
2. You have a physical structure where you and your family feel safe.
3. It allows you to have more space for your family.
4. It gives you control over what you do with your living space (renovations & updates).

Should this surprise us? Aren’t these the same reasons our parents bought their home? Aren’t these the same reasons we purchased our home?

These are the same reasons parents have suggested their children buy a home. They want the same things for their grandchildren that they believed to be important for their children.

Bottom Line

Now that the craziness of this housing market is beginning to show signs of settling, people are getting back to the core values that families have always embraced. Homeownership is definitely high on the list.

Would you like to discuss buying a home in Colorado Springs? Are you a First Time Home Buyer? Perhaps you are considering Selling a home in Colorado Springs. Now is the time to contact your Colorado Springs Real Estate Expert, Mike MacGuire. He will discuss with you in detail the Colorado Springs Real Estate Market!

Would You Hire a Fat Personal Trainer?

Imagine you decided to get into great physical condition in 2011. It was your most important New Year’s resolution. Would you hire an out-of-shape trainer to help you achieve your goal? Of course you wouldn’t. You would want to take advice from a person that already is in the physical condition you hope to attain.

Shouldn’t the same principle apply when considering the financial risks involved in purchasing real estate in today’s market? We should want to follow the people who have already reached a good financial position in their lives.

How do we get the wealthiest people in the country to advise us as to whether or not now is the time to buy a home? It’s actually rather easy. Just look at what they are doing and do the same.

Right now the wealthiest people are investing in real estate. It was recently reported that sales of condos over $4 million have skyrocketed. Crain’s NY Business explains:

Nine apartments asking more than $4 million went into contract last week, according to brokerage Olshan Realty. The firm tracks the high-end residential market and began releasing its data to the public last month. By comparison, during last year’s Christmas week, no apartments over $4 million went into contract …

In fact, the number of luxury apartments that went into contract so far this month, 52, rose 62.5% from the same period a year ago. UrbanDigs, an analytics and consulting firm that tracks Manhattan housing activity in real-time, confirmed the strong contract signing activity for luxury apartments last week. It defines the luxury market as including properties listed at more than $5 million and found that there were 83 such contract signings this month, up 10 from a month ago.

This coupled with previous information on the luxury purchaser proves the wealthy are again excited about real estate.

Bottom Line
If we want to make great financial decisions, we must look at what the most affluent are doing and do the same. The wealthiest are buying real estate. Shouldn’t we?

For More Information on Purchasing a Home for Sale in Colorado Springs or Selling a Home in Colorado Springs, contact your Colorado Springs Real Estate Expert, Mike MacGuire today for more Information!

3 Questions You Must Answer Before Buying a Home

If you are thinking about purchasing a home in Colorado Springs right now, you are surely getting a lot of advice. And most of that advice is probably negative. Why buy now with prices still falling? Don’t you realize real estate is no longer a good investment? Don’t you know that people who bought five years ago lost their shirt? We understand the concern your friends and family have. However, let’s look at whether or not now is actually the perfect time to buy a home.

There are three questions you should ask before purchasing a home in today’s market:

1. Why should I buy if house prices are still depreciating?

We believe that in most parts of the country prices will in fact soften in 2011. Price is the major concern for anyone selling a home. When you are buying, COST should be your primary concern however. Your monthly payment (cost) is definitely impacted by the price of the home you purchase. The other major component is the interest rate. Waiting for prices to bottom out while rates are increasing can wind up costing you more over the life of the mortgage

Over the last seven weeks, rates have increased over 1/2 a point going from 4.17 to 4.86. Looking at the attached chart shows this increase. Waiting for prices to bottom out seems to make perfect sense. Yet, at a time when rates are increasing, it might NOT make sense. Make sure you have a mortgage professional help you with this math before making a decision.

In an article last week CNN Money reported:

“You can kiss those record lows goodbye,” said Greg McBride, chief economist for Bankrate.com.

Keith Gumbinger of HSH Associates, a provider of mortgage information said that the market reached a new plateau.

“I don’t think we’re going back to a 50-year low anytime soon without an economic collapse,” he said. “Rates will probably never revisit those levels.”

2. When will I begin to see appreciation if I buy now?

This is a great question. Macro Markets, LLC is a company that studies housing prices. They started their Home Price Expectation Survey in 2010. They ask 100+ housing industry experts to project housing prices through 2015. The most current survey shows that the experts are predicting prices to soften until 2012. The experts then project prices to rise reaching a cumulative appreciation of over 10% by 2015.

Purchasing a home in Colorado Springs today makes great sense from a financial standpoint. Think of the old axiom: You want to buy low and sell high. We may be at the low point regarding the COST of a home. But, this decision should not only be a financial one.

That leads us to our third and final question:

3. Why am I buying a home in the first place?

This truly is the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with finances. The Fannie Mae National Housing Survey shows that the four major reasons people buy a home have nothing to do with money:

A good place to raise children and for them to get a good education
A place where you and your family feel safe
More space for you and your family
Control of the space
What non-financial benefits will you and your family derive from owning a home? The answer to that question should be the reason whether you decide to purchase or not.

Bottom Line:

The COST of a home will probably remain relatively unchanged even if prices continue to depreciate. Don’t allow money to get in the way of you making the right decision for you and your family. In the long run, the finances will work in your favor anyway. Looking to Purchase a Home in Colorado Springs? Considering Selling a Home in Colorado Springs? Contact Mike MacGuire, your Colorado Springs Real Estate Expert for more information on the Colorado Springs Housing Market.

What You Want to Hear vs. What You Need to Know

A new year brings changes. Some homeowners will decide that this is the year to move on with their lives in some way. Some will move south to join children and grandchildren. Others will move either east or west in search of a better career opportunity. Growing families may decide to purchase a larger home with a bigger back yard. Empty nesters may determine to downsize and begin to prepare for their retirement.

Often, the families will need to sell the house they are currently living in. In this confusing and rapidly evolving housing market, the vast majority will take on the services of a professional real estate agent (88%).

According to the National Association of Realtors’ 2010 Profile of Home Buyers and Home Sellers the number one thing the seller wants from the agents is “help pricing the home competitively”. And therein lays the dilemma.

What You Want to Hear
Every homeowner wants to maximize the sale of their house by achieving the highest price possible. Every truly professional agent realizes this and has the same goal. However, what the homeowner believes to be the value of their home might not be in line with current market conditions. When the agent explains this to a seller, there can be a natural skepticism on the homeowners’ part. Is the agent telling me the truth or just trying to low ball the price to make a quick commission?

Adding to the dilemma is the fact that there is at least one agent in every market that will tell the seller whatever the seller wants to hear in order to avoid conflict. Or perhaps, just to get the listing on the property.

When these doubts arise, remember:

A pretender worries about your feelings and places great emphasis on whether or not you will like them. A professional worries about your family and how they can help. A pretender will tell you what you want to hear. A professional will tell you everything you need to know.

What You Need to Know
If an agent is telling you that the price you were hoping for is not available in the current market – listen! They are probably saving you from a further decline in value as 2011 proceeds forward.
Here are a few reputable sources and what they have to say about housing prices. Each of the quotes below were reported in the last 10 days.

Bloomberg:

A wave of foreclosures waiting to reach the market means home prices will remain under pressure in 2011 … “The double-dip is almost here,” said David Blitzer, chairman of the index committee at S&P.

CNN Money:

The (Case Shiller) report ran counter to what have been generally positive signs of economic recovery, according to Richard DeKaser, an independent housing market analyst and founder of Woodley Park Research.

The coming of the second of the double dip is icing on the cake for homebuyers, who already have benefited from prices not seen in years in most markets.

Forbes:

Stalled foreclosures waiting to hit the market will put additional downward pressure on prices, according to Westwood Capital. “The market has still not completed the price discovery necessary to determine the final value of housing – after all, easy money policy is still producing affordability that has masked the failure of prices to completely readjust to normalized levels,” Westwood said in a research note.

Wall Street Journal:

The housing market, which appeared poised for a recovery earlier in the year, now could be heading for a second downward drift …

The housing index was driven down by factors including the expiration of a tax credit for buyers who signed contracts by 4/30, which caused demand to fall off.

Prices also were weighed down by a huge inventory of foreclosed homes, which tend to sell at sharply discounted prices.

Wells Fargo & Co. projects prices will drop 8% more by mid-2011.

CNBC:

(T)here are two factors specific to the housing market that are putting downward pressure on home prices.

The first factor is the expiration of federal home buyer tax credits for first time home buyers.

“That tax credit stole demand from the future and its expiration led to another 30% fall in home sales, pushing Case & Shiller lower for the last few months,” (Nouriel) Roubini wrote in a text message earlier this morning.

The second factor putting downward pressure on home prices is the ongoing chaos with mortgage documentation, and the consequent suspension by banks of mortgage foreclosure proceedings—which has actually worsened the underlying problems in the housing market …

“The shadow inventory of not-yet-foreclosed homes—due to the moratorium—will surge in the next year,” Roubini says.

Gary Shilling:

This huge and growing surplus inventory of houses will probably depress prices considerably from here, perhaps another 20% over the next several years … Furthermore, our forecast of another 20% fall in house prices may be conservative. … another big house price decline will spike delinquencies and foreclosures leading to more REO sales, which will further depress prices. Our analysis indicates that a further 20% drop in prices will push the number of homeowners who are under water from 23% to 40%, resulting in more strategic defaults, more REO, etc.

Bottom Line

If you are considering selling your home in Colorado Springs in the next year, sit down with your Colorado Springs Real Estate Professional today. Let him explain what is taking place with prices in the Colorado Springs Real Estate Community.

If they suggest a price less than you had hoped for, do not immediately eliminate them as your agent. Ask them to explain their thinking and, if they can do that in a simple and effective way, consider yourself lucky.

You have just found a professional!

To all potential Colorado Springs home buyers: Just because prices are falling does not mean you shouldn’t buy now. Prices may be decreasing but your cost may be increasing.