Tax Credit Extended? Almost.

November 5, 2009 By

[UPDATE: legislation passed the Senate on Nov. 4th and passed the House on Nov. 5th.  The president is expected to sign the bill into law as soon as today (Nov. 6).  You can read more about the tax credit extension and expansion here.]

As you may already know, the $8,000 tax credit for first time homebuyers expires November 30 (based on closing date). Congress is on the cusp of sending an extension and expansion to the Presidents desk so we’ll keep you updated.

For now, you can read more at VARbuzz.

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WOW – $179,900 in Briargate – NOT a short sale or bank owned!

September 28, 2009 By

I don’t often mention another agent’s listing on my website, but today is an exception. I was showing homes Friday and came across this cute house in Briargate with D20 schools for less than $180k.  It’s a ranch style plan with 4 bedrooms and 1648 finished square feet. It also has a 2 car garage, air conditioning, hardwood floors, and backs to open space!

Typically, the only homes close to this price in Briargate are bank owned and need lots of work, but this is move in ready. Here are a couple pictures just so you can see the condition.

Dining Room

Dining Room

Backs to Open Space!

Backs to Open Space!

Living Room

Living Room

If you’d like more information or would like to view this home, please call me at 719.231.9043.

Distressed Property Part 2 – Buying a Short Sale

September 11, 2009 By

Long before a home is foreclosed on, the homeowner has been struggling to make payments.  (It will typically be 7-8 months from the first missed payment to eviction.)  In a better market, this owner would often list their home and try to sell it before the foreclosure became a reality, but in today’s market, this situation is often impractical because they can’t sell for enough to pay off their mortgage(s).

This scenario has led to a massive increase in short sales. A short sale is simply a sale in which the lien holders (i.e. mortgage company) agree to settle for less than is owed; this allows the transaction to take place in a situation where it would otherwise be impossible.  This benefits the homeowner by avoiding foreclosure, and almost certainly reduces the lender’s losses by tens of thousands of dollars when compared to a foreclosure.

Because of these advantages, short sales have become rather ubiquitous in the past year.  Given their prevalence, here are some things you should know in regard to purchasing a short sale:

Who Qualifies for a Short Sale: While a lender could theoretically agree to a short sale for any home, it is generally required that the the seller have some form of “hardship” which has resulted in their inability to pay. (There are dozens of “hardships” generally accepted by lenders)  Anyone can purchase a short sale.

Typical Terms: The property itself will be “as-is” in most cases since the seller typically has very little cash for repairs. Other terms, such as closing costs are generally negotiable but the lender holds the trump card since they approve each sale individually.  The lender can effectively dictate just about anything related to the transaction, and while most lenders are becoming more cooperative, how stubborn and meddlesome the lender is varies greatly from one lender to the next.  Also, because the seller’s lender needs time to approve the transaction most short sales take significantly longer than a traditional sale.

Value: In the present market short sales are selling for prices similar to bank owned property in most cases, but tend to be in better condition. This makes them some of the best deals readily available, but they do carry some additional risk if you don’t understand the process (mostly in the form of lost time and frustration if the deal falls apart).

Opportunity: Excellent opportunities for a flexible buyer who doesn’t have to move by a specific date.  Short sales have gotten a bad rap due to the sluggish lender response times, but things are improving with the vast majority of lenders and short sales are a viable option for many buyers.

[jeremy]

Defining Distressed Property

September 9, 2009 By

So just what is distressed property? If you’ve been paying any attention to the housing market recently you’ve no doubt heard the term.  For most people, in conjures up the image of a foreclosed property with waist-high weeds, holes punched in the drywall, and massive amounts of other deferred maintenance. But is this an accurate picture?

Not necessarily. In fact, many distressed properties are actually in pretty good shape. So then why call them “distressed” you ask? Often it is the homeowner who is distressed – not the property itself. Over the next couple days I’ll explain the different types of distressed properties and the opportunities that they represent.  Buying distressed property may not be for everyone, but it should at least be at least a consideration for almost anyone – especially now, as we’re seeing them spread across all geographic areas and price ranges like never before.

Spinning Real Estate News – What do the facts ACTUALLY say?

August 18, 2009 By

We all see the real estate and economic headlines in our local and national news, but to say the headlines represent any kind of consensus would be absurd.  Just in the past couple weeks Newsweek declared the recession over while Bloomberg declared the recession even worse than previous estimates.  And while these very recent examples are in reference to the national picture, local real estate and economic headlines for the Pikes Peak region are just as varied.

So why the disparity?  You’ve been told since you were in grade school that the numbers never lie, right?  True enough, the numbers don’t lie because they are just that, numbers – raw data that has to be interpreted to have any meaning.  Anyone with an agenda, vested interest, prior conclusions, or who is just having a bad (or great) day can warp the data to present a disingenuous picture.

To illustrate, I’ve prepared a few mock headlines and lead paragraphs pertaining to the Colorado Springs real estate market, and even inserted some charts to support them. All of these are 100% true and could have been legitimate stories in the past couple months, but they all paint very different pictures.  My intent here is not to draw any conclusions without providing you addition information and proper context.  While technically true, what follows does NOT represent my opinion.

My intent is simple, to point out how easy it is to make the numbers say whatever you want them to say, and encourage you to take a closer look next time you see a news article about the state of the real estate market.

Exhibit 1.1

Skyrocketing Unemployment More than Doubles over past 24 months!

Perhaps one of the most ominous signs for the Colorado Springs economy is near record unemployment.  Economists will tell you that this is one of the most important indicators for the economy and we’ve now seen the rate more than double in the last 2 years. (May 2007 to May 2009)

2yr unemployment doubles

Sounds terrible, but what if we report the exact same data this way…

Exhibit 1.2

Unemployment Rebounds; Leaves National Numbers in the Dust

While unemployment has been going up during the past couple years, there are signs that this is reversing, at least in Colorado Springs.  While Colorado Springs has seen significant improvement over the past 2 months, the national numbers are still escalating.  The local unemployment rate tends to track closely with the national only rarely registering more that a half percent more or less when they are compared.  In fact, the March rates were identical.  But now?  The local unemployment rate is lower than the national rate by 1.7% – in terms of unemployment that is a very significant spread.

CM Capture 1

Exhibit 2.1

Median Home Prices are Accelerating Downward

So you’ve seen the news that home prices are declining, but did you know the decline is actually accelerating?  When using year over year statistics, we can see that the trend is that prices are falling faster.

median change

We don’t have time to analyze the flaws in the above logic, but it is technically completely true.  Here is another way to look at the exact same median price indicator.  I’ve used the same raw data to show the opposite extreme.  (In this case, I believe reality exists somewhere between these two pictures.)

Exhibit 2.2

Median Home Prices Jump $20,000 in first half of 2009

Are you waiting to buy at the bottom of the real estate market?  If you live in Colorado Springs that chance is gone; Prices have already rebounded $22,000 since their low in January 2009 according to the median price for single family homes in the Pikes Peak region.

Median 6mo

Exhibit 3.1

Month Supply back at equilibrium – lowest in 3 years

One of the most important indicators in any housing market is “months supply” which allows us to see the relationship between supply and demand.  As of June, we’re in unfamiliar territory here in Colorado Springs – month supply is at the lowest level in 3 years!  Most experts would consider 5-6 months supply a good measure of equilibrium in a market; we’re at 5.9.

month supply

This is a fair picture of the market at large, but what if you chose to only evaluate a segment of the market using the same criteria?  What follows could have been extrapolated from the same data!

Exhibit 3.2

Luxury Home Market Could Take Another Decade to Recover

The news in the luxury homes market just seems to keep getting worse.  June ended with 28 month supply for homes over $500,000; that’s almost 2.5 years.  Once you pass the million dollar threshold the situation only gets worse – the sample sizes aren’t large enough to get to specific, but it’s safe to say that there is OVER 5 YEARS supply.  Once you factor in homes yet to come on the market, it could be years, maybe even a decade, before demand catches back up with the supply of these high end homes.

Talk about a difference in perspective…

So next time you read a headline about the housing market plunging deeper (or recovering) take a minute to evaluate what is really being reported.  There are two sides to most statistics, and a cursory review in a news article rarely paints the whole picture.

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