What was the market like in Colorado Springs and the Pikes Peak region for 2010?
The year started off with increased sales numbers over 2009, mostly attributed to the $8000 first time home buyer tax credit. Sales were up and prices began to increase in the first two quarters.
Sales began to fall off starting in July but for the 2010 calendar year, sales were down only 6.4% compared to the 2009. New listings averaged 3.2% more than last year.
The Average purchase price actually ended up 5.3% to $229,152 for single family homes compared to last years stats.
The condo/town-home market average price didn’t fare so well ending down 19.3% for 2010.
The median sales price is the statistic that shows us the middle price. That is to say the same number of homes sold below this price as above. The median single family sales price for the Pikes Peak region ended up 3.1% for the year to $198,500.
The sales volume in dollars was down for the year by 1.4% for total dollars sold $1,875,609,120 compared to $1,903,156,860 last year.
What will 2011 bring? Only time will tell us but with the economy improving we should have some more good news on the housing front. 2011 will still be a good year to buy and sell real estate.
By Luther Benson
As published in the Gazette.
How do we help create jobs in our community? I am not an expert on how to romance big corporations by providing tax credits or incentives, but I do know that in the Colorado Springs metro area our number 1 industry is the building industry. So when home building suffers, jobs suffer and not just building jobs but jobs in other sectors of the economy are affect by those job losses. So what is one thing we can do about it?
Negative and misleading news, mostly on the national level has caused a low in consumer confidence when it comes to buying a home. Let’s examine the local market and dispel some misconceptions about our housing market.
Misconception number 1: “You can’t get a loan to buy a house right now.”
Conventional loans are available for as little as 5% down. FHA loans are also a good option for many people and come with a low 3.5% down payment. In El Paso County we currently have 14 million dollars in bond money available for first time home buyers with a low 3.9% fixed rate and Down Payment Assistance that never needs to be repaid. The definition of a first time home buyer under this program is someone that has not owned a home for 3 years. So even if you owned a home in the past, if you haven’t owned a home in the last 3 years these funds are available to those that qualify.
CHAFA (Colorado Housing and Finance Authority) also has funds available for first time buyers at a low rates and down payment.
VA is an excellent 0 down loan that is very popular for those that so honorably serve or have served in the military.
The misconception of that there is a lack of available home loans is nothing more than confusion over some changes in the way people qualify for loans. You now need to show appropriate income and a fair credit score in order to obtain a mortgage loan, which is a good thing. There are no more “no documentation” loans, which was a major cause of the subprime mortgage debacle that contributed to so many foreclosures.
If you hire a real estate broker with negotiation experience many times you can get all your closing costs paid making it even easier to get into a loan with little or nothing out of pocket. It’s also important to hire a broker that knows the ins-and-outs of lending; as well as, having the appropriate contacts to secure all types of local funding.
Misconception number 2: “I should wait until the prices drop farther.”
The average sales price is actually up compared to last year’s stats 5.1% Year to Date. The median price is also up 6.4% compared to last year at this time to $200,000. (The median price indicates the same number of homes sold above the median price as below). This stability in the market could indicate we have reached bottom.
Between 2003 and 2007 the average home price rose about 6% a year for a total gain of almost 24% in the local area. So if you bought a $200,000 house in 2003 by the end of 2007 that same home was worth $252,500. If you bought a $400,000 house that same $400,000 home was worth $505,000.
In the Colorado Springs metro area we have done much better than some areas of the country that have seen a 50% or even a 75% drop in prices. In 2008 through 2009 the local market began to correct to less inflated prices and the average purchase price dropped a total of 17% during that time. So if you bought that $200,000 home in 2003 and sold it today, statistics indicate a sales price in the neighborhood of $222,000, which is still more than the original purchase price. That $400,000 home purchase would be in the area of $445,000.
That brings us to misconception number 3: “Rates aren’t going up so there is no hurry.”
The average 30 year fixed mortgage rate from 2003-2007 was 5.75%. So if you had a $200,000 mortgage, the principal and interest (P&I) payment would be $1167 a month. If you had a $400,000 mortgage the payment (P&I) would be $2334 a month.
Today the rates for a 30year fixed rate mortgage are in the area of 4% to 4.25%. Comparing that same $200,000 mortgage at 4.25% the payment would be $983 and that $400,000 mortgage would be $1967 a month.
So what if you sold that $222,000 house and bought a $300,000 house? The difference in payment from the 5.75% rate to the current 4.25% rate is only $144 a month for $80,000 more in house.
Misconception number 4: “Homes aren’t selling so why bother?”
7005 homes have sold Year to Date in our community. This is an average of 4.4% less than last year but the most interesting fact is that the sales volume for our area was up from last year’s stats to $1,601,307,975 in single-family homes sold, an improvement of .4% from last year.
Misconception number 5: “It’s better to wait until the market improves.”
Since markets are cyclical we know that the prices will surely go up again and this market will be a blur in our memories.
So since history repeats itself and the market will again rise, should you sell and buy a house now? For some the answer is to stay put but for many that are on the fence they should be jumping in. Anyone that does not own a home now or will be making a “move up” buy should be thinking about buying a home now. Investors too should be taking advantage of the low rates, higher home inventories and good prices.
Home prices are stabilizing and the economy is beginning to improve. In order to keep inflation in check the rates may begin to go up soon, so I recommend acting as soon as possible. Most banks are trying to move their foreclosure inventories and are slashing prices. You may have heard buying a short sale can be a difficult process but the short sale process is improving making buying short sale easier as well.
This is likely the most advantageous time to buy a home in the foreseeable future. Buying a home now not only benefits the home buyer but will also help get our local economy back on track by putting people back to work in our number one industry. How can we help the local economy? Buy a house!
Note: Rates have gone up a little since the printing of this article in Nov but are still excellent.
Local statistics derived from the Pikes Peak MLS.
Local statistics derived from the Pikes Peak MLS.