Days Like These are What Makes Colorado Springs So Popular

Since our wet Memorial Day weekend, we have had close to perfect weather here in the Springs. Glorious sunny warm days (around 80 again today), cool nights, a thunderstorm here and there in the afternoon, wildflowers blooming, even the snow is still on Pikes Peak!
I've been a little busy to write this week, as we've been getting my wife packed out of her classroom, showing properties, inspections, what have you. Not to mention I'm still moving kind of slow after being sick. While it is still not as busy as in some past years, the pace has quickened a little, especially in light of interest rates starting to go back up. In addition, short sales are making a lot of unproductive work out of this business. I previously wrote about one that finally gave up after 3 months and found another house. Many short sale buyers just give up after the lenders (who we taxpayers just gave hundreds of billions of dollars to) sit on their offers for months. For anyone who wants a house in the normal 30-60 day time frame, short sales are just not an option, and a big waste of time. Foreclosures will continue to be a problem until the banks get their acts together on this issue. In the mean time, it severely constrains the homes you can show for some buyers, and makes them feel cheated when a house comes up that looks great, only to find out they are a short sale. While only 9% of the 5079 homes in our MLS are indicated to be in any kind of distress, the actual percentage in many segments is significantly higher, and overall these are under reported, largely due to agents not wanting to restrict showings on their listings.
Interest rates jumped late this week, all the way to 5.25% That doesn't sound like much, but when you consider it was 4.75%, that is a big jump. While we all hope it will go back down, all this government borrowing isn't helping mortgage rates, and oil prices jumping again isn't going to help consumer confidence much either.
I'm off to show some more homes today. Being such a nice day, I'd guess we might even sell one!
Got questions about living in Colorado Springs? Call me at 719-590-4768 or 888-568-6784!

FHA Loan Limits Finally Back To Reality

Colorado Springs has never been a town whose real estate prices were blown way up with speculation. Many of the sales here tend to be owner occupied, and either FHA or VA, which is the last real "low down" financing options out there. The trouble has been that FHA loan limits were reduced to only $271,000 late last year, really putting a damper on the low down (3.5%) financing option. The limits are now back up to $325,000 in El Paso County effective late this week, enabling thousands of buyers to look at homes that their down payments otherwise would not have provided for. Many areas of town don't really have too many homes under $271,000, so this should be a big help for areas such as Briargate, where the average inventory is at $354,000.

Speaking of Briargate, I listed a nice home this week in the Wedgewood area of Briargate. Priced at $309,900, it has excellent views nicely updated, good sized at 4 bed 4 bath 3100+ sf finished, and very close the mall, Rampart HS, Parliament Park, Focus on the Family, etc. It has brand new Corian counter tops with molded sink, many new Pella windows, nice hardwood floors throughout the main level, and a huge master with a 5 piece bath. Here is a link to more information: 8330 Sutterfield Dr Please call me at 719-331-7675 if you'd like to see it!

First Time Homebuyers Can Use the Help

Ever since they did away with down payment assistance last fall, we've had an issue for 1st time homebuyers. While many here in the Springs are eligible for zero down VA financing, there is a substantial group that is not. FHA financing requires 3.5% down, which is not awful. Sellers have always been able to help with closing costs, and that has not changed either. Still, the new stimulus package makes it nice for buyers to be able to tap their tax payments for up to $8000 to make it happen, and the new provisions make it so that this does not have to be paid back. For people who have plenty of equity, this won't be any help, but it does help some younger buyers 'get into the game' and may free up some 'move up' buyers who needed to sell their homes before they could buy something. We'll see how much real impact it has, but I know I am working with some first time homebuyers who will definitely like the help!

Qualifiying For A Loan Is Not Always Easy

These days there are lots of misconceptions about how hard it is to get a loan to buy a house in Colorado Springs. But not all of rumors are UNtrue either. Yesterday we got burned by an issue that has hurt many a loan before - what will a lender consider as income.
It is commonly known that self employed borrowers have the toughest time getting a loan, because after all, small businesses are sometimes risky, and subject to lots of ups and downs. But some employees are being treated as if they were self employed these days, and that is where the 'sucker punch' comes from.
The test that the lenders use is simple. Is your income reported on a 1099, or is it on a W-2? If you get a W-2 that documents your income, congratulations, you win major bonus points for the It's Easy To Get a Loan game. Assuming your credit scores are good, you don't have a lot of debt, and the income that is documented is sufficient, you are a likely winner. But no matter how good your credit score, how high your income, how low your debt, if you are a 1099 person, you need 2 years of tax returns from the 'business' you are deriving your livelihood from before they will consider it real. Even if it is guaranteed by contract. Even if it is in a field of expertise you've been in for a long time. No exceptions. This can really hurt someone who is in any number of fields where in fact the employer simply does it that way to avoid some payroll taxes and insurance, like some truckers, some construction workers, some technology workers, etc.
What is the answer? In general, it is best to qualify and purchase before setting out in a new direction, even if it means taking a little less pay for a while in exchange for the security of the W-2. Once you have the house, it is far easier to make major changes in your compensation structure or even line of work. Otherwise, a co-signer is likely your only fall back. If you are considering going to work in a 1099 environment that should really be a W-2 (there are surprisingly many of these), consider negotiating a slightly altered deal, where the employer can recover some of the payroll processing costs in exchange for you getting paid with a "real" paycheck. It might make the difference between owning a home or not.

The implosion of the financial markets is predictably having at least some impact on the mortgage industry in Colorado Springs, if for no other reason than they both compete for the same funds. Generally when the stock market tanks, interest rates go down, however, this has not happened quite yet, as they are still hovering around 6% despite the Dow closing below 10,000. Mortgage guidelines continue to tighten, however, the new rules are not all unreasonable. They are simply bringing the rules back in line with what have been common sense rules historically. By paying attention to the percentage of income people are making in house payments, and requiring reasonable credit scores and documentation, it is a bit like closing the barn after the horses have already gotten out, but it has to be done. Most of these rules are not that strenuous, and will be good for the market longer term.

I am getting a chuckle (between bouts of nausea) out of the new court fight between CitiGroup and Wells Fargo over Wachovia Bank. Citi made a sweetheart deal with the backing of the FDIC, and Wells figured out it was worth a lot more than that, and moreover did not need federal funds to do it. Now CitiGroup wants a court to award them $60 billion to cover their "lost opportunity" to steal the bank. Is there no shame? As things like this develop after the passing of the "bailout bill", on top of the millions in last minute bonuses at Lehman Brothers before it went under, is it any wonder that people are disgusted with the banking industry in this country?

I am a sucker for mountain scenery. The top photo today is, of course, the famous Maroon Bells, near Aspen. The lower photo is Mount Sopris, taken at Carbondale. Both pictures are from Sunday, October 5, 2008.

Colorado Springs was not the showcase of the Democratic National Convention, but our near neighbor to the north, Denver, got some nice coverage out of the deal. Mile High is about 1 hour from here, and it is nice knowing that the Denver Broncos NFL football, Avalanche NHL Hockey, Colorado Rockies MLB baseball, and Nuggets NBA teams are all so close, and play in some really world class venues. Whatever your politics, it is fun to have some sports teams to root for.

Speaking of sports, the quintessential Colorado sport, skiing / snowboarding, celebrates a major pre-season milestone this weekend, with the major equipment and pass sales beginning. Lift tickets at most resorts are in the $85 range for one off visits, and season passes or 4 packs are the best way for Colorado residents to beat the high cost of riding. We'll probably go with 4 packs to Copper Mountain this year ($119 for 4 visits), as gas prices and slow real estate sales will be putting a crimp on our families style. Normally a season pass for unlimited riding is $399.

We got a chance to check out the new emergency at Memorial Hospital North last night. My wife apparently hurt herself at the YMCA in a workout, and it flaired up badly on her late last night, so we drove the 1/2 mile to the ER (we could have walked, but she really was not feeling too good :-) It is a beautiful place, and before I even got the car parked in the nearby lot, she was already being treated. If you have to spend the night at the ER, this is the place to do it!

We finally got a foreclosure property under contract yesterday. It took a full week, 3 or 4 rounds of back and forth negotiating, but I think the house will be a good one for this client, and it is by the cleanest foreclosure I've ever shown, with very little that needs doing.

We also had a closing delayed for a day as a result of miscommunication between lender and buyer (not my buyer or a lender I would normally use :-) This could get interesting for the buyer, as he is scheduled to deploy to Iraq next week, and needs to be moving in this weekend. The processing department of your lender can make all the difference between a good purchase experience and a bad one, hopefully this will end up as just a minor inconvenience for the buyer and seller, but it is was another object lesson in using the best lender possible for your loan. I use Dana Hines at Adams Bank for this very reason, she never has these kinds of glitches.

Today's photo is from the top of Copper Mountain this spring, we really enjoy taking the lift up and hiking down, and was the view looking back toward Frisco from Copper.

Mortgages are still pretty available, despite all the commotion in the financial markets. Ironically, it might actually bring rates back down if this keeps up (although we are in the low 6's now, which is pretty good). With the stock market at such low numbers, it usually brings money into the bond market, helping rates.
We still have some pretty good programs too. I talk a lot about FHA, because with only 3% down, it goes all the way to $325,000, which buys a pretty decent home here. With 5% down, conventional loans go all the way to $417,000, which even includes some of our nicer new construction areas. And for jumbo loans (over $417,000), Wells Fargo has a program that allows you to combine a smaller 1st mortgage with a purchase money 2nd HELOC that avoids the stiff penalties of going to a true jumbo mortgage (although this is a 20% down program).
Last week we got a briefing on the new Sanctuary in the Pines development in D20 Black Forest. One of the signs that our market may be getting closer to a turnaround is new developments like this. Although prices will be starting in the $600's pretty much for completed homes, these are 2.5 acre wooded lots in D2o, on a community water system, which is a first. I think this one will be a winner.
Another sign that things may be turning around is the supply of "spec" homes keeps shrinking. Last weekend I noticed the list of specs in Cordera in particular was very short. While the overall supply of homes is quite ample, there are definitely pockets where the only choice is start one from scratch. There sure are some great deals out there in resale homes!

The constant thrashing in the worlds money markets is not helping real estate sales. At least not here in Colorado Springs. Our market is very "housing cost driven", which means that people are sensitive to the monthly payments required to buy a house. When interest rates jump, it has a dampening effect on peoples appetites to buy, because for the same payment, they can afford less. With the stock market already low, and now Fannie Mae (FNMA, Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) both having liquidity problems, it is going to be interesting how liquidity is going to flow into the real estate market so that buyers can still borrow the money to buy homes. We solve that, and the oil crisis, and "then there will be world peace" :-) Currently rates are still in the mid 6's, which we can probably live with, but it was only last month we were still in the 5's, and I miss that already.
It is hot for the next couple of days here. It started pretty nice (ok, gorgeous) this morning, but 90 today and higher tomorrow is what they say. I don't think we hit 80 before noon, but it seemed to be warming up kind of quick over lunch time. Our overnight temps tend to drop 30 or more degrees from the daytime high, so even hot weather like this is pretty bearable, although I am personally more of a cool weather fan.

As Colorado Springs largest real estate office, our monthly sales meetings and marketing forums really are good, even though I usually am not a fan of meetings. The RE/MAX Properties Chapel Hills office marketing forum was this morning, and I thought I'd share a few things that were of interest.
We actually had the meeting at the Cordera community center, and had a little briefing about Cordera as a community. In addition, Campbell Homes, one of their featured builders gave a short presentation as well. Cordera is going to be where 1400 homes eventually go, at the moment there are around 200. Cordera is a community oriented neighborhood, meaning that the dues are a little higher ($100 month currently), but they include more, and have lots of community activities. The D20 elementary school, Chinook Trail, is the only one in the region to my knowledge, teaching Mandarin Chinese to the students, and will eventually be joined by a middle school. Their overall emphasis is on world language and culture.
Campbell spoke briefly about their guaranteed delivery date program, which is unique among local builders. They have a 5 1/2 month build schedule, and will actually pay the buyer $100 per day if they miss it. In 10 years, they have not had to write a check, which is really remarkable when you consider how many things can go wrong when a house is being built.
Wells Fargo bank attended the meeting, and gave us the unhappy news that El Paso County conventional loans now all require 10% down minimum, and rates are definitely up sharply this week. My regular lender's quote was 6.5% today. They strongly recommended exploring FHA and VA eligibility for anyone needing a less than 10% down payment program.

Yesterday was a very pleasant day here in the Springs, and I hope the other dads out there had as good a Fathers Day as I did. It was great to be surrounded by my grandkids and kids, grilling steaks on the back deck. Today we woke up to a cool drizzly day, and interest rates took a big jump to 6.75% :-(, so it wasn't as nice (although rain is very welcome right now). Tiger Woods winning the US Open in a sudden death playoff was a consolation at least!
I showed property over the weekend, primarily in Cordera. I really like the community center and pool, and the views are very nice. The location is also extremely convenient for Powers access, great D20 school situation, and you can still build a pretty nice house for under $400k, although I think most are coming in for much more than that. It has the advantage of being a little upscale from Wolf Ranch, or Cumbre Vista, without the higher prices of Flying Horse Ranch.

Springtime in the Rockies is when summer and winter collide, and that was most apparent in Colorado Springs in the last 24 hours. After a balmy 75 or so yesterday, it is snowing at present. The sun started to come out for a brief interlude this morning, and I caught this shot from our RE/Max Properties offices. Pikes Peak was trying to appear for a moment, but was soon hidden once again by snow. This won't stick, and it has been quite dry, so the moisture is very welcome.

They think yesterday's rate decrease by the Fed might be the last one (maybe this is the last snow for the year?) It might take more than interest rate cuts to get housing back on it's feet.

Just when you think the worst is over, another new wrinkle gets thrown in. Yesterday we had a deal almost crash because the lender announced the property was in a "declining value neighborhood" and they wanted an extra 5% down to do the deal. From what I understand, most of the country has had trouble with soft prices, and such actions just further exacerbate an already difficult climate to do business. Fortunately the buyer could meet the requirement if they choose, and we found another lender that could do the deal (albeit at a higher rate), but it sure makes things more interesting than they really need to be! Government loans are not affected by this (yet!), and this sort of thing may put some pressure on the owners of foreclosure properties to recondition prior to putting them back on the market, instead of the typical "as is, where is" stuff they like to do, so they can qualify them for FHA or VA financing.

What an odd week this has been in the financial markets. While everyone who is anyone in Washington says they want lower mortgage rates, whatever they seem to do about it, keeps pushing them up instead of down. While low 6's is not bad by historical standards, we were in the mid 5's only last week, and it makes a difference. Since most people are payment constrained, the difference between 5.5% and 6.5% is the difference between a $300,000 loan and a $269,000 loan, when budgeting roughly $1700 for a PI house payment. At 7.5%, it drops all the way down to $244,000. In our market, that can make a huge difference in the choices a buyer has. I for one am in favor of low interest rates :-)
Tuesday we had our monthly sales meeting, and this month was hosted by the Colorado Springs Country Club. They have a membership drive underway, and I was impressed at how affordable the packages seem to be. They have a family full golf membership (they have an 18 hole golf course, tennis, pool, restaurant, etc) for $9500 initiation plus monthly dues, which by local standards is very cheap (Flying Horse for instance is $38,000 for initiation). We also have a special program whereby we can take our clients for an orientation, and they can receive a voucher for a round of golf! If this sounds good, give me a call (719-590-4768) and we'll set it up.
The other guest presentation was by the Banning Lewis Ranch, and although I have covered this topic before, it once again hit home how important this new development will be in this city. Please give me a call if you'd like a tour of this fantastic new concept community, it is going to be big, really big!

The new FHA loan limits have been announced for the Colorado Springs area, we are now looking at a loan limit of $325,000. This considerably expands purchasing power for those who are down payment constrained, because FHA only requires 3% down. FHA underwriting guidelines have historically been a bit easier to work with as well, the only downside being that that FHA appraisals have been a little pickier on things like pealing paint and other cosmetics. Many bank owned properties will probably NOT be eligible for FHA because of this. I happen to have a couple of listings at that $325,000 mark, as well as one at the $230,000 mark (the old limit was actually $250,000 I believe), so if you visit my web site, you can see the difference in the kind of home that can be financed with FHA.
Don't forget to set you clocks ahead this weekend. It has been pretty light out in the morning these days, and with the time change it will make it a bit easier to show property after people get off work in the afternoon.

With the Fed continuing to lower interest rates, I am optimistic for Colorado Springs real estate in 2008, although January will probably not be a great closing month. Our unsold inventory is holding at fewer than 5500 units, which is a very good sign, down almost 2000 units from the peak last summer. In addition, with today being the last day of the reporting month, there are almost 900 units pending (in escrow), which bodes well for the next month.

Sometimes the week day a month ends on can make a difference as to how closings happen, and can affect statistical reporting. Many / most people prefer to close toward the end of the month, or on the very 1st day of the month, because the buyer is charged minimal prepaid interest in their closing costs. In addition, many people like to move on the weekend, and so Fridays tend to be popular closing days. When a month ends on a Thursday, as it does this month, there will be closings that are held on the 1st that might normally have happened earlier. We'll see how the actually number line up, but it would be my guess that we will see around 600 sales for January, and closer to 800 for February, even though it is a shorter month.

The current national real estate slump is having an impact that I had not really anticipated. When someone moves here from out of state that has sold their home, we assume they probably have equity, and are not in need of "zero down" financing. However, with the market being tough all over the country, that is not necessarily so, and sometimes equity has disappeared with price declines in other areas, resulting in someone "starting over" in the home equity building process, but not being a 1st time homebuyer either. Fortunately, we still have programs for this, and if you anticipate that will be your situation, you should speak with Dana Hines at Colorado Online Mortgage (719-593-8778) about it. She can advise you on the program that will best fit your needs.

What a week in the financial markets! Even mortgages had a wild ride yesterday. One of my favorite lenders, Dana Hines at Colorado Online Mortgage, said they got repriced 4 times yesterday afternoon, starting the day at 5.25% and ending at 5.675%. A few of the things I like about working with this particular lender are:
1. They always do what they say they'll do
2. Their rates are great, and they never charge an origination fee
3. They have a great web site for getting current rate quotes (although when the market is jumping around so much, sometimes these can be out of sync a little) and making application
4. When you need to talk to them, they answer the phone
5. When talk isn't good enough, or paperwork needs signing or picking up, you can go into their office
I do a lot of relocation work, and one of the biggest problems we run into is when a relocating buyer wants to bring their old lender along for the deal from out of state. Don't get me wrong, there are some situations that are complicated enough and the history is good enough where that can make sense, but MOST of the time, it results in problems. My most recent horror story on this was just at the New Year. I think told the story in an earlier blog, so I won't repeat it here, but the bottom line is that when relocating or even making a local move, it is a good idea to use a reputable local lender.
This week I have been showing property in the low 200's in the Powers area and on the eastern plains, and have been very impressed with overall quality of the homes we are seeing. What a great time to buy! The weather has been a little cold, but sunny at least. Yesterday it was about 10 degrees colder (16 degrees!) in Forest Green (Northeastern Black Forest) than it was at Woodmen and Powers, only a 15 minute drive or so.

The snow storm we had been expecting never really materialized, and drifted off the to northeast without doing much here. Not that we couldn't use the moisture, but it is kind of nice not to have snow shovelling on my "to do" list today. The Palmer Divide, which is a ridge that runs east west on the northern border of El Paso County is a little famous as dividing line that diverts storms to the east, and it happened again. Usually when this happens we get a pretty large disparity of weather, with Monument and Black Forest getting a bunch of snow, and city areas of Colorado Springs getting little or none.

The new lending restrictions are starting to get annoying. I have 2 closings "hanging fire" that were delayed as a result of the tighter lending restrictions. For one, more documentation was required. The other, more down payment. Both were a little on the unusual side, but not weird deals by any stretch. A year ago, both homeowners would have been decorating their homes already.

The financial markets always surprise me. Because almost all major news is "discounted" in the markets before it happens (translation: bets are placed), when actual news happens like todays rate cut, the market seems to "flip out" if it doesn't match their bets (translation: lot of people were betting the Fed would cut rates by 1/2 % instead of the actual 1/4% they chose). No matter how you slice it, lower rates are good for real estate, so I'm happy. Well, almost. Mortgage rates actually jumped since last week back into the low 6's, apparently because some folks felt it would be better to own stocks than bonds when rates might be falling. Argh.
I'm not going to devote a lot of space to the morbid details of the tragedy we just experienced at New Life Church, but I have to say I was SOO proud of Jeanne Assam the security guard, and her brave action. Larry Bourbonnais also acted fearlessly, and between them saved a lot of lives. I know it sounds weird to have armed guards at church, but in the this day and age, it is the prudent thing to do, and virtually all large public gatherings have them. I for one, am reassured that our church leaders had that foresight. Tomorrow night we have a congregational gathering, and hopefully this will be a time for mourning and healing as well.

Into the 5's finally! Interest rates are finally starting to reflect the rate cuts at the Fed and Wall Street's maladies. While it may not last long, today's quote of 5 7/8% with minimal fees is the first foray we've had in this territory in quite a while. They say you can't time the market, and while that may be true to a point, the timing is right to take advantage of these great rates!!
I got a little excited about the storm that is on its way here - until I heard the 30 inches of snow that is forecast is primarily in the southwestern mountains (the San Juans) and we along the Front Range may only get some freezing rain, or worse, some freezing rain followed by a little snow to make it really slick. For now we'll enjoy the sunshine.

Todays Pikes Peak photo is from one of my listings on the west side from several years ago.

What is it going to take to get mortgage rates down? I had kind of hoped (naively) that the most recent rate cuts would begin to trickle into the mortgage market. Even with the stock market tanking this week (will it get back into the 12's before this is over?), we are still at 6.25%, which is great rate, but is the same as we were looking at before the Fed ever did anything. Home prices make this is a great time to buy. Maybe it will get even better?

Today's Pikes Peak photo is from a listing we had a few years back in the Vista Grande area. It was May, and there was still some snow hanging around on the top.

Like clockwork, a chance of rain or snow and cold are in the forecast for Colorado Springs Halloween again. It is the darndest thing, but it happens almost every year. And if the doesn't rain or snow on Halloween, it does within a few days before or after. Even the ski resorts tend to use the week of Halloween as their target opening (at least the ones with much snowmaking capability).
This week is also the week when the monthly real estate statistics normally come out. We are finally below 6600 units for sale in Colorado Springs, but that is not great, since sales for October will be around the 700 units mark, making for just under a 10 month supply of homes for sale. An article published today on Yahoo mentioned that lower interest rates will not help the current problems, but at least here, I kind of disagree. Lower rates should expand the pool of buyers, allowing some of this inventory to get sold and get us to more normal levels, and even allow some of those who need to sell because they are in trouble, a way to get out without going into foreclosure. The problem (as I see it), is that the rate cuts at the Fed are not trickling down to mortgages. The market is already assuming the 1/4 point cut will be made today, and mortgage rates are still at the same level they were before the first cut, if not slightly higher. I know there is an argument that qualifications, not rates, are keeping people out of the market, but I am not sure that is really the case.