First, let me share a little history lesson.  The change in the markets the past few years is now affecting what people are buying when they do buy a home.  During the roaring 90s when the dot com industry rose, people had a lot of extra cash in their pockets and built homes to reflect their desires.  Showy, big, extravagant homes dotted (that is a pun ) the landscape, especially in California.  Then the dot com bubble burst starting in 2000 and the market changed.  Investments in the stock market tied to technology went poof and bank accounts dwindled.  Real estate then became the go-to investment arena and we all know what happened.  Real estate prices escalated until 2006.  In markets like CA, FL, AZ, and Las Vegas, prices were surging 30-40% per year and those who were actually awake during that time realized what goes up must come down.  I personally could not believe that interest only loans were being used by consumers to purchase the home they would be living in.  Interest only loans are a strategic product used by real estate investors to manage cash flow.  I don’t think that description applies to most of our neighbors.  So what does all this have to do with smaller homes?

Just think how different the real estate market and our economy would be today if we had foregone the speculation of the past decade.  Did you know 1 in 4 homes was sold as an investment during the go-go years?  That’s 25%.  Do you think that had an impact on pricing?  Absolutely.  Just like tulip bulbs in Holland centuries ago.  We Americans went around with blinders on because getting money was so easy and we didn’t want to believe it could end.  But just like the dot com bubble, it was an upside down pyramid and collapsed under it’s own weight.  We ran out of buyers who could buy at such frothy prices.  Fortunately, in some markets such as Colorado Springs, we had more steady increases in prices and never saw huge increases, so most homeowners can weather the current market.  But even here prices have dropped about 20% on average over the past 3 years and people who bought at the height of the market are underwater unless they had a large down payment or have been making extra principal payments since they bought their home.  If they can stay put, they’ll be okay.  If they have to sell, they have a problem unless they can bring cash to closing.  For some, hardship will allow them to qualify for a short sale to avoid foreclosure.  Sadly, others will lose their homes.

So back to my question.  What would the market be like if the housing market had been steady instead of the scenario we did have?  First off, not as many people would own homes or if they did, they would own smaller homes than they purchased because they wouldn’t have based their decision on an expectation that their home was going to appreciate in the double digits every year and make them rich.  Home ownership DOES make people rich, but it is a slow steady process that lasts a lifetime.  The other thing we would have seen is smaller homes because they would be more affordable.  In some places, like California and Hawaii, they’ve had to keep home sizes smaller in general because land is so expensive.  If speculators hadn’t driven up prices buying properties with loans that required no verification of income or assets, more people would still be in their homes because they would have been given those loans based on more realistic requirements.  Hind sight is always 20-20, and looking into the past shows us a process that was totally out of control.

Fortunately, our economy provides the answers and we will dig ourselves out of this mess.  Without buyers who can or will pay inflated prices, home sellers have had to reduce prices in order to sell.  Many people who would like to sell have kept their homes off the market for now, reducing inventory, which will help with recovery.  The market is winding down, although in some places, it definitely crashed.  At some point we will reach equilibrium.  We are getting closer, although there are still more foreclosed homes coming to the market that will keep prices down for the next few years.  As prices have come down, people who didn’t want to or couldn’t buy when prices were high, are now finding that homes are affordable.  The rate of affordability has increased.  Builders will build smaller homes to entice first time buyers and seniors who are downsizing.  The other good thing that has happened is that people have started saving again and are being more cautious about buying.  Loans aren’t as easy to get and people have to jump through hoops to prove they can pay their mortgage in order to get a loan.  Many people will wait until they feel more secure in their work or feel they will be in the house long enough for buying to make sense.  But more people who didn’t think they could ever afford to buy, can now find homes within their means.  And ultimately we will help the environment as green technologies become more prevalent in building and remodeling and energy efficiency becomes more important.

If we keep the recent market lesson fresh in our minds, what has happened can prove to be a good thing because it is changing how people view money.  Perhaps individually people will remember and not allow themselves to be drawn into craziness in the future.  New homes built will be smaller so that builders can keep prices where buyers can afford to buy.  Condo owners will ultimately be helped as people discover that is an affordable option in not so affordable markets.  As baby boomers retire they will still want 2nd homes and that will once again help the Florida, Arizona, and condo markets recover.  Some baby boomers will retire to smaller, more affordable communities and will help the economies of those areas where their spending will create more jobs.  First time home buyers have a fantastic opportunity right now to get into a home at lower prices and amazingly low interest rates.  Even when the $8000 tax credit ends, homes will still be affordable.  But that still doesn’t mean everyone should buy.  It still needs to be a careful decision.

For those who can’t buy yet, investors are buying foreclosure and short sale homes and renting them out, so renters will find more choices available to them.  Investors will be part of the solution as well.  So there is light at the end of the tunnel.  Now is the perfect time to put money aside and plan to one day be a homeowner or get that 2nd home or move up to a bigger home.  With planning they are all great choices.  If you are in a position to act now, congratulations!  This will prove to be one of the greatest opportunities of the 21st century.

Here’s where you can find a list of important changes to credit card regulations intended to protect consumers.  Changes Set to Protect Credit-Using Consumers | RISMedia  I don’t know about you, but the fact that you could be a few hours late with your payment and could end up being dinged by “universal default” so that all your card rates go up, is a practice by credit card companies that I have considered very underhanded.  Universal default still exists, so look at the new rules to see how it is applied.

With the new rules, as long as your payment is received by 5pm the day it is due, you are considered to have paid on time.  Plus, if your payment due date falls on a Sunday or holiday, you get an extra day added to your due date.  The other thing I think is an improvement is that the credit card companies have to mail or deliver your bill 3 weeks before it is due and they have to give you a consistent due date.  That will help everyone who uses electronic bill payment services so you can set up an automatic payment and never be late again, which can help raise your credit score.  If you only pay the minimum due, you will still take years to pay off your balance, so make a plan to get those balances down and don’t use the card until you pay off what is owed.  Paying interest is a lost opportunity for being able to buy fun things you want.  Instead you get nothing for your money except a bill every month.  The best plan is to pay off your balance every month.  If you can’t do that, figure out why not.

People under 21 will now have to show proof of financial ability to make their payments or have a co-signer to get a card.  Let’s hope this rule helps a lot less college students and young people get in trouble with credit cards which damages their credit at a young age.  Plus you start out in life behind and never seem to get ahead.  Very sad way to start adulthood.  Financial responsibility goes a long way to helping you have a less stressful life.

There are needs (food, transportation, shelter) and wants (video games, top of the line mobile devices, name brand clothing) in life and wants will never be needs.  Too many people have been using credit cards to buy wants they can’t afford.  Maybe as a country these rules will help us individually get our priorities straight and we can tell Congress to get their spending priorities straight as well so that the next 3 generations aren’t bankrupted.  Not many of us, government included, have a pocket full of blank checks with endless resources to pay off debt.  But that’s another topic.

Every week I provide sellers whose homes I have listed with information about trends in our local market so they can be up to speed on what’s going on.  The good news during March was that the number of listings flattened and the number of showings for our company is staying steady.  Sellers have to know this market is not easy and must have a hardy constitution to weather all the uncertainties if they really want to sell their home.  This is not a market to “try” to sell.  That commitment has to be made upfront.  But, with a leveling of listing activity and a 22% increase in sales in El Paso County for March 2009, there is a glimmer of a silver lining on all those clouds.

There are still a lot of foreclosures and short sales to wade through and many more coming, so any upward trend won’t happen quickly, but when it does come, it will be steady because that’s what our local market usually is - steady.  No flash and dash like 40% gains per year seen in Florida, just steady upticks in prices.  Distressed property sales are still more than 30% of the monthly sales for March and 94% of homes that sold were priced below $400,000, so El Paso County is becoming more affordable to more people.  With the $8000 tax credit for first time buyers (remember that also means people who haven’t owned a home in 3 years) and low interest rates, we are in the midst of a perfect storm.  What an opportunity!!!  There is increased activity in some areas of California and in Las Vegas, so we’ll just keep watching the trends and keep you informed.

There’s a new real estate community that just launched today - epicketfence.  It started in Colorado and I had the opportunity to be the first Featured Realtor for the Colorado Springs market.  When you click on the link above, it takes you directly to the article I wrote for epicketfence.com.  Check it out if you want to learn more about what’s happening in the Colorado Springs real estate market.  If you want to learn more about the statistical details of our market, don’t miss PikesPeakFacts.com.  It’s updated every month.

What a crazy year 2009 has been already.  I’ve been busy listing homes, took 2 full days to attend CDPE (Certified Distressed Property Expert) training in January, and attended the CRS Sellabration in San Francisco in early February.  The real estate market continues to change and opportunities for buyers and investors are ripe.  Low interest rates, prices that haven’t been seen in many a moon, and lots of people looking for rentals in our local Colorado Springs market has created those opportunities.

Sales in January 2009 were down close to 17% from December, primarily because of everyone sitting back with bated breath waiting to hear if there is something in the stimulus package that will make their home purchase more profitable.  Many potential buyers are also waiting to see if their job will still be in place as the economy tumbles.  Stock portfolios have been hit hard as well, so investors are licking their wounds at the moment and trying to figure out if they can jump into the real estate fray anytime soon.  The good news is that inventories are also down, making it easier for sellers who are trying to sell increase their chances of a sale.

In this market, price is paramount!  We saw 1/3 of our sales go to distressed properties in November and December of 2008.  Some markets are much much worse.  What it means for sellers is they have to compete on price with short sales and foreclosures.  That will continue to reduce inventory and voila, one day the market will turn around because there will be more buyers than homes available.  That isn’t going to be anytime soon because another wave of foreclosures is coming, but history tells us it will happen.  Real estate has always been cyclical and we are in one hell of a cycle since 2007.

Prices rose too quickly because of easy money and lack of accountability.  One of 4 homes sold in recent years was either an investment purchase or 2nd home.  A whopping 25%!!!  When the bubble burst, there was a lot of collateral damage as plunging prices were brought to most neighborhoods.  As the cycle continues, buyers who were priced out of the market over the past several years will now have an opportunity to buy.  Investors will salivate over the opportunities for low priced rental properties.  Yes, the people with money will make money.  Wouldn’t you like to know how to be in that group during the next buying opportunity.  Stay tuned as I launch seminars to help you later this spring.

So that’s where we are now.  Lots of opportunity, but not a lot of credit available unless you have stellar financials.  For buyers who can buy now, have fun shopping.  It’s a great time to be in the real estate market!  Your dream home awaits.

In an effort to help my clients understand the real estate market, which is changing constantly, I send them statistics and updates on a weekly basis.  It helps people make decisions that move them toward their goals with real estate.

I decided it would be a good idea to let you, cohomesgateway readers, in on this information as well.  You may not be in the Colorado Springs market, or you may be just browsing the web trying to decide if the time is right to buy or sell, andyou may find this information useful.  I’m happy to elaborate on any points if you want to contact me directly.

So what is going on with Colorado Springs and Pikes Peak Region real estate?  Teller County was hit hard when gas prices rose to $4 a gallon levels.  All of a sudden the drive into Colorado Springs to work while living in the mountains seemed like a huge investment of resources so people working in the Springs have been choosing to buy homes closer to their work.  The mountains have an appeal for many though, so gas prices dropping by 2/3rds will probably help that area once again.  There are always buyers who want the mountain and smaller community life in Woodland Park, Divide, Florissant, and other mountain towns.  After all, it’s closer to the ski resorts!

In Colorado Springs and points east, we have hit a low in sales over the past 4 years.  Less than 500 homes sold in November and again in December, 2008.  This is a time of year when we would expect sales to be closer to 600-700 per month.  This has caused a lot of sellers to abandon the market and sit on the sidelines, thus reducing inventory 15% since June, which is an excellent step towards market recovery.  This is not the time for sellers to “play real estate”.  There are no profits to be had and real estate professionals are not inclined to let sellers test the market with their limited marketing funds in this tough market.  Sellers have to be motivated to sell and understand that means competing with 34% of sales going to foreclosures and short sale properties locally.  Price is the key because the bargain shoppers are those in the real estate market, just as they are in the malls looking for the after Christmas steals.  Weren’t you there?  I was.

The median price for the Pikes Peak MLS has stayed in a 20% range over the past 4 years with the high being $225,000 in mid-2006 and the low $187,000 for November, 2008.  We never had the go-go market of other areas such as Phoenix, Las Vegas, and Florida, but sales happened a lot more quickly from 2004-2006 than they are now.  We have 10 months of inventory without anything new coming on the market, even with a reduction in inventory since June, 2008 of 15%.

Only homeowners who are 100% committed to selling should have their homes on the market now and the more limited inventory will help us move to a seller’s market as the economy improves.  Nothing ever stays the same.  A change will come and buyers who sat on the sidelines fearfully while prices and rates are low will be scrambling to make attractive offers on the most desirable properties to encourage sellers to take their offer over others.  The best homes always sell.  It’s just a matter of what buyers will willingly pay because the biggest fear is to overpay.  Too many people have experienced that in rising markets and are now looking at being part of that 34% of distressed sales.  Or 70-80% distressed sales as is happening in other markets.

So what’s a person to do?  If you are considering buying, but thinking about renting, look at your goals.  How long do you plan to be in the house?  Can you still save money and pay a mortgage?  Remember that the tax breaks of owning a home are a form of savings over renting.  If this is a 2nd home or investment purchase, can you withstand vacancies or managing multiple mortgages if your income changed?  Would owning real estate make you sleep better or worse?  If you think renting is better, have you considered the 6-12 months of rent you would be throwing away to pay someone else’s mortgage?  Have you saved money for a down payment, for home repairs, for an emergency fund?  Have you tried setting aside the difference between your current rent/mortgage payment and the new payment amount for a few months to see if it fits (the side effect is you are saving your down payment!)?  Would you be comfortable and still have money for fun activities or would you be house poor?

I could fill a book with questions to ask yourself, but you get the picture.  Make sure you have goals.  Seek the help of experts.  Then have fun making a purchase or selling and moving to the next town or bigger or newer home that you desire.  There are some great deals out there.  It’s a fun process.  Make the right decisions so you can enjoy it and smile when those new keys are put in your hand.  You’ll know you are taking the right step!

I subscribe to a number of real estate related websites and came across a good article on RISMedia today.  Are you sitting back waiting for the economy to improve so that you can pounce on a house once you feel the waters are safe?  Are you prepared to do this?  Have you talked with a lender to make sure you can act when you find the right house?

Read this article and learn what is new that you may not be aware of.  Could any of this affect you?  Be prepared and all your dreams CAN come true!

Wow!  I just finished listening to the latest webinar in the library and it has some tips to help just about everyone.  Did you know that you should freeze credit bureau accounts for minors and the deceased so that their accounts aren’t at risk for identity theft?  Did you know when you co-sign a loan that the amount of the debt is on your credit bureau file also so it is added to debt you have when applying for a mortgage or other credit?  Did you know just one late payment of 30 days or more can impact your credit score by as much as 100 points?  Do you know how a short sale affects your credit?  Taking time to listen to the new webinar is worth it!  Learn ways to keep your FICO score as high as possible.  800+ is possible when you pay attention to managing your credit.

The importance of quality was brought home to me again this week.  Many companies talk the talk, but don’t walk the walk.  My daughter had a roof leak this summer and has had a new roof put on and is having damaged drywall replaced and her ceiling repainted.  One process went very well and one not so good.  It IS important who you work with no matter what the job that needs to be done.  That’s why my team and I emphasize the level of service and skill that we bring to our clients.  We want them to be wowed.  You can read testimonials at carefreehomes4u.com if you’d like.  The people providing my testimonials would give you the same testimonial on the phone too.

Back to my daughter’s story.  Our insurance company used to be run by a fabulous agent named Brian Smith, who was very responsive and always treated us like we were his best customer.  Since his retirement several years ago, the company has been sold twice and neither agent is anywhere close to being a Brian Smith.  Once a claim is out of their hands, forget about it - “Not my job.”  I hate that!  I’m looking for a new “Brian Smith” with the same company.

I referred an excellent roofing company, Empire Roofing, to my daughter and they did a great job.  They were timely and did skilled work.  They also did a great job for both a business partner and a client of mine, so I am happy to refer them.  The insurance company’s “preferred” contractor is your run of the mill firm doing insurance work who it appears is running their project manager ragged all over southern Colorado and there is a lack of oversight.  The painter started prepping and painting without the damaged sheetrock being replaced.  Duh!  Unfortunately, there are a lot of businesses like that out there.  Somehow we all let them get away with it.  Stop that!  Before you hire anyone, check them out.  Get referrals from people you trust - your Realtor, your great aunt, your neighbor, your lender, your dentist, whoever.  Call the BBB and see if they are listed and have a good record.  Get references and CALL them.  Drive by the location where the work was done and look at it.  Ask what the reference’s experience was with the company you are considering hiring.  Be specific with questions that are important to you.  Let’s all drive the quality of business up by increasing our expectations of the companies we hire.  You deserve excellent work.  Talk with your pocketbook and don’t sign off until it’s the way you expect it to be.

I always ask my clients to rate me after the transaction is complete and have a Platinum (100% satisfaction) rating for 2007.  Are the people you are working with doing that?  If not, what are they afraid of?  If they don’t ask, still give them feedback on the job they did and let the BBB know.  By the way, the contractor I trust in Colorado Springs is Brian Rief, owner of Independent Construction and Remodel.  Let me know if you need Brian’s contact information.

Another wild week, with volatility in the stock market and not much news about the real estate market because it’s a lot more boring right now.  The upcoming election is front and center and comments from the peanut gallery I frequent are that we are ready to be done with political commercials!

Interest rates popped up this past week, so for some their immediate home buying opportunity is gone.  But by watching the markets we know nothing stays the same for very long.  If you have a lender relationship, stay in close touch so they can let you know when rates are where you need them to be in order to buy or refinance.  You can’t lock a rate until you have a home you want to purchase, so when you find that house with the help of an expert in your area, make sure you get a pre-approval letter from your lender so you can act quickly and possibly get help from the seller to buy your rate down if necessary.  When you work with professionals, they can advise you on the best path for your situation.  If you don’t know who is professional in the real estate and lending industries in your area, get a recommendation from someone you trust.  You never know what is possible until you take action.