Some interesting facts came to mind as I was looking over the new Pikes Peak Association of Realtors report. While local sales are basically the same as they were a year ago, the full report includes an “investor snapshot” that indicates single family/patio homes sales in July were the highest for the month since 2007.
When you consider that in July 2007 our market had 7,065 listings versus 4,230 for this July, we had 40 percent fewer homes for sale last month than seven years ago. And the average sales price on single family/patio homes in July was 4 percent higher than a year ago while the average sales price on condo/townhomes was 5.3 percent higher.
What does this mean? The time to buy is now. Homes are worth more, interest rates are still historically low and while there are fewer listings, there are still plenty of choices in most price ranges.
The local stats include “all homes” — both resale and new homes sold through July 31, 2014 as compared to July 31, 2013. In comparing July 2014 to July 2013 from PPAR:
Single family/patio homes
• New listings, 1,647, down 0.7 percent;
• Total sales, 1,199, down 0.2 percent;
• Average sales price, $267,109, up 4 percent;
• Median sales price, $230,000, up 1.9 percent; and
• Total active listings, 4,226, up 2.2 percent.
• New listings, 186, down 16.6 percent;
• Total sales, 158, up 5.3 percent;
• Average sales price, $163,793, up 3 percent;
• Median sales price, $148,750, up 4.5 percent; and
• Total active listings, 401, down 13.6 percent.
There’s an interesting note in terms of financing of the 1,357 total local single family/patio homes and townhomes/condos sold in July: Cash, 183, 13.5 percent; conventional loan, 488, 36 percent; FHA, 186, 13.7 percent; VA, 465, 34 percent; other financing, 35, 2.8 percent.
The majority of sales were financed either through conventional lenders or VA.
Meanwhile, various sources are reporting that U.S. home ownership is near a 20-year low.
Lower wages and larger student debts among recent college graduates have limited the Millennial generation.
“The falling home ownership in recent years is partly due to the struggles of first-time buyers,” Lawrence Yun, chief economist for the National Association of Realtors, wrote in the Economists’ Outlook blog. “Lower wages and larger student debts among recent college graduates have limited the Millennial generation from taking advantage of the historically low interest rates.”
Only 35.9 percent of those under 35 are homeowners, a historical low.
Home ownership peaked in 2004 at 69.4 percent of adult population and has been dropping steadily ever since. There were higher numbers in the past few months, but the number of renters grew faster. Yun said that in the past three months, the number of renter households rose by 312,000 while the number of homeowners rose by 54,000.
“This trend also means that housing demand for both home purchases and rentals will be on the increase,” Yun said.
Other sources have cited low inventory as another reason for the low ownership rates. According to the NAR, “History shows us that a balanced real estate market requires a six-month supply of available housing inventory.” In the Existing Homes Sales Report last week, the NAR revealed we have only a 5.5-month supply of homes for sale. We have not reached the six-month mark in more than two years.
“The good news,” Yun said, “is that price appreciation has decreased to its slowest pace since March 2012. … With rents rising 4 percent annually, potential buyers are less likely to experience ‘sticker shock’ and can make smart decisions on whether or not it makes sense to buy or continue renting.”
Bottom line? Now might be the best time to cash in on your home equity and, while a change in home ownership may not be as easy as it once was, locally we still have a decent selection available.
Also, with the influx of renters, those looking to buy a home for Investment might want to get in that market as soon as possible.
Harry A. Salzman, a 40-year local real estate broker, owns and operates Salzman Real Estate Services Ltd. Contact him at 719-598-3200 or at Harry@HarrySalzman.com.