Colorado Springs house-seller heaven
Today in the Colorado Springs business Journal (CSBJ), Marija Vader says that Colorado Springs is a house-seller heaven. She says that because home prices are increasing faster than income levels, moderately-priced homes are selling quickly, so young home buyers are having trouble making deals on homes. As soon as a home under $200,000 goes on the market, it is sold, leaving no room for bargaining. She goes on to say:
People shopping for homes in the $150,000 and lower category have “slim pickings” to consider, and the homes tend to be smaller, around 900 to 1,500 square feet, said Realtor Kim Tzitzicas of Your Real Estate Source. “I am concerned about people who are in that $160,000 and below category because they are having to accept less for that purchase price,” she said. “It is a problem. There is less bargaining power for them.” Millennials searching for homes in the lower price range make up the biggest group of potential homebuyers — around 30 percent of the market, said Adam DeSanctis, economic issues media manager for the National Association of Realtors. And that means they’ll have fewer options going forward, he said. Student debt is taking up much of their disposable income, as Millennials pay off college loans with money they could be spending on their first home, said U.S. Sen. Elizabeth Warren, D-Mass., who spoke at the 2016 NAR Legislative Meetings and Trade Expo earlier this month. “Student debt is crushing young people, it’s hurting the nation’s economy and delaying the opportunity for many to buy their first home,” she said. Student loan debt is more than $1.2 trillion, and nearly 70 percent of college graduates have some student loan debt, according to the Federal Reserve. Other research groups, like the Apartment List, show that 57 percent of Millennials with college degrees make a student loan payment monthly. On average, they pay $410 each month for student loans — lowering the amount they can save for a down payment. “Faced with stagnant incomes and rising home prices, many Millennials will be forced to delay homeownership, migrate to more affordable cities or take on more debt,” said Andrew Woo, manager of growth strategy at Apartment List. Economist Ted C. Jones drilled the numbers down to El Paso County when he spoke to real estate and mortgage professionals in Colorado Springs last week. The United States is seeing the lowest homeownership rate in 50 years, said Jones, senior vice president and chief economist shareholder of the Stuart Title Guaranty Company. During the past year, Colorado Springs has added 7,300 net new jobs and issued 3,993 new building permits for housing. Essentially, it would take the income from almost two jobs for each new housing unit built, Jones said. Economists state that in a normal market, there should be from 1.25 to 1.50 new jobs to make new housing units affordable, he said. “That means we are dramatically under building the market,” Jones said. “It’s going to be difficult on a typical entry-level home buyer to afford a home … but they’re having a difficult time just paying their rent.”
