“For Sale” signs are a common part of the landscape in Woodmen Hills and Meridian Ranch this fall, as interest rates increase and investors shy away from the real estate market.Susan Craig, a ReMax real estate broker, said the multiple listing services showed 209 homes on the market in those subdivisions during September. She said she blames the downturn in the market on two factors: higher interest rates and over building.Craig lived in Colorado Springs during the 1980s, when the city was known as the foreclosure capital of the country. Comparing the two time periods, she said there may be more homes on the market today, but at this point the over-building problem has not impacted all sectors of the economy as it did in the 1980s.”Unlike the 1980s, today’s buyers have been spoiled by interest rates as low as 5 percent, and they don’t realize that 6 and 6 and a half-percent interest rates are still very good,” Craig said. Thus, the glut of houses on the market combined with increased interest rates are making buyers think twice before purchasing a home, she added.However, Sara Reuter, broker for Keller-Williams, thinks Falcon’s real estate market is in good shape. “While it’s certainly a buyer’s market, prices for Falcon homes have not declined and houses sell faster (here) than in other parts of the country.” She pointed to statistics provided by Pikes Peak Multiple Listing Service showing the average home in Falcon sells within 68 days for $221,059. Sellers also receive 99.12 percent of their asking price. “So that’s not too sad of a picture for Falcon sellers,” Reuter said.Reuter also said an excess of new homes (over building) is the reason for the high real estate inventory. Reuter and Craig said the excess could be corrected by spring because fewer new-home construction permits were issued in September compared to any other month over the past few years. In other words, developers are aware the housing market is saturated.But Reuter said bad mortgage loans that force homeowners to refinance or sell when interest rates increase or personal finances decrease is a major threat to a stable real estate market. She said Colorado’s relaxed lending practices have allowed buyers to overextend themselves, preventing a build up of equity and/or forcing foreclosure. “While I’m not a financial advisor, if at all possible, buyers should purchase fixed rate 30 or 15 year mortgages,” Reuter said, adding that once again Colorado has the highest foreclosure rate in the country.According to a May article in the Rocky Mountain News, Colorado’s foreclosure rate is driven by questionable mortgage practices including no-down payment mortgages, interest-only loans and the extensive use of adjustable rate mortgages (ARMs) and mortgage fraud.In a recent press release, Attorney General John Suthers agreed, “Too many Coloradoans are losing their primary financial asset because of the growing number of mortgage and foreclosure scams.” He initiated a task force to combat fraudulent mortgage practices last July and will host a forum in Loveland Nov. 17 aimed at ending mortgage and foreclosure fraud.While home prices remain stable in Falcon for now, other areas of the country have seen steep declines. An October Wall Street Journal included this statement: “Median house prices are likely to decline more than 10 percent over the next few years in 20 metro areas, including Las Vegas, Tucson, Arizona and Washington, D.C.”Citing statistics from Moody’s Economy, an economic research firm in West Chester, Penn., the Wall Street Journal reported that Americans are spending a disproportionate part of their income on housing, which is the driving force behind declining real estate prices. The firm predicts the largest price declines will occur in Florida, where prices may drop between 18 and 13 percent. San Jose and other high-tech areas are expected to have the lowest declines.Colorado homeowners will not go unscathed, according to Moody’s research. The firm predicts home price declines in the following cities: Greeley will drop by 10.7 percent, Denver 4.6 percent and Colorado Springs 1.6 percent.Craig said the real estate market in Colorado Springs is boosted by the large number of military installations in the region. She still advises homeowners, “If you don’t have to put your house on the market right now, wait!” For those who must sell, Craig said, “Price conquers all,” and sellers must price their homes realistically before buyers will even come through the door.Craig and Reuter said staging a home is a “must” in this market. They advised sellers to clean, paint and repair all defects before putting up the “For Sale” sign.Asked how real estate brokers personally adjust when the market slows, Reuter said, “Some brokers leave the business, providing more opportunity for those who can hang on.” Craig said, “We save for a rainy day, and it’s beginning to look cloudy.”
