Interesting numbers from Colorado Springs New Homes - New Homes for Sale in Colorado Springs Real Estate

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Interesting numbers from Colorado Springs New Homes

by: Brian on November 21, 2007 12:23:58 Leave a comment »

Interesting home equity loan analysis from Colorado Springs New Homes. While reading the Colorado Springs Business Journal, I found some interesting information important to Colorado Springs New Homes and our entire local community. In her article “Soaring home equity loans threaten U.S., local economy,” Rebecca Tonn talks to two local economy experts – Dr. Fred Crowley, senior economist and associate research professor at the University of Colorado at Colorado Springs, and Bill Berenz, regional president of American National Bank. Each offers insight into both the current local economy and Colorado Springs New Homes housing market.

According to Crowley:

• “During the last 10-15 years, the average home price increased 100 percent, while income only increased 1 or 2 percent.”

• “In El Paso County, population growth is 3.4 percent, but job growth is only 0.4 percent. We need to see job growth grow by at least 2 percent, just to keep the population employed.”

• “If consumers are disappointed with the economy, they stop buying. Then business inventories rise temporarily, but the lag effect is that retail, shipping companies and manufacturers start laying off employees.”

According to Tonn, these factors and several others have led to Americans “borrowing against the equity in their homes at a rate that threatens the economy.” Furthermore, “during the first quarter of 1991, only 3.9 percent of all home mortgages were used to take equity out of the home. That number soared to 49.8 percent during the last quarter of 2005 and dropped to 41.5 percent during the second quarter of 2007,” and it is still too high.

Part of the solution to this, according to Berenz, is for homeowners to stop “using their residence like an ATM. When the home equity line of credit is maxed out, they will cut back on spending.”

I encourage you to take the numbers seriously and respond to the facts carefully. Doing so will help stabilize the Colorado Springs New Homes housing market and the local and national economies.