Utah Realty News

Lt. Gov. Praises Utah Economy & Housing Market

Recession is not a feeling, but a formula that has not yet occurred. This doesn’t mean we won’t have one, we’re just not there yet.

By Amy K. Stewart
Deseret Morning News

OREM — While statements from federal financial officials this week are painting a bleak picture of a looming national recession, Utah Lt. Gov. Gary Herbert says the state is faring well when compared nationally — especially in the area of housing.
"I don't think we're in a recession, and I don't think Utah Realty is headed for one," Herbert said, in an interview with the Deseret Morning News Thursday afternoon.
Herbert also addressed state transportation issues as related to the economy when he spoke at Utah Valley State College on Thursday.
His presentation was part of UVSC's Reed and Christine Halladay Executive Lecture Series. The one-credit class presents a speaker each week for business students. The lectures are free to the public.
Herbert, who has worked in the real estate field, said some people are overemphasizing the negative side of the housing crunch right now. "We have people who are comparing it to the (Great) Depression," he said. "That's ridiculous."
During the Great Depression, around 25 percent of people were out of work. Now unemployment is 4.5 percent to 5 percent, Herbert said. "It's not even comparable," he said.
Herbert said interest rates are still very low — around the 6 percent range — so "it's a buyers market. There are opportunities out there."
Further, with Utah's better economy and higher quality of life, the state will still have in-migration, added to the state's ever-high birth rate. "And they are all going to need housing," Herbert said.
Housing in Utah is going to remain viable, he said. "It's not going to be the boom years where we had 7, 8 or 9 percent growth but I think we're going to have 2 or 3 percent growth — and growth is positive," Herbert said.
During his presentation, Herbert said as Utah experiences growth, the state needs to keep up with transportation infrastructure or suffer the negative consequences in not only lack of quality of life but also potential loss of economic opportunity.
Herbert said he spoke with Texas transportation officials recently. They told him Dell Computers, headquartered in Austin, chose to open up a new division in Tennessee because Texas was behind in transportation. The new Dell division has the potential to create 10,000 jobs.
Utah government is working on a $2.5 billion reconstruction project of I-15 from American Fork to Spanish Fork. And there are 207 road projects going on right now statewide, Herbert said.
"You're going to see a lot of orange cones," he said.
Previous to his being elected to his state position Nov. 2, 2004, Herbert served on the Utah County Commission for 14 years. He and his wife, Jeanette, have six children.

[ back to the top ]

By Josh Loftin

Utah's housing market is stronger than ever, despite a nationwide slow down in the third-quarter prices that was the lowest in more than a decade.
With 12.9 percent growth in home prices from the third quarter of 2006 to the third quarter of 2007, Utah had the biggest increase in the nation, according to a report issued Thursday by the Office of Federal Housing Enterprise Oversight. Four of the state's metropolitan areas were among the top 11 in the nation for home-price increases.
Only the St. George market is suffering, with a 0.9 percent drop in prices in the third quarter. The St. George area is experiencing the same problems that are plaguing other parts of the nation, primarily because it also was one of the hottest areas during the housing boom during the first half of the decade, said Jim Bringhurst, president of the Utah Association of Realtors.
"Our market is very different from the rest of the country," he said. "We have a healthy market, and since we didn't see the massive gains, we won't see the big drops."
U.S. home prices marked a quarterly decline for the first time in 13 years in the third quarter, according to the report. Home prices dipped 0.4 percent nationwide in the July-September period, compared with the previous quarter.
Compared with the third quarter of 2006, U.S. home prices posted an increase of 1.8 percent, but it was the smallest year-over-year increase since 1995, according to the agency, which oversees the big mortgage-finance companies Fannie Mae and Freddie Mac.
"While select markets still maintain robust rates of appreciation, our newest data show price weakening in a very significant portion of the country," agency director James B. Lockhart said in a statement.
Ten states saw declining prices compared with the third quarter in 2006, and 21 states saw a drop in prices since the second quarter of this year.
Price declines were steepest in Michigan (down 3.7 percent), California (down 3.6 percent), Nevada (down 2.4 percent), Massachusetts (down 2.3 percent) and Rhode Island (down 2.2 percent.) Of the 20 metropolitan areas with the largest declines, 17 were in California and Florida.
"Rising inventories of for-sale properties are clearly having a material impact on home prices," said OFHEO chief economist Patrick Lawler in a news release. "Until those inventories shrink, that will be a great source of resistance to price increases."
Bringhurst does not believe that those negative numbers nationally portend a decline in prices for most of Utah, because the state's economy is still growing, unemployment is low and growth remains strong.
The Provo-Orem market, with a 14.3 percent increase, was second in the nation among metro areas for home-price increases, trailing Wenatchee, Wash., a ranking it also held in the second quarter. Ogden-Clearfield was ranked fourth this past quarter, and Salt Lake City was fifth, with both areas seeing an increase of more than 13 percent in the past year and 2.4 percent in the past quarter.
The Logan metro area, which in the report included the northern Utah and southern Idaho/Cache Valley market, was ranked 11th in the nation, with a price increase of 9 percent from the third quarter last year. Third-quarter prices rose only 0.4 percent, however, compared to the previous quarter.
Other reports released Thursday provided a similar or worse picture for the national real estate markets.
The Commerce Department said Thursday that the median sales price of a new home fell 13 percent in October, compared with a year ago, to $217,800. It was the biggest annual decline since September 1970 in the median price, the point at which half of homes sell for more and half for less.
A mortgage research firm, meanwhile, said U.S. foreclosure filings nearly doubled in October from the same month last year. A total of 224,451 foreclosure filings were reported in October, Irvine-based RealtyTrac Inc. said Thursday.
Other measurements of home prices have been falling for some time while OFHEO's index, until now, had continued to rise. The reason, economists say, lies in differences in how home prices are calculated.
The widely tracked Standard & Poor's/Case-Shiller nationwide housing index, which fell 4.5 percent in the third quarter from last year, focuses on major metropolitan areas and includes expensive properties as well as cheaper ones. The federal government index, while more national in its scope, excludes higher-priced homes and ones financed by riskier mortgages.
A separate report Wednesday from the National Association of Realtors said the median price of a home sold in October declined to $207,800, a drop of 5.1 percent from a year ago, the biggest year-over-year price decline on record.
But many economists consider the OFHEO and Case-Shiller indexes to be better measurements of the housing market than the Realtors' report, because both indexes examine price changes for the same properties over time instead of calculating a median price for houses sold during a particular month or quarter.
The OFHEO index is calculated solely using home loans of $417,000 or less that are bought or backed by government-sponsored mortgage companies Fannie Mae and Freddie Mac. Importantly, that excludes properties bought with some of the riskier varieties of home loans that have gone sour this year.

[ back to the top ]

Home-price appreciation highest despite what you hear

By Lesley Mitchell

For some of the homeowners who are having to cut asking prices to get their properties sold, especially in the $500+K price point, it might not feel like Utah's real estate market could be considered the best in the country.
A report released Tuesday by the Office of Federal Housing Enterprise Oversight confirms, Utah is No. 1 among all states in home-price appreciation, from the fourth quarter of 2006 to the same period in 2007, with a 9.27 percent gain. It is the state's fifth consecutive quarter in the top spot.
Utah's appreciation rate is down considerably from the double-digit gains of recent years. When it first topped the nation in appreciation in the fourth quarter 2006, its one-year appreciation topped 17 percent. By the third quarter of last year, appreciation had slowed to 12.9 percent before dipping even farther in the fourth quarter.
But compared with many other states, coping with a much sharper residential downturn, Utah's residential real estate market is faring much better.
"We do have a lot of inventory, which has caused prices to have flattened," said Realtor Bill Heiner, second vice president of the Salt Lake Board of Realtors. "But we're still doing well."
That's due in large part to Utah's economy, which continues to see solid job and population growth and low unemployment. It also had less exposure to subprime lending in recent years, in which scores of people with poor credit got loans they could ill afford and that ultimately ended in foreclosure.
"Our fundamentals aren't as good as they were six months ago, but they are still better than most every other state," said Jim Wood, director of the University of Utah's Bureau of Business and Economic Research.
Falling home prices for Utah in the coming years are "not likely," Wood said. "I just don't think we're on the brink of price declines in a broad Wasatch Front or statewide market.
Nationally, Wyoming was No. 2 on the appreciation list, with a 8.27 percent gain. The U.S. average was up only 0.84 percent in the year that ended December 31. The index created by the federal agency is based on data from Fannie Mae and Freddie Mac on more than 34 million sales transactions and appraisals ordered for refinancings of conventional "conforming" mortgages for less than $417,000.
All of Utah's major metropolitan areas - with the exception of St. George - were in the top 10 metro areas nationally. Wenatchee, Wash. was No. 1, with a 13.67 percent increase; Ogden-Clearfield was No. 4, with a 10.80 percent increase; Provo-Orem was sixth, with a 10.46 percent gain, Salt Lake City was seventh, up 9.68 percent; and Logan was ninth, up 8.75 percent. St. George actually showed a 1.91 percent decline, placing it No. 220 on the list.
The southern Utah city's real estate market began a home-price runup more than a year earlier than much of the Wasatch Front and began its downturn in 2006. The Wasatch Front's real estate market began to slow last summer.
Earlier this decade, Utah's home-price appreciation was the worst in the country, while many of Utah's neighbors and such states as Arizona and Florida were racking up impressive home-price gains. Then, a few years ago, the state's real estate market took off, too.
But even as that was occurring, Utah's western neighbors were hitting a downturn that continues today. Nevada's home prices fell by 5.86 percent in the year that ended in December and prices were down 2.40 percent in Arizona. The lowest-ranked state in terms of appreciation in the report was California, with a decline of 6.65 percent.

 

[ back to the top ]

Locally, great markets like Provo, Utah, are affected by the poor decisions of others nationwide.

By Prashant Gopal

A year ago the six-bedroom house where Scott and Dawn Norton raised 10 children in the shadow of a Utah mountain range would have been snatched up.

The Provo (Utah) home, which is listed for $368,000, seems to have plenty going for it besides scenic lake and mountain views. For most Americans, the housing slump began in 2006, but in Provo and adjacent Orem, home prices leaped 14% in the quarter ending Sept. 30, compared with the same period in 2006, according to the Office of Federal Housing Enterprise Oversight's Nov. 29 report. Only one metropolitan area in the nation—the city of Wenatchee, Wash., in the eastern foothills of the Cascade Mountains—saw higher price appreciation.

Still, the Nortons have knocked $30,000 off their original asking price, set five months ago, and are giving a 3% discount to any buyer who comes to the closing table without an agent. Why offer incentives in a hot market? Well, it seems that even some of the nation's strongest markets, including Utah, the state with the highest third-quarter year-over-year appreciation, are losing steam. "We live in a great area, and I know we're priced reasonably," says Dawn Norton. "I've had a Realtor tell me, 'It's not just your house.'"

No Place Is Immune
Unlike previous downturns, this housing slump is affecting even areas and properties that should be immune. Prices are rising in some places, but not as much as they were, and the pace of sales is down almost everywhere. The hottest markets have likely already been weakened by tighter loan restrictions in the wake of the subprime mortgage mess.

"I keep hearing that Utah's economy is great," says Kevin Shoell, who owns title company Title One in Salt Lake City. "But the housing market isn't great. I've heard the stats before [about the state's home prices]. Everybody in the industry is looking around and saying, 'Who are they talking about?'"

The credit-tightening brought on by the subprime mortgage crisis took hold in August, but its impact on home prices won't be quantified until the fourth-quarter 2007 data are released next year. "It's really hard for any state to escape a downturn of this magnitude," says David Stiff, chief economist for Fiserv Lending Solutions in Brookfield, Wis. "There are places that won't drop. But the strongest markets will roughly be growing at the rate of inflation, so in real terms, they'll be treading water."

Where the Housing Boom Hangovers Are
Of course, speculative markets such as Southern California, Nevada, Arizona, and Florida are suffering the worst housing boom hangovers. Developers during the boom overbuilt to accommodate flippers and buyers with no-money-down mortgages and other creative loans that are going into default. But prices are also falling in Ohio and Michigan and other Midwestern states with troubled manufacturing economies that never experienced much appreciation during the boom. New England has also cooled off: "It was early to come into the boom and early to exit the boom," says Andrew Leventis, a senior economist with OFHEO.

Less than two hours from Yosemite National Park, Merced, Calif., is the nation's worst-performing housing market, at least according to the OFHEO's third-quarter data. Prices in Merced plunged 13% from the third quarter of 2006. Merced also leads the nation in foreclosures with one filing for every 82 households, nearly seven times the national average, according to Irvine (Calif.)-based RealtyTrac. The best market was picturesque Wenatchee, a city of more than 35,000 that is the seat of Chelan County, Wash. Prices in the Wenatchee metro area increased by 15.7% year over year in the third quarter.

States that had the largest quarterly price growth generally had healthy economies. Rising fuel prices have been a boon to energy-producing states such as Texas, Wyoming, New Mexico, Colorado, Oklahoma, and North Dakota. The falling dollar has helped states with export-heavy economies such as Washington. Transactions Dropping in the Pacific Northwest

Home prices jumped more than 10% in second home markets in Utah, Idaho, and Colorado. "They're doing so well because they're getting the runoff from California, Nevada, and Arizona," says Jeannine Cataldi, senior economist for Global Insight. "When prices got so high [in those states], people said, 'There must be places that are more affordable.'" But even the nation's hottest markets are slowing. In the Pacific Northwest, where many markets have been bucking the national trend, the pace of sales transactions and price appreciation is dropping off.

In Wenatchee, real estate agents acknowledge the softening. "We've had a little bit of a slowdown but nothing compared to what we're seeing in the rest of the country," says Lisa Day, a Realtor with Lisa Day Group at Century 21 in Wenatchee. "In my market, prices have gone up and they've plateaued. You're seeing a little bit of a plateau now."

Utah Not Crashing
Day says Realtors in Wenatchee are still busy. But Merced real estate professionals are leaving the business or adjusting quickly to disastrous conditions. Jessica Rattanasack, a Realtor with Century 21 M&M Associates in Merced, said she started selling foreclosed properties during the summer and now 90% of her sellers are banks. Katherine Zupan, who owns My Very Own Room in Merced, used to help residents stage homes—that is, decluttering, cleaning, and preparing properties for quicker sales and higher closing prices. But she no longer feels comfortable taking business from Merced sellers who appear to be calling her out of desperation. "It's hard even for a staged home to stand out from the rest of the homes when new home prices are comparable to resale homes," Zupan says.

Shoell, the Utah title company owner, says prices aren't crashing in his state. But it's not "all wonderful here," he adds. "We're always about two steps behind everybody else, but we'll feel it."

Check out the BusinessWeek.com slide show to see the best- and worst-performing housing markets in the U.S.

[ back to the top ]

The Subprime Market Has Changed Substantially, However They Can Still Be a Good Way Buy a Home

Subprime mortgages are loans that are offered to borrowers with low credit scores. Each lender has its own guidelines for deciding whether a borrower is subprime. As a general guideline, if your credit score is in the low-600s, you might be subprime or very close to it. In that case, finding a good mortgage lender might be a little more challenging. You'll want to talk to lots of prospects, and avoid any lender that makes you feel uncomfortable about your situation. Use every available resource at your disposal, including mortgage calculators, to compare your mortgage quotes. Most importantly, you're the one who has to decide what you can and can't afford.

[ back to the top ]

What You Won’t Here Reported In The News, Thought You Might Like To Know

This, if you will, nascent downturn — because it hasn't happened yet — this nascent downturn is unforgivable in many respects," Romney said. "The products that were being sold into the marketplace were frankly way too high-risk and inappropriate for our mortgage market. In some respects, people have pointed out they were insisted upon by congressmen and others saying: 'Lend to the poor, lend to poor credit risks because it's a good thing.' " Mr. Romney said the Federal Reserve took proper action by lowering the discount rate and the federal funds

[ back to the top ]

Real Estate Opportunities for Home Ownership Keep Getting Better and Better. If You Don’t Like What You Are Hearing About Real Estate In The News. Just Wait A Minute. . . .

It seems like yesterday that Salt Lake City was expanding I-15 and constructing TRAX in the buildup to hosting the 2002 Winter Olympic games. Yet only 10 years ago, in the backdrop of the expansion, Envision Utah had formed and was capturing headlines with its workshops and media events advocating the concept of Smart Growth. Now, 10 years later, with rapid growth up and down the Wasatch Front, TRAX and market dynamics are spurring the realization of this vision in new housing development patterns focusing on higher density, mixed use and access to light rail to accommodate a new set of homebuyers: young urban professionals and empty nesters. Boasting one of the highest rates of job growth in the nation and a population boom near the top of the 50 states, Utah is experiencing an urban renewal. An estimated one million new residents are expected to be added to Utah’s population by 2020. To accommodate this expected influx, our state’s transportation system will be upgraded, new housing will be built and precious natural resources will be developed. As demands for more of these services rise, political pressures will increase, economic factors will be examined and local governments will grapple with how to find the right mix to serve an increasingly diverse population base. With land at a premium, it is anticipated that the demand for smart growth communities will increase.

New Urbanism: Looking Back To Move Forward
Along the Wasatch Front, communities are placing emphasis on an evolutionary approach to residential development: new urbanism. The basic concepts of new urbanism are not new, but instead, find their foundations in the planning principles of the pre-World War II era, when access to the automobile was not readily available. Pre-1945, residents lived in close-knit communities with schools, employment, parks, entertainment and public transit within close proximity. In these communities, residents joined each other on walks to the neighborhood market, or conversed for hours on the front porch. Today, a new segment of society, burned out by long commutes and faceless communication, is seeking greater mobility and interactivity. Along the Wasatch Front, expansion of TRAX light rail and construction of a new commuter rail line to connect Weber and Davis counties to Salt Lake City are opening a new frontier for new urbanism. Already, communities in the Salt Lake Valley are utilizing mass transit options to spur massive redevelopment efforts that hold the potential of transforming blighted, industrial sectors into new, inviting urban oases. Along with enhancing a city’s aesthetics, these developments are bringing a new workforce, community-minded residents and a diversified tax base to revitalize aging neighborhoods.

Murray City: A New Place To Re-Think Along The Wasatch Front
An established city with few undeveloped parcels and a history rooted in industry, Murray City is leading the way in utilizing redevelopment agency authority to encourage urban infill and revitalization. Working with local developers, the city has begun to transform blighted and underutilized industrial properties west of State Street. Murray’s famous smokestacks were the first to go, making way for the Intermountain Medical Center, a major hospital campus built by Intermountain Healthcare at 5300 South. When the campus opens this fall, it will join the Costco store next door in breathing new life to this sector. This is only the beginning as Murray is capitalizing on its location in the heart of the Salt Lake Valley. Convenient access to TRAX, I-15 and I-215, makes Murray an ideal setting for high-density mixed-use development

THE WORLD IS WATCHING
As it did during the massive infrastructure expansion leading up to the 2002 Olympic Winter games, the Wasatch Front again finds itself under the national microscope. With countless American cities having failed to implement smart growth and now facing the undesired consequences of suburban sprawl, many are watching Utah to see if an experiment with New Urbanism can provide a growth that maintains our high quality of life. In April 2007, the New York Times featured Murray’s Fireclay District, which was followed by a USA Today feature about light rail and commuter rail expansion along the Wasatch Front. The next several years will prove whether this investment in new urbanism development strategies has paid off. We at Hamlet Homes are optimistic that the new urban homebuyer recognizes the value of smart growth and will continue to purchase homes that are more affordable, require less maintenance and provide convenient access to multiple modes of transportation. (Sources: Utah Governor’s Office of Planning and Budget, Utah Department of Workforce Services, Envision Utah)

[ back to the top ]

By Brice Wallace
Deseret Morning News

The real estate forecast nationwide for 2008 and overheard in Utah is peppered with frightening words: "recession," "soft market," "down turn," "hard times," "sub prime crisis," "foreclosures."

But speakers at a meeting Tuesday about the "Emerging Trends in Real Estate 2008" report said Utah has a hard-charging economy and demographics that will insulate it from a lot of the troubles besetting the real estate industry nationwide.

"Our fundamentals are absolutely outstanding," Michael Richmond, a commercial real estate broker for Commerce CRG/Cushman Wakefield, said at the meeting of the Salt Lake District Council of the Urban Land Institute.

The 29th annual report was undertaken by PricewaterhouseCoopers and the Urban Land Institute, a research and educational group, and is based on surveys of more than 600 industry experts nationwide. The report can be found at www.uli.org.

Salt Lake City was a middle-of-the-pack market in several rankings in the report, including prospects for commercial and multifamily investment and development, and prospects for for-sale homebuilding. But speakers said Utah's strong economy portends continued real estate industry growth. Dean Schwanke, a senior vice president at the institute and editor, principal researcher and adviser of the report, said he would have ranked Salt Lake higher in the "markets to watch" lists, but he had to base the report on the survey results.

Richmond said Salt Lake's rankings were due to the city being "lumped in" with other secondary and tertiary markets, and the city was "too small to be on the radar screen."

Michael Hansen, director of state and local planning in the Governor's Office of Planning and Budget, said Utah's "white-hot economy" is driven by a booming population and continued job growth, and buoyed by exports and manufacturing, defense spending, quality-of-life amenities and a highly educated work force, in addition to "skyrocketing" home values.

In many respects, Utah is "almost an untapped market" because of the strong economic factors, he said. Those factors will result in continued growth, he said.

Richmond said any white-hot real estate markets in Utah could not be sustained. "If you see headlines about the economy slowing in Utah, yes, but it's not panic," he said. "I think it's being back to more sustainable, more healthy levels."

Office vacancy rates peaked in 2002 but are now "in equilibrium" at about 11 percent. Office absorption remains strong, too. The industrial market features low vacancy rates, still-strong lease absorption and a relatively low construction rate. Utah also is "very, very strong on the retail side," Richmond said, although retail is a source of concern at the national level.

"It's a slower growth that we're going to see here," Richmond predicted of the overall real estate market in Salt Lake.

"With respect on the housing side, we have seen some defaults occur through the financial services and the real estate-related companies. A few of our particular submarkets, especially on the office side — in kind of the Union Park area, which has a high concentration of mortgage, title and real estate-related companies — there's going to be a little bit of risk there with companies downsizing and shutting down those offices, but that area is valued and in very high demand and I think that space will be filled quickly," he said.

Downtown Salt Lake is aided by continued growth at law firms and banks, he added.

Schwanke said that despite pessimistic comments from survey respondents, about 80 percent were optimistic about the outlook for their business in 2008.

And turmoil actually could be good for the industry because it could lessen the chances of overbuilding, he said.

"The theme for this year is 'A Dose of Fear,"' Schwanke said. "And I think that's a good thing, because we were a little fat and happy, I think, for the last five years, and it just couldn't last forever."

[ back to the top ]

Sub-Prime Mortgages at Issue In Housing, Not-So-Much In Utah and Not As Bad As National Media Reports.

Even with double-digit increases in home values in some areas, prices along the Wasatch Front remain within reach for most potential homebuyers, according to mortgage broker Coldwell Banker. In addition, Utah seems to be bucking the trend of increased foreclosures across the nation.

"If all the (nation's) mortgages in the subprime went into foreclosure that were in default, that would be about one percent," said Jaren Davis, vice president of business development for Coldwell Banker Residential Brokerage Utah, speaking to the Deseret Morning News editorial board.
He said despite the national concern over increases in subprime loans and in the number of loans in foreclosure, the problem is not as bad as some analysts make it seem.

"The subprime issue is an issue across the country. Is it here in Utah? It's very minor," said Max Thompson, president of Coldwell Banker Residential Brokerage Utah.

Recently released figures show nationwide the number of foreclosure filings have risen greatly in the wake of the recent lending debacle.
But the Beehive State has managed to avoid the default trend due to its strong economy and stable growth in its housing market," Davis said.
"A person doesn't lose their home to foreclosure in an appreciating market because they have equity," he said. "When markets are appreciating, foreclosures are lower."
Davis added another reason for Utah's lower foreclosure rates is the state's concerted effort to crack down on mortgage fraud. He credited the state for putting safeguards in place to track potential fraud and prevent deceptive mortgage practices.

A recent survey by Coldwell Banker indicated more than half the zip codes in Salt Lake County reported appreciation rates greater than 10 percent in the first and third quarters of 2007 compared to the same time last year. The report also stated the average price of homes remains affordable, with "affordable" defined as homes selling at less than $225,000 in 2007.

"There's still a shortage in the marketplace on the lower-priced homes," said Thompson, noting the average time for homes to be on the market ranges from 35- to 45-days. That time frame could be extended for higher priced homes.
Even with the challenges, he considers the local housing situation stable.
"The market is healthy, the market is strong," Thompson said. While housing sales decreased significantly during the last three months, home prices remained relative constant.

Thompson said he doesn't expect real estate activity to reach the fever pitch of the last year or two but proceed at a healthier level that will allow the market to maintain stability and reasonable growth.
"I see buyers holding off, being prudent and being smart," Thompson said. "Buyers who are cautious will enter the market over the next few months.

[ back to the top ]

Today the Fed announced its second consecutive decrease in rates, cutting another 0.25% from the Fed Funds Rate. This change could directly impact millions of American borrowers.

Are you one of them?

Adjustable Rate Mortgages
If you currently have an ARM that is scheduled to reset in the next 14 months, then today's news is good for you. Now is the time to investigate your options. Even if you have a pre-payment penalty or you're behind in your payments, don't delay. There may still be options available to get you out of your ARM and into a mortgage you can afford, including FHA or the new FHASecure program introduced by the President.

Important: The FOMC does not meet in November, so ask yourself this: Can you really afford to roll the dice until its next meeting in mid-December?

Buying at the Bottom of the Market
If you're looking to invest in real estate in the next six to twelve months, and recent rate cuts have inspired you to start taking action, now is the time to prepare yourself for intense credit scrutiny. There are a lot of great real estate deals to be had today. But if your credit doesn't stand up in today's tight-fisted credit environment, then you could easily miss out on an exceptional opportunity.

What's the point of taking advantage of discounted home prices if you can't qualify for the right mortgage or interest rate that makes it all worthwhile? Get pre-approved now and know exactly what you can afford. And with the right REALTOR® on your side, you can have incredible negotiating power in a buyers' market!

Refinancing – Know Your Options
While rate cuts often spark ideas of refinancing, this may not be the best choice for everyone. In some cases – especially in a market where home values are declining – refinancing may be impossible or disadvantageous. Call me today for a free mortgage review. Based on your individual goals and financial needs, we can explore every available option for you and your family.

[ back to the top ]

While the sky may not be not falling look out for some clouds

By Angie Welling
Deseret Morning News

With pundits around the country playing Chicken Little when it comes to the national housing market, local economists and real estate experts continue to have a more optimistic outlook for Utah's market.

"The housing market here locally has been strong and still is strong," said John Norman, executive director of the Utah Mortgage Lenders Association. "We have the underlying economic foundation for it to be."

Record low unemployment rates and continued job growth, at a rate of about 4,500 new jobs each month, contribute to a continued need for housing along the Wasatch Front. However, a decrease in sales of existing homes and new building permits show signs that the market is beginning to slow down.

Presenters at a symposium on the state of Utah's real estate market also painted a fairly rosy picture of the state's commercial, industrial, retail and residential markets. Of course, there are, as one presenter said, some "storm clouds on the horizon."

"In life there's not always all good news," said Gary Wright, a consultant for Ivory Homes, one of Utah's largest homebuilders. "There's good news and there's bad news. And so it is in Utah's residential housing market."

Utah's housing market remains one of the strongest in the nation, Wright said, but it has shown "definite signs of weakness" in the past six months. Single family building permits, for example, have decreased 20 percent since January 2006.

The biggest threat to Utah's market, analysts agree, is affordability. Despite Utah's strong performing economy, house prices in the state are increasing at least twice as fast as incomes and have, so far, shown no signs of dropping amid decreased sales.
The average price of a house in Salt Lake County is nearing $300,000 — a $110,000 increase over the past four years, according to a recent Wells Fargo analysis. At the same time, Wright said, land prices have gone up 250 percent.

"We have so many economic and demographic things that are strong in our economy," Wright said. In spite of these ... there is a serious disequilibrium in Utah. These prices will be a major drag on the number of new home starts and existing inventory sales."

Kelly Matthews, executive vice president and economist at Wells Fargo in Salt Lake City, agreed. "At the moment, we just simply can't afford the homes that are being offered for sale vs. the income levels of our people."

In his recent affordability analysis, Matthews predicted it would take a 7 percent reduction in house prices over the next year to start to solve the problem.
"That would be a very significant adjustment, but based on my analysis it would take something like that, along with another good year of income growth and really no change in interest rates, to begin to rectify the affordability situation that we've got ourselves into," he said.

Another blemish on the national housing picture, which has plenty of implications in Utah, is the meltdown in the subprime mortgage market. In the wake of that crisis, lenders have tightened standards, making it more difficult for even those potential homebuyers with good credit to qualify for a home loan.
The subprime market meltdown is "having a large effect on the housing market both nationally and in Utah," Wright said.

[ back to the top ]

Utah Top Ranked: Rising Home Values
Utah’s new construction single-family home market has slowed, which falls in line with weak performances across the US. Despite the slowing the latest national data confirms that Utah is recording the nation’s strongest home price appreciation.
Home price data from the National Association of Realtors measuring second quarter 2007 performance versus 12 months earlier ranked Salt Lake City as having the largest median (half cost less, half cost more) price increase in the nation, with a rise of 21.9% to $233,100.

The report noted that the median price for existing homes across the nation declined by 1.5% to $223,800. Prices rose in 97 metro areas, while declining in 50 communities.

The Office of Federal Housing Enterprise Oversight (OFHEO) ranked the average Utah existing home first in the nation in the 12-month period ending June 30, 2007, with a 15.28% price increase. Provo-Orem, Salt Lake City, and Ogden-Clearfield each ranked among the nation’s top four markets for average home price appreciation. The OFHEO data noted that the average U.S. home value rose 3.19% during the past year, with dozens of communities registering modest price declines.
The average U.S. home value rose 50.76% during the five-year period ending on June 30, 2007. Arizona, California, Florida, and Nevada, states which saw home values jump on average more than 90% during the past five years, now struggle with weak prices, overbuilt markets, rising foreclosures, and serious subprime mortgage lending challenges.

Many Sellers
Strong Utah real estate performance has now given way to a mismatch between buyers and sellers. Record inventories of Wasatch Front homes for sale, particularly of higher-end homes, suggest home price appreciation has largely run its course. Serious strains within the mortgage finance sector for higher priced homes only aggravate the current problem. Lower-priced homes face lesser challenges.

[ back to the top ]

Utah certain to maintain balance during economic correction

By Jasen Lee
At least one analyst says he views Utah's economy as half-full, while the rest of the nation is beginning to look half-empty.

During an interview with the Deseret Morning News on Tuesday at the Hilton Salt Lake City Center, Peter Linneman, professor of real estate, finance and public policy at the University of Pennsylvania Wharton School of Business, said Utah has the unique ability to maintain balance even during economic upheaval.

"The fact (Salt Lake City) is a state capital, it provides a 'leveling' phenomenon. You have the dynamic of the private sector and the stability of (state) government. So you don't go up as high as the (national) highs, but you also don't go down as low as the (nationwide) lows," Linneman said

He said because Utah did not experience the huge price run-ups in housing like Florida, California and Nevada, there shouldn't be a major economic correction. Linneman cited south Florida as an example, noting that during the previous 10 years buyers purchased 10,000 condo units total; today there are 40,000 new units under construction, and they are expected to be available in the next three years.

"You don't have to be a genius on supply and demand to say 'That doesn't work' and prices will fall a lot," said Linneman.

He predicts the Wasatch Front will see an increase in the housing market in early 2008 because the area "did not have a big excess" in homes, which he believes should bode well for next year.

Linneman said he expects prices in local commercial real estate to remain fairly flat and even decline in the coming year.

"You'll see on the commercial side there won't be a lot of transactions in the next year, so property values on commercial will go down a little bit," he said.

Nationally, he blames at least part of the current residential real estate downturn on poor judgment in home mortgage lending and people trying to make a quick buck.

You have what I call 'idiots lending to idiots.' You had lenders who lent money to people with 5 percent down and no credit checks. That's not smart lending. And (there were) people who borrowed with only 5 percent down and not being able to lose that money to buy speculative homes. That was not smart either," said Linneman.

With that scenario in mind, Linneman said the market will begin to even out once buyers, sellers and lenders reach a point of equilibrium, with each side giving in a little and weeding out those in the market who don't belong.

The national commercial scene has a more positive outlook, according to Linneman.

"The commercial side is in quite good shape. The overpricing has largely disappeared in the last couple of months," he said.

Linneman expects the state as well as the rest of the country to experience a mild recession in 2009 following the presidential elections as people try to determine what impact the new administration will have on the economy.

"This is not a Democrat-Republican thing," Linneman said. "It always happens. And then you figure it out and move on from there.

"We always recover. We recover because we add people; we're a healthy economic system," he said.

[ back to the top ]