I’ve talked to many people recently who assume that money to buy a home has dried up. This is not true. Although many lenders have tightened their restrictions and raised their requirements, people are still getting loans. Incredibly, financing is still available for those looking to buy a home with little to no money to put towards a down payment. On top of that, first-time home buyers can take advantage of the federal $7500 tax credit.

So don’t just assume that you cannot qualify for a loan. Rather, find out for sure by scheduling a free consultation with a loan officer. Even if you don’t qualify for a loan, your loan officer will be able to counsel you as to what you need to do to get in the right position to buy a home in the future. But if you do qualify for a loan, you can take advantage of today’s buyers market, low interest rates, and home buyer incentives. As always, I can put you in touch with an excellent loan officer.

He’d say that Utah is in one of the best positions possible for real estate.  Things are certainly more strained in the real estate arena right now in Utah, but there are still buyers and sellers out there.  Comparatively, Utah is in a much better position than many other states that have really taken some hard hits.

Dick Gaylord, President of the National Association of REALTORS® (NAR), spoke to the our local Utah County Association on Wednesday.  It is quite rare for the President of NAR to make trips to Utah and even more rare for him to come to Utah County.  I listened and took notes of his prepared remarks.  Here are some vignettes of what he had to say:

• REALTORS® make life better for other people and fight for homeownership rights
• The national economic impact is finally impacting Utah and its real estate.  Home sales are down.  There is a lack of consumer confidence.  However, Utah has created many jobs in the last few years that will bolster the local economy
• Utah’s state foreclosure rate remains very low
• Because of local market gains, there is a great deal of pent-up demand for homes.  It will only be a matter of time until that demand pushes forward

President Gaylord also spoke of optimism, hard work, and the great service that real estate agents provide to families and communities.  If you are looking for help navigating Utah County’s current real estate market, let me get you set on the right path.

September 2008 Utah County Real Estate

I’ve been greatly anticipating seeing the new Utah County real estate market statistics for September.  September is a pivotal month every year since real estate is very cyclical.  There are more homes for sale and more people out buying during the winter months.  Then when school starts again, real estate transactions slow down.  Makes sense - people have other things vying for their time.  Generally speaking, the slowest time of the year is during the winter holidays: many people don’t like to be out in the cold or snow; additionally, there are so many other things to be doing (Thanksgiving get-togethers, Christmas parties, holiday shopping, New Year’s parties, etc)

I’ve been wondering what effect the drastic slide in the world’s financial markets would have on our area’s real estate.  October’s data may be a better reflection of that, but some of that was starting in September as well.  Anyway, here are the latest indicators:

Properties Sold During September 2008: 433.  This is down from August’s sales (473) but up from sales a year ago (374 in September of 2007).  Overall, I think this is positive.

Median Sales Price for Properties Sold During September 2008: $207,500.  This is down from last month’s median sales price of $225,000.  Depending on the month, median prices have bounced around over the last two years from as low as $205,000 to as high as $225,000.  I believe on the whole that prices have depreciated from what they were one year ago.  But looking at graphs over time, I see that prices have generally increased.  Each location and property type will be affected in different ways.

Active Listings are 4775, down from 4890 in August.

Condo Sales are down to 73 from the 87 that sold last month.  This is the most surprising to me.  I would have thought that condo sales would increase since they are usually much more affordable than single family homes.

We are definitely in the middle of a market correction, as we have been for some time now.  These statistics only reinforce what many of us have experienced - that homes are not selling as quickly and usually not for as much as they were during the peak of the most recent market cycle.  Sellers can still sell - but they must position themselves correctly.  And credit-worthy buyers can certainly still buy.  Many on both sides of the fence, both buyers and sellers, have expressed hesitancy.  Uncertainty in the market and where it is headed has caused a lot of people to put their plans on hold, sometimes unnecessarily so.  If you have questions about your specific situation, contact me to help you evaluate what things you should be considering.

Lastly, Taylor Oldroyd, CEO of the local Utah County Association of REALTORS®, summarized the current data by saying this:

“The Utah County market continues to defy many economists who predicted dramatic reductions in price and sales, but we continue to show relative strength in both categories. While obviously stating a 16% increase above last year’s sales does not give a true reflection of our market, neither do statements of doom and gloom. We continue to enjoy a robust buyers market…and with the uncertainty on Wall Street we should continue to bring in wise buyers and investors looking for a deal and a stable place to invest. Keep in mind that we enjoy strong housing demand, job and wage growth, and competitive loan rates. All these factors indicate that our local market is doing well.”

A new version of Utah’s Real Estate Purchase Contract (REPC) was recently approved by the Division of Real Estate.  This contract is significantly different from the previous contract and can be used anytime now.  The old contract can still be used up through the end of the year but beginning January 1, 2009, the new contract will be required.  I have not yet seen any offers written on the new contract, but it will only be a matter of time.

What has changed?
There are a TON of changes with this new contract.  There are both good things and bad things about the new contract.  The biggest change is that homes will now be sold in “as is” condition.  There will no longer be warranties that the seller guarantees the key elements of the home (heating, cooling, electrical, plumbing and sprinkler systems and fixtures, and the appliances and fireplaces).  This will place a much greater burden on the buyer to thoroughly perform due diligence in evaluating a home.  I have always recommended home inspections and home warranties.  They will be even more important now! Home sellers will still be obligated to disclose any known material defects about the home, but will not be held responsible to ensure that the aforementioned key elements are indeed “working and fit for their intended purposes”.

Utah’s new real estate purchase contract is an improvement in many ways.  It provides further clarification or brings to light many potential sticky issues that were not previously addressed.  To name a few, these issues include such things as water rights/shares, special assessments for capital improvements, HOA transfer fees, and additional disclosures that are required.

It requires an upgraded title insurance policy primarily to protect buyers against mechanic’s liens.  Furthermore, the necessary contract dates have been trimmed and streamlined.  In many ways this new contract spells out more precisely what must happen throughout a real estate transaction.

Excellent Working Knowledge of Utah’s New Contract
I have been studying the new contract in depth.  I have already taken a state-approved class teaching the new contract.  This class was taught by Curtis Bullock, attorney of the Utah Association of REALTORS®.  I have spoken on the phone with Curtis since then, asking him to clarify questions I’ve had about the new contract.  I’ve even taught a few classes to the other agents in my office, pointing out things I’ve learned and helping them see how changes can affect how we consult our clients.

One of the best things I do for my clients is help them understand exactly what the contract requires of them and help them understand the process.  I have identified several potentially significant pitfalls that I will steer my clients away from.  If you have any questions about how the new Real Estate Purchase Contract changes your real estate transaction here in Utah, please contact me.

Move it to your own piece of land and it’s yours - as long as you can elbow your way through the masses of other people hoping to do the same.

Jacquie Jones has gotten national media attention for offering her home for free to anyone willing to move it.  The home is about 100 years old and has approximately 3600 square feet.  It has had a good deal of upgrades and is in pretty good condition.  Jacquie wants to move it by the beginning of November and then start construction on a new home to go in its place.

The home has received a lot of attention and plenty of serious removal offers.  Jacquie is contemplating who will get the home - many have approached her with sad stories explaining why they need the new home and have presented their ideas on how to move it.  It will be intriguing to see who becomes the recipient of the home, how the home will be moved and for what price, and where the home’s new location will be.

Current Location: 1809 South Sunset Drive, Kaysville.  Moving the home will be quite costly and depends largely on how far it must be moved.

Contact Jacquie Jones at (801) 979-5225 if you are interested - but you better do it fast and be ready to tell a compelling story as to why she should give you the home over the dozens of others vying for it.

This story, although fascinating, doesn’t surprise me.  Affordable housing for those new in the work force is a challenge.  I worked with some clients just earlier this week on submitting an offer on a foreclosed home that was also 100 years old.  The home had 9 offers in only 2 days!  The homes in the entry-level prices are still selling quickly as long as they’ve been well taken care of.

This last week has been a roller coaster ride for anyone watching the United State’s financial markets.  Fannie Mae and Freddie Mac, Lehman Brothers, AIG, Washington Mutual, Wachovia, Morgan Stanley, Goldman Sachs, and more have all suffered terrible losses recently.  Some have failed completely while others have merged to try and stave off failure.  The stock market has been up and down; completely volatile.  The White House’s proposed $700 billion bailout plan was defeated yesterday and both Republicans and Democrats are doing all the finger pointing you’d ever care to see.  The “fear index” (VIX) is at the highest levels it’s ever been.

Life as we know it is shaken right now and many people are worried.  But we can rebound from this scare.  We can make good decisions and move forward the best we know how.  I am an optimist.  I think you can learn from every experience, especially ones like these.  Things might get worse before they get better, but I believe they will get better.  We are too resilient and innovative as humans.

August 2008 Utah County Real Estate

The August numbers are in!  Last month’s real estate statistics show some definite positive signs.  The number of homes sold throughout the county during August 2008 was up to 473, the most number of sales in any month this year.

Additionally, both the average and median sales prices of homes are up.  Since the median sales price is more important, let’s look at that:  for single family homes, the median sales price of homes sold in August was $240,000.

The number of days on the market that it takes a home to sell is continuing to increase, now up to 107 for single family homes.  When you include the time it takes to prepare a property for sale with the additional time needed between when a property goes under contract until it actually closes, you are looking at roughly 5-6 months needed to sell a home.  Not the best news, but not impossible, either.

For condos: 87 units sold in August with a median sales price of $156,069and days on the market averaging 118.

In total, there are 4,890 properties listed for sale throughout Utah County with a real estate agent.  This has dropped down from a peak of about 5,300 earlier in the summer.  Homes are taking longer to sell, but they are still selling.  Sellers need to have correct expectations about what they are facing.  Home buyers have still have a big advantage now of a lot of homes to choose from, coupled with traditionally low mortgage interest rates.

Uncle Sam lends Fannie Mae and Freddie Mac a helping hand

Earlier this week, the federal government took drastic measures to prevent the possible collapse of Fannie Mae and Freddie Mac.  Both institutions are sponsored by the government and play a huge role in the operations essential to mortgage financing and are responsible for the majority of the United States mortgage market. 

The shake up of the ‘credit crisis’ that began over a year ago continues to have a rippling effect.  Over the last few months, people expressed fears that Fannie Mae and Freddie Mac had some potentially serious chinks in their armor.  Now, the federal government has taken control at the helm entirely, to the tune of billions and billions of dollars being infused into the systems to try to stabilize them. 

The anticipated effects of this bailout?  To stabilize the mortgage market and to support the liquidity and availability of mortgage financing.

The potential drawbacks?  The American taxpayer is the one footing the bill.  Additionally, some argue that it will only increase inefficiencies in the system

The reaction?  Interest rates dropped drastically right after the announcement.  From what I’ve heard and read from experts, many think this will ultimately be positive.  As with everything else, only time will tell.  Personally, I wish that it wouldn’t have resorted to this because I think innovation and necessary adaptation to difficult problems occur best when performed by individuals incentivized by the free market as opposed to further government regulation.   At any rate, I do think this will strengthen the housing and mortgage markets as well as the overall national economy. 

7 years ago today.  It’s hard to believe that it has been that long.  I remember first hearing about the attacks against America.  I was in Germany at the time.  A friend of mine came running into the room and said that airplanes had struck the twin towers, that terrorists were suspected.  It all seemed like a crazy dream.  It just wasn’t possible.  I heard the reports of everything that was happening - the hijacked airplanes, the Pentagon, the downed plane in Pennsylvania.  Everything seemed so surreal.  Over the next few days, friends and neighbors offered their sympathy.  I received a post card in the mail from someone I had never met expressing sympathy and expressing hope.   As the days wore on after that event, the reality of what happened slowly sunk in.  I felt so badly for those who had lost their lives.  I hurt for families who were looking for loved ones, unsure if their father or friend or coworker was still alive or not but tormented by not knowing.

What a blessing it is to live in a country that protects so many freedoms for us.  And yet, as many have said before, freedom is not free.  It is something that must be safeguarded and cherished.  I am thankful for all those who are making this possible, and I am trying to contribute as well.  Sometimes I believe the best way to honor those whose lives have been taken is to remember them.  Remember their sacrifice.  Remember the tragedies.  And pass on your memories as reminders to those around you.  I remember a mural in my high school that said ‘United We Stand; Divided We Fall’.  This is particularly true to remember and applies to our families, our co-workers, our friendships, and our neighbors.  I hope we will all remember this tragic event 7 years ago and be motivated to be better and to appreciate more the people around us.

The Newest Competitive, Low Rates for Utah County Mortgages

Competitive interest rates for home mortgages in Utah County dropped significantly today - as a result of the Fannie Mae and Freddie Mac buyout.  I will illustrate more about the government buyout of these companies later, but for now the interest rates on new loans is as low as they have been in a long time.  My last article happened to be about the mortgage interest rates, but then these new rates surfaced and are much lower still.  You have to know about them.  Here is what you could expect to get on a good mortgage if you have a good credit score, employment history, and down payment:

Conventional 30 year loan: 5.875%
FHA 30 year loan: 5.75%
Conventional 15 year loan: 5.75%
3 Year Adjustable Rate Mortgage (ARM): 6.0%

Thinking of buying a home?  Don’t go about it in the dark.  Call me so you can know exactly what to expect.  As I said in my last article: if you are wondering what you should expect as far as payments, amount of down payment to save for, or what your credit score is, then contact me and I will put you in touch with the right people.  Now could be the perfect time to save money on a low-interest long-term loan while taking advantage of the current buyers’ market.

Thinking of refinancing?  You can likewise take advantage of great, lower rates.

Current Interest Rates for a Mortgage in Utah County

Although mortgage rates differ from every company and in respect to each individual situation, the basic competitive interest rates right now for a home loan are as follows:

Conventional 30 year loan: 6.25%
FHA 30 year loan: 6.25%
Conventional 15 year loan: 5.875%
3 Year Adjustable Rate Mortgage (ARM): 5.75%

These are the competitive rates that you could expect with a good credit score, income, and down payment. Every situation is unique, though, and you could get an even better rate with exceptional credit and a significant down payment. The reverse is also true.

Thinking of buying a home? If you are wondering what you should expect as far as payments, amount of down payment to save for, or what your credit score is, then contact me and I will put you in touch with the right people.

First Time Home Buyer Tax Credit

An interesting law was passed recently that is designed to encourage first time home buyers to take the plunge and buy a home. The law is called a tax credit, although technically it is a zero interest loan. I actually have mixed feelings about the new law. Let’s get the nitty-gritty. In the words of CENTURY 21’s President and CEO:

• The amount of the federal tax credit is for 10% of the cost of the home, up to a maximum credit of $7,500. In essence, this is an interest-free loan that enables consumers to receive a tax credit on a dollar-for-dollar basis on their personal income tax return in the calendar year following the year of closing on their home. They begin paying the tax credit back the year after that and make equal installments during the next 15 years. If the homeowner sells the home at any point during the 15-year payback period, then the remaining amount is recaptured, unless they sell the home at a loss, at which point the balance is forgiven. e.g., If a home costs $65,000, the allowable credit would be $6,500. If a home costs $120,000, then the allowable credit would be $7,500.
• Eligibility is for first-time homebuyers only. In this case, a first-time homebuyer is defined as an individual who has not owned a primary home at any time during the past three years, but who may have done so previously. Although certain income limits do apply, the amount of the credit is the same for all taxpayers, married or single.
• Individuals whose Form 1040 filing status is single (or head of household) are eligible for the tax credit if their income is no more than $75,000. Individuals who file a joint return may have no more than $150,000 in income.
• Individuals with incomes between $75,001 and $94,999 (single) or $150,001 and $169,999 (joint returns) are eligible for a partial tax credit.
• Individuals with incomes greater than $95,000 (single) or $170,000 (joint return) are not eligible for this tax credit.
• The federal income credit can be claimed on one’s individual or joint tax return for the purchase of any single-family home between April 9, 2008 through July 1, 2009. Individuals should consult a professional tax advisor for exact tax calculations.
  e.g., If an individual’s actual tax liability was $5,000, then after the tax credit is applied the purchaser would receive a total refund of $2,500. The refundable amount is the difference between the $7,500 tax credit and the amount of one’s tax liability.
  e.g., If an individual’s actual tax refund was $2,000, then after the tax credit is applied the purchaser would receive a total refund of $9,500.
• This tax credit is required to be repaid without interest in equal installments of 6.67% of the total credit each year for 15 years beginning the year after the tax credit is claimed.
  e.g., If a homebuyer claims the $7,500 credit in 2009 on their federal income tax return for a closing that occurred in 2008, then the credit is received in 2009, so repayment begins in 2010 with an annual repayment amount of approximately $500 a year.

As I said before, I have mixed feelings. This could be beneficial for many people, but I don’t think it would do a lot of good for those who need the money right away to help them get into a home. It doesn’t help much if the money needed to get people over the hump and become a homeowner is tied up until taxes are filed next year. Also, does it encourage people to get into more debt? Will they use this money wisely or will they spend it away and put themselves in a bit of a crunch every year when portions of it need to be paid back?  In certain situation it is probably a good thing. In other situations, I actually think it may be bad. You be the judge.

To see more answers to frequently asked questions, click here.

July 2008 Utah County Real Estate

Not a whole lot has changed in our market over the last little while. We’re in a bit of a rut and it may take some time to get out again. The silver lining is that homes still sell, they just take longer to do so and may not get as high a price as they did at the peak of the market last year. However, even if a person sells her home for less today, chances are good that she will also be able to buy a home for less. And, like I’ve said many times before, different price ranges are affected in different ways. The higher end homes have way too much competition and oftentimes not enough to stand out from the rest. The lower-priced entry level homes are still selling quite well, without drastic changes in price.

Now to some of the July 2008 Utah County Market statistics:

• Median Sales Price = $214,250
• Number of Properties Sold = 445
• Number of Condos Sold = 85
• Number of Properties currently for sale with a real estate agent = 5126

Home prices have definitely dipped. Certain areas are still stronger than other areas and certain price segments are far better than other segments, too.

Call or email with any specific questions.

My neighbor asked me if me and my family were going to starve. He had heard that real estate was struggling right now.

It is true that it is a SLOW market in our area. It is also true that if home sellers have realistic expectations of what they are up against with the market and react accordingly, that they can still sell their home. Home sellers need everything working on all cylinders right now to make that happen. Homes need to show well inside and out, be available to show at the drop of a hat, be priced correctly, and be marketed through a professional. When these things are done and sellers are taught realistic expectations to reflect their current position, then homes still sell and people can still move on with their lives.

With that being said, let’s look at some of the current stats to see where we are at for home sales in Utah County. The numbers for May were just recently made available, of which I think the following are quite intriguing:

• Active Listings of Homes for sale May 2008: 5306. Still near the highest it has ever been. There is more inventory of homes for sale. More supply = more competition among sellers and a longer sale period.
• 418 properties of all types sold in May 2008. This is down quite a bit when compared to May 2007; however, it is an increase from April 2008, making it a positive trend for the current year.
• For single family homes, the median sales price decreased from $235,000 in April 2008 to $230,000 in May 2008. The median sales price of homes in Utah County has hovered predominantly between $230,000 and $240,000 for the last year and a half. No real gains or losses over that stretch of time when looking at the market as a whole. Of course, there are gains and losses in specific areas. With gas prices right now, more people are demanding to live closer to the center of Utah County in cities like Orem, Provo, American Fork, Pleasant Grove and Lehi. On average, these areas seem to be faring better than places further out such as Eagle Mountain, Woodland Hills, Santaquin, etc.
• The number of condos selling stayed about equivalent to last month at 82 units. This surprises me the most since they are the most affordable for first time home buyers.

All in all, it’s true that things are slow in our corner of the real estate market. At the same time, positive trends give a glimmer of hope. Consumer sentiment is hesitant and uncertain. Fuel and food prices make it an interesting time throughout the nation right now. Let me know if you have questions regarding your specific situation.