November 05, 2008

REAL ESTATE VALUES AND TRENDS FOR 2009 & 2010

In reviewing the national real estate reports we see that in areas like Florida, Nevada, and Arizona the number of sales is increasing faster than the new listings being added. This means that the over supply of homes on those markets will begin to diminish ever so slowly. As the inventory reduces, supply and demand will take effect and values will begin to increase. Many prognosticators indicate it will take well into 2009, or even 2010 before the market balances again.

Many qualified buyers in Utah may be sitting on the sidelines waiting for the absolute bottom before they make their purchases. Current Sellers are asking how long before Utah will begin to see an improvement in values? Since we tend to lag behind many parts of the nation, our recovery will likely be after the above listed markets. One can watch both coasts to see what they are doing and then find a similar trend in Utah a year or so later.

The key number to watch in order to see when the “turn” will happen is when new listings in Utah are less than the number of homes being sold in a month. For example, in Davis County, August sales were at 265 units. New listings for that month were 353 units. That means that current sellers will be seeing more competition in the future. As a result, homes that sell will do so at lower list prices. That trend has carried over to September and October. Right now, with the current sale pace, there is over a 10-month supply of homes without any new homes coming on the market. Weber County has an 11 month supply of homes currently on the market with more listings being added than are actually selling.

What we expect in the near future is an increase in the number of foreclosures and short sales with reductions in price for the seller. This may appear to be a great thing for buyers but the real risk for buyers is staying on the sidelines too long and missing the bottom. One of the reasons home values declined was that many sellers were waiting for the absolute top of the market before putting their home on the market. When the market peaked, so many homes came on the market that supply overwhelmed demand and prices dropped. In addition we had the subprime mortgage problems and the credit crunch.

The inverse could happen as well. Buyers could wait too long trying to time the very bottom of the market only to find that the market has “turned” and when everyone wants to buy at the same time prices will increase, and at a faster pace than buyers will want. Reports from many real estate experts say that between now and the next six months would be the best time to buy properties. We are buying our investment properties now so we don’t miss these good rates and prices.

One thing is for sure, the Federal Government is focused on fixing housing. There may be some debate as to the best method to do this, but the country’s and the world’s economies depend on this issue getting resolved. With all the chips on the table for many world economies, it would be unwise to be against this effort. Now is a great time to buy real estate.

Posted By: Steve Randall