January 31, 2011

Are Home Prices Stabilizing in Northern Utah?

Posted to Neighborhood Market Trends, Steve Randall

The Utah Association of Realtors recently released their Local Market Update Report for the State of Utah which identifies market trends for the number of units sold and median home price trends for every county. In the Northern Utah Counties of Weber, Davis and Salt Lake, the market was not kind to sellers – with Weber County showing a 29.5% drop in 4th Quarter unit sales, Davis County showing a 31.6% drop in unit sales, and Salt Lake County showing a 27.2% drop in unit sales for the 4th Quarter of 2010 when compared with the same quarter of 2009. This shows the market is still soft but predictions are that unit sales will increase in 2011.

The median price of homes in Weber County for the entire year decreased 3.5% when compared with prices of homes in 2009. Davis County home values dropped 2.3% and Salt Lake County prices fell 3.5% when compared to 2009 prices.

Points to Ponder:

It appears that the rate of decrease is slowing but sellers must price their homes for the current market if they are to sell. The trend for 2011 will be for more unit sales but that will also be countered with an increase in listings from foreclosures, shadow inventory (pent up demand), and the normal new listings that will come in the spring. For sellers, it is best to price the home at the market value earlier in the year when prices are higher rather than in the second half of the year when prices will have dipped some more. For more details on specific neighborhoods and cities please  at anytime.

Posted by:  Steven Randall





January 27, 2011

Want to Live Near Snow Basin Ski Resort?

Posted to Buyers, Owners, Sellers, Steve Randall

Snow Basin was the host of the 2002 Winter Olympic downhill race course. I have traveled down its steep slopes many times but never at the speeds of the great skiers. A bedroom community near Snow Basin is Eden, Utah. We have several listings in the area as well as several lots to build a summer and winter retreat. It is a great summer and winter recreation area and priced much lower than Park City.

An offer came in on one of our lots yesterday. The current list price was about $70,000 down from $110,000 just a year ago. The reason for the reduction in price has to do with supply and demand. There are currently 38 competing lots for sale about the same size as our listing. There is one listing that is priced about $20,000 less but it has a slope which increases excavation costs and makes the lot less usable. With so many lots available, why did our lot get the offer?

Pricing! The seller priced the lot to attract any buyer who is ready to buy now!

Should sellers wait to put the Eden lots on the market until spring? It is predicted that more lots will sell this year. However, there are many sellers who are waiting to put their homes on the market in the spring hoping the lots will sell for more. Those who want to sell a home but have not actively listed their home at this time, contribute to what we call the “Shadow Market” inventory. When Shadow Market homes get added to the active market, supply will increase over demand keeping prices the same in Eden…or maybe even dropping a little more in 2011.

Point to Ponder:

If you are buying in Eden, buy now before interest rates eat up the savings you have with heavily discounted lots.

If your are thinking of selling, you will get more for your property in the first half of the year than selling in the second half of the year. For more details, never hesitate to .

Posted by:  Steven Randall





January 25, 2011

Is Fruit Heights a Buyer's Market?

Posted to Buyers, Sellers, Steve Randall

Yesterday I attended a closing with a client who had just purchased a bank foreclosure property in Fruit Heights. The house was a tri-multi level home with four bedrooms and in very good condition, surprisingly so for a bank owned property. The price for this 2,900 square-foot home was $246,000 with the seller paying closing costs. The backyard abuts to the golf course and the home has a beautiful view of the mountains and has close freeway access to Salt Lake.

The buyer was excited to have this home and felt good about the price per square foot he had paid. As we looked at the market conditions in Fruit Heights the absorption rate, which measures the rate of homes sold in a given period, ranged from 9.33 months to 11.20 month of inventory in the past twelve months. For sellers in Fruit Heights that is not good news because inventory over 7 shows that the market is still a buyer’s market and means downward pressure for home values in the area. The good news is that we seem to be making a turn and there is more good news that we are seeing now than we have in the past.

There remains some great inventory in Fruit Heights for buyers with values ranging from the low $100,000s to values that exceed a million dollars. For information on buying a home in Fruit Heights and negotiating the best value, please at anytime. If you are a seller, then we can help you price your home so that it will sell based on current market conditions. We are happy to share the latest market data for Fruit Heights.

Posted by:  Steven Randall





January 20, 2011

The Impact of Population Growth on Housing

Posted to Owners, Sellers, Steve Randall

It was interesting to me to find out that our national population growth each year normally adds about a million new homes on average. In the last 10 years, however, the growth rate has been 27 million new homes added which includes the bubble time up to 2010. When interest rates were very low, there was a marked increase in homes added as it fueled new construction and made homes more affordable for many more people.

I remember buying a home in the 80s when interest rates were at 18%! During 1982 housing didn’t see any increase in home units that year. High interest rates offered no incentives for buyers to make the move into a new home.

Even though the population may be increasing, the impact of the economy tends to determine the growth of additional homes in the marketplace. Jobs will be the key indicator of when home growth will start again. We are seeing signs of a recovery even in jobs with the Labor Department reporting 1.1 million more jobs now than at this time last year. We will let the politicians debate the argument over private and public sector jobs and the rate of job growth but we do seem to be in a positive turn to more normal housing growth.

POINTS TO PONDER:

In 2011 we will see about 5.2 million homes actually sell. That will be an increase of about 8% over 2010. That means that demand will increase this year. In 2012 demand will increase to about 5.5 million homes for sale according to the latest NAR numbers. I wish this was all good news for sellers but even though demand will increase, supply will increase more! That supply will be driven not only by the sellers wanting to sell in 2011, but also by short sale and foreclosure properties. This will keep prices stable at best and most prices will drop 2%-6% this year. That means that if you are going to sell, now is the best time to do so. You will get more for you home in the first half of the year than by selling later in the year! Economic factors this year will still trump population in 2011…and likely 2012 as well.

Posted by:  Steven Randall





January 18, 2011

How To Predict the Next Real Estate Bubble!

Posted to Buyers, Owners, Sellers, Steve Randall

An experienced real estate investor knows from following appreciation values in the past that real estate normally increases in value about 25% to 29% every five years. The normal appreciation since 1980 has been about 5% to 6% each year. However, from 2000 to 2006, real estate values increased a whopping 89% during those years. This was due to low interest rates, lenders willing to lend, and a desire by government to make sure everyone had a home… and nobody seemed to care if the buyer was qualified or not!

From history, we can predict future bubbles by watching past appreciation rates. There are times where real estate values will accelerate more than 6% per year but be wary of buying when values are increasing 14% - 15% each year because it will not be sustainable over the long run. If you roll the dice and hope to get in at the right time there is greater risk you assume… as so many buyers can now verify. It is hard to time the market and that is why so many are underwater at this time.

POINT TO PONDER:

There is an old saying that “pigs get eaten.” Meaning that when you try to capitalize on appreciation rates way above the norm there is a good chance it will come back to haunt you. Real estate is a great investment if bought responsibly. Now is a great time to buy real estate even though prices may drop another 2% to 6% in 2011. It is hard to time the market perfectly, but with prices down, inventories high, and interest rates low… the stars are now aligned. If you try to save a few thousand dollars more by waiting for a lower purchase price you will likely be caught on the other side of the equation with higher interest rates. Rates are now on the move up from their lows of several months ago. Overall cost would show now is the time to buy rather than waiting for a lower home price. Thanks to Steve Harney at Keeping Current Matters for pointing out that monthly costs now will be lower than if interest rates rise in the future.

Posted by:  Steven Randall





January 18, 2011

Is Real Estate Still A Good Investment?

Posted to Buyers, Owners, Sellers, Steve Randall

Last week I was driving to a HOA meeting in Salt Lake and listening to a popular talk show host on Fox News, Sean Hannity. The topic of discussion dealt with the economy, jobs, and the current confusion of where people should put their investment money. Sean mentioned that he had money to invest but did not trust the stock market even though it was doing much better now. He didn’t know much about commodity investing… he knew gold was doing well but wasn’t sure about how much longer that would last. He mentioned real estate but with the recent downturn of home values, foreclosures, and short sales he wasn’t sure about that either.

If you return to the year 2000 and had $100,000 to invest in the Dow, S&P, NASDAC, or real estate… what would have happened to that investment in the year 2011? With Dow Jones you would have gained 5.8% and your investment would now be worth $105,800. With the S&P and NASDAC you would have lost money and the value of your investment would now be $82,000 and $66,000 respectively. Had you invested in real estate, your $100,000 would now be worth $145,300. At the top of the bubble you could have earned 89% on your money. However, if you bought at the top of the bubble you are now likely underwater. The great thing about real estate is that if you hold on long enough, it will come back and if you rented your property you would have had income even though values might have declined.

POINT TO PONDER:

Despite real estate’s current dilemmas, for the long term it has returned the highest ROI in the last 10 years. With all the talk about changing social security, now would be a great time to start buying real estate to insure that the golden years of retirement remain golden. While property values have fluctuated in recent years, rental values have remained stable and in some areas are on the increase. Now is a great time to buy real estate.

Posted by:  Steven Randall