Mortgage rates continue to average well below 5 percent – 4.7 percent last week on average for 30-year fixed rate loans and 4.5 percent for 15 year loans. Rates like these are a major factor pushing applications.
Nearly 600,000 home buyers have already claimed either the $7,500 tax credit from last year or the $8,000 credit for this year, according to IRS data cited by the National Association of Home Builders.
Also of interest, new home sales have been showing signs of improvement. Last week the Commerce Department reported that March sales were off just 0.6 percent, exceeding analysts’ expectations, after climbing in February.
In other positive trends, interestingly enough, The Wall Street Journal reported this week, “Analysts say: The end (of declines) is near. While new home sales show signs of stabilizing as builders cut back on building and boom-bloated inventories are slowly absorbed, prices of both new and existing homes are still being dragged down by a flood of foreclosures. Still, the experts were optimistic that the federal government's efforts to stem foreclosures eventually will have an effect by the end of this year or early next year; Mark Zandi, chief economist of Moody's Economy.com, even ventured (jokingly) a date when home prices would stop falling—December 15, 2009.”
It’s hard to know whether or not the sum of these indicators is equivalent to a recovery but my sense is that the end is near—if we haven’t already passed it here in Utah (some experts are even saying that we’ve already hit bottom and we’re in slow recovery mode). When the bottom has hit exactly is hard to predict but based on what I am seeing in our offices, based on the statistics that I am seeing on pendings and buyer interest/activity and based on the overall national recovery effort, it seems the prediction by many experts (in late 2008) that we would hit bottom by the middle of 2009 is probably not far off.
Now for those of you who are “timing” the market, I have to caution you on this. The only way you know that the market has hit bottom is when it is on its way up. While certainly housing is one of the biggest and most important investments we will make in our lifetime, it is also important to remember that our home is so much more than an investment. It is not a stock that we trade quickly. It is where we raise our family, where we create memories and where we plant our roots. So as you try to “time” the market, remember these key facts and make sure that beyond the investment, you are choosing a home that will bring you the happiness you deserve. Because in the end, that is what matters most. Choose the home that is right for you and your family right now and for years to come. Historically speaking, Utah real estate brings long-term investment gains for almost all homeowners so if you choose the home that is right for you, you almost can’t lose.
Now, let’s take a look at this week in real estate along the Wasatch Front:
- Davis County—Our Bountiful office reports that it had its highest number of units in nearly 18 months. Buyers are out looking and making offers more than they have for some time. Both new construction grants from the state and the national tax credit are being used by buyers. Activity seems to have improved as there is more buzz in the marketplace but the number of sales and closings are still relatively flat. Agent involvement in business development programs is high.
- Salt Lake County North—Our Sugar House office is reporting that of the 13 multiple offer situations in the last two weeks, the price range was anywhere from $160,000 to $400,000. The majority were in the $160,000-$250,000 range. In one case our offer was the lowest of the three competing, but because our offer had no contingencies and a cash transaction it was accepted. Our Salt Lake office is reporting that the market is improving due to low interest rates and stimulus grants—mostly in the entry level market. The Previews (luxury) market arena is not as strong. We are seeing a lack of financing for homes over $800,000 and that market is virtually non-existent.
- Salt Lake County South—Our Union Heights office reports that we have seen a dramatic upsurge in the number of offers our Agents have been writing and the ratified offers created. The numbers have more than doubled the previous 20 or so weeks. At least the buyers seem to be getting “off the fence” and taking the first step. The market in Salt Lake is starting to pick up in most areas and most price ranges. We are still dealing with a substantial number of short sales and foreclosures. Inventories are being depleted at a fairly strong pace compared to first quarter activity. Our Jordan Commons office reports that opens and closings are spread out throughout the Agent population, not just a few Agents. Many are experiencing successes in obtaining listings and buyer opens. Sign calls via CB Connect and buyer acquired calls are being turned into appointments. Our Draper office reports that it still has lot of condo/townhome projects under $200,000 so that market is moving. The market in single family homes from $200-$400,000 is moving slowly. We still have an oversupply of $500,000 homes.
- Salt Lake County West—We’re working with a lot of buyers! Our West Jordan office reports that many of our Agents are busy with buyer appointments and many other Agents are reporting working with multiple buyers and submitting many offers. The absorption rates for Bluffdale, Riverton and West Jordan have improved slightly with Herriman improving greatly over the fall numbers.
- Tooele County—Our Tooele office reports that closings are lagging in the first quarter but new pendings have risen to just over 100 in the month of April. New pendings nearly equal new listings. A lot of short sales are written but we are waiting for third party approval. Our Previews (luxury) market remains slow with no sales over $400,000 in last six months. Prices are dropping drastically in the luxury end and this sector of the market is very slow.
- Utah County—No information reported.
- Weber County—Our South Ogden office reports an influx of short sales. This continues to cause a delay in closings and contributes to an increase in failed sales. The Previews (luxury) market is very slow. We currently have five listings that are $500,000 and above.
No matter how cynical you are about today’s economy—and trust me, with as much as we’ve all been through over the last few years, I certainly understand—it’s important to point out the positive signs that we are seeing in the local marketplace. All signs are definitely pointing towards a recovery.
Next week I will release my May Reality Check message and I will focus it on why today’s market brings such prime opportunities for savvy investors. I hope you will check it out.
Until then,
Make it a great week,
Dan Christensen
