Recent Housing Stats Are Showing Encouraging Signs for Market

This week I thought I’d share some positive stories that continue to permeate not only our local news but on a national level as well.

The National Association of Realtors® said its Pending Home Sales Index, based on contracts signed in March, rose 3.2% as first-time buyers waded into the market to take advantage of favorable prices and mortgage rates.

A report from the U.S. Commerce Department showed construction spending rose 0.3% in March, the first increase in six months.

The pending home sales report added evidence that sales have reached a bottom. “That's critical because once sales bottom, it's only a matter of time before you work off excess inventories. That's the key to stabilization in the financial system and the economy at large. We're closer to that than people thought just a few months ago.”

-- Michael Darda, chief economist at MKM Partners in Greenwich, Conn., “Sales and Construction Data Lift Hopes for Housing,” by Lucia Mutikani, Reuters, May 4, 2009.

On a national basis, the forces driving real estate right now are increasingly turning positive and encouraging.

• Home sales in major markets around the country have shown dramatic gains in the past month.


• In Florida, statewide sales jumped by 30% in March over year-earlier levels, and were up 33% over the previous month. Even condo sales were up by 25%.


• In California, statewide sales rose 64% in March compared with March 2008. Unsold inventory is now just five months -- that's down from 12 months the previous March.


• Median house prices may be bottoming out. The California Association of Realtors® reports the median price of homes sold was up by 2.2% for the past month.”
  
  -- “Real Estate Outlook: Sales Rising in Some Areas,” by Kenneth R. Harney, Realty Times, May 5, 2009.
  
  Also interesting to note:
  


• The current price level of homes seems to be drawing more buyers into the market, according to Jim Gillespie, president and CEO of Coldwell Banker Real Estate. “We are seeing a lot of activity across the nation. Of course we're in the spring market, but we've seen more buyers in the market now than at this same time last year.”


• “Home prices are where they should be. Sellers are accepting the current reality and are pricing more realistically," said Robert Abbott, co-owner and VP of a northern New Jersey brokerage. “More people are not only 'kicking the tires' but actually buying right now. We are showing significant activity when it comes to sales. The number of days for a house on the market is going down.”
  
  -- “More Homes Get Multiple Offers; Downturn May be Nearing End,” by Julie Schmit, USA Today, May 6, 2009.
  
  Multiple bids have picked up in recent months in California and other states hit hard by foreclosures and steep price drops, real estate executives say. “If a house is in a good neighborhood, is maintained and is a good value, it'll get multiple offers. One in 10 homes now draw multiple offers, up from one in 30 last fall.”

-- Julie Holt, owner of a title services company in Florida, “Is Now the Time for Some Home Buyers to Make a Deal?,” by Mark Koba, CNBC, April 28, 2009.

So what does all of this mean for our local market?

Well for starters, we’re definitely starting to feel the effects of the short sale and foreclosure phenomena. It seemed a year ago we were almost immune to it. But, alas, a report released earlier this week noted that Utah saw an increase of 120 percent in foreclosure-related filings over the past year and now we have the sixth highest rate among all states. Here is the online story from the Salt Lake Tribune: http://www.sltrib.com/ci_12364153?IADID=Search-www.sltrib.com-www.sltrib.com

I pulled the stats so you could see a local by county comparison and Utah County has the highest percent total with 20.2% of all listings being short sales. Salt Lake County follows closely behind with 16.8%.

To help our Agents prepare for and be properly educated on the process of short sales, later this month we will be launching a Short Sale Training Seminar that will help streamline the short sale process. It is the first program of its kind to be developed by a residential brokerage firm in Utah. The program is in response to the unprecedented challenges some homeowners face in today’s market. The new training streamlines short sale transactions for lenders and educates the public and our Managers and Agents about the short sale process. If you haven’t yet signed up for the training, I encourage you to do so as soon as possible. It’s a training you and your clients can’t afford to miss.

And with that news in tow, let’s take a look at this week in real estate:

• Davis County—Our Bountiful office reports that sales have slowed compared to the previous two weeks. The market under $225,000 is really moving well with new listings. Strangely enough, homes that have been on the market for awhile, even if they are in that "Hot" price range do not seem to be attracting as much attention as the new listings. Our North Davis reports several failed transactions this week for various reasons. Appraisal issues (i.e. not enough data to support sales price) starting to surface more regularly. We did have a listing in Riverdale at $189,900 sell in about a week which we haven't seen in quite some time.


• Salt Lake County North—Our Salt Lake office reported that sales are strong with stabilizing process. Offers are within 95% of asking price on homes under $300,000. In the luxury market, bargain hunters are out there but the market is soft due to limited financing and consumer confidence. Sellers are entering the market in increasing numbers as they want to take advantage of low interest rates. Sellers are becoming buyers on the home they want to be in before value begins to appreciate. Market is beginning to move in all levels under $500,000. Our Union Heights office reports more activity each week. There is increased activity in almost all price ranges. We are seeing a very active market with more and more multiple offers.


• Salt Lake County South—Our Draper office reports that listing inventory was down a little from the previous week and sales activity was up. Our Jordan Commons office provided this update from one of its Agents: My listing on 7704 S. Lincoln had 11 showings last week and one offer. It's still in the negotiation process, but it has only been on the market 10 days. I still have had some great activity on my listings from CB Connect and have picked up a couple of good leads from that. I do have four other leads. There is a sense in the market place that the economy may have hit bottom so buyers are trying to move forward to get the best deal they can before the market changes to a seller's market. I am also seeing some really well qualified buyers who have strong financials moving forward due to this reason.


• Salt Lake County West—Our West Jordan office reports that we had a large number of offers written last week on short sales. We have buyers who have offers in on multiple short sales and are waiting to see if they can get one approved. Interestingly, we are starting to see buyers getting tired of the wait and wanting to look at only “non-short sale” properties. In the past six weeks we have only had two properties go under contract that were over $500,000. The majority have been between $200,000 and $300,000. We had a total of 98 properties go under contract in the West Jordan, South Jordan, Riverton, Herriman and Bluffdale area this past week; 72 of them were under $300,000.


• Tooele County—Our Tooele office reports that Agents are extremely busy. Buyers are still hesitant to make offers. The fall off rate is really high. Most short sale buyers fall off even after price is approved.


• Utah County—Our Orem office reports we are starting to see multiple offers not only on short sales, but under the $300,000 price range. The inventory has depleted and many areas are starting to see a turn towards a sellers market. You will never see prices like this again; if you want to buy a $1,000,000 home for $500K, don't wait. You may want to get out there and buy now.


• Weber County—Our Ogden offices report that we are seeing an increase in business in both listings and sold. The most exciting thing we are seeing is an increase in average sales price. What this means to us is that homes are selling in higher price ranges. We also saw brisk sales in the $100,000 to $250,000 price range. Homes above $300,000 are starting to move with several open between $300,000 & $439,900. Agents report a few multiple offers with at least one home selling for over full price.

Overall I think the market is showing some definite signs of recovery. Even with the increase in short sales—or possibly because of—buyers are finally starting to get the sense that now is a good time to buy and that if they wait, they may loose out on one of the best times in Utah history to purchase real estate. It’s an exciting time so make use of it!

Until next week,
Make it great one,


Dan Christensen
President