Now that school is almost out, we’re finding many families are starting to look at homes in anticipation of getting settled prior to next school year. Showing activity, in many markets, has increased considerably.
Sellers are now getting their homes on the market and, in general, seem to be quite knowledgeable regarding staging and pricing. The homes in the entry-level market, for the most part, are moving well if they are in good condition and fairly and competitively priced. Several Agents whose clients’ listings are in the entry level market are reporting that they have had buyers lose out on homes in bidding wars. Could they be back? The competition for well priced homes in good condition is heating up and we are seeing multiple offer situations in most of our first time home buyer markets.
Though we have seen sporadic increases in the upper end market, it is still relatively slow on showings and closings but we do anticipate that that sector will loosen somewhat if the economic news continues to show some stabilization and an upswing.
Before I get into the week’s top news, what I would like to share is that LORE Magazine and The Wall Street Journal this week released their Top 400 list. You may view it online at http://online.wsj.com/ad/top400-articlecontinued.html. Many of our own Coldwell Banker Residential Brokerage colleagues we’re recognized within this coveted ranking and for that—along with all of their hard work and dedication—I salute them.
The most notable news this week was The Mortgage Bankers Association’s (MBA) release of is Weekly Mortgage Applications Survey for the week ending May 29, 2009. The Market Composite Index, a measure of mortgage loan application volume, was 658.7, a decrease of 16.2 percent on a seasonally adjusted basis from 786.0 one week earlier but was 14.4% higher than the same week a year ago. This increase is due, largely in part to the first time home buyer market which, as we know, has been vastly stimulated by a triple threat combination of low interest rates, the $8,000 first time home buyer tax credit and increased affordability. Together these incentives are finally getting buyers in the first time home buyer market off the fence and into the market which—once we get through the large number of REOs on the market—we should finally start to see some price stabilization.
But for those of you who are waiting for your homes to come back to their pre-recession values, be prepared to wait. A recent study that I read notes that real estate is now as affordable as its has been in the past 38 years (this of course relates to median homes when compared to median mortgage rates and incomes).
The fact is, the peak of unaffordability was in 2006, when an average family in the United States needed to spend 44% of their income to purchase an average single family home. Today, housing affordability in the United States is up to 73%. This means 73% of all new and existing homes sold in the first quarter of 2009 were affordable to families earning the national median income of $64,000.
A couple of other interesting articles of note this week:
- RISMedia’s First Time Home Buyers Grabbing Houses and Tax Credit (http://rismedia.com/2009-06-03/first-time-home-buyers-grabbing-houses-and-tax-credit/)
- Realty Times Multifamily Builder Confidence Up From Record Lows; Interest From Prospective Renters and Buyers Rises (http://realtytimes.com/rtpages/20090603_confidenceup.htm)
- Realtor.org Pending Home Sales Up For Three Months in a Row (http://www.realtor.org/press_room/news_releases/2009/06/phs_up)
Now, let’s take a look at this week in real estate:
- Davis County—Sales were slow in both the Bountiful and North Davis offices last week, but our agents remain busy working. Many are working to hold deals together that are under contract. I’m consistently hearing that transactions are increasingly difficult to keep together for various reasons. Many Agents are feeling that for some reasons the buyers that they are working with are back to the “wait and see what happens” attitude, but we are not really able to pin why they are feeling like that at this point, since April and early May reported such tremendous sales activity relative to where we had been for the last 18 months or so. Markets above $400,000 remain difficult and we are seeing seller’s who really need to sell continuing to lower prices to attract buyers.
- Salt Lake County North—Our Salt Lake office reports market activity is strong but has slowed in the past couple of days with increasing interest rates. Buyers are spoiled with the 4% rates of the past few months. We may see a week or so pause in activity as buyer's adjust to 5% rates. Demand is good so I would expect improvement in the market to continue. Our Union Heights office reports the market in general is starting to pick up in all price ranges but mostly below $350K. It remains to be seen if this is a seasonal adjustment or will continue with a upswing. Our Sugar House office reports we have been very busy the past week. Open houses are receiving good activity.
- Salt Lake County South—Our Jordan Commons office reports that we are still hearing lower priced listings are selling. My Spurrier Rd listing, $164,900, now has had 3 back up offers about $154,000. We had one multiple offer situation, buyers did not want to revise their offer. Sellers seem to be more willing to improve the condition of their homes versus negotiating on the price.
- Salt Lake County West—One Agent reports the following in regard to South Jordan: “Seller in South Jordan had their home on the market April 2008 for 188 days with no sale or offer. When I did comps of "solds" of like homes, there were 6 sales in the past 90 days and 3 of them were short sales with 23 like homes "active" and 2 under contract. There are a few buyers in the price range, but absorption rate is 8 months. Sellers will list their home aggressively at $30,000 lower than the listing a year ago. There continues to be a correction in South Jordan market.” Another reports: “I have had 3 offers written, called the other agent to send over, and they were under contract.” A third agent reports: “My thoughts are that the market is moving especially in the price range under $300K. I have 3 recent contracts and agree that the buyers are still looking for the BEST deal and sellers are aware that if they take less for their own property that they will most likely pay less as well when they select another property. Value is only a mind set. When the seller sets their mind to sell, it will happen!”
- Tooele County—Our Tooele office reports listing inventory is stable. Sales activity remains slow. The fall rate has to be increasing because under contracts are not translating to closings. Also, it's taking a lot longer to close transactions.
- Utah County—No major changes week to week.
- Weber County—We have seen a noticeable increase in showing requests. We had a marked increase for about two weeks which was good. Listings which are priced accurately are seeing good offers. Down payment still seems to be the major issue. However, business just remains steady. High end listings $350K and above are seeing a huge increase in showings and several are now pending. Month end for May included 50 new listings, 41 under contracts and 40 closed. Compared to 2008 we had 39 new listings, 42 under contracts, and 36 closed transactions. Agents are reporting increased activity on their listings. One Agent reports multiple offers and has accepted a backup offer on one of their listings. Another Agent reports the sale of a home that had been on the market for 11 months with no activity. Business has picked up for the third week in a row.
I am also pleased to provide you with this commentary from Axiom Mortgage President Melissa Wright:
The Facts about the $8000 Homebuyer Tax Credit Program:
Most people have heard about this First Time Homebuyer program by now, but this information may help to clarify some of details of the program. You’re a “first time homebuyer” if neither you, nor your spouse, have had ownership interest in a property for at least 3 years. When using the tax credit, you must occupy the home for 3 years from purchase, or you will be required to repay the credit.
If you’re married and filing separately, the tax credit is cut to a maximum of $4000. If you make over the $75K/$150K AGI limit for individuals/married couples, you may also see a reduction in the credit you qualify for but still see a significant benefit. One interesting fact is that the tax credit may be applied to either your 2008 or 2009 tax liability, and it is refundable – meaning that you can receive the difference between what you owe in income taxes and the tax credit refunded to you.
This program is a solid stepping stone to those considering buying their first home, but is limited to purchasing your home by November 30, 2009. For full details on this program, contact your Axiom Financial Mortgage Consultant today at www.axiomfinancial.com or 1.888.656.LEND.
Conditions apply. Programs and rates are subject to change without notice. Consult a tax advisor before choosing this program. Not an offer to lend. Axiom Financial is an Equal Housing Lender providing mortgage services.
I’d like to leave you with this. It is an excerpt of an article I found online that I think really should get us all thinking. As I visit our offices, what I hear from most is that things are changing and I think many of us agree—at least as far as the housing market is concerned—it seems we are on the path to recovery. Having said that, there are some buyers and sellers out there who continue to wait. For those of you (and you know who you are), please read on:
“…If you're a buyer, buy because you love what you're buying. Buy because the lifestyle you're looking to live can more easily be accomplished with the purchase than without. If you're selling, sell because you want to sell. Sell because you need to sell. Sell because your neighbor is driving you crazy. Sell because the house you've always had your eye on just hit the market. Sell to move up in the market. Sell to downsize. Sell to liquidate, but if you really want to sell, just sell already. If you're waiting to sell until markets rebound, please realize that doesn't mean to list in October. That means you'll be listing several years down the road, and the reason you were planning on selling in the first place might not exist at that magical time in the future. None of us are promised today, let alone tomorrow. Let alone 6 years from now when you can possibly sell your home for 15% more money.
If you're in no hurry to sell, do your neighbors a favor and take your home off the open market. If you're wanting to sell, be realistic in your asking price and aggressive in your hunt for a buyer. If you're a buyer, John Burns seems to be telling you that it's a pretty good time to buy. I'm telling you it's a good time to buy, and my reasons are not the same as Mr. Burns'. Buy because you want to. Buy because you can. Buy because you know the purchase will make you look like a real estate savant 15 years from now. Welcome to 2009 and the new rules of real estate. Sell low, hopefully buy lower.”
And with that, I’ll bid you adieux.
Until next week,
Make it a great one,
Dan Christensen
Coldwell Banker Residential Brokerage Utah
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