A Rebounding Market

This week a Realty Times article provided some insight into a rebounding market. Here are the highlights:

• Pending home sales rose sharply, by nearly 7 percent, in the last month measured by the National Association of Realtors.
• Pending sales were up in all four major regions of the country—and that caught the attention of some key industry economists.
• Orawin Velz, economic forecaster for the Mortgage Bankers Association, said in a commentary that "the steady improvements in pending home sales are encouraging," and confirm the view that existing home sales hit their cyclical bottom in January and are likely to continue to rise in the coming months.
• Since the January low point, she noted, the Realtors' pending sale index is up by 13 percent.
• Mortgage rates continue to be favorable, an average of 5.3 percent last week for 30 year fixed rate loans, 4. 8 percent for 15 year fixed, and those rates are pulling in growing numbers of home purchase loan applications.
• According to the Mortgage Bankers Association's weekly survey, new applications to buy houses increased by nearly 7 percent in the week ending July 3rd.

My overall assessment of the market is that while we are still seeing challenges out there, the market continues to show some encouraging signs. The fact is, we’ve seen the low-end of the market doing well for a while, but its starting to cascade to other segments of the market. We’re starting to see more activity and interest in the move-up market and luxury market.

There appears to be growing consumer confidence from buyers, perhaps as the stock market has stabilized and real estate is showing improvement. Also, buyers in our offices are telling us that they believe that the market overall is starting to recover and they don’t want to miss out on the buyer’s market.

Now let’s take a look at this week in real estate:

• Davis County—The Bountiful office reports we have 2 or 3 Agents this last week report that they had been contacted by investors who are looking to move their money out of other markets and into real estate investments. Seems that they are looking for a safe place to park their cast and real estate is making more sense for them than many other investments. the good thing about this is that they are investors not looking to flip or make some quick cash, but are investors with long range plans for their property. Could we be turning back to some good old fundamentals? Short sales continue to be challenging and plentiful. With every transaction being a bit different than the next, it feels like we are shooting at a moving target. Several of our agents have a bunch of time invested in transactions that seem to drag on forever. It is also interesting to observe the many different ways that listing agents are handling short sales, which makes it difficult for buyer's agents to educate a buyer about the process; since it can be different depending on how a listing agent handles it. Our short sale package and new UAR short sale addendum have been helpful in attempting to standardize the process.
• Salt Lake County North—The Sugar House office reported we have been very busy the past week. Open houses are receiving good activity. The Union Heights office reported the holiday week slowed production with shorter time period, but momentum remains strong. The Salt Lake office reported total activity was off this week as we begin July with a holiday. Consumers are either just all away for summer vacations or they are losing confidence as there are more signs of weakness in the U.S. economy. Dismal job reports strike fear into potential buyers who decide to wait till the economy improves for fear of taking on payments they can't afford if they lose their jobs. Rates are still good, but not enough to overcome the fear of a weak economy.
• Salt Lake County South—Our Jordan Commons office reports short sales are going under contract. Price ranges in the high $300K are coming into the low 300's. Multiple offers are occurring under $200K. I had an offer accepted on a bank owned property over the weekend. There were four offers on it. We feel fortunate to get the offer accepted. While making appointments for this client, a lot of short sales and bank owned have multiple offers. There are buyers out there. In the Draper office what is fascinating is the people who choose to work July 3-5 did business. There are plenty of people wanting to buy/sell during the holidays and if you choose to work, you can get great business.
• Salt Lake County West—Our West Jordan office reports we are noticing an increase in multiple offers in the under $200,000 price range. We have recently taken listings under $200,000 that have gone under contract very quickly. Additionally, one Agent reports that in this same price range, when pulling five properties to show, by the time they call the Agents to make appointments 2 of the 5 are under contact. That's good news!
• Tooele County—Our Tooele office reports an extremely slow sales week. I would attribute it to the 4th of July holiday. Listing inventory almost the same.
  Utah County—
  Active Sellers in Utah County
  June - 2009 4442
  July - 2009 4378
  Down by 1%
  
  Active Buyer's in Utah County
  June - 2009 883
  July - 2009 1055
  8.4% increase in # of active Buyers in one month
  
  Multiple offers, in number of issues with short sales and banks (2nds) not
  cooperating & placing home into foreclosure.
• Weber County— Not much has changed with regards to the market. However, there is some concern around the potential for failed transactions with the new Mortgage Disclosure Improvement Act that will become effective on July 30th. We have noticed many low appraisals in the past few weeks, causing sale price changes.
  
  Commentary from Axiom Mortgage President Melissa Wright:
  
  “June saw many fluctuations in rates due to speculation that the economy had turned the corner. The good news for homebuyers is that rates have settled down and remain at historically low levels. Although there is a huge supply of government debt, there is still demand, with the U.S. Treasury auctioning off record amounts of government debt. The solid results have helped keep Treasury Yeilds lower, alleviating mortgage rate upheaval. Refinance activity has slowed, producing less supply on the market resulting in greater rate stability. The Federal Reserve announced they will keep the Fed Funds rate at an exceptionally low level for an ‘extended period’ due to inflation remaining subdued. They also reiterated their commitment to help rates remain low through their purchasing of mortgage-backed and Treasury securities. If the current factors remain unchanged, rates will likely remain at low throughout the summer.”

Regardless of the market or the reason behind the recent upswing, things are starting to pick up throughout Utah. It seems buyers are finally starting to get the message that we may have hit bottom and, as buyers take action, we’re slowly but surely working our way into a transitioning market.

It’s been a challenging ride but what we have to look forward to is exciting. Prepare. The coming months and into 2010 are going to be an exciting ride.

Make it a great week,

Dan Christensen
Coldwell Banker Residential Brokerage Utah