Where is 2013 going? 2nd Quarter Home Sales in Utah County

If you're at all like me, you're probably wondering where 2013 has gone so far... wasn't it just January?  

Not only where has the year gone, but where is it going???

As far as the housing market is concerned - it's going UP!!!

Below is a home sales chart for Utah County going back to the 1st quarter of 2005.  

As you'll see, the number of sold homes in the 3rd Quarter of 2012 went back up to 2005 levels.

Even more interesting is - look where prices are - we're back up to 2006 levels, just prior to the jump.  

2006 was the best year in Utah history for QUANTITY of homes sold... but what about value?  That didn't get inflated until 2007, when inventory declined and prices rose... supply and demand.

We're in a similar market now!  Prices are on the up-tick... sales are climbing... and inventory?

I'm seeing a mirror-effect for the 2005-2006 increase.  

Inventory is down - sales are up - prices are rising...  take advantage of the shifting market:

If you've been waiting to buy - do it now!  Prices are only going to go up.

If you've been waiting to sell so you can move up - now is the time - pass your property to a first time buyer.

If you're an investor that bought in 2007, there's nothing that can be done - you're still hosed and you should find a new agent - I can help.    

If you bought in 2009 cash out, now is the time to chat with me about your holding strategy.

If you bought property as an investment, make sure your property management company is maintaining the integrity of the home so you can capitalize on the increasing values... 

Let's just quickly glance at the last 2 months:  823 homes sold - media price is $230k.   If current trends persist through the end of this quarter, we will be in a BETTER MARKET than we were in 2006.

And that's your Utah County report!

2012 - To be or not to be? I say, definitely to be...

This is pretty simple.  Scroll to the bottom for the basic equation.

Take look at the following graph: (What do you see?)

You're seeing 4th quarter sales
(Oct-Dec) from 2005 thru 2009
in Northern Utah County.

If you recall, there was a real estate bubble that started at the end of 2005 and hit its peak in 2007, right before the big recession slammed us in 2008.  What's really interesting about this graphic?  Look at the start point, the mid-point and the end point of each of these lines:

Blue Line: Average Home Price - Green Line: # of Homes Listed - Red Line: # of Homes Sold

Do you see anything interesting there?  I see a lot.

2005, which was considered a great real estate market because it was one of the most affordable points for Utah homes in the last decade, is just slightly higher than it was in 2011.  That means what?  Homes are more affordable now than they've been in over half a decade...

Okay, so, there was a big spike for 2 years from 2005 to 2007.... and prices have now regulated and come back from the over-inflation we saw in 2007 to a realistic and affordable price.  But, interest rates in 2005 weren't nearly what they are now.  So... homes are more affordable than they've ever been.  I can't stress that enough.

A 1% difference in a mortgage on a $200,000 home is roughly $25,000 over the life of the loan.  So, we're 6 points lower than the average rates in 2005.  So, yeah... saving $150,000 over the life of your loan is better.

Even more interesting is the reverse nature of the Red and Green lines.  Look at the start point in 2005.  Look at the end point in 2011.

I don't see a whole lot of difference in the numbers there, do you?


Now, look at what happened in 2006, 2007 and 2008 on those Blue, Red and Green lines.  The Blue line shoots up... home prices are rising fast!!!  The green line goes up... more homes listed... the red line goes....down....  in fact, only about 1/2 of the homes sold in 2005 were sold in 2007 because of the over-inflated home prices.

Home sales last year didn't quite double the low in 2007 (the imaginary peak of the real estate market) but they are rebounding nicely.  It's a great time to get your home listed.

If you've been in your property more than the 6 years this chart represents, you're probably in a great position to sell and take advantage of upgrade options at lower price points.

If you have never bought a home, now is a great time.  They're more affordable, there's great inventory, and they're moving... what does that mean?  Interest rates will start to climb again very shortly.

If you are looking to invest: Do it.

Inventory + prices + interest rates = Get Started!


If you've been looking for some information to help you make a decision.... I hope this helps.

You can find me on my Facebook Page or get started on your search by visiting My Website.

Stay tuned for the next great insight... ~ Happy New Year 2012! ~

Utah County Foreclosures - Then and Now - Part 3 of 3

It's been a long time in coming, but, well, I've finally had some time to sit down and cap off this bit of knowledge dumping. Let me just say that this post will not be nearly so heavily laden with facts and figures. Frankly, there's not enough information publicly available for me to get into the super nitty-gritty, so, consider yourselves lucky on this one. This may get a little preachy, but, this is my soapbox and I'll preach this message until my throat is blistered and the medics haul me off to the crazy people zoo. So, let's start this one off with a chart:

The graph above shows Utah foreclosures (Listed & Sold) per the Multiple Listing Service(MLS) from January 2010 thru Present. Now, I'm going to caution everyone that this may not be a fair representation of fact, as this is only data extrapolated from the MLS, and is not indicative of filings of foreclosures. Further, this information is only as good as the agents that input the information to begin with, which, none of them were me, so I won't speak for them. Typically when a real estate agent inputs a listing, if it is a bank owned property - aka "foreclosure" - then conventionally the "Owner" field is input with "REO" which means Real Estate Owned - aka Bank Owned foreclosure. I didn't make the system, and I'm not defending it, but, it's what we have. So, if this is an accurate representation then, WOW! Times have been good! 

We have noticed a significant decrease in properties listed as REO over the last year. Those great deals are getting more and more scarce. Some believe that the banks are holding more property back from sale to try to ease the downward strain these foreclosures cause in the market, impacting Fair Market Value for non-distressed homeowners. Personally, I'm undecided. That would be a very prudent thing for a bank to do. 

I've heard many rumors that banks have begun hiring asset managers, otherwise known as property managers, and have been converting a large portion of their owned property portfolios into rental housing. It could just be that the agents who have been given listings have been instructed not to list the owner of the property on the MLS, therefore avoiding a perception of distressed property. Really, the dynamics are so uncertain it's become very difficult to know for sure what's been happening without the assistance of reporting from county records, and that's just not available yet.

 Here's another fun graphic for you:

This graph shows the overall listings and homes sold from the first quarter of 2010 through present. You'll notice that throughout 2011 the homes listed on the market have been keeping pace with the homes sold on the market, averaging about a 50% listed to sold ratio per quarter. That's not bad for such a "depressed" real estate market. Also, you'll note that the average price, although it has declined, has leveled off by and large, with the average price of a sold home coming in at $214,000, down from $238,000 at the beginning of 2010.

So, well, all that says is that homes are more affordable than they've been since 1995, interest rates are better, preliminary data suggests foreclosures have slowed down, and well, it's a great time to buy! So, don't wait. Get out there. BUY REAL ESTATE NOW!!!

Don't sit on the fence. Don't let your uncle Leroy tell you about all of the money you'll lose because he knows someone who once urinated in a public restroom next to him who told him about his sister's fiance that lost it all in the real estate market or some other nonsense. Private investors are seizing property at unheard of rates, for incredible deals. They're depreciating these investments and recuperating significant tax windfalls.

If you've got a moderate-to-good credit rating and 2 years of stable, decent income, YOU CAN GET A HOME. Don't take uncle Leroy's advice. Talk to a professional. We're required by law, and a lot of oversight, to provide you with complete and accurate information. The profiteers have washed out of the industry, and what's left is a corps group of real estate professionals ready to guide you to the next stage of your financial future. Do yourself a favor, hop down from the fence, and call a Realtor today.

Happy Hunting Utah!

Utah County Foreclosures - Then and Now - Part 2 of 3

That was a bit of a lengthy break in our discussion and one for which I am personally grateful.  This time away has given me some time to really review the previous climate of the market and put together a much briefer synopsis of the market from 2009 to 2010.  So, brace yourself for some whirlwind statistical dissemination and then the wrap-up.

As we know from part 1, things began to appear dismal in 2008 as Utah rose up the foreclosure chart rankings like the Beatles climbed the record charts in the 1960's.  Utah "gained" rank on the other states as we often do, following a bit behind the national trends.  From 2008 to 2009 we experienced another 83% rise in foreclosures year-over-year, totaling 27,140 foreclosures.  So, 2008 brought a 52% increase over 2007's foreclosure figures, and 2009 brought an 83% increase over 2008, leaving everyone wondering how it could possibly get any worse...  

Now, as the foreclosure rates began to rise we started to see some very interesting changes to the overall market climate.  As you remember from the "Crisis of Credit" video we were beginning to see the "strategic foreclosure" rates rise as upside down homeowners began to walk away from the properties they had committed to paying for as agreed based on the market climate in which they originally purchased their property.  Concurrently with the rise in "strategic foreclosures" the TARP money from the bailout hit the market and by June 2009 a whopping 9 banks, including JP Morgan Chase, had paid back the money they had taken for bailouts.  Other banks and lending institutions still saw record breaking gains as some of the highest payouts for private corporation salary bonuses were awarded to many of the top executives that pioneered the policies and procedures that led to the market bust to begin with.

Now, rather than taking the money received from the TARP funds to keep homeowners in their homes, the banks began another round of "creative financing" and invested the TARP money into high yield stocks and other investment vehicles, thus yielding the record breaking bonuses mentioned already.  This is where it begins to get really sticky.  Unlike with property, the gains the banks and bankers saw on these investments would be subject to huge amounts of federal taxes as capital gains increase.  In order to offset these gains they had to show considerable losses and had to figure out how to make the foreclosures they were pursuing pay off for them, yet again.

So, the banks began reporting the fair market value (FMV) of the properties they had foreclosed on as being far below the face value of the note they had just foreclosed upon.  EX:  My mortgage is for $245,000 and I fell behind on my mortgage.  The bank proceeds with foreclosure and successfully forecloses and resumes ownership of the property.  They then report the FMV of the property as $165000, a loss of $80k, and then actually sell the property for $155,000, a total loss of $90,000.  The bank was then able to use this $90k loss to offset the gains they had received on the investments from the TARP funds, washing their tax liability clean yet again.  Think about it... 27,140 foreclosures in Utah in 2009.  If the average loss claimed was even only $100,000 that would be $2.7billion in gains the banks could begin to offset.

This doesn't even take into account deficiency judgments and other remedies the lending institutions still have available to come after the defaulted homeowner down the road.  This is just the immediate offset.  So, we have a situation where banks are actually intentionally driving the prices of homes lower than they needed to be and tightened their purse strings on new loans to ensure that the market dips to the point where their capital gains issues go away, all at the cost of the taxpayers and homeowners whose TARP funds from our tax dollars were paid to "save" them in the first place.  I hope you're beginning to see the forest for the trees here.

So, again, an 83% increase in 2009 foreclosure activity and another increase in 2010!!!  Utah maintained it's position as the 5th leading state in foreclosures in the US in 2010 boasting an additional 20% increase in total foreclosures over 2009.  In 36 short months Utah home prices fell a full 30%.  A home previously worth $300,000 had lost $100,000 in market value and that is where we find ourselves today...

Enjoy this entertaining clip of one home owning couple that decided to take on the banks and won... and stay tuned for part 3!



Written by Brian C. Andersen - Realtor, Property Manager - www.UtahHomes4me.com - (801)687-1812

Utah County Foreclosures - Then and now - Part 1 of 3

Now that we've had a chance to explore how we've gotten to the state of the market we're in, let's turn an exploratory eye to what has actually happened since the beginning of this "Crisis of Credit".  This post will explore the Utah County Real Estate market from 2007, just prior to the collapse, through our current position with regard to foreclosures and the impact they have on the overall market condition - PART 1 of 3.

Stretch your arms & legs, grab some popcorn and get ready for an intense several minutes of fingernail biting and heart-pounding statistical analysis.  Just like with your favorite horror movies, keep in mind that what you're about to experience may upset you temporarily, but in the end you will be safe and your life will continue as normal.  Just as with those horror-movies, the "foreclosure monster" is a scary beast that with a little education and some smart strategies will remain a figment of another reality, never to find you as you slumber peacefully through the dark hours of this financial storm.  You will be okay - now, let's begin!

In 2007, Utah County sold 5,767 single family homes and condos.  Not too bad.  In 2007, the percentage of sold homes that were Foreclosures was a whopping 1.7 percent of the overall market.  That means that in 2007, just prior to the collapse of the housing market on a national level, Utah County had a whopping 98 homes that were sold at foreclosure.  At that point in time, Utah was 22nd in the nation for home foreclosures, only behind more rural states.  This primarily was due to the fact that Utah has never been a real estate driven economy.  Our unemployment rate in the state in 2007 was less than 5% and our new home development was keeping pace with our population growth.

Interestingly, 2007 saw a great surge in investment capital from other areas of the country where the real estate market bubble burst more dramatically.  Out-of-state investors from California, Virginia, Florida and Nevada started to buy up real estate in Utah as their local economies went down the toilet.  We began to see a surge in the building of speculation homes throughout Utah County and new developments like Traverse Mountain in Lehi were developed with outside income as well as the colossal failure of Orem's twin monolith condo fiasco - Midtown Village.

For the first time in the history of Utah County real estate, we were developing new construction at a non-sustainable rate.  Perhaps fortunately, the first wave of foreclosures in Utah were primarily these same outside investors.  I say perhaps because foreclosures in any aspect aren't great, but I would personally prefer to see a real estate investor lose a little money than to witness a family lose their home and the roof over their heads. Now, unfortunately, this first wave of foreclosures began to really hit us in 2008.  Although the primary losses were incurred by investors this set the stage for the broadly depressed market in which we now find ourselves.

All of a sudden, home owners trying to sell their property were having to compete with short-sales and bank owned properties in their neighborhoods that were being sold for pennies on the dollar.   The lending institutions were quick to foreclose in order to resale the assets and write the losses off of their books.  Homeowners were beginning to get a quick education in the painful reality of the need to short-sale their property.  Banks were becoming inundated by the sheer volume of defaults and short-sales flooding their establishments and were increasingly bogged down in the quagmire of foreclosure actions.  All of this was occurring without the banks having a system in place to handle this swell in demand for a complicated and bureaucratic process for which they had neither the infrastructure nor the desire to service.

Still, at the end of 2007 we were not in too bad of shape.  But then 2008 began.  The market began to plummet.  Foreclosures went on the rise.  Short sales increased.  Home sales decreased.  Things began to get bad.

In 2008 we saw a 52% increase in foreclosures over 2007.  Between January of 2008 and February of 2008 Utah jumped from 22nd in foreclosures to 15th in the nation.  Salt Lake still led that trend and continues to do so.  Still, with that increase our overall market in 2008 for foreclosure sales as compared to the rest of the market only consisted of 5% of the overall home sales in the state, with the majority coming in the last quarter of 2008.  

Even still, we were not the worst to suffer.  Check out this video and stay tuned for Part 2.

The Daily Show - Home Crisis Investigation
Tags: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

Written By:

Brian C. Andersen
Realtor, Property Manager - Bill Brown Realty, Inc.
www.UtahHomes4me.com

Welcome to Utah County Real Estate 101

Let's face it, the economy over the last couple of years has been tragic at best.  Foreclosures have been on the rise, short sales have been on the rise, home prices have been falling, unemployment rates have reached crisis levels and everyone is burying their heads in the sand hoping for this to pass.  The fact is, it is passing.  The question is, will it pass and leave you in a better position or a worse position than you're in now?

The purpose of this blog is to keep a conversation going with Utah County residents about the state of the housing and real estate market here at home.  Our market is different than the national market, different from the state market as a whole and different even from Salt Lake's real estate market.  We have our own unique makeup of communities and this blog will help keep everyone updated on the relevant happenings in our micro-local market.

This blog will help first-time home buyers, real estate investors and others interested in the Utah County Real Estate market to make more informed decisions on their real estate purchases and aims to be a resource for all Utah County Residents.

To kick off the launch of this blog, please enjoy the following video entitled "The Crisis of Credit" to see how we've gotten to where we are today.  Subsequent posts will bring us all up to speed on where we've been as a county and where we are headed.

Enjoy!

Brian C. Andersen
Realtor, Property Manager
www.UtahHomes4me.com