The SLC Market

Thinking of Buying a Foreclosure or Short Sale? Timing is Everything

Last Call For First-Time Home Buyer Tax Credit...Or is it?

Why We Have Not Hit Bottom...And Why First-Time Home Buyers Should Not Wait

Salt Lake County 2009 1st Quarter Numbers

Salt Lake County Home Inventory March 2009

Thinking of Buying a Foreclosure or Short Sale? Timing is Everything

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If you are thinking about capitalizing on recent foreclosure activity, then timing may be the key to your success. Foreclosure activity in Utah is up 96% from a year ago and we are currently ranked 6th in the nation in per capita foreclosure activity. So how does timing play into buying a foreclosure? For bank owned homes (REOs), it is all about speed. On the other hand, short sales are all about patience.

First, lets talk about REOs. When a bank gets ready to put a home on the market, they typically get two opinions on the value of the property from local real estate agents. They take those values, reconcile them, and come up with a list price. The bank wants to be as competitive as they can without giving the home away. Because it is not an exact science, sometimes their values are high and sometimes they are low. They key is being ready to buy when a home comes on the market priced to sell.

The best way to do this, is to have your real estate agent set you up with an automatic email to alert you anytime an REO comes on the market in your chosen neighborhood. This way, you will can track prices and be ready to write an offer when the right property comes on the market. Keep in mind that banks want to sell their properties quickly and without trouble. They are looking for buyers most likely to make it to the closing table. You can enhance your offer by putting as much cash down as possible, having a strong pre-approval letter ready, and being ready to close quickly. With this strategy, you will be among the savvy buyers picking up the best priced REOs.

With short sales, the strategy is a little different. Here, you have to have the patience to work on the bank's time. Remember the bank has not foreclosed on the property yet so they are not in a big hurry to take a loss. They are going to review your offer with the buyer's package when it is convenient for them. If you have the flexibility to close when it is convenient for the bank, it will make your offer more attractive. Approval from the bank can be as quick as a few weeks or can take over a year. 3-6 months is not uncommon. You should ask your agent some questions to get a sense of how long it is going to take. For example, has the buyer submitted their hardship letter and package yet or are they waiting for offers? Have any other offers been submitted to the bank? And, has the bank approved the list price yet?

These questions will help you narrow down properties that are priced right and likely to close fairly quickly. Buying a foreclosed property can be a challenge, but the savings can be huge. With the right timing, you will be much closer to winning when buying a foreclosed house.

Source: Realtytrac

Last Call For First-Time Home Buyer Tax Credit...Or is it?

The $8,000 federal tax credit for first-time home buyers has been a boost to the local market. Salt Lake has seen the number of home sales this summer on par with last summer. Without first-time home buyers jumping in, we could have seen fewer sales and prices falling further than they have. The majority of my activity has been by people taking advantage of this credit.

So if you still have not taken advantage of this credit, you have until December 1st to close on the property. That means you would will want to have your home picked out by mid October so you can close mid November just in case you need a few extra days to tied things up.

If you are the gambling type, you could take your time and hope H.R. 2801 passes in time. The bill extends the credit for all home buyers through 2010. Currently the bill is in committee and it may not make it out in time for congress to vote on it in September when it goes back in session.

The bill would be a definite boost to the home market but opposition points out a few obstacles to it being passed. First, Congress is too involved with healthcare to worry about another bill. Second, the original tax credit was meant to protect buyers from future depreciation and some argue that we have already hit bottom. If that is the case, there is no need for depreciation protection. And finally, there may not be the funds for the bill.

With this type of opposition, it looks unlikely that this bill will pass. If you are thinking about buying a home in the next year, you may not want to wait any longer.

Sources

http://www.creditunionsonline.com/news/2009/Congress-Considering-8000-Fist-Time-Home-Buyer-Tax-Credit-Extension.html http://www.federalhousingtaxcredit.com/2009/index.html, WFRMLS

Why WE Have Not Hit Bottom...And Why First-Time Home Buyers Should Not Wait

The good news is sales activity is up. Unfortunately, the same is true for foreclosure activity. But prospective first time home buyers would be wise to act now and take advantage of an $8,500 tax credit and low interest rates now available to them.

The number of REOs (Foreclosed bank owned homes) has continued to increase since June of 2007. In summer of 2007 we only had 39 REOs in Utah. The number has skyrocketed over the past two years, now approaching 800 REOs. What's worse, Utah is now #5 in the nation in per capita foreclosure activity.

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When a property is foreclosed on in a neighborhood, it drags down the prices of all the homes in the area. And when home prices decrease, more foreclosures are likely as homeowners lose their equity cushion.

So when will this foreclosure activity stop? It could be a year or two. Places like California have seen a slow down in foreclosures due to moratoriums but they expect another surge of foreclosures when the government hold on foreclosures is lifted. I expect Utah to trail California in foreclosures like it did in home prices leading up to the boom. Until we see foreclosure activity decreasing in California, we should not expect the same in Utah.

With all this bad news, first-time home buyers may be reluctant to purchase. In actuality, this is a very opportunistic time to buy your first house. The majority of buyers are at the $200,000 and lower price range. This price range is the least susceptible to further price drops. Also, interest rates are very low right now and experts do not expect them to go much lower. Finally, the $8,500 tax credit expires Dec 1, 2009. With all these factors in mind, there is no reason for the first-time home buyer to wait.

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source: WFRMLS, Realtytrac

Salt Lake County 2009 1st Quarter Numbers

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1st Quarter Numbers Reveal Mixed Results

The Wasatch Front MLS released 1st Quarter numbers for 2009 and the news is not all bad. Year over year, the average sales price for single family homes fell by only 2.8%. Areas like Draper and Holladay with the highest sales prices experienced the largest declines. This is most likely a sign of the affordability problem in Salt Lake that people have been discussing for a while now.

One concern is the number of home sales. Only 1441 single family homes changed homes last quarter. This is the lowest number of home sales in over 10 years.

Recently, I have noticed an increase in 1st time homebuyers testing the market. Several people are realizing that low interest rates, an $8,000 tax credit, and lower prices are creating a great opportunity to buy. Remember that the tax credit expires November 30, 2009. If you are thinking of buying, make sure you time your purchase accordingly.

1st Quarter Statistics By Zip Code

Find your Salt Lake County zip code below to see how the market and home prices are doing in your neighborhood.

Zip              %Change     1st Quarter   1st Quarter
                                       2008              2009

84020     -11.50%        $400,000       $354,000
84047     -16.00% $221,000 $185,000
84065     -3.56%          $316,000 $304,750
84070     -0.41%          $230,950         $230,000
84088     -10.54           $255,000 $237,500
84092     -9.80%    $380,000 $342,750
84093     -6.13%          $310,000 $291,000
84094     -11.52%        $250,000 $221,200
84101           -82.90%    $372,000 $63,639
84102           +55.62%       $190,830 $297,000
84103     -3.18%      $392,500 $380,000
84104     -10.90%        $145,900 $130,000
84105    +7.92%          $265,000 $286,000
84106     -6.04%          $259,950         $244,250
84107     -6.67%          $232,500 $217,000
84108     -16.20%        $420,000 $351,950
84109     -11.52%        $330,000         $292,000
84111     -16.09%     $185,000         $155,225
84115     -0.18%       $168,300 $168,000
84116     -6.78%      $177,000 $165,000
84117 -6.05%          $380,000       $357,000
84118     -8.09%          $184,950         $169,995
84120     -11.79%        $193,000         $170,250
84121     -9.38%          $325,000         $294,500
84123 -10.28%    $248,000 $222,500
84124     -21.69%    $332,000 $260,000

SL County
Average -2.80            $287,597         $279,544

Salt Lake County Home Inventory March 2009

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Home inventory levels are figured out by taking the number of homes on the market in a given zip code and dividing it by the number of homes sold in that zip code for the last 30 days. The answer will give you the absorption rate. Or the number of months it would take to sell the existing inventory at the current rate if no other homes came on the market. A number higher than 8 indicates prices will likely fall. 6-8 prices should stay the same. And 6 and below points to a likelyhood of price appreciation.

Note: I do not include properties under contract in the calculation. And I round up for .5 and above.

Sellers Market 1-6 Months

Normal Market 6-8 Months

Buyer’s Market 8+ Months

City	Zip	July, 2007	November, 2007	July, 2008	November, 2008	March, 2009
Draper	84020	10	20.2	14	22	10
Midvale	84047	3	9	8	12	15
Riverton	84065	8	21	12	13	17
Sandy	84070	4	19	9	13	10
West Jordan	84088	8	9	9	14	10
Sandy	84092	7	14	13	15	12
Sandy	84093	15	8	18	11	19
Sandy	84094	3	7	7	13	10
South Jordan	84095	9	19	16	22	11
Salt Lake City	84101	11	16	36	25	34
Salt Lake City	84102	4	10	10	21	11
Salt Lake City/Aves	84103	7	12	16	22	17
Salt Lake City	84104	3	4	8	7	26
Salt Lake City	84105	6	9	8	8	10
Salt Lake City	84106	8	8	9	11	16
Murray	84107	4	7	9	13	10
Salt Lake City	84108	6	13	9	12	11
Salt Lake City	84109	6	21	19	13	12
Salt Lake City	84111	7	7	9	8	7
South Salt Lake	84115	4	5	12	10	15
Salt Lake City	84116	2	5	8	12	25
Holladay	84117	5	9	23	16	10
Taylorsville/Kearns	84118	3	8	8	12	12
West Valley City	84120	3	10	10	10	16
Cottonwood	84121	13	16	10	19	15
Taylorsville/Murray	84123	3	5	6	11	18
Holladay	84124	6	21	9	25	20
Average	6	12	12	14	15

It looks like inventory levels continue to edge upward albeit at a slower pace than before. One bright spot is Draper which had a terrific March. 60 Homes closed in Draper for March and 10 of those are short sales. That is great news because it means that buyers are stepping up and taking advantage of the deals out there. It also shows that short sales are closing. 17% of those home sales in Drapervwere short sales. Short Sales help the homeowner avoid foreclosure and they keep the market from getting glutted with inventory. However, they do take their toll on home prices. Currently, 23% of the homes on the market in Draper are short sales.

The downtown Salt Lake condo market still appears to be in a glut with a 34 month supply of homes and condos in zip 84101. Only three units sold in 84101 and one of those was a short sale in American Towers. Bring your best haggling and bargain hunting skills if you are shopping in this zip code.

Salt Lake County 2008 4th Quarter Numbers

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The WFRMLS just released the 3rd Quarter 2008 market numbers. For a year over year comparison:

Single Family

1) Total units sold 1738. ↓ 21%

2) Average sales price $278,019. ↓ 3%

Condos

1) Total units sold 369 ↓33%

2) Average sales price $182,471↓5%

County Totals

1) Average time on market 73 days. ↑ 66%

2) Average asking price $325,944 ↓9%

The graph above is a little bit more encouraging than most of the housing market news you are hearing these days. It does not look like the bell curve of some other metro areas in the U.S. The spike from 2005-2006 does look imposing but I am hopeful that it will be a soft landing from 2007-2009.

The SLC Market

Mark Alder