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2013-07-18 14:32:17
2nd Quarter 2013 Market Analysis and Rates

Happy Thursday!!

We hope you all enjoying your weekend with some enjoyable plans for this weekend!

It has been a roller coaster ride this past quarter with both interest rates and home prices. Let's start with home prices:

2013 2nd Quarter Market Analysis:

1) Utah State, Salt Lake County and Utah County Home Sales Graphs

Home Value Graph 2nd Quarter 2013 - Utah State

Home Value Graph 2nd Quarter 2013 - Salt Lake County

Home Value Graph 2nd Quarter 2013 - Utah County

As you can see, home prices have been and are on the rise. In the past 5 quarters (15 months), prices are up 21% in Utah as a whole, almost 30% in Salt Lake County and 18% in Utah County. In addition, more homes sold in the 2nd quarter of 2013 for any quarter since 2007 (the peak of the market). We also had more new listings than we have seen in the past 3 years. This rise in values may be slightly deceiving in that there are a whole lot less distressed properties (short sales and foreclosures) hitting the market and selling to bring down the values, and a lot more equity owners with well maintained homes are selling, thus increasing the median sold price. Regardless, values for individual properties have definitely increased at least 10-15% in the past 12 months.

2) Utah County Condos and Townhouses

Home Value Graph 2nd Quarter 2013 - Utah County Condos and Townhouses

Condo and Townhouse values in Utah County have increased about 14% since the bottom of the market. These type of low end properties are usually the last to recover and appreciate in value and seem to be following that trend. The good news is that values are almost at 'home buyer credit' levels of 2009/2010 which will allow many of the home owners who bought with the home buyer tax credit to now sell and at least break even (without needing the $8k credit to do so). This should allow more condo/townhouse owners to put their homes on the market and upgrade to single family homes. This market has appeared to return to a more normal track of appreciation which should hopefully continue at 3-5%/year depending on what interest rates do in the next 12 months.

3) Utah County Newer Single Family Homes - Under 3000 sq.ft. and 3000-6000 sq.ft. (both are 1990+)

Home Value Graph 2nd Quarter 2013 - Utah County Starter Homes

Home Value Graph 2nd Quarter 2013 - Utah County Luxury Homes

As you can see, both 'starter' homes and larger homes enjoyed a nearly 21% jump in prices. It is interesting to note however that the 'luxury' home market rally hit bottom and stabilized in late 2009 while 'starter' homes didn't experience this same stabilization until 2011. This is probably due to the home buyer tax credit delaying the dramatic decrease in home prices for 'starter' homes.  There has also been a steep increase in inventory in both markets in the 2nd quarter of 2013.

Expectations Moving Forward for the 2nd half of 2013:

With interest rates increasing (see below), we expect a slight decrease in demand. The increase in inventory is creating some excessive inventory (supply) thus far in the 3rd quarter. When demand decreases and supply increases, it should produce a slight decrease in value, or at least stabilize values and/or trends. The general consensus right now in the industry is that values should stabilize UNLESS rates continue to dramatically increase to the upper 4%'s or higher, which could cause values in some markets to start coming back down.

So far in July, we have seen a large decrease in activity, in both new listings and buyers entering the market. This could be the result of the July holidays, heat and vacations. But with the rise in rates, both home buyers and owners seem to be waiting a little longer to enter the market (which could be a huge mistake for both if interest rates jump into the 5%'s).

Update on Interest Rates received this morning from one of our preferred lenders, Lane Aldrich, with First Colony Home Mortgage, the largest loan originator in Utah County:

FHA 30 YR- 3.875% (5.03% APR)

Conventional 30 YR – 4.25%  (4.39% APR)

Conventional 15 YR- 3.375% (3.52% APR)

Rural Housing 30 YR: 4.0%  (4.73% APR)

'Interest rates continue to trend upward as the Fed lays out their exit strategy for their stimulus bond buying program. We saw 30 year rates increase more than a full percent from May to June, but most experts agree that rates will likely remain in the 4.50%-4.875% range thru the end of 2013. On a $200,000 loan, the difference between a 4.25% interest rate and a 4.875% interest rate is an additional $900 in yearly interest. If you are considering buying in the near future, I recommend doing it soon so you don’t end up having to pay more for the same house.'

As always, if you have any questions about the information provided, please don't hesitate to contact us. We will continue to work our hardest for our clients and putting on fun and informative events for them and we hope you will continue to refer your friends and family to our team.

Thanks again for all your support, business and friendship! Have a great end to your week!

Best Regards,

Jared Fields, JD, ABR, SFR
The Jared Fields Real Estate Team: 'Dedication, Integrity, Transparency, Results'
Realtor, Senior Partner
RE/MAX Results- 480 East 770 North, Orem, Utah 84097
2010-2012 RE/MAX 100% Club
J. Reuben Clark Law School Class of 2009
Mobile: (801) 360-1003
Email: Jared@TheFieldsTeam.com
Website: TheFieldsTeam.com
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