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2010-07-20 16:36:06
Interest Rates and Market Update/Analysis

For those considering buying a first-home, upgrading to a larger and/or nicer home, or buying an investment property, this is a very beneficial market for you and the best time to buy may be NOW. Interest rates are at historic lows and have continued to fall. In the last month, I have had several clients get pre-approved and close on 30 year fixed FHA loans at 4.25% and 4.375%. I have also had a client close on a 15 year fixed conventional non-owner occupied loan at 4.675%. Interest rates are expected to return back to their more typical rates of 6% or 6.5% in the near future; whether that is 6 months or two years, no one really knows.

On a 30 year fixed FHA loan for $200,000, the difference in monthly payments between an interest rate of 4.25% and 6% is over $200/month, and the difference in interest paid over the life of the loan is over $75,000. On a 325,000 loan, these amounts increase to $350/month and $125,000 over 30 years.

In addition, an FHA loan is assumable, meaning that if you were to sell your home in a few years when interest rates are back up in the 6-7% range, the new buyers can assume your interest rate for the amount of the loan that you still owe, and would only need a new loan at the higher rate for the amount they owe you above what you owed on your loan. In other words, your loan will become a major marketing point in selling your home and will add value to your property. 

As you will see below, home prices have also continued to fall over the last 6 months but appear to be stabilizing if not beginning to increase. The combination of these amazing interest rates with low home prices, and signs that the Utah housing market may be turning the corner, there may not be a better time to buy a home in Utah than the next 6 months or so.

After working through some technical difficulties, I am finally able to post a brief market update for the second quarter of 2010. I have attched two graphs to shed some insight into the current local housing market. I am more than happy to put together a personalized market analysis for you with customized criteria, so don't hesitate to ask. For example, I can perform a market analysis for BYU condos, townhouses in Provo or luxury estates in Mapleton.

I have chosen two of the most popular general sets of criteria for this brief market analysis.

This first graph is single family homes built 2000 or newer, located from Lehi down to Spanish Fork, with at least 2000 square feet. As you can see, it appears the prices for these homes have reached a plateau, if not hot bottom before the swing back up. Home prices are at late 2005 amounts and have fallen almost 30% ($350k to $250K) since the peak in 2007.

SFR from Lehi to SF, 2000 sqft, 2000 or newer


This next graph is condos, townhouses and twinhomes, built 1995 or newer with at least 1000 square feet, located from Lehi to Spanish Fork. It appears that prices are beginning to stabilize as they have come down over 20% since 2007 and are around 2006 amounts. The ending of the home buyer tax credit seems to have really hurt this market during the 3rd quarter of 2010 but that is just my personal observation and the observation of several of thee agents that I work with. I expect that 2011 will bring a very nice rebound to this market with a new crop of buyers without a tax credit to influence things.

Condos, townhouses and twinhomes from Lehi to Spanish FOrk 1995 or newer

Again, if you are interested in a customized market analysis, don't hesitate to contact me and request one. If you are considering buying, let me know what your interests are and I will send you a customized MLS search. Access to the MLS is free on MyProvoHome.com so feel free to take advantage of this service.

For any of your real estate needs in Utah or elsewhere, don't hesitate to contact me. Thank you.

Jared Fields, JD
(801) 360-1003

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