Market Update May 10, 2012
Generally I try to post market and interest rate updates at least every week or two on this blog. Work and life has been very busy the past few months so I apologize for the delay.
The good news is that all signs are pointing to a very healthy economy and real estate markets nationwide. Here are a few recent articles in the news for those of you who like to stay up-to-date on the economy:
Fannie Mae: Confidence in Economy and Home Values Increasing
Buying a Home Won't Get Much Cheaper
Home Prices Rise in Half of U.S. Cities as Markets Stabilize
Here in Utah, the economy in general, and housing specifically, is doing even better! Inventory/supply is low, demand is high, interest rates are still hovering at historic lows and appraisers are not allowing for much appreciation, which is keeping prices down.
BUYING IN UTAH
REMEMBER THIS EQUATION for all you non-cash buyers:
LOW HOME PRICE X LOW INTEREST RATE = AMAZING DEAL … and historically there has NEVER been a better time than now to get an amazing deal!
But this will not last!! The current balance of supply and demand necessitates appreciation, albeit a very slow and steady appreciation as appraisers are generally not allowing it; and interest rates WILL increase, whether it be weeks, months, a year or a few years, no one can predict. But by 2013 rates will be higher, and by 2014, they will likely be in the middle 5%’s if not over 6%. A healthy economy is bad news for keeping mortgage interest rates low. So the key is purchasing a home with low interest rates just before the economy is “recovered”.
So if you are considering buying a home in the next few years, and are able to now, you should highly reconsider purchasing sooner rather than later. It is NOT too late to find yourself an AMAZING DEAL, but to get a good deal, buyers and I are having to watch the MLS like a hawk for new listings, visit the new listing within a day or two, and make an offer as soon as possible, usually the same day as the showing.
Last week I put in four offers for three different buyers. All four were had just listed and each listing ended up with multiple offers of 2, 4, 6 and 12. Even though my clients offered full price for one, over full price on another, and the other two were also great offers, we lost out on all four (I think two of them sold for too much, one asked for terms that were too risky and the other was bank owned that went for way above list price).
But another client did go under contract this week for 2% below list price on a super clean, newer, fully finished home for only $67/square foot. I currently have 7 buyers under contract: four already existing homes, two new construction townhouses and one new construction custom home. I have closed four buyer deals in the past 6 weeks and they all ended up with amazing deals; but we worked hard and fast to get them.
BUYING AS AN INVESTOR
For investors, this is the perfect time to purchase. Rental prices have greatly increased over the past several years, rates for 20-25% down loans are incredibly low, many of my investors are able to take out 15 year mortgage with only 20-25% down and have rental income cover the full mortgage, and many investors are finding deals with 8-10% ROI.
If you would like to purchase an investment property, be sure to let me know what you would like to purchase so I can be on the look-out. Investors are snatching the deals up faster than ever before, so we have to be vigilant at finding the new listings and acting quickly.
Cyclic Market – NOW IS A GOOD TIME
The real estate market here in Utah seems to be very cyclic, with the buying seasons generally February to mid-April and mid-June to the end of August. The last three months have been incredibly, yet predictably, busy, but things have begun to slow down.
The next 4-6 weeks will be a great time to focus on home buying before the next buying period is upon us, not just because I will have more time to focus on you, but because loan officers, inspectors and listing agents will have more time and underwriting times will also be down.
SELLING IN UTAH
For those considering selling, this is a great time to sell a home quickly for appraised value. Although home prices are generally not appreciating yet, homes are selling very quickly for “appraised value” (not the exact same as “market value”).
One of my goals for this year is to close on a dozen listings and so far I am on pace. I am currently under contract or have sold every listing I have received this year, including a few short sales and one that we didn’t even have to list on the MLS.
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