Rental Hikes

Salt Lake City registered the largest apartment-rent increase in the nation, as rents have soared 10.4 percent since last year, according to a report this week.
The Provo/Orem area was a close second, with rents increasing 10.1 percent over the past 12 months, according to the report by RealFacts Inc. Among the four Western states that the report called the "desert" region of the country, Utah ranked second in average rents, at $799. Nevada was tops at $882, Arizona was third at $783 and New Mexico fourth, with average rents of $730.

Utah also registered the highest average occupancy rates for renters, at 95.3 percent, with New Mexico second at 93.9 percent, followed by Nevada at 92.7 percent and Arizona at 89.5 percent.

RealFacts, a company specializing in multifamily data, said that average rents across the nation increased by only 2.5 percent in the past year, and 0.6 percent since March.

Wells Fargo economist Kelly Matthews said Friday that rental rates in Utah are increasing because of the current housing situation.

"Everybody was moving out of rentals and getting mortgages and buying homes," he said. "That process has reversed now, and many people can't get mortgages or don't want to get into houses, so the demand for rentals is definitely stronger now."

http://deseretnews.com/article/1%2C5143%2C700244360%2C00.html

Top 10 Cities to Buy a Home

Top 10 Cities to Buy a Home

Financially, at least, the best places to buy houses are those where buying costs less than renting, tax incentives are attractive, and there’s an opportunity to build equity.

Forbes magazine surveyed the 40 largest metropolitan area housing metrics looking for cities where home prices have appreciated over the last two years. It also measured vacancy rates. And it gave extra points to cities where rents are significantly higher than a buyer would pay for the same home.

Texas dominated the magazine’s list because of its healthy job market and growing tax revenues.

Here are the 10 cities that topped Forbes’ best-places-to-buy list:

Houston
Austin, Texas
St. Louis
Philadelphia
San Antonio, Texas
Dallas
Salt Lake City, Utah
San Francisco
Jacksonville, Fla.
Atlanta

Top 10 U.S. Cities with Highest Rates of House Price Appreciation

After five consecutive quearters the highest rates of house-price apprecaition in the nation, Utah fell to no. in this year's first quater, according to a May report by the U.S. Office of Federal Housing Enterprise Oversight.

For the three months ended March 30, Utah home prices appreciated 5.58 % compared to the first quater of 2007. When compared to the fourth quarter of 2007, Utah home prices declined slightly at 0.20%.

Wyoming saw the strongest house-price apprecaition of all states at 6.34%. California ranked dead last, with home prices there dropping 10.58%. Besides California, 14 other states (including Nevada, Florida, Arizona and Michigan) saw home prices fall.

Three Utah cities made the top 20 list of 292 U.S. cities showing the highest rates of apprecaition.

Nationally, home prices were down 0.03% in the first quarter compared to a year ago and down 0.23% compared to the fourth quarter of 2007.

James B. Lockhart, OFHEO director, said the naitonal price declines bring positive and negative news, " For homeowners and financial market observers, these declines spell further erosion in home equity levels and potentially more trouble for mortgage markets," Lockhart said. " To prospective home buyers who have been shut out of homeownership because of affordability constraints, these declines may be welcome news, as are continued low mortgage rates."

Top 10 U.S. Cities with Highest Rates of House Price Appreciation

Houma-Bayou Cane-Thibodauz, LA-11.22%
Grand Junction, CO-9.08%
Wenatchee, WA-8.02%
Austin-Round Rock, TX-7.74%
Billings, MT- 7.09%
Provo-Orem, UT- 6.76%
Anderson, SC-6.73%
Mobile, AL-6.64%
Ogden-Clearfield, UT-6.64%
Hickory-Lenoir-Morganton, NC-6.41%

Few Mortgage Tips

1.With the sub-prime issues continuing to impact the real estate industry, it is refreshing to know that veterans can get 100% financing on a single family residence. The lending limit for a veteran to purchase in Utah is $417,000. This applies to duplexes, triplexes and fourplexes as well

2.Did you know that missing just ONE payment on that little credit card balance can cause your FICO score to drop 100 points in one month and could disqualify you for a loan, even if the minimum payment is only $5.00. Watch those little ones. . .paying only the minimum on time is more important than paying the whole balance off.

Utah's Real Estate Market

Two recent real estate reports show Utah's real estate market is considerably weaker than a year ago, but home prices continue to appreciate. A report out yesterday on April's home sales in Salt Lake show a volume decline of 33%, but a price increase of 2%. This is reflective of other areas of the country that showed a decline ahead of us.

The Salt Lake Board of Realtors is optimistic about these numbers:

But Realtor officials said Tuesday they believe that any downturn here will be comparably shallow and short-lived.

Board president Jillinda Bowers said April was the third consecutive month in which home sales increased in the county. Last year, sales started to slip in the summer, with January's total of 634 an eight-year low for monthly sales. April's total of 972 units sold is up from 934 in March and 746 in February.

"It appears to be a trend" of increasing sales, Bowers said.

I disagree. Utah's housing market is having a downturn and will continue to do so for probably a year. Looking at month over month sales is a poor indicator of progress. However, demand for starter homes and low cost homes will continue to increase with commensurate price increases. Homes above $300k in the valley will have slight problems selling. Price points above $600,000 will see the greatest price drops, especially next year, the most difficult price to sell.

Even though the analysis may not sound good, what we should focus is:

1. the interest rate is still low
2. it is a good time to buy: you can negotiate concessions and possibly lower price
3. if you are buying the house for more than two years, you will be fine. And, in the meantime, your house is still appreciating
4. The rent market is strong and very competitive, definitely landlord's market
5. we are going through this economically difficult times better than other states.


Utah is No. 1 among states in home-price appreciation with a 5.6 percent increase, relinquishing the top spot to Wyoming, which posted a 6.3 percent gain, according to a report released today.

Montana rounded out the top 3 with a 4.9 percent increase, according to the House Price Index report by the Office of Federal Housing Enterprise Oversight.

The OFHEO numbers reflect refinances as well as purchases and that's why they show bigger increases than the Board of Realtors that only reflect sales of existing homes. Realtor numbers showed less than 1% appreciation in the first quarter.

I don't expect a housing crash. It will slower than 2005 and 2006, little slower or same as 2007.

Styles of Properties: Rambler

Almost all of the ramblers in Sugar House Utah were built after World War II. Most were built from the mid-1950s to the 1970s. What they lack in charm they make up for in space. Ceilings are high, rooms are big, and many basements are walkout. If you need a house above 3,000 square feet with five or more bedrooms and a two-car garage, you'll want to look at a rambler. Many St. Marys and Oak Hills residents are original owners of their homes. They are dated, and sell for about $150 per square foot. As this area turns over in the next few years and these homes are updated, watch out. These are big houses close to town, many with great city views. It could one day be the most desirable area in town.

Quirks: Built around 1960, most ramblers have plumbing and wiring that is not an inspection issue. Check the bar-tile roof in Oak Hills/St. Marys, however. If original, they might be due for a replacement.

Moab Wedding...

I will be away for a weekend. I will have access to phone and rarely to Internet. So, please call...

Our friends will be getting married in the Wilderness House in Moab Utah. Upon return, I will share few pictures with you. Until then, please have a nice weekend.

Marina Vialtsina
801-649-5883

Offer vs. Contract and everything about Earnest Money (Deposit)

Even though as a Buyer you are using the Contract Form to spell out all terms of your offer, this offer will not become a Contract until Seller accepts it.

What is Acceptance?

When Seller or Buyer, responding to an offer or counteroffer of the other do the following:

1. signs the offer and counteroffer where noted to indicate acceptance
2. and communicate to the other party or to the party's agent that the offer or counteroffer has been signed as required.

What if while you are waiting for Seller's response you have changed you mind, and do not want to purchase the property anymore?

Not a problem, as long as you correctly communicate that to the Seller...Talk more to me or your Agent about how it should be done.

What is Earnest Money (EM)? And as a Buyer, why do you need to submit it?

Earnest Money (also known as Deposit) is a promise that as a Buyer you will follow the rules and terms of the agreed contract. This money can be returned to you at the Title company during closing or become your downpayment.

Do you need EM to write an offer?

No, in state of Utah, you only need your good intention? However, if the offer becomes a contract, in other words upon Acceptance of the offer by all parties, this money shall be deposited in accordance with state law.

Where and When will it be deposited?

As a Buyer you should give check or cash to your agent who should request his/her broker to deposit it within three banking days after the offer acceptance to the bank. The bank account most of the time will not be interest bearable one.

As a Seller, you are interested prior to final acceptance of this offer or few days after-- request a Buyer to provide proof of the earnest money deposit as being received by Buyer's Agent.


Required amount?

While a lot of other states require earnest money to be at least 2-3% of the purchase price. Utah has no such requirement.It is personal decision between Seller and Buyer. Sometimes, you can see as little as $500 and as high as complete purchase price.

As a Buyer, because the Utah Purchase Contract is very much biased, if you play by the rules, you will not loose your Earnest Money.

As a Buyer, you can choose your deposit to be with Title company. The only thing keep in mind that title companies are regulated by the Department of Commerce, and they may have different release rules which have nothing to do with your agent.

What if EM check is returned as "NSF"? (not sufficient funds)

Very grey area, but Seller can cancel agreement if EM check bounces back.
As a Seller, good idea to specify this right in a contract.

Mortgage Foreclosures in Utah

Mortgage Foreclosures in Utah

Utah currently has one of the lowest rates of seriously delinquent mortgages in the nation.
In the fourth quarter of 2007, 7,000 mortgages in Utah were seriously delinquent, or 1.58 percent of mortgages.

Utah currently has one of the lowest rates of seriously delinquent mortgages in the nation.
Table 1

States Ranked by Seriously Delinquent Mortgage Loans
(Fourth Quarter - 2007)
Ten
Lowest
% of Loans
Seriously Delinquent
Ten
Highest
% of Loans Seriously Delinquent
Alaska
1.21
Michigan
5.93
Oregon
1.32
hio
5.89
Wyoming
1.36
Indiana
5.57
North Dakota
1.37
Mississippi
5.28
Washington
1.39
Louisiana
4.09
ontana
1.53
Illinois
3.98
Utah
1.58
Rhode Island
3.9
Idaho
1.60
Kentucky
3.86
Hawaii
1.73
Alabama
3.73
South Dakota
1.83
Maine
3.5
U.S.
3.62
Source: Mortgage Bankers Association.

There are six states that have lower delinquency rates than Utah including Alaska, which has the lowest rate in the nation at 1.21 percent. The states hit hardest by foreclosures and delinquencies are Michigan, Ohio and Indiana. In each of these states nearly one out of every sixteen mortgages is seriously delinquent. These are not states where housing prices have had huge run-ups over past five years, but rather states with prolonged job losses and states that have had difficulty recovering from the 2001 recession.

Utah ranks even better when looking strictly at foreclosure rates without 90 days or more delinquencies. In the fourth quarter of 2007 Utah’s foreclosure rate was 0.80 percent. Only four states had lower foreclosure rates; Alaska 0.67 percent, Oregon 0.72 percent, Washington 0.72 percent and North Dakota 0.79 percent. The number of homes in Utah in foreclosure was 3,550 in the fourth quarter of 2007, up 750 homes over the third quarter.

The second quarter of 2007, with a rate of 0.55 percent, was the lowest point for foreclosures in this cycle and the lowest rate since the fourth quarter of 1997, when foreclosures were 0.50 percent of all mortgage loans.

Subprime mortgage loans have been particularly vulnerable to foreclosure. Nationally there are 6 million subprime loans, accounting for 13.2 percent of all mortgage loans. Subprime loans in Utah represent a very similar share, 13.4 percent of all mortgage loans. There are currently 52,987 subprime loans in Utah and 32,394 of these loans are subprime ARM (adjusted rate mortgage) loans, the most vulnerable to foreclose.

Nearly five percent of the subprime ARM loans in Utah are in foreclosure, about 1,600 loans. While this rate may seem high, Utah’s subprime loans look healthy compared to other states. In fact, Utah has the lowest rate of foreclosure for subprime ARM mortgages in the country. Nationally 13.4 percent of subprime ARM loans are in foreclosure.

Mortgage Foreclosure and Delinquency in Utah
(Fourth Quarter 2007)
Number of Loans*
30 Days
Late
90 Days
Late
Foreclosure
Seriously
Delinquent
All Loans
444,645
2.56%
0.78%
0.80%
1.58%
Prime Loans
335,259
1.62%
0.32%
0.38%
0.70%
Subprime Loans
52,987
6.66%
2.79%
3.68%
6.47%
Subprime ARMLoans
32,394
7.29%
7.29%
4.86%
8.10%
*Loans don’t sum to total due to exclusion of FHA and VA loans.

When Utah experiences a high rate of economic growth there is typically a very low rate of foreclosure. This was certainly the case in the mid-1990s when job growth and rising home prices drove the foreclosure rate down. During this cycle the foreclosure rate hit its lowest point of 0.30 percent in the third quarter of 1996, when only 600 homes were in foreclosure. Historically, Utah’s foreclosure rate is considerably more volatile than the national rate, Chart 1.
For 15 years the national foreclosure rate moved consistently around a narrow range of 1.0 to 1.25 percent, but in late 2006 the national rate suddenly accelerated, while the rate in Utah continued to decline. Foreclosure rates in Utah steadily declined from the peak of 2.0 percent in 2002 to 0.64 percent in 2007.

Not surprisingly, the serious recession of 2001–2003 led to the highest rates of foreclosure in Utah since the mid-1980s. As shown by the troubled large industrial states of Michigan and Ohio, foreclosure rates are particularly sensitive to job growth and economic expansion. Without doubt, Utah’s strong job growth, which continued throughout most of 2007, has helped to keep the state’s foreclosure rate among the lowest in the country.

While Utahns can take some satisfaction in the low rate of foreclosures, there has been a strong up-tick over the past two quarters. The number of homes in foreclosure has risen from 2,400 in the second quarter of 2007 to 3,550 in the fourth quarter of 2007. As Utah’s job growth slows from 50,000 annually in 2006 to an expected 25,000 in 2008, and 16,000 in 2009, the rate of foreclosure could approach 1.5 percent by the end 2009.

Solid Fundamentals

Markets rise and markets fall. Utah is no exception. But as talk of a national recession intensifies, Utah keeps adding new jobs and new people.

In fact, by year-end 2007 Utah gained nearly 45,000 new jobs, a 3.6 % increase compared to 2006 and the highest job growth rate of all 50 states, according to Mark Knold, chief economist of the Utah Department of Worforce Services. The phenomenal job growth put Salt Lake City at the No. 1 spot in the nation for the "Best Cities for Jobs in 2008", according to Forbes Magazine. And the job growth has led to a surge in net migration-the number of people moving into a place minues the number of people moving out. As of July 1, 2007, Utah saw a net migration of $44,252 people. In addition, there was a record 53,953 births, resulting in the highest single year population increase in the state's history. Combined, new job growth and net migration establish the foundation of a strong real estate market. While many places are experiencing job losses, population declines and flat house-price appreciaiton, Utah's fundamental economic picture remains solid.

"I don't believe that Utah is subject to the bubble concerns that exist in other markets.", said Juliette Tennert, chief economist to Gov. Jon Huntsman Jr. "Our demian home price right now is $206,000 compared to national home price of $220,000. We're well below the national mediam. Our housing demand is solidly rooted in populaiton increase as opposed to specualtion."

Since 1970, Utah has experienced four housing booms. The housing booms of 1971-1972, 1976-1978, 1994-1996, and 2004-2005 all had one common element-high rates of net migration, according to James Wood, director of the University of Utah's Bureau of Economic and Business Research. As Utah's Echo Boom generation comes of age-those born in the late 1970s and early 1980s-new ouseholds formation is certain to keep demand for housing strong. Utah's Echo Boom generation is larger in numbers that that of the state's Baby Boomers,a phenomenon unique only to the state of Utah, according to Tennert.

Although Utah's houseing market has slowed a little, the issue has little to do wuth overbuilding, according to the 2008 Economic Report to the Governor. "There are plenty of consumers and mane more to come who are willing buyers of homes," the report noted. "Instead, the porblem is in the mortgage markets....that is the primary reason for the Utah's slowing housing market. They have severely restricted mortgage lending."

By Brian Kohler
SLBR Chief Executive Office

Contact for more information
Marina Vialtsina
801-649-5883

Price the House Correctly...

Knowing how much you can get for your house is very important...



First of all, you have only one chance to price it correctly. Certainly, you can argue that if no buyers come, you can lower the price...But, the fact is pricing incorrectly results in



1. Asking too little

2. Asking too much and loosing money (mortgage payments) and time...



Let me give you an example:



In Summer 2007, I got clients/listings on 2300 N / 3186 W, Clinton, Davis County, UT. Back them (since market changes monthly, and daily sometimes), I recommended them to price it for $243,000. The house in front of us (I believed in a clearer condition) got sold for $245,000 few months prior. Being on the market for less than 2 weeks, we got an offer (1st offer) for $238,000 with all other conditions and buyers' financial situation, I recommended to take. My clients informed me than less than $245,000 they would not consider anything. Knowing and informing my clients that it is quite difficult to get what you ask for, back in summer 2007, it was not impossible yet; however, if we were beoynd summer/early fall selling season, it can be late. Too more weeks later, we got offer (2nd offer) for $250,000 with $5,000 concessions/seller would pay $5,000 towards buyers' closing costs. I had more doubts about financial situation of these buyers, but having full price offer on hand, my clients wanted to take it.



At the end, this offer did not go through because of buyers' financial situation. I started loosing faith that in late September and changing market, I can bring someone else for full price offer. I suggested buyers to hire someone else if they think $245,000 is the only price they intend to receive. (they should have ask for $250K if they wanted to get $245K) In early September, I cancelled my contract and relationship with these clients for this and few more reasons. Letting go is smarter sometimes that keeping something which is not working.



In early October, 2007, clients hired some other agent. Asking price started decreasing slowly from $245,000 to $238,000. Only in late January, 2008, (4 months later), they got an offer (3rd offer). And, a week ago (2/20,2008), it was finally sold for $237,000 and 7,110 concessions.



So, the moral of this story is compare what would have been better for them. $238,000 was more money than $229,890 no only because it is more, but also because it came sooner with other better conditions. And, if the goal was to receive $229,000, we could have achieved it faster than 4 months.



1. Offer number 1, which came in 2 weeks OR 1. Offer number 2, which came in 4 mos

2. $238,000 no concession=$238,000 2. $237,000-7,110 = $229,890

3. No more mortgage expense, and ability to reinvest 3. mortgage expense for 5 months

the money same summer before school year started no money to move. rent in a new place

(these clients needed to move either way before in addition to mortgage expenses.

school started)



It is important to be realistic about your goals when pricing the house, and very important to estimate other possible expenses and time, plus stay informed what is happening with market during your listing.

How New FHA, GSE Loan Limits Impact You

Few posts ago, I have mention that new limit is coming....so, now, when it is here, how is it impacting you?

Last week, President Bush signed into law a $152 billion economic stimulus bill that includes temporary increases in loan limits for the government sponsored enterprises (GSEs) — Fannie Mae and Freddie Mac — and the Federal Housing Administration until Dec. 31. But what does this mean for you?

The NATIONAL ASSOCIATION OF REALTORS® launched a new resource Web page, http://www.realtor.org/gapublic.nsf/pages/economic_stimulus devoted to educating you about the new loan limits, which loans are eligible, and the implementation of these temporary limit increases.

NAR has developed estimates of the FHA and GSE single-family loan limits (http://www.realtor.org/GAPublic.nsf/files/new_loan_limits.pdf/$FILE/new_loan_limits.pdf) by state and county so that you can get a sense of how the loan limits will rise in your markets. As you can see, Nevada, for instance, is mentioned, but nothing was done for Las Vegas. However, Salt Lake City is there: FHA limit used to be $362,790, now it is $546,875 and same for GSE limit. Other effected Utah cities are Garfield, Grand, Iron, Juab, Kane, Millard, Morgan, Piute, Rich, San Juan, Sanpete, Sevier, Summit, Tooele (same before anf after numbers as SLC), Uitah, Utah, Wasatch, Washington, Wayne, Weber. As you see some cities are missing?

"The importance of immediately implementing the new limits cannot be overstated," said NAR President Richard Gaylord last week in a public statement. "Mortgage markets throughout the country need liquidity. Our research indicates that the increased FHA loan limits will help an additional 138,000 Americans achieve the dream of homeownership and will allow nearly 200,000 homeowners to refinance and potentially keep their homes.”

The FHA limit will increase to as much as $729,750 in high cost areas (to 125 percent of local median home prices). The GSE limit will jump to $729,750 for loans; currently Fannie Mae and Freddie Mac loans are capped at $417,000. So, when you hear and see these numbers, please know it is not about all of us.

Eligible loans from FHA include mortgages that were issued for credit approval on or before Dec. 31, 2008. GSE loans that are eligible include loans that originated after July 1, 2007 to Dec. 31, 2008.

The U.S. Department of Housing and Urban Development is required to publish the new mortgage limits by March 14; the limits will be effective for FHA immediately upon publication.
"This will be a major stimulus for the housing industry and for people who want to own a home,” Gaylord said.

Reasons to Buy Real Estate in Utah

Reasons to Buy Real Estate in Utah
1. Tax Savings: You can write off the interest paid on the home loan and real estate property taxes if the home is your primary residence. You can write off mortgage insurance!
2. Fixed payment: Rent keeps going up. If you buy, with a fixed rate mortgage, your monthly payment only increases as property taxes and home owner’s insurance increase.
3. No Landlord. When you rent, you write a check and the money's gone forever. Why make your landlord rich?
4. Do it your way with your style. Plant a Garden, tile the floor, help your kid build a tree house, paint your kitchen green. When it's yours, you can do it your way and increase the value of your home.
5. Be part of a neighborhood!
6. Create stability: Moving sucks, nobody likes it and besides that, its nice to find an area you like and put some roots down.
7. Build Equity as the overall market increases & as you pay off your mortgage. A home is the biggest purchase most people make and for many their biggest investment.
8. Your equity can add up over time and be used to purchase a bigger home, an investment property or cover other big expenses if you need it.
9. Forced Savings.
10. Retirement: It may be a long way off, but owning your home free & clear is a major step toward retiring. Especially if your want to retire early.