With foreclosures continuing to rise in most areas of the country, one of the most common questions asked of real estate professionals these days is some variation of the following: “Is now a good time to buy a foreclosure or a short sale?”

We believe that the coming months could represent one of the best opportunities in our lifetimes to buy or invest in real estate–specifically foreclosures and short sales. The free market metronome tends to swing to extremes before settling back into a reasonable rhythm.

What we saw over the past few years in many parts of the country was a real estate market ratcheted up to an unsustainable rate. Homes were far overvalued and overpriced, builders scrambled to meet future supply based on demand artificially inflated by speculative buyers-who relied on risky loans that were provided by lenders with risk analysis clouded by seemingly insatiable demand from investors in the secondary mortgage market.

Now, the market has moved back to the other end of the spectrum and everything is slowing to a snail’s pace: home prices in many areas are plummeting, builders are inactive and many prospective buyers and investors are sitting on the sidelines, waiting as the inventory of homes for sale balloons. That makes the market all the more attractive to fiscally sound buyers and investors because it gives them an ideal environment in which to find the best property at the best price to fit their wants and needs-they shouldn’t settle for anything less.

Foreclosures and short sales are the cream of the crop in such a real estate market because they typically represent the most motivated sellers and, therefore, give the biggest advantage to buyers. And many buyers realize that and are interested in an agent who can help them with foreclosures and short sales.

For more information about this expanding market, be sure to contact us at klairgunn@kw.com.  I am knowledgeable and excited to help buyers invest in this fantastic market!

Housing may never be this affordable again.  Over the past few months, the market has created a unique opportunity for first-time homebuyers.  If you are renting, you should act now to take advantage.  Here are a few reasons renters should take a serious look at buying now:

IMPROVE YOUR LIFESTYLE
Home ownership is the best way to improve your lifestyle.  The ability to choose your own home, be your own landlord, and start saving for the future, is a great opportunity.  Maybe your family needs a yard, a garden, room to grow, new schools, or just a fresh start.

TAKE ADVANTAGE OF GREAT PRICING
Housing in Utah is affordable again.  More than ever before, the market is offering great pricing and incentives.  It is a buyers’ market and this means you can find great deals on your new home.  Take advantage of today’s pricing before it’s too late.

RECEIVE SIGNIFICANT TAX BENEFITS
There are two great tax benefits available for first-time homebuyers.  First, the new $7,500 first-time homebuyer tax credit is only available for a few months.  Purchase before July 1, 2009 and the amount will come as a refund when you file your 2008 or 2009 tax returns.  In addition to this temporary benefit, each year homeowners can deduct their mortgage interest and property taxes.  This keeps more money in your pocket right away and each year that you own your own home.

AVOID RISING RENTAL RATES
Rental rates in Utah have been rising.  In Salt Lake County, they increased 9.2 percent over the past year.  Become your own landlord and stop flushing your money down the toilet.

LOCK IN GREAT INTEREST RATES
Interest rates are one of the biggest factors influencing the affordability of your monthly payment.  Right now, interest rates are near 30-year lows.  This helps make your first home more affordable and keeps money in your pocket.  For example, if you wait to buy and interest rates increase one (1) percent, your payment will increase by $165 per month on a $250,000 loan.  In other words, you lose $27,417 in purchasing power.  Act now before rates increase further.

GET THE BEST HOME AND LOCATION
There are currently a large number of homes on the market.  The best options for homes and locations in each community always move first.  Move quickly to make sure you are the one who gets the best option.

Like much of America I followed the events of last week on Wall Street with a sense disbelief and confusion. Feeling the need to better understand what happened, and what it will mean moving forward, I spent the better part of the weekend reading The Economist, the Wall Street Journal, the New York Times, and speaking with experts in the field of finance. The following is one layman’s attempt to put it all in terms understandable to those of us, like me, who are not economists and who do not have a MBA.

In recent weeks we saw: (1) the federal seizure of mortgage giants FANNIE MAE and FREDDIE MAC; (2) the bankruptcy of LEHMAN BROTHERS; (3) MERRILL LYNCH’S shotgun marriage to BANK OF AMERICA; (4) the federal seizure of AMERICAN INTERNATIONAL GROUP; (5) a fall in the stock prices of MORGAN STANLEY and GOLDMAN SACHS of 24% and 14%, respectively; (6)  the downgrading of WASHINGTON MUTUAL’S credit-rating to junk status; (7) the SEC issue new rules prohibiting the practice of short selling on financial shares; (8)  the LIBOR rate jump from 3.33% to 6.44%; (9) RESERVE PRIMARY, the oldest money-market fund, post a loss; and (10) the FED, in co-ordination with other CENTRAL BANKS, pledge to inject $180 billion of short-term liquidity into the markets.

Wow, it’s no wonder that the Dow whipsawed up and down causing anyone who watched it to feel queasy.  But why was the government saving some institutions last week, and letting others fail?  There is a pattern in the government’s ad hoc response crafted and directed by Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke. Put simply: 

 * Determine if the firm is so large or integral to the financial system that to let it fail would cause a catastrophe.
 * If the answer is no, encourage a private sale, or let if file for bankruptcy.
 * If the answer is yes, then take it over and make sure that the taxpayers get first claim on the assets, and replace the current management.

Applying the above test, the government took a hard look at the books of FANNIE and FREDDIE and determined that they were woefully under-capitalized, which had been suspected, but not readily apparent due to the use of questionable accounting practices. Since these two giants buy up half of all US mortgages, to allow them to fail would not only have been catastrophic to the housing market and the overall national economy, it would have had international political and economic ramifications. Now with the explicit backing of the government the hope is the market for mortgage-backed securities will stabilize, allowing more loans to be made.

Read the rest of this entry »

We are always telling our clients and friends that Utah is the place to be for real estate and employment.  Check out the article below that talks about Provo-Orem ranking #1 and Salt Lake City #3!

WASHINGTON (Associated Press)If you’re looking for work, your best shot may be in Provo-Orem, Utah, the city with the best record of recent job creation.

That’s according to an index released Wednesday by an economic think tank, the Milken Institute, and Greenstreet Real Estate Partners.

Raleigh-Cary, N.C. ranked second and Salt Lake City, Utah came in third. Washington state also had two cities in the top 10, Tacoma and Olympia.

Six Texas cities were among the top 25 U.S. metro areas in creating and sustaining jobs, but only Austin-Round Rock, which finished fourth, cracked the top 10.

Texas cities have benefited from the large run-up in oil and gas prices in recent months, the report said, while cities in Utah and Washington saw job creation spurred by technology companies that have rebounded from the tech bubble earlier this decade.

Cities in Florida and California, meanwhile, have been slammed by the housing and construction slumps. Last year’s top-ranking city, Ocala, Fla., fell to 30th place, the report said. Riverside, Calif. fell from third to the 53rd spot.

Nine of the 10 lowest-performing metro areas are from Michigan or Ohio, the report said, reflecting the ongoing struggles of automakers and other manufacturing industries.

The Best Performing Cities Index ranks U.S. metro areas based on their ability to grow employment and wages over one-year and five-year periods.

Now’s the time to buy, my friends!  Read the article below to find learn more about why you don’t want to wait to buy your first home or maybe upgrade to a brand new one!

Home prices in Salt Lake City and other parts of Utah are more affordable than they’ve been in years, according to a national report released Aug. 19. The Housing Opportunity Index, which is published by the National Association of Home Builders and Wells Fargo, said second quarter home prices in the Salt Lake metro area were more affordable than they’ve been since 2005.

The report said that during second quarter 2008, nearly 55 percent of all new and existing homes were affordable to families earning the area’s median income of $65,300. The availability of affordably priced homes hasn’t been this high since the third quarter of 2005 when 58 percent of homes were considered affordable.
Of all the Utah metro areas reported, Ogden-Clearfield had the highest affordability ranking in the state, with 68 percent of homes being affordable to those earning the median income. That’s up from about 61 percent in the first quarter.

The Provo-Orem Metropolitan Statistical Area also saw improved affordability in the second quarter although there were fewer affordable homes in the area compared to Salt Lake and Ogden. Provo-Orem, however, is showing real improvement in terms of affordability. As recently as the third quarter of 2007, only 22.5 percent of homes were affordable to those earning the area’s median income. Now nearly 50 percent of homes are considered affordable.

Even St. George has seen huge affordability gains. In 2006, only 16 percent of St. George homes were affordable; now that number has jumped to nearly 37 percent.

UTAH HOME SALES: 8,205, down 31.34 percent from last year, up 29.99 percent from first quarter (numbers are not seasonally adjusted).

AVERAGE SALES PRICE for Utah homes: $272,576, up 0.82 percent from last year, up 0.03 percent from first quarter (National Association of REALTORS®).

UTAH HOME SALES:  down 28 percent from last year, up 6.3 percent from first quarter (numbers are seasonally adjusted).

MEDIAN SINGLE-FAMILY SALES PRICE for Salt Lake metro area: $234,200, up 0.48 percent from last year, up 0.04 percent from first quarter (Office of Federal Housing Enterprise Oversight).

PERCENT CHANGE IN UTAH SINGLE-FAMILY HOME PRICES: up 1.87 percent from last year, down 0.80 percent from first quarter.

Last week I had the opportunity to go to a feng shui class that also gave tips about how to feng shui your house to sell.  I know that many sellers are learning the value of staging their homes to appeal to buyers and I believe that adding elements of feng shui can truly help.  I found the tips below and thought I’d share them with you.  If you would like more information about feng shui or if you would like a consultant to meet with you, Jan Magner is an excellent choice.  Click Jan’s name to visit her blog and get more information.

 FENG SHUI TIPS 

Have a house to sell or looking to buy a new one? I hope you know feng shui can help you. If you plan to sell your house, or have been trying to sell it for a while, here are some proven-and-true tips to get the energy moving:

1. GO OUTSIDE - your duplex, your condo, your house, whatever it is that you are selling, and look at it from a bit of a distance. Better yet, do it with a friend who has not seen it for a while. Jot down all the thoughts that come to mind in the first 2-3 minutes.

Do not censor it or get defensive; the more open you are to criticism, the better off you will be when presenting it to other people. You might think the big purple frog looks cool by your main door and is even good feng shui (no, it is not) but potential buyers will not appreciate it. As with every sale, it is a lot about selling a specific emotion, rather than the commodity itself. Make your main entrance look fresh and inviting.

2. GO FRESH AND GO GREEN. If you own a house, definetely invest in some landscaping; it will increase your property value. Do some research and make a call to a good landscape professional; it may create a totally new energy around your home.

If you live in a duplex or a condo and there is not much “outside” to work on, focus on the main entrance and bring vibrant chi, or energy, right as you come in - a big elegant plant or a vase with fresh cut flowers, good lighting, beautiful art and a feel of spaciousness/expansion the strategic placement of mirrors is the secret here!

3. LESS IS MORE. When you shop for anything, and I mean anything - clothes, appliances, food - it is often helpful to see the item in action i.e have your skirt on a mannequin, try a sample of the food, etc. However, would you want to pay full price for a used item? Probably not. Think of it and apply it to your home - the less “personal”, or “used” you make it, the better. Show to the best how the space can be used, but do not overdo it with personal touches.

Create a spa feel in the bathroom, but do hide all your personal items (buyers do not need to know which toothpaste brand you prefer) make the kitchen smell and look good, but take it easy on how you save with recycling cans, etc etc. You get the idea.

Most importantly be aware of the “almighty” triangle when selling a home: the Kitchen, the Bathroom and the Bedroom. Buyers need to know they will sleep well, eat well, and well, unwind well if they chose to buy your home. Treat their imagination well.

A WALL STREET JOURNAL NEWS ROUNDUP
August 22, 2008; Page C6

Mortgage rates moved lower this week, according to Freddie Mac’s weekly survey.

The 30-year fixed-rate mortgage averaged 6.47% nationally in the week ended Thursday, down from 6.52% last week. The mortgage also averaged 6.52% a year ago. The 15-year fixed-rate mortgage averaged 6% this week, down from 6.07% last week. The mortgage averaged 6.18% a year ago.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.99%, down from last week’s 6.02%. The ARM averaged 6.34% a year ago. One-year Treasury-indexed ARMs averaged 5.29%, up from 5.18% last week. The ARM averaged 5.60% a year ago.

“Even with the current historically affordable mortgage rates, news continues to show signs of weakening in the housing sector,” said Frank Nothaft, Freddie Mac chief economist. “Housing starts fell to 0.965 million units [annualized] in July, the slowest pace since March 1991. As a result, home-builder confidence remained at an all-time record low in August since the series began in January 1985.”

Housing starts and building permits also tumbled in the latest data.

Next week, house-price indexes from S&P/Case-Shiller, the Office of Federal Housing Enterprise Oversight and Freddie Mac will be released, which may provide signs “of whether home prices may be slowing their descent as recent monthly indices have shown or whether the observed deceleration was temporary,” he said.

Mortgage-application volume was down 1.5% last week, according to a separate report from the Mortgage Bankers Association.