Sally's Blog

The ski season is beginning to wind down with a month and a half left before Deer Valley closes.  But as spring approaches, so too does the seasonal pick up in Real Estate activity.  While other parts of the country still see their markets languishing, things are picking up in the Park City area—check out these figures for January and February:

• The number of Single Family homes sold in this time period in 2009 was only 16.  This year we’ve had 26, which is a gain of 63%
• In 2009, 35 condos sold in the first two months of the year.  In 2010 66 sold, which is a gains of 89%
• Even more significantly, land has started to sell after being virtually dead.  In 2009, 2 lots sold and this year 15 sold.

What are the possible reasons for all this positive activity?

• Prices are getting close to levels that buyers feel confident with, yet it’s worth noting that current prices are only down to 2005 levels.
• Inventory levels are down 20-30% from this time in 2009.  However sellers need to be cautioned about increasing their prices in the false belief that the increase in transactions will translate into higher prices—still way too many choices for buyers.  And there are still lots of short sale and bank owned transactions holding prices down.

Just as in the stock market, trying to time the market is generally a losing proposition, but it sure looks like now is the time to buy and realistically priced homes should attract buyers.

Meanwhile the skiing is great and we usually get lots of snow this time of year.  Later in the month you can often ski in the morning and golf in the afternoon—unless, of course, you are a busy Realtor!

Cheers, Sally

In the midst of all the negative data about the housing market this past year, one significant aspect has been overlooked it seems.  We often talk about pent up demand during down turns and to be sure, that is definitely a force.  However, according to a recent article in Forbes, population growth vs. housing starts is another major issue:

The focus of the U.S. real estate market lately has been the number of foreclosures and people trying to purchase cheap housing. But Brian Wesbury, chief economist at First Trust Advisors, says that if Americans don’t start focusing on building new houses, the market will have a much bigger problem on its hands.

"We need one and a half million houses per year just to keep up with population growth," Wesbury said in an interview with Steve Forbes. "And then if you throw in, you know, fires and tear-downs and just worn-out properties, we need 1.6 million or more per year. Right now, we’re down to about six and a half, seven months’ inventory whether you look at new homes or existing homes."

Privately owned housing starts in December 2009 were at a seasonally adjusted annual rate of 557,000, according to the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4% less than where it was in November, which had 580,000 housing starts.

So if new houses aren’t being built at a rate to keep up with attrition and population growth, what does that do to the existing home market?  It puts buying pressure on it which is sure to drive prices up or at least off set some of the foreclosures yet to come.  Sure, prices in our area have come down, but in many cases only to where they were three or four years ago.

Cheers, Sally

We’re a bit behind on our snowpack as we just can’t seem to get some big storms in here.  The big storms are all going to waste in the mid Atlantic and Southeast!  But it’s snowing today so we’ll take what we can get. Temperatures are beginning to moderate and the days are getting longer.  And speaking of moderation, there was this note in the Wall Street Journal yesterday:

Home prices rose in more than a third of U.S. metropolitan areas in the fourth quarter, the National Association of Realtors said Thursday as it pointed to a "broad stabilization" in values.

The median price for single-family home resales was up from a year earlier in 67 of the 151 U.S. metropolitan areas included in the trade group's quarterly survey. But other housing analysts say the home-price trend depends heavily on any recovery in the job market and on the pace of foreclosures.

The national median price for single-family homes was $172,900 in the fourth quarter, down 4.1% from a year earlier. That was the smallest decline in more than two years.

Little by little, we seem to be pulling out of the housing dumps, so it will be interesting to see how the spring buying season goes this year.  Judging on the activity we’re seeing now in this area, things are definitely picking up—still a number of overpriced properties, but plenty of good buys also.

Cheers, Sally

We’ve just entered the best month for skiing, in my opinion—great snow, longer days and moderating temperatures.  And it appears that the Real Estate crisis is moderating, even in commercial Real Estate where some have worried about “another shoe to drop”.  But that may not happen according to a recent article in Forbes:

According to David Joy, chief market strategist for RiverSource Investments, "There has been a significant degree of price deterioration in commercial real estate already, but the pace is moderating."

Joy expects the market will be close to bottom around mid-year, and expects prices will finally begin to inch higher as money slowly begins moving off the sidelines and back into the sector: "So no, we do not believe that commercial real estate is the next shoe to drop, but rather that most of the bad news is already reflected in stock prices, including bank stock prices."

So it would appear that the concerns about the commercial Real Estate market imploding thereby dragging the residential market down have moderated with a number of analysts pointing to Real Estate as a good investment now, both in hard Real Estate and REITs.

Analysts can be wrong, to be sure, but compared to this time last year the general outlook has improved considerably.

Cheers, Sally

Here we are in the dead of winter; getting lots of snow and things are heating up in the California Real Estate market.  Why should we care here in Utah?  Because California is a feeder market for our resort community properties.  Here’s what the Wall Street Journal said:

SAN FRANCISCO—California's inventory of unsold, previously owned homes shrank to a five-year low in December, in another sign that the state may be coming out of its worst housing slump in decades.

The supply of unsold single-family homes dropped to 3.8 months from 5.6 months a year ago and 16.6 months in January 2008, when inventories were at a peak, according to estimates released Friday by the California Association of Realtors. The inventory levels are now at their lowest level since 2005, resulting in frenzied sales with multiple offers in some cities.

California's housing market is closely watched because it is the nation's biggest and helps fuel both the state's economy and the national building industry. With California still weighed down by economic problems, including a 12.4% unemployment rate, higher than the 10% rate nationwide, economists are looking at bellwethers like housing to determine when California will rebound.

"I'm convinced that once the general public believes prices have bottomed out and are coming up, more people will put their homes on the market," said Andrew LePage, an analyst at MDA DataQuick, a housing-data provider in La Jolla, Calif. "And that will probably coincide with the economy and job market improving."

The Standard & Poor's/Case-Shiller home price index released Tuesday inched up 0.2 percent to a seasonally adjusted reading of 145.49. That’s because other feeder markets such as Florida and Arizona are also improving.  So, have we moved just past the bottom of this market?  Certainly, only time will tell, but the signs are encouraging…

Cheers, Sally

Finally it’s snowing again—good for skiing and our water year.  And while this market is excellent for buyers, you need to be aware that with all the competition amongst sellers, there may be some pressure to fudge the facts about a house to get it sold

Here are some of the common misrepresentations and white lies that buyers may hear as they shop for a house, according to real-estate experts and state regulators:

• "This house is on two acres." Disputes about property dimensions—how many square feet in a house or condo, or its exact boundaries—are common. Sometimes buyers don't learn the exact dimensions until the lender's appraisal. Smaller dimensions also can cause an appraisal to come in lower than the agreed-upon purchase price. Low appraisals are a leading cause of ruined deals in today's market. A properly worded appraisal contingency in the purchase contract would allow you to scuttle the deal or find other financing if the appraisal comes in low.

• "We don't have pests." A basic home inspection generally doesn't include a peek inside walls or underground for termites and mold, which are among the top complaints. Inspections for mold and radon gas also generally aren't included; usually buyers must order these inspections separately. Other inside-the-wall problems include faulty wiring and old plumbing, which also may require specialists.

• "This place never floods." Even arid states such as Arizona and New Mexico have occasional flash floods, and water and drainage problems aren't always obvious.

• "Taxes and maintenance costs are low." Home buyers often gripe about tax and utilities bills that are higher than sellers said they were. Homeowner association and condo dues and assessments are also common complaints. Sometimes sellers simply underestimate the bills, or forget to include recent or expected increases, agents and brokers say. Taxes can also be deceptively low because of unrecorded improvements like decks and finished basements. Ask to see recent bills, and check with the tax assessor's office for up-to-date information.

• "This is a quiet neighborhood." Sellers may play down distractions that could drive you crazy, such as barking dogs or idling buses. A charming park by day could be a teen hangout at night. Your best bet is to view a property at different times of the day—especially evenings and weekends when you are more likely to be there.

It can be difficult to dig into the details when you find a home you really like, but you need to do your due diligence, just as you would with any financial investment.

Cheers, Sally

It’s been a while since we’ve had any new snow around here and the ski runs are getting a tad hard or rocky depending on whether you are skiing groomed runs or not.  So we’ll probably pay for this with snow storms in the spring when we’re ready for warmer weather.  Like unwanted spring snow storms, unplanned repair expenses on a house can also be unpleasant.

Houses have seem to have the nasty habit of coughing up expensive problems when we least need them.  Many buyers will use too much of their cash to get into that nicer, bigger house only to learn this painful truth. As a rule of thumb, furnaces have a 12-15 year life, water heaters around 10, but there are many other gremlins lurking like roots in the sewer or mold developing from an unseen roof leak.  Even fancy new houses have their boxes of tricks to spring on owners like settling causing a water main to break, etc.  If you don’t have the cash set aside to deal with these issues, getting a loan in the current credit market can be difficult, if not impossible.

Many experts recommend that you have at least 1% and preferably 2-3% of the value of your house set aside to handle unforeseen repair emergencies.  Recently, we had to replace the water main between our house and the street to the tune of many thousands—ouch!  For planning purposes, here is very useful web site that has estimates for life expectancies of various home components:  LivingWithMyHome.com  It’s sponsored by Pillar to Post, a home inspection company.

We have a great buyer’s market underway, so you can find that wonderful home and still keep a decent cash cushion to care for it down the road.  Can’t say that we have as much control over the weather….

Cheers, Sally

So here we are with a new year and a new decade.  And many wonder about the Real Estate market, particularly in light of the recent data reflecting a significant sales drop in November.  It’s easy to get skittish about home buying in the current economy, but Brett Arends of the Wall Street Journal wrote in a recent article:

…long-term fundamentals are more important than the short-term noise. And it's generally a mistake to pay too much attention to doomsayers or to overthink these things.

Here's some home truths.

Real estate prices in the Case-Shiller 10-city index have now fallen by a stunning 30% from their 2005 peak. Nothing like it has been seen since the Great Depression–and, according to some sources, not then either. Obviously for anyone who bought a home at the peak of the market this has been a disaster. But for those thinking of buying a home now this is exceptionally good news.

And at the same time, mortgage rates have also plummeted. In 2006 you had to pay an average of about 6.4% on a 30-year fixed loan, according to the Federal Reserve. Right now you can get deals for about 5%.

Net conclusion: On average, a home now is as cheap as it was in the mid-1990s, when houses were an absolute steal.

If you buy an average home today, and take out a 30-year mortgage at 5%, the annual bill for interest and repayment of principal will come to about 19 times typical weekly earnings (If you get the $8,000 refundable tax credit too, it drops below 18 times). …we haven't seen it that low since the early 1970s.

You can hear the objections. Doomsayers ask: What about these waves of mortgage resets coming in the next two years? What about all the unemployment? And the foreclosures? And so on.

These are all valid arguments for refusing to buy homes when they are expensive, or even averagely priced. But the whole point about markets is that they adjust. Prices are now cheap. They reflect this bad news, and more. If you have a stable income, and you can get a 30-year mortgage at 5% or so, and you are willing to drive a hard bargain on a home in this market, this is your time.

Brett went on to say that outside of the hotspots (Miami, Las Vegas, Phoenix) housing is a buy.  I guess it’s all in your perspective.  In the Park City-Heber area, we’re definitely seeing a significant pickup in the Real Estate market.

Cheers, Sally

Here’s hoping you have a merry Christmas and a Happy New Year!  This year has been surprisingly good in my Real Estate business, particularly the last half of the year and I want to thank all my clients for your support.

There seem to be many signs of an improving market—more buyers and reducing inventories coupled with prices that seem to be stabilizing a bit are reasons for optimism.  In fact, an article in Realty Times referred to a recent speech by Ben Bernanke at the New York Economic club. For some strange reason, his comments received little notice:

Speaking to the Economic Club of New York, Bernanke described some of the well-known problems standing in the way of economic growth -- especially double digit unemployment and consumer confidence that's shaky week by week at best.

But buried away in his speech he said: Housing in the coming year is going to be a relative bright spot - a helpful driver of national economic growth, rather than the wet blanket it's been for the past couple of years.

Think about that: Home sales and new home construction, at least according to the Fed, are likely to stimulate the economy in 2010 -- enough to generate jobs and help avoid a double-dip recession.

That forecast just happens to track nicely with another that came out last week: Fannie Mae issued its projections for the coming year -- and predicted that housing sales will jump by 11 percent -- even in the face of a slow recovery for the economy as a whole.

We’re all a bit shaky on economic forecasts as the result of the past several years, but these comments seem to track with what I’m seeing in the local market.  And with ‘feeder markets’ like California picking up, that also helps our resort properties. 

So the Real Estate market is but one of many reasons to be of good cheer this holiday season!  We’ll talk to you again next year…

Cheers, Sally

We are still finalizing the paperwork, but I have agreed to become a part owner of Re/MAX Park City! (www.pcmountainproperties.com).   I will be working with our principal broker, Ron Wilstein, to further strenghten the many benefits we offer to our clients.

For my clients, this means an enhanced marketing presence and the confidence that you will be dealing with an owner.  With declining Real Estate inventories and a gradually improving economy, we look forward to a great 2010!

Sorry for the personal horn toot, but I couldn't resist.

Cheers, Sally