The housing market in northern Utah looks healthy. We have half as many homes on the market as we did at the peak of the crisis in August 2008, when we had over 8600 homes on the market. All indicators point towards a continued mild recovery.

As of January 1, 2012, we have 4,750 homes and condos for sale in Salt Lake County. 1,470 are listed as short sales and 153 are REO bank owned properties. We have consistently had 1/3 of the properties in our market listed as distressed, or lender mitigated. 11,177 homes and condos sold last year and there are another 1,324 sales pending. The absorption rate is down to six months! A far cry from the 18 months we once had. Interest rates re still hovering at or below 4%. Economists don't see this changing in the foreseeable future.

Happy New Year!

Here are three Reasons why you should get off the fence and buy a home now.

Do not wait before taking the plunge into homeownership.

1. The 30-Year Mortgage May Disappear

There has been much debate regarding government's role in providing support for homeownership. There are several experts who believe if Fannie Mae and Freddie Mac's roles are eliminated, or even limited, it may be the end to the 30-year mortgage. This concern is addressed in MSN Real Estate's, Is it curtains for the 30-year mortgage?

2. QRM Requirements Could Be Much More Stringent

Here are proposed changes to the requirements for a 'qualified residential mortgage':
• Certain mortgage types would be eliminated
• You would need to put a minimum of 20% down
• You would need a minimum 690 FICO score
• The ratios of income to both the mortgage payment and overall debt would become much more conservative (28% and 36%)
There would be loans available to purchasers who don't qualify under the new rules. However, they will probably be more expensive to the buyer (both in rate and costs).

3. Rents are Expected to Increase

The supply of available rentals is decreasing and the demand is increasing. That will lead to an increase in rental costs throughout the year. The Wall Street Journal recently quoted a report by Reis, Inc in which it states, "Expect vacancies to continue declining, and rents rising through the rest of 2011 at an even faster pace."

Home prices in Salt Lake and across the nation are still falling, but the good news is that Salt Lake's median home price is now about three times the state's median household income of $59,000.

Historically, lenders used the three-times income rule as a rough guide in determining how much a home buyer could afford, according to Kay Ashton of SWBC Mortgage Corp.

Salt Lake's median home price (all housing types) in the first quarter was roughly $187,000. Based on the three-times income rule, if a household earned the state's median income of $59,000 they could qualify for a home around $180,000. With today's low mortgage rates, that amount would likely be higher.

Of course, the three-times income guideline is only a general rule of thumb. It doesn't take into account other debt or down payments. But it does show that home prices are finally within reach of more households.

A report by Zillow.com today said home values across the U.S. fell 8 percent in the first quarter compared to a year ago and are down 3 percent compared to the fourth quarter.

Zillow's Home Value Index does not include Salt Lake City. However, according to Utahrealestate.com, Salt Lake's home prices are following a similar trend. Home prices (all housing types) in Salt Lake fell 9 percent in the first quarter compared to last year and were down 7 percent compared to the fourth quarter.

Salt Lake's median home price (all housing types) was at $186,900 in the first quarter, slightly higher than Zillow's national median price of $169,600.

All of this negative news on housing prices have some analysts going against the grain. According to Brett Arends of MarketWatch, there are too many bearish reports that make it hard not to be a "contrarian bull."

"I have absolutely no idea when real estate is going to hit rock bottom," Arends said. "It may take several years. I suspect it will do so in different markets at different times. But there are good homes out there going really cheap. If you hunt down the bargains, you're disciplined about price, you get the right financing, and you hold on for five years or more, you'll probably do pretty well from here."

Tthe Greater Salt Lake County Absorbtion Rate as of March 1, 2011, including February 2011 home sales figures are as follows:

Active Listings 6,476
Homes sold in the past year  10,255
Homes currently pending (under contract)   1,340
Listings that expired in the past year 12358

New listings in the last 30 days   1,516
Homes sold in the last 30 days    579
Home pending (under contract) in the last 30 days  812
Listings that expired in the last 30 days   947

Salt Lake area Absorption Rate (months supply of homes) 11.2

The following is a snapshot of pre-foreclosure short sales:

Active short sale listings    1,745
Homes sold in the past year that were short sales    1,388
Short sale homes currently pending (under contract)  232
Short sale listings that expired in the past year   2,503

New short sale listings in the last 30 days  317
Short Sale homes sold in the last 30 days  102
SS sales pending (under contract) in the last 30 days  128
Short Sale istings that expired in the last 30 days 218

Salt Lake area Absorption Rate of short sales (months supply of homes) 17.1

Conclusions

26.9% of all Active Listings are Short Sales
13.5% of all Sales Last Year were Short Sales
20.3% of Short Sale Listings ended up Expired Last Year

20.9% of New Listings in Last 30 days are Short Sales
17.6% of all Listings Sold in the Last 30 Days were Short Sales
15.8% of all Pending Transactions (Under Contract) in Last 30 Days are Short Sales
23.0% of all Listings that Expired in the Last 30 days were Short Sales

The previous information was derived from the Wasatch Front Multiple Listing Service MLS

In January 2011, we only saw 468 home sales in Salt Lake County, but 679 transactions went under contract and are pending.  Of the 468 homes sold, 75 were short sales.  We currently have 6420 residential properties for sale and a 12 month absorbtion rate.

Michael Hoffee is no longer with Rocky Mountain Realty.  He has started a new real estate brokerage in Sandy Utah specializing in residential real estate.  The new firm is Wasatch Mountain Realty.  They assist both home buyers and sellers with relocations, short sales, foreclosures, luxury properties, second homes, ski properties, and commercial property, and investment acquisitions.  Wasatch Mountain Realty is headquartered in Sandy, and services all of Salt Lake County, including Sandy, Draper, Cottonwood Heights, Holladay, South Jordan, Riverton, Herriman, Murray, Midvale, Sugarhouse, the Avenues, and of course Salt Lake City.  WMR covers Park City and Deer Valley in Summit County. In Utah County, the cities of Alpine, Highland, Cedar Hills, Saratoga Springs, and Lehi are well represented.  The new website is http://www.WMRutah.com and Michael's new email address is Michael@WMRutah.com .  The office phone is 801-571-5001 and the office fax is 801-571-6001.

Utah Housing Corporation has announced today that its interest rate on home financing has increased to 4.875%. Along with their rate announcement they have made a policy change for how long their rate is valid. Here is their statement:

“In recent years, Utah Housing has announced interest rate changes effective for one full week each Friday. Effective immediately, UHC will no longer guarantee the announced rate for a full week and may announce rate changes more frequently. The most current rate will continue to be posted on UHC’s website and broadcast via email.”

Home buyers planning to use Utah Housing financing should understand that Utah Housing can change their rate at any time and lenders cannot guarantee a rate until a Mortgage Purchase Agreement is requested and an MPA is not requested until the loan is credit approved for a Utah Housing loan.

Utah's foreclosure rate is finally showing signs of dropping, according to a new report by the Mortgage Bankers Association.

At the end of this year's third quarter, the percent of Utah loans that had been foreclosed (bank-owned) fell to 3.23 percent, down from 3.35 percent in this year's second quarter.

Foreclosures had been climbing in Utah for the past three years -- since the third quarter of 2007 when the rate was at 0.66 percent. Utah's foreclosure rate peaked in the first quarter of 2010 at 3.43 percent, according to the MBA report. Since then, Utah's foreclosure rate has steadily fallen over the past two quarters.

Still, over the past 12 months, Utah's foreclosure rate has exceeded the 3 percent mark, a level that hasn't been seen in the state since 1979, when MBA started keeping foreclosure data. In addition, foreclosure starts in Utah reached an all-time high in the third quarter at 1.35 percent of all outstanding mortgages.

Other states also are seeing slight declines in the foreclosure rate. Florida, which had a foreclosure rate earlier this year above 14 percent, has seen its rate decline to 13.68 percent. Nationally, the foreclosure rate in the third quarter was 4.39 percent, down from 4.57 percent compared to the second quarter.

T'is the Season to be Jolly (think positive) ~ turn up the heat, and turn up the price

Contrary to what some Utah home sellers think, I believe there is no better time of year than right now (November through January) to put your house on the market if you are considering selling it in the near future. The gardens have been cleaned up for the winter, the lawns have had their final manicure of the season, the garlands and outdoor decor has been put into position, and soon the interior will smell of baking goodies and wassail.

Why is this a good time of year to sell?  There is often a lack of inventory of homes for sale on the market during the timeframe immediately following Thanksgiving, and this can put homeowners thinking of selling, in an envied position.

Lack of homes on the market often means, aside from maybe getting a higher sale price from real buyers (yes they are always out there) - the ones that must buy to fulfill obligations they have personally undertaken, such as having sold their own place already, not thinking about what might be available for them to choose from elsewhere, in a different market area (even across town) - and they are ready, willing, and able to buy your house.  There are other people having special reasons for needing to buy at the moment, often looking for a quick closing, who are sometimes prepared to pay a premium, just to bring their house hunting to an end.

Let’s not forget the snowbirds looking for a second home in Park City , or a permanent home in Sandy, Draper and Cottonwood Heights for that matter, close to the greatest snow on earth!

And guess what? As a homeowner taking advantage of the season and all the community twinkling of lights, you might even get a boosted price for your property, rather than waiting until February to go to market, and possibly competing with your neighbors whose houses will come on the market then too, at variable prices. And those asking prices might be less than you could currently get for yours.

Your home will never show better than during this season of jewel tones that permeate the atmosphere making such a beautiful show. And it might just happen really fast for you. No muss, no fuss, and a quick sale at a great price.

It would be ideal to leave festive interior lights on for viewings, such as the Christmas tree and lighted garlands, and perhaps a fireplace turned on -BUT- only if you are just stepping out when the potential buyers arrive and staying outside, next door or across the street while the showing is taking place, so you can keep an eye on your house and return immediately following the showing.  Making your selling atmosphere optimal is never worth doing dangerous things, like leaving an unattended fire and tree lights plugged in.

For Fresh Air: bring half a cup of apple cider to a soft boil, then turn it off.  Toss in a cinnamon stick, a bay leaf, and a pinch of nutmeg.  Cover and let sit on a back burner, turned off.  Don't drink this, just keep it warmed before viewings.

This is a completely natural way to enhance the air.  By the way, even in winter, open a window for fifteen minutes each day, even on cold days, to change the air around in your house, so it doesn't smell stuffy to visitors, and if anyone has a cold it helps to chase away the germs.  There are magical pots available in shops throughout the season, but this is inexpensive and serves the purpose well. Can be reused indefinitely and does not impact the atmosphere negatively with chemicals.

This all could help bring the magical gift of a SOLD SIGN to your house for Christmas, and perhaps help you establish a new (high) norm in pricing for your neighborhood.

Is it time to take advantage of the market?

There is a BIG nasty surprise awaiting a number of people starting in 2013 that has NOT been mentioned by the media. Under the new Health Care Law, single taxpayers who earn over $200,000 of Adjusted Gross Income (AGI) or married taxpayers filing joint returns who earn over $250,000 get hit with a major surprise. They will have to pay a new 3.6% Medicare surcharge on all interest, dividends, royalties etc. This seems to be covered by the media. What has NOT been mentioned is that this Medicare tax also applies to capital gains. Thus, it applies to stock and bond sales, mutual fund gains and sales etc. In addition, it could even apply to the sale of your principal residence on all appreciation beyond the first $500,000 of gain.

Example: John and his wife earn $275,000 a year. John sells his home for a $1,000,000 profit. He can avoid tax on the first $500,000 of gain. John not only pays capital gains tax on the remaining $500,000 but also pays an additional 3.8% surcharge.  If John were selling his second home, there is no exclusion. Thus, he pays this tax on all gain.

This is a major bomb for those of you with substantially appreciated real estate. You might want to consider selling your home or second home before 2013.