Utah Cribs » Economy Update.

Real Estate market update for Salt Lake City Real Estate..

utahcribs — Tue, 06 Jul 2010 17:01:11 +0000

It’s official — on July 2, a law was passed extending the closing date deadline for the Homebuyer Tax Credit Program. As a result, any buyer that signed a Purchase & Sale Agreement by April 30 has until September 30 to close.

The real estate market continues to rally — and interest rates on mortgages are extraordinarily low. As always, my goal is to provide updates and information that will add value to your business. It’s always a pleasure to help.

Sincerely,

Aaron Butler
aaron.butler@academy.cc

Weak Economic Growth Helps Mortgage Rates

Highlights

Average 30 yr fixed rate

Stocks (Weekly)

	The Unemployment Rate fell to the lowest level since July 2009
	The Core PCE inflation index rose at a tame 1.3% annual rate
	Consumer Confidence dropped to 53 from 63 last month
	The Fed’s Duke suggested that Fed MBS sales are a long way off

This week: -0.05%

Dow: 9,700 -400

Last week: -0.05%

NASDAQ: 2,100 -100

After dropping to the lowest level in decades last week, mortgage rates fallen even further. Weak economic data from the US, Europe, and China caused investors to question the pace of the global economic recovery. Slower economic growth was positive for mortgage rates and negative for the stock market.

Friday’s important Employment report reflected a slowly improving labor market. The economy lost -125K jobs in June, which was very close to expectations. The figures include a loss of -225K census workers who completed their temporary assignments. The private sector added 83K jobs. The Unemployment Rate fell to 9.5% from 9.7% in May, but this was due to 650K people leaving the labor force. The labor force consists of everyone in the US who either has a job or is looking for one, and the Unemployment Rate measures the percentage of the labor force without jobs.

There was mixed news in the housing sector last week. May Pending Home Sales declined 30% from April, as many buyers rushed to sign contracts ahead of the April 30 deadline to qualify for the home buyer tax credit. On a more positive note, the “close-by” deadline for the home buyer tax credit has been extended to September 30. Although the tax credit is not available for new contracts signed after April 30, extremely low mortgage rates and high home affordability levels make conditions very favorable for home purchases.

21 Things You Should Never Buy New – Yahoo! Finance

utahcribs — Tue, 29 Jun 2010 23:30:51 +0000

13. Houses: You’re typically able to get better and more features for your dollar when you purchase an older home rather than building new. Older houses were often constructed on bigger corner lots, and you also get architectural variety in your neighborhood if the houses were built or remodeled in different eras.

via 21 Things You Should Never Buy New – Yahoo! Finance.

I am always looking for interesting things in the news. This was a great article I think a lot of people need to read. Because I work with consumers directly I am constantly being bombarded with financial questions. And it really comes down to simple management. If you want me to dumb down our current economic situation it is actually quite simple. Money mangement! How hard is it to not buy something you can’t afford? Is that hard to understand? When you buy a home, you buy a home that you are qualified to purchase. Based on your income, your income to debt ratio. Now what is your income to debt ratio. For example, if you make $2000 a month, and you have a car payment and a credit card payment that equal $1000 a month. That would put you at 50%. That is what lenders are looking for.

Our Govt. hasn’t quite learned this principle yet either. So I guess I can’t be to surprised that the majority of the country doesn’t either..

ksl.com – Stocks slide after new home sales drop 33 percent

utahcribs — Wed, 23 Jun 2010 15:23:01 +0000

ksl.com – Stocks slide after new home sales drop 33 percent.

Home prices slide due to the expiration of the first time home buyer tax credit. Apprently it did inflate the number of homes selling over the last 6 months.

Interesting time, who would have thought? The big questions is, do you think they will bring the tax credit back now that they realize things are pulling back again?Some say they will, others say they should stop writing checks they can’t cash..

Remodels in Today’s Market!

brad — Thu, 17 Jun 2010 19:57:47 +0000

Hey I thought I’d run this idea by you because I think its great…

There are a bunch of homes in areas in Salt Lake County (Magna, Rose Park, Kearns, West side Salt Lake, etc) that have a great potential for remodels. The reason they have great potential is because the homes are pretty trashed and the everyday buyer in that price range does not have the cash to fix it up, and more importantly they can’t get a loan because a bank isn’t going to loan on a house in this condition. Well, some of these homes get their value hit so hard they are selling for anywhere from $50K-$100K as bank repos. However if you go in and do a quick cosmetic uplift, maybe a new vinyl exterior depending on condition, new carpet, new paint, nice cabinets (but still cheaper ones), you can turn around and sell these things for a nice profit because buyers will pay up to $150K for a home in decent condition.

I have been showing a client these places and he is going to submit a couple offers on bank repos next week and do the work himself and turn around and sell it and make anywhere from $20K-$40K depending on the deal with a 6-8 month time frame, and it usually works out to be a great return on his money. The one he has his eye on will actually be around an 18% return. The deals I have been looking at with him have all been less than $70K and need around $20K of work. In a nutshell, he is into the home TOTAL around $90,000. Then he can turn around and sell it for anywhere from $120K to $140K depending on sq footage, # of bedrooms and baths, area, etc.

Attached is sheet I made of a guy who did this all last year. He successfully did over 5 of these in the worst market most of us will ever see. I know of a few other guys who are jumping on board as well.

Here’s the advantages I see to a deal like this:

1) Not very expensive. You won’t extend yourself too much.
2) Lots of buyers. Surprisingly Rose Park and areas on the west side of Salt Lake (900 W to 1700 W) have been selling quickly and had good turnover. It’s not like trying to sell a million dollar east side home that don’t move quickly and stay on the market for a long time.
3) Return on money. I have looked at a lot of remodels this year and even for the guys who pick up a home in a better east side location usually will max out at $40K profit, but yet they need to pay upwards of $150-$220K just to get the house, and THEN they have to remodel it. The more expensive homes don’t necessarily mean better return on $$, in fact sometimes it is worse.
4) Worst Case scenario. I always like to look at deals with a worst case scenario in mind. Meaning, if for some reason you said, “Crap, I HAVE to sell this in a weekend!” We could put it up for around $109,000 or even $105,000 and you’d still make a little money and it would sell. Think about it from a buyer’s perspective. The only thing even decently nice under $120k in ALL of Salt Lake are condos and many are only one or two bedroom, so if you are advertising a 3 bed, 2 bath 1,400 sq foot home you will be able to sell it. These homes are out there.
5) Short time frames and turn around time. These remodels are quick and don’t need to be anything fancy or over the top. As long as it is nice and all the systems in the home are working, low income families will look at it and like it. You really could do most work within two months from what I’ve seen, and in some cases one month if you are working fast.

Sorry this got so long, I just think its one of the only things that makes sense in today’s housing environment as far a flips and remodels go. These deals really are selling quickly and more investors are jumping on board. I sent my client three new listings last week and all three are under contract now.

Let me know what you think!

-Brad

UPDATE 1-Senate votes to extend US home tax credit deadline | Reuters

utahcribs — Thu, 17 Jun 2010 17:26:34 +0000

UPDATE 1-Senate votes to extend US home tax credit deadline | Reuters.

Well, lucky for all those that waited. Check out this interesting article about extending the Housing Tax Credit..

BONDS | GLOBAL MARKETS

June 16 (Reuters) – The U.S. Senate voted on Wednesday to give homebuyers another three months to settle on their contracts and take advantage of a popular tax credit that sparked a rush of activity in the housing market.

The Senate, with a vote of 60-37, accepted an amendment by Democratic Leader Harry Reid that extends the closing deadline to Sept. 30 for buyers who met the April 30 deadline to have a signed contract.

The current deadline requires buyers to close by June 30 to get the $8,000 tax credit for first-time homebuyers. Existing homeowners buying a new primary residence are eligible for a $6,500 credit.

Reid offered the measure as an amendment to a bill that would extend some popular business tax breaks and extend unemployment insurance benefits for jobless workers.

The proposal would not have a significant impact on future home sales as the extension would be only for home buyers who already had a contract in hand by April 30.

The popularity of the tax credit has caused some anxiety because settlement offices are inundated with buyers trying to close on transactions by the end of this month to get the tax break. (Reporting by Donna Smith; Editing by John O’Callaghan)

First Time Home Buyer Tax Credit, Even though it is about to expire..

brad — Wed, 02 Jun 2010 20:04:23 +0000

Here are a few items for you to read about the First Time Homebuyer Credit as it applies to married couples:

An article from CBS Money Watch is attached. I have highlighted the critical section. The $6,500 they are referring to is the so called ”Move Up” credit. More details about that credit can be found herehttp://www.federalhousingtaxcredit.com/faq2.php#1. I am not sure but don’t think you would qualify for this credit. Let me know your thoughts. I don’t think you have both lived in the old house for five years.
IRS Instructions to Form 5405, which is the form to claim the credit. I have highlighted the critical section.
The actual Internal Revenue Code Section 36(c)(1) (the law) shown below.
Scenario 4 from the IRS Websitehttp://www.irs.gov/newsroom/article/0,,id=206294,00.html shown below. Other scenarios make the same point on that page.

I hope this information is helpful. Again, I am not trying to keep you from receiving any benefits. It is my job to get you all the benefits you are entitled to. At the same time it is my job to properly inform you of my understanding and knowledge to keep you from being audited by the IRS. They are watching this credit very close and auditing it very frequently. Please let me know if you have further questions and I will be happy to answer them for you.

Section 36(c) Definitions. For purposes of this section–
(1) First-time homebuyer. The term “first-time homebuyer” means any individual if such individual (and if married, such individual’s spouse) had no present ownership interest in a principal residence during the 3-year period ending on the date of the purchase of the principal residence to which this section applies.

S4. If husband and wife wanted to sell the home that the wife owned when they got married, and the husband had not owned a home within the past three years, could he qualify as a first-time homebuyer for the credit even though the wife would not qualify?

A. No. The purchase date determines whether a taxpayer is a first-time homebuyer. Since the wife had ownership interest in a principal residence within the prior three years, neither taxpayer may take the first-time homebuyer credit. Section 36(c)(1) of the Internal Revenue Code requires that the taxpayer and the taxpayer’s spouse not have an ownership interest in a principal residence within the prior three years from the date of purchase. The husband may not take the credit even if he filed on a separate return.

Stocks rise after pending home sales top forecasts

utahcribs — Wed, 02 Jun 2010 15:36:13 +0000

ksl.com – Stocks rise after pending home sales top forecasts.

So some good news, the stock market is reacting to the good news in the Real Estate market. I hve a hard time keeping the good/bad real estate news straight. It really doesn’t make sense to me sometimes.. And I am a local Real Estate Broker in Salt Lake City UTAH.. Real Estate is so volatile, just like every other aspect of the financial world we find ourselves in. Who’s to say its good or bad. The fact of the matter is, I am busier right now then I ever have been. Now, what do I think is going to happen in the coming months. Well bottom line, interest rates are at an all time low. Which I am amazed at, affordable housing I think has hit its bottom in Utah anyway.. However, the upper end homes along the wasatch front? That is a completely different beast. I think current owners of those types of properties are chasing the market down. They will see another 10% drop in home prices.. People just can’t afford those types of homes. So get ready for anoher roller coaster, becasue it is coming fast..

Tax credits fuel 6 pct. rise in April home sales – Yahoo! News

utahcribs — Wed, 02 Jun 2010 15:27:54 +0000

Tax credits fuel 6 pct. rise in April home sales – Yahoo! News.

Some interesting articles have been coming out about an increase in home sales.. You know many people in the industry are having mixed feelings about what is to come in the coming months? I have heard in Salt Lake City UTAH, some people are talking about another 10 percent drop in Real Estate prices. Now that is in the upper priced properties, but wow that will be a shock if that happens..

Thoughts

Bank REPO’s in UTAH

Huntsman family acquires Sothebys real estate franchise – Salt Lake Tribune

utahcribs — Wed, 12 May 2010 14:31:02 +0000

Huntsman family acquires Sothebys real estate franchise – Salt Lake Tribune.

Huntsman Family acquires Sotheby’s Franchise in Idaho and Wyoming. The luxury Real Estate Brad of Sotheby’s international has a new owner.. The Hunstman Family.. Many in the Salt Lake Valley are familiar with the household name of the Huntsman’s..

Interestingly, the Hunstman Family has decided to become a franchise owner of the Sotheby’s Brand. I think this is a great idea, NOt just because I am a broker for Sotheby’s Salt Lake office, but rather I have seen their Huntsman Springs project, and the Luxury Real Estate market share Sothebys has on the United States is unsurpassed. Which will help them sell their project.. I welcome them to the family.

Foreclosures Hit Rich and Famous

utahcribs — Mon, 19 Apr 2010 18:21:35 +0000

Foreclosures Hit Rich and Famous – WSJ.com.

So I thought to follow up with my earlier post today about Luxury Yachts, You all would enjoy to know even the Rich and Famous are suffering through this down Turn.

Apparently they can no longer afford the 20,000 sq. ft. mansions they call their 3rd homes! The one thing the article does not point out, is most of these guys get foreclosed on and because it was a portfolio type of a loan or whatever, it usually doesn’t even hit their credit. Which obviously wouldn’t matter, because most of the time, just because they are getting foreclosed on doesn’t mean they don’t have any cash. So as this article may portray they are hurting as the common person in society today, the rich and famous are not going to get any sympathy from this reader..:)

There are going to be some millionaires made in this recession, some of the properties are going to be sold for a steal. And when the market comes back, oh and you know it will because we are Americans and we have a very short term memory, they will sell for a bundle.. Enjoy..