Let's get back to basics. Before the crazy days of 20% annual appreciation, people used to buy houses to have a place to live! The average net worth of renters is $4,000; the average net worth of homeowners is $184,000. Historically, homes have appreciated at 5% per year. But even if property does NOT appreciate (which is unlikely), here are some reasons why it makes more sense to buy than rent:
Debt Pay Down--A fixed mortgage payment will not change over time but rent will increase with inflation. Over time, the principal will be paid off while renters will have no equity.
Tax Incentives--Mortgage interest and property taxes are deductible. The goverment wants you to own instead of rent and provides incentives.
$8,000 Federal Tax Credit--I have clients borrowing downpayment money from their parents until they receive their tax refund next year.
Utah Home Run Grant Program--Provides a $6,000 grant for those buying new construction. Some buyers may qualify for both the $8,000 tax credit and the $6,000 grant.
Record Low Interest Rates--You can get a fixed rate conventional mortgage for about 5%. That's almost free money!
FHA Loan Programs--You only need 3.5% and sellers will often pay all closing costs!
Buying instead of renting makes more sense today than ever. There are some great deals in Park City right now. If you are a first time buyer or the parents of a potential first time buyer, I urge you to contact me to learn more about the great opportunities available. Greg Cutt and I are hosting a First Time Home Buyer open house on May 14th. It's free and open to the public!
NEW YORK TIMES HAS THEIR DATA RIGHT BUT THEIR ANALYSIS ALL WRONG.
"No End Yet for Downturn in Housing, New Data Suggest"-This is the headline of an article published by the New York Times this morning (http://www.nytimes.com/2009/04/17/business/economy/17econ.html?partner=rss&emc=rss). The article suggests that the twin signals of decreased new construction and increased foreclosures signal further trouble in housing. In my opinion, the writers may have the data right but their analysis is all wrong. Everyone knows that there is currently excess inventory in many housing markets. Until this inventory is cleared, prices will not be able to go back up. Increased new construction would only prolong the pain. In terms of foreclosures, what the article mentions half way down is that "cheap, plentiful houses and lower mortgage rates have drawn buyers back to the market, and an industry group says homes are more affordable than ever before." Once again, the glass is either half empty or half full, depending on your situation. If you are a first time buyer who can finally afford to buy a home and get a record low 30-year fixed interest rate, your glass is half full. If you speculated that the investment home you bought at pre-construction prices would double in value by the time it was complete, your glass may be more than half empty. In Park City, the market where I work, we are seeing a massive decrease in new construction and more short sales and foreclosures, although distressed properties still make up a small segment of our market. We are seeing incredible opportunities for buyers. Sellers who have owned property for 4 or more years are seeing nice profits on their real estate investments. I realize the New York Times in the business of selling newspapers, but this type of sensationalized reporting creates stress and panic instead of an understanding of market forces.
THE NEW "MUST HAVE" QUALITY TO BE A SUCCESSFUL REALTOR: PATIENCE...
I just put two properties under contract this week. I wrote 5 offers for one of the buyers and 3 for the other (two on the same property). I am working diligently on another transaction where we have gone back and forth six times. Another client wrote an offer on a home last October and was unable to come to agreement with the sellers until February! I have been working with two developers since November and they still haven't finalized either of their deals. This is NOT the way people used to buy and sell property. You wrote an offer, went back and forth a few times and closed a month or two later. The financial crises of 2008 have changed everything. Realtors who haven't or won't get with the new program will find their clients frustrated and unhappy. It takes a Realtor with patience and an "I never give up" attitude to get the job done in 2009.
"New-Home Sales Rebound After Record Low in January""Home Prices Rise for First Time in a Year, FHFA Says"-Surprise! These two headlines from http://www.marketwatch.com appeared this week, not two years ago.
Real estate is selling!
Let me explain it this way. A couple of weeks ago, while visiting the Tanger Outlet Mall in Park City , I bought a dress and 3 shirts from one of my favorite stores. Although I wasn't really in the market for new clothes, I could not resist the 70% off sale. Did I look at the clothes on the "regular price" rack? No. Was the store crowded? Yes. Which racks do you think the other shoppers were looking at? I'm sure you know the answer.
Let's go back to those headlines. Real estate is on sale! The inventory of foreclosures, short sales and otherwise distressed properties is selling! This inventory needs to be cleared out before people start buying regularly priced inventory. This is great news for everyone! Buyers are snapping up excellent deals; distressed sellers are getting out of properties they can't afford; and when this is over, regular sellers won't have to compete with distressed properties and prices will go up. Remember, retailers clear their inventories by putting them on sale. That's what is happening with real estate TODAY. The question is, do you want to buy property on sale or do you want to wait and pay retail?
A wellness survey ( http://www.ahiphiwire.org/WellBeing/News/Default.aspx?doc_id=259977) ranked Utah as the state with the highest "well-being" due to the excellent outdoor activities and a younger population. The next states were Hawaii and Wyoming. It comes as no surprise to those of us who live in Utah full time or part time. Outdoor activities appealing to people of all ages and fitness levels abound. In the winter we have snow shoeing, alpine and nordic skiing, ice skating, tubing, sledding and snow mobiling. Spring, summer and fall provide incredible settings for mountain biking, hiking, fly fishing, golf, running, white water rafting and boating. I would argue that Utahns are happier not only because of the myriad of activities, but also because we live in one of the most beautiful settings imaginable. The open space, nature, views and abundant wildlife create a relaxing atmosphere full of negative ions. With softening real estate prices, this is a great time to find your little piece of heaven in Park City, UT.
The number of home sales is down, and even in robust Park City, only about one-third of homes listed for sale actually sell. If you are serious about selling a home in, it must look its best. Think of it as a beauty contest or a job interview. Would you show up for a job interview in tattered clothes? Would you sell a car without getting it detailed? New paint and carpet are the two most valuable improvements because they establish a clean first impression. Decluttering and depersonalizing are also important. Buyers need to picture themselves living in your home. Buyers do not want to picture themselves living in a messy home full of someone else's stuff. Remember, the home that is perceived to be the best value in its class will sell the quickest and for the highest price. [We work with accredited staging professionals to ensure all of our listings look their best.]
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How many times have you seen these words when it comes to investing? How many times have you followed this advice? It takes courage to buy when everyone else is selling. I recently came upon the following story by Robert Kiyosaki (author of "Rich Dad, Poor Dad" and many others): In 1989 Kiyosaki and his wife set a goal of buying two rental houses per year for ten years. They were buying real estate in Phoenix at a time when the housing market was crashing. They found so many bargains that they bought five homes in their first year. Five years later, the housing market recovered and these homes formed the base for Kiyosaki's retirement, or, as he calls it, "financial freedom". In hindsight, it makes so much sense. Buy low and sell high. The reality is that it takes foresight and guts to move in the opposite direction of the herd.
Trying to pick the top and bottom of any market is tricky for the best investor. If you have the means, desire and fortitude, this is a great time to hunt for bargain properties. You can take your time and negotiate your best deal. Sellers understand that the leverage has moved over to buyers and are more flexible. Interest rates are still at record lows and as long as you have some money for a down payment, lenders are still in the business of lending money.
Flagstaff - A New Project at Empire Pass at Deer Valley
East West Partners, developers of the Village at Empire Pass, recently announced the sale of its Flagstaff Condominium project at Empire Pass. The 37 units will be completed in the late spring of 2009. Finishes include walnut floors, travertine floors, copper tiles, marble countertops, 2-3 fireplaces and a "bunk room" which features separate contained beds with curtains and mini-flat screen televisions, internet access and DVD players. There will also be additional owner amenities, including a pub, a daily continental breakfast and exercise room, and a live-in groundskeeper and full time concierge. Prices range from $2 million-$6 million. John Calhoun, Vice-President of Sales and Marketing with East West Partners, told the Park Record, "We're at the highest end of the game. This is expensive real estate. They are marketed to very successful people who are rewarding themselves for their successes." The project is ski in/out and owners will automatically become members of the Talisker Club and have on-mountain access to The Tower Club.
While some real estate markets around the country are faltering, the Park City real estate market remains strong. Our robust local economy coupled with easy airport access for second home owners continues to attract new buyers to our area. And who can blame them? The dramatic beauty, rich culture, incredible year round recreation and friendly locals create one of the most desirable communities in the nation. There is no question that Park City is a unique and special place.
The only market that matters is the one that you are planning to buy or sell in. And the story in Park City is not the same as in other locales.
· Utah has the lowest unemployment rate in the U.S. causing in-migration of workers (85,000 people added to the population last year).
· Deer Valley was ranked the #1 ski resort in the U.S. for the third time
· Salt Lake City had the largest median home price increase in the U.S. for 2007.
· Utah has the strongest economy in the U.S.
· Salt Lake City had the most jobs added of any U.S. city.
(as reported on January 7, 2008 in an article by Matt Woolsey, Forbes.com).
Overall Sales Volume of 2007 BEAT 2006 by 3%. Park City had its second best real estate year in 2007. In 2005, the best year on record, we broke $2 billion in sales. 2006 saw $1.92 billion in closed sales and 2007 saw $1.979 billion in sales.
Average and Median Sale Price Still Trending Up. Although less property was sold in 2007 than 2006 (16% less), we saw the average sale price increase 26% overall and the median sale price increase 25% overall. What does this data mean? Expensive, luxury properties are continuing to sell. But, that is not the whole story. The average sale price of single family homes in zip code 84098, which is composed primarily of full time residents, increased by 16%.
With interest rates at 5-year lows and a great selection of properties, there has never been a better time to buy Park City real estate.
Below is a summary of Park City Real Estate statistics for 2007 compared to 2006. (Source: Park City Board of Realtors MLS for areas 1-22)
Visit our website www.tallman.biz for more Park City real estate information.
"Has Chicken Little Struck Again or Is the Sky Really Falling?" The latest UCLA "Anderson Forecast" stated the nation's economic performance was "near recession". Many of the report's dire predictions were picked up by the media, including:
An expected drop in home prices through the end of 2009, particularly in Florida, California, Arizona, Nevada and parts of the Northeast.
Fewer qualified home buyers as mortgage lenders lean towards full documentation, larger cash down payments and higher income standards.
Working families with "middle-of-the-pack home prices and extremely high usage of adjustable-rate mortgages" would be most susceptible to foreclosures.
What do these predictions mean for the real estate market in Park City, Utah?
According to statistics provided by the Park City Multiple Listing Service:
The average sale price for homes, condominiums and land in Park City is higher in 2007 than 2006.
Less property was sold in 2007 than 2006.
Less property was listed for sale in 2007 than 2006. As the number of sales dropped, the inventory dropped by an even greater percentage.
My analysis of how the Anderson Forecast predictions will play out different in Park City vs. the nation is as follows:
Owners in other parts of the country may be forced to sell their homes, even at a loss. Park City owners have the staying power to hold onto their property until conditions are favorable for selling.
As a bedroom community to Salt Lake City, [which is experiencing a robust economy], and a premier 4-season resort community, Park City continues to see an influx of buyers entering our real estate market. I have heard that as many as half of theses buyers pay cash. Clearly, Park City will be somewhat buffered by the current mortgage debacle.
The average sale price for Park City homes is now over $1,000,000. Working families with "middle-of-the-pack home prices" do not make up a large segment of our real estate market.
In my opinion the proverbial sky is not falling in Park City real estate market, no do I expect it to. We will continue watching the real estate market and keeping our clients informed.
Please do not hesitate to contact us with your real estate questions and concerns.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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