That's the focus of the Salt Lake Board of Realtors' newest report out Wednesday covering the housing market along the Wasatch Front. In Salt Lake County, about 2,400 single-family homes were sold in the fourth quarter, up more than 36 percent from the same quarter in 2008. Yet the median selling price fell nearly 8 percent, to $221,650, during the same time period. Prices in Utah's most populous county overall are off about 13 percent from a peak three years ago, with higher-priced homes taking the biggest hits.
Realtors point to lower prices, federal home-buying incentives worth as much as $8,000 and low mortgage rates as factors in the rising sales, a trend they expect to continue in 2010, though at a slower pace.
No Better Time to be a Home Buyer
'It's a tough time to be a seller,' said Realtor Scott Colemere. 'But with prices down and rates down and the government giving you money to buy, I don't think there's a better time to buy.'
In today's market, there's plenty of evidence to back up that Realtor analysis. Justin Lloret and wife Kristi have qualified for a federal home-buying incentive of $6,500, locked in at a mortgage rate of 5.5 percent and got a great deal on a 3,100-square-foot home on nearly one acre in Taylorsville they plan to close on within days.
The couple had been looking for a for about a year and a half. 'Compared to a couple of years ago, we got a really great price,' Justin Lloret said.
The federal income tax credit for home buyers was at first available only to those who either were buying their first home or those who hadn't owned a home in the past three years. Last fall, the credit, worth $8,000, was expanded to include a $6,500 incentive for repeat buyers. Buyers also were given more time to qualify. The tax credit, which was set to expire on Nov. 30, was extended to those who go under contract as late as April 30.
Like the Llorets, Kelly and Elizabeth Callister plan to claim the $6,500 incentive. The Callisters sold their previous home in January 2009 and settled in the fall on their new home in Davis County, where they were able to buy at $15,000 below the already-low asking price for a newer house on a large lot.
Kelly Callister said the home-buying incentive, lower prices and his 4.75 percent mortgage rate vastly outweighed the specter of more price declines. 'It's in the back of my mind, but this is our long-term home, this is where we want to be, so I'm OK with it. We're thrilled.'
Many Realtors, such as Colemere, are telling buyers they need to think about how long they are going to be in their home before they buy. Even if you get a great deal or buy a distressed property, it isn't a great time to be 'flipping,' or even thinking of selling in a year or two without possibly taking some type of financial hit. 'The safe way to avoid losing money or losing your equity is to stay in your home at least three to five years,' Colemere said.
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Why are Home Prices Low?
There are several influences on prices, including the surplus of homes for sale, especially foreclosures, and fewer buyers because of tighter lending criteria that makes it more difficult to qualify for a home loan. Not to mention many buyers are first-timers purchasing homes in the lowest price ranges.
Economic conditions continue to weigh on the housing market, with foreclosures 'the biggest factor in pushing down prices,' said Mark Knold, chief economist for the Utah Department of Workforce Services. Banks are heavily discounting and taking losses on properties to get bad loans off their books and will continue to do so through 2010, he said.
That's why the Realtor board expects selling prices in Salt Lake County will slip another 3 percent to 5 percent this year before stabilizing, probably at some point in 2011. If that happens, it would mean a total correction in home values pushing 20 percent.
Year over year, home sales were up in all of Utah's other most populous counties, while prices were down 4 percent to 8 percent. Sales were up 19 percent in Weber County from the fourth quarter 2008 to the last three months of 2009. Sales were up about 26 percent in Davis County, 46 percent in Utah County and a whopping 61 percent in Tooele County.
The surge in sales along the Wasatch Front gained momentum in the second half of the year, the report shows.
For all of last year, 9,146 existing single-family homes sold in Salt Lake County, up only 4 percent from 8,796 in 2008. But even that's good news, given that sales had been declining on a year-over-year basis since 2006. The board estimates sales this year could reach 10,000.
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BLOG contents taken from an article by Lesley Mitchell at the The Salt Lake Tribune 01/28/2010
