IS IT A BUYERS MARKET IN UTAH?

With the current housing dilemmas appearing to be longer lasting than most anticipated, I have been wondering about the current state of the mortgage market, particularly in Utah.

Traditionally spring is the most active time of the year for home purchases. We see refinance applications rise slightly through the summer, but the spring is for buying. Now, with a larger number of homes on the market and with home values declining nationally, the general consensus according to the various housing and real estate “expert” around the country is that we are in a Buyers Market. The funny thing is, as I have been saying all along, Utah is not on the same wavelengths as the rest of the nation. So is it a buyers market now?

What about Utah?

According to the National Association of Realtors (NAR), existing home sales are down nearly 28% from a year ago. In addition, the NAR reports that existing home sales prices are down 8% from a year ago. Does that make it a buyers market?

Recent articles in local newspapers have highlighted the fact that while existing home sales in Utah are down approximately 30% when compared to last year, the average sales prices actually increased—with a state wide average of 12% appreciation. In fact, according to the Utah Association of Realtor some areas of the state experienced appreciation of over 15% in the past year.

What does this tell me? I guess it all depends on how you define the term “buyers market.” In simple terms of supply and demand one would assume that the increase in home inventory when compared to the decrease in the number of existing home sales would have a downward pressure on home sale prices, making it a buyers market.

Then again . . .

On the other hand, multiple state economic statistics would indicate that it is still a good time to sell. The Utah Association of Realtors has a new website (www.utahhousingfacts.com) that lists several reasons why it is a good time to sell in Utah. Here are 3 of the most significant in my view:

1. Utah has a growing population, with an increase of 84,000 people anticipated for 2008.
2. Utah is increasing the total number of jobs at a pace that exceeds the rest of the nation with 44,000 new jobs expected to be created in 2008.
3. Utah unemployment is nearly half of the national average.

So what does it all mean?

My feeling is that while it is more difficult to sell a home in Utah right now than previously, we are nowhere near the “buyer’s market” that many would have you believe.

If I were buying a home I would take advantage of the increased inventory and shop around. I would not feel pressure to make an offer right away on a home because I realize that there are more homes for me to consider than ever before. However, I would not assume that just because someone has had their home on the market for a longer than normal period of time that I can lowball my offer.

If I were selling a home in Utah (which I, in fact, happen to be doing) I would not panic, but I would accept that it may take many months longer than anticipated. If I need to move, I would not rule out looking for someone to rent my current home, nor would I rule out renting in my new location for a few months (but I would look for a rent-to-own in both cases). Perhaps most important, if I were selling a home in Utah right now I would start the process much earlier than before, giving myself an extra few months to find the right buyer.

Tired of being the Bad Guy

This weekend I had an open house at a home I have for sale. A gentleman came in, looked around, and then started to criticize my asking price (which happens to be nearly $30,000 below the recommendations from realtors and agents with whom I have consulted) telling me that “with the housing bust I need to take whatever offer comes my way.” Obviously I disagreed with his suggestion, reminding him that while home purchases may have decreased last year, home values still increased by an average of 9% state wide.

Next the man started on a diatribe about how “all this economic mess is because of the crooks that lend money.” When I told him of my career his reply was simply: “then you ought to be more honest with people, and stop giving people loans that you know they cannot afford.”

ARE YOU KIDDING ME!

I am sick and tired of people accusing mortgage brokers and loan officers of ruining the economy and creating the current lending environment. Blaming me for the high rate of foreclosures in this country is like walking into a McDonalds and blaming the cashier for obesity in America.

Do loan officers have some responsibility? Yes. As I mentioned in my series last fall about Loan Fraud in Utah (http://utahloanexpert.blogspot.com/2007/10/utah-loan-fraud-part-1.html), brokers and loan officers who have participated in fraudulent activities should be identified and help accountable. But loan fraud is a small portion of the problem.

Yes, the Mortgage Lenders are paying the price of having too loose lending guidelines and requirements. Yes, it was too easy for someone with limited income to qualify for loans. Yes, too many home owners to given high-risk mortgages without proper education concerning those risks.

But we must not forget the homeowners themselves. Not reading the loan disclosures is not my fault. Choosing to state a higher than actual income level is not my responsibility. And, perhaps most significant to me, it is not my fault that home owners in recent years have proven themselves to be more than willing to “shop” for the loan officer that will give them exactly what they want.

CNN.com has and article this morning that blames “poor underwriting standards and abusive lending” for the current mortgage mess. Well, that may be true to some point, but when will some responsibility fall on the shoulders of the actual home owners who accepted loans they knew darn well they couldn’t pay. Last I checked, economic institutions in America are the result of the actions of individual people coupled with market demand. I can tell you right now, if thousands of homeowners weren’t willing to have bad loans, those loans would have never been written.

I guess, until this whole mess gets fixed I will have to continue being the scapegoat for everyone’s problems.