Tuesday, August 05, 2008

Variables Interacting to Create the Current Real Estate Scene Nationally and Locally in St George,Utah

Housing and Economic Recovery Act of 2008

President Bush signed a massive housing bill on July 30, 2008. The Housing and Economic Recovery Act of 2008, this promises to help thousands of struggling homeowners and stabilize the financial market. One of the bill’s key provisions gives first time home buyers a $7,500 dollar-for-dollar tax credit. This should become available to residences on or after April 9, 2008 and before July 1, 2009.

Another piece is that at the end of August 2008 there will be no 3rd party down-payment loan assistant programs that will be able to kick in and rescue that portion of being able to help some buyers get into a home. I'm not sure how broadly or how many this affects because whenever I came across these types of programs I thought they were a loop hole to get around requirements, but none the less were legal and as such have been viable ways of getting into a home. If you're doing that, you better do it quick because it is about to end. I think if that was my only way to have gotten into a home, I might have considered it myself. At last, I think my premonitions about it being a way to get around the requirement, might have been right when it comes to Congress having voted it out. I believe the Act enacts these changes and to the jumbo loan limit discussed below, starting Oct. 1, 2008.

Jumbo Loan Limit as Applied to St George Utah
Now, a deterrent for buying more expensive homes for many home buyers has been the fact that when buyers lend money over $417,000 they take a hit on the interest rate being higher. Well, another part of the Act of 2008, permanently increases the cap guaranteed by Fannie and Freddie on the size of mortgages, to a maximum of $625,500 from $417,000. Previously, this jumbo limit was only applied to certain parts of the country and while northern Utah has been getting the benefits, Washington County has not been, but has remained at 417K. Having it this low may have helped to bring prices down, so the benefits can be looked upon as relative to whom we'd like to give them to, the buyer or seller. However, this legislation will make mortgages more affordable in those upper price ranges. This might have the affect of curbing some of these homes out and away from foreclosure when the mortgages are now more affordable on them.

(For example, I have a beautiful home in Heritage Fields listed for a builder whose price hovers possibly just out of reach of the prior limit and I know the Seller is going to be glad as this was pressuring him earlier to perhaps have to drop it a good 50K to make it feasible for a loan in this market. That would have forced him into foreclosure he believes as he already is selling it for 50K below what it took to build it. The house is upgraded to the hilt and the best looking house in its class, but even then few buyers swim by ever in that price category that can seriously afford a home that expensive, although the activity has doubled on it for some reason. It has 3229 SF, custom travertine, inlaid marble and granite galore, 2 story with each 10 foot ceilings, 6 bedroom and 5 bath, listed now at $469,900.)

To have this increase by a couple hundred thousand or so, this could be the biggest boost to bigger and more pricey home buying here locally. Previously, these higher-end homes have reached an all time low in demand, leaving many builders and some sellers in stagnation if not in dire straits. This stimulus could also become an indicator for remedial affordability in the category of jumbo home loan ownership.

These are only parts of what The Housing and Economic Recovery Act of 2008 covers as an overall stimulus package signed in by Pres. Bush and passed by Congress. To see what else the Act covers see this CNNMoney.com article on The Housing and Economic Recovery Act of 2008.

Banks Toughen Terms on Loans

According to the Wall Street Journal, banks are imposing tougher lending terms across the board for both consumers and businesses. Banks are being tougher on credit score requirements and are reducing credit limits on card loans. Home equity lines of credit have also been tightened, as reported by 70% of the banks queried. 60% tightened standards for prime mortgages and 75% for nontraditional and sub prime mortgages. 80% tightened Commercial lending standards.

St George Mortgages

Locally, for St George Mortgage and Lending needs, I've relied heavily on Steve Stout with SGI mortgage as a source for top notch professional advice with a real good bead and pulse on the market and also consultation for many buyers. He told me that for people he's tried to pre-qualify for shopping for a house, they've needed to not only show good credit, but that they've needed to also show the cash flow income to substantiate what they are trying to do. Off that he is able to help people set realistic price ranges to shop in. Why find out later and waist all your precious time?

With 15 years in the business I not only find him experienced and knowledgeable, but he is also about the nicest and most decent guy I've ever met. If you want him, you can have his number: (435) 467-1090. If he helps you, pay attention as a few times he really nails it on the head. I first turned onto him when meeting him at a Closing [table]. This was back when he looked to me like he might be driving a tractor (as if I ever thought that, just that he was speaking it different than what everyone else was saying) or a horse (as in being a real live cowboy). I couldn't tell which at first when he did his old shake the head thing when talking on the subject of "option loans for everyone". I've since learned he is a real live root en toot en cowboy. Call if you think I'm just ad libbing and you can discern for yourself. And those mortgage professionals make more on those option loans, you know that don't you? Mortgage loans are not one size fits all. But if you want it from the 'horses mouth', for straight shooting, give Steve a call.

Real Estate Projections for the Washington County Housing Market

Is the Washington County Housing Market Stabilizing? That is a great question. According to the total sales in June 2008 (to include homes, lots, and commercial), it has had a slight decline from December, 2007 to March, 2008 and is now in a slightly upward growth pattern. Job growth in Southern Utah has been on a slight decline up to the end of last year. Since the first of this year the job market has been on a slight, but steady increase.

Generation Y

The Generation Y buyer is 26, 3 years younger than the Generation X or baby-boomer buyer. Generation Y is born roughly 1965 to 1978 and represent a very Internet Generation, Echo Boomers, Nexters and the Digital Generation. Also they are the MySpace and Facebook generation. Favorable rates make it easier in a buyers market to facilitate research for these people. They are also confident in their buying habits and are, and will be, buying homes. They are OK with getting away from the big back yard, they look for newer and low maintenance, are more environmentally conscious and look for permanence on the outside of the structure, while maintaining more flexibility for renovating on the inside to evolve with technology.

Foreclosed Homes and Notice of Defaults in St George, Utah

Here locally, St George Utah Foreclosures are slightly increasing. Notice of defaults, of people that are reported as not making their house payments, has remained steady of about 180 per month. The implications from a realtor perspective for me, have been that with some price niches or outlying areas (like fast paced subdivisions that overbuilt and had inflated pricing), it is increasingly more difficult to think about having a home your putting an offer on actually meet appraisal. In those niches or outlying areas, not only is there relatively few comparable sales (has to be within the last 6 months) to base value off of, but of those few existing comparables, if all are short sales or bank sales, then the law of conservativeness reigns supreme for appraisers and banks, irregardless of equality of perceived value transferring outside that subdivision to the market at large. To think about how to get a home under contract to appraise at what you currently have as an agreed upon purchase price then could be difficult. In some new outlying areas, where price rush appreciation was the rule of the day, then parallel subdivision price point comparables are becoming scarce enough to push prices even further downward. Implications for many Realtors are that they will not just anxiously "list" a home anymore. Rather, they will take only [to sell], "saleable listings".

Renters More Reluctant to Buy

Mark Obrinsky, chief economist with the National Multi Housing Council (NMHC), reports a significant slowing of outflow of renters into home ownership. Of the survey respondents giving information relating such, 80% report a decrease in the number of renters leaving to become homeowners. The survey indicated that more renters were moving out of investor-owned properties and into professionally managed buildings, much of which was forced by investors giving up the properties to foreclosure.

National vs. Utah vs. Southern Utah Real Estate Forecast

About 50% of homes nationally are selling in an appreciation cycle, which might indicate about that much being sold after or in depreciation mode. Overall, Utah Real Estate appreciation has fared pretty good in comparison to the national scene. However, Southern Utah Real Estate has not fared as well, so our forecast on the market then is also a mixed one. It really will depend on what part of the market. Mortgage requirements are being tightened, although more people are becoming eligible at the same time, particularly the first time buyer segment. In California, for the First Time Buyer the percent of home buyers who can afford a home jumped from 26 to 44 percent for this same time a year ago. The index is based off an adjustable interest rate of 5.65 and assumes a 10% down payment.

On the other hand, a lot could depend on the overwhelming nature of reticence on the market with so many foreclosures that do not necessarily ear mark confidence in buying as well as fears of homes not appreciating when you buy them. This can help to stave off a lot of people. On the other hand, because so many that could have bought, have held off, perhaps we've reached a bottom that could turn the tide. Our projection at SoUtah.com will be that we really kind of got out of sorts with inflated appreciation and enamored with speculators and investors, such that the working class opportunities may not be large enough to compensate with the needed money in the system to support it all. On another note, if people are freed up to move again, there could be enough enamoring again with our area, to help pick us up. Chief economist Lawrence Young has said with the National Association of Realtors (NAR), that while the market is flattening now, he anticipates some improvements in the last part of the year. With St George Real Estate, we might normally expect the same thing, except that some price range niches that have not seen enough action to retain anything but Short Sale or Bank Foreclosure sold comparables. This may still suppress prices enough to forestall any type of noticeable change.

Even still, I've always thought that it is as good a time to buy in St George, although as selectively as one can do, that even so, it will take a good couple of years to pull off any type of goodly appreciation on it, at any rate. So, why wait, in my mind, because it will tend upward because of our location in the Midwest. As I think where we are location wise, and how many people there are in other parts, like in Arizona and California, not to mention "Snowbirds", that might become more inclined to have a decent place either to retire or to raise a family, I think about calling it safe. These things do matter and will increasingly matter to make St George Utah a more and more attractive place to live!

If you've liked this blog update and could use a great agent now or in the future or a good lender recommendation or even if for a resource for friends, please go to my real estate website and save me in your favorites now. Thank You! ~Brian