Housing Forecast for 2012

The worst for the housing market may finally be over, according to housing experts in a recent article in Kiplinger. After median home price have dropped nearly 40 percent nationwide, a rebound is taking shape -- although, housing experts say, the market may stay flat for awhile before gradually ticking up.

According to housing experts in a recent Kiplinger article, here are some predictions for the real estate market in the coming year:

Home prices stabilize: Mark Zandi, chief economist at Moody's Analytics, predicts that home prices nationwide may still drop another 3 to 5 percent in 2012, but the new year will most likely finally bring a leveling off of home prices before gains start to take shape in 2013. When markets do begin to stabilize in the new year, “price appreciation tends to spread unevenly, creating a lot of confusion about where the recovery is occurring and when,” David Stiff, chief economist at Fiserv Case-Shiller, told Kiplinger. “Even within a single city, more desirable neighborhoods will stabilize first, while prices in other neighborhoods may fall at a rapid pace.”

Housing affordability high: Housing affordability -- the ratio of median home prices to median family income -- will likely remain at record levels in 2012. Homes in many cities are “substantially undervalued,” the Kiplinger article notes. That may even lead to a mini bubble with double-digit spikes in prices, such as an increase of 10 to 15 percent in a given year in some markets, housing experts say.

Low mortgage rates: Helping to keep affordability high, low mortgage rates are expected to continue on in 2012 -- at least the first part of the year, economists predict. The 30-year fixed-rate mortgage, the most popular among home buyers, has been hovering under a 4-percent average the past few weeks, staying in record low territory. Rates are expected to stay between 4 to 5 percent in 2012, predicts Guy Cecala, publisher of Inside Mortgage Finance, an industry publication.

Sales increases: The National Association of REALTORS^® has already been showing a tick up in sales taking shape with increases in existing-home sales during the summer and early fall of 2011. High inventories of homes continue to flood the market but a drastic slowdown in new-home building the past three years is “gradually easing the surplus,” the Kiplinger article notes.

Foreclosures: Foreclosures remain the problem and still plague many markets. After a slowdown with lenders processing the paperwork, foreclosures have began to pick up once again. About 1.84 million home loans are 90 days or more delinquent and 2.17 million have finished the foreclosure process but aren’t up for sale yet, according to RealtyTrac data. Alex Villacorta, director of research and analytics at Clear Capital, told Kiplinger that he predicts regardless of the downward price pressure caused from foreclosures, overall home prices won’t fall as long as lenders bring additional foreclosures to the housing market at a steady pace.

Source: “What’s Ahead for Home Prices in 2012,” Kiplinger (January 2012)

Logan first among small U.S. cities for business

An economic think tank has ranked Logan first among small cities in the U.S. for being a good business community.
The Milken Institute, founded in 1991 and based in California, has released a new list of best performing cities for the year. Salt Lake City, Provo and Ogden ranked in the Top 25 among large metro cities, while Logan ranked No. 1 among small cities.

Logan skyrocketed from its No. 19 ranking in last year's list.
The research looked at 179 small cities and 200 large metros. In the large-city category, Salt Lake was ranked No. 6, Provo was listed at No. 9, and Ogden took the 15th spot on the list. St. George, which falls in the small-city category, was ranked 124th. No other Utah cities made the list.
The Milken Institute, which releases an annual index, noted that Utah cities made in impressive showing this year.
"Utah was the only state to double its volume of exports over the past five years, and Salt Lake's economy is highly diversified, with pharmaceuticals, medical devices, transportation equipment, financial services, and high-tech companies," Milken representatives wrote in a media release.
In this report, Logan is looked at as a metropolitan area, which includes about 130,000 people through all of Cache Valley, including parts of Idaho.
Logan scored high in several areas. It was ranked sixth in its five-year, relative high-tech gross domestic product growth; and ninth in high-tech gross domestic product location quotient, which is a measure of high-tech concentration. And the city ranked first among small cities nationwide for its number of highly concentrated high-tech industries. In that category, Logan received a score of 9; the U.S. average is 1, and anything higher indicates a higher concentration.
Cache Chamber of Commerce CEO Sandy Emile called the report "fabulous news."
"It's been an outstanding year for Cache County and Logan, in general, in terms of recognition that we've had in a downturned economy," she said. "To still be on the nation's radar for doing business ... this is just another feather in our cap."
The Milken Institute index includes measures of job, wage and technology performance in ranking the areas. It does not use quality-of-life metrics, including commute times and housing costs.
San Antonio, Texas, was ranked No. 1 among large metros.
In a statement from Utah Gov. Gary Herbert, he said the new research is "further evidence that Utah continues to be the most impressive economy in the country."
"Our work ethic, our skilled labor force, and our business-friendly environment - exemplified by these four cities - continue to fuel expansion and job growth in Utah," he said.
Emile said she thinks Logan's showing on the list is evidence of "excellent leadership" in local municipalities.
"There is a visioning process that's going on in Logan and in Cache County that allows us to make decisions to move us forward systematically and intelligently without jumping to some rapid growth conclusions," she said.
Representatives from the Governor's Office of Economic Development said Utah's cities have led the economic charge over the past year.
Executive Director Spencer Eccles commented on the list through a press release issued Friday.
"We recognize that communities across the state, large and small, have all created unique and innovative strategies that have resulted in accelerated business development and job creation. Classic examples include Logan's No. 1 ranking as a best-performing small city versus last year's No. 19 rank," he said. "Clearly all Utah's cities are pulling together in the same direction."

Source: Herald Journal

New Home Construction up 9.3%

New-home construction and building permits — a future gauge of construction — surged last month, slowly helping to pull the new-home market out of one of its worst years for home building.

Builders broke ground on more homes in November, a 9.3 percent increase over October, reaching the highest level since April 2010, the Commerce Department reported Tuesday. Year-over-year, new-home starts were up 24.3 percent in November.

Home construction increased to a seasonally adjusted annual rate of 685,000 homes in November. However, while it’s an improvement, the rate is still below the 1.2 million home pace that economists consider healthy for the new-home sector.

November’s increase was mostly driven by construction of multi-family homes with at least two units, which soared 25.3 percent in November. Construction of single-family homes increased 2.3 percent for the month.

Building permits jumped 5.7 percent in November, the highest increase since March 2010, with the increase mostly driven by apartment construction permits.

Builders Feeling More Confident

Meanwhile, for the third consecutive month, builder confidence in the new-home market continued to edge up, according to the National Association of Home Builders/Wells Fargo Housing Market Index for December. The index is at its highest point since May 2010.

While the index reached 21 in December, it is still far below 50, a reading which indicates more builders view conditions as good rather than poor. The index hasn’t reached that point since the housing boom in April 2006.

“While builder confidence remains low, the consistent gains registered over the past several months are an indication that pockets of recovery are slowly starting to emerge in scattered housing markets," Bob Nielsen, chairman of the National Association of Home Builders, said in a statement. "However, the difficulties that both builders and buyers continue to experience in accessing credit for new homes are holding back potential sales even in areas where economic conditions are improving."

Source: “Apartment Construction Spurs 9.3% Jump in Housing Starts, But Level Remains Low,” Associated Press (Dec. 20, 2011); “U.S. Nov. Housing Starts +9.3% to 685K; Consensus +0.3%,” Dow Jones International News (Dec. 20, 2011); and National Association of Home Builders

Fed Reafirms Pledge To Keep Rates Low

At its Tuesday meeting, the Federal Reserve reaffirmed its pledge to keep interest rates low and opted to not take any new measures to bolster the economy, saying the economy has already been showing signs of “expanding moderately.” The economy has shown some improvement in employment and consumer spending in recent weeks. However, the Fed cautioned at Tuesday’s meeting that the "housing sector remains depressed."
In reaffirming a pledge it first issued in August, the Fed said the federal funds rate -- which serves as a benchmark rate for many types of loans, including mortgages -- will remain near zero until mid-2013. The Fed said it will continue with plans to move $400 billion of its bond portfolio into longer-term securities, which ultimately could send long-term interest rates even lower.
Overall, the Fed said the economy has steadily been showing signs of improvement and is on track to post its strongest gains of the year in the final months of 2011. But the Fed said that the European debt crisis will continue to pose a major threat to recovery with “strains in global financial markets continue to pose significant downside risks."
Source: “U.S. Fed Leaves Rate Unchanged, Says Economy Expanding Moderately,” Bloomberg News (Dec. 13, 2011)

Fed Chair Takes Advantage of Low Rates Too

Now you know for sure that it's a good time to buy or refinance!

Fed Chair Takes Advantage of Low Rates Too

Principle Reductions Outpacing Short Sales?

Some lenders may be more willing to reduce the mortgage principal than grant a short sale for borrowers under the Home Affordable Modification Program (HAMP). The principal reduction can mean big savings for home owners too — the average amount reduced on a principal reduction is more than $65,000, or 31 percent of the unpaid balance on the mortgage, according to new Treasury Department data.
Principal reductions under HAMP began in October 2010, serving as an alternative to a short sale or deed-in-lieu of foreclosure for cash-strapped home owners. Only loans not guaranteed by Fannie Mae and Freddie Mac are eligible for a principal reduction.
“The median loan-to-value ratio on modifications that went through principal reduction was 158 percent,” HousingWire reports in a recent article. “After the workout was complete, the borrower held an LTV of 115 percent, meaning he or she owed 15 percent more on the mortgage than the home was worth rather than being 58 percent underwater.”
Banks may find a principal reduction is better for them financially too. Banks report an average loss rate of 60 percent whenever borrowers complete a short sale, and an average 70 percent loss for homes in the foreclosure or REO process, according to Moody’s Investors Service.
Source: “Principal Reduction Outpaces Short Sales Under HAMP,” HousingWire (Dec. 12, 2011)

 I haven't seen this as much with Real Estate in Logan, UT but it may be the trend that is coming.

Where Are Mortgage Rates Headed?

Where are rates heading? You may soon get more insight with a new proposal the Federal Reserve is weighing.

The Federal Reserve doesn’t traditionally make a point to reveal its predictions for future actions on interest rates widely known to the public — that is, until recently. This summer in a rare step, the Fed announced that it would keep short-term interest rates at nearly zero until 2013. The Fed may start making it a tradition to reveal more with a regular forecast of its future decisions on interest rates.

The Fed may consider adopting such a move at its Tuesday meeting, but if it does adopt an action, it most likely wouldn’t be announced to the public until January, The New York Times reports.

According to a recent article, the minutes of the Federal Reserve committee’s last meeting in November revealed that “participants generally expressed interest in providing additional information to the public about the likely future path of the target federal funds rate.”

In 2007, the Fed weighed a similar move but decided against it because they feared that public would take the predictions as commitments, and the Fed wanted to be able to change course if needed without public misunderstanding.

If the Fed adopted a forecast, it likely would predict where interest rates are heading for the next three years, and it would be similar to the forecasts it already publishes about economic growth, unemployment, and inflation four times each year, The New York Times reports.

Source: “Fed to Weigh Publishing a Forecast on Rates,” The New York Times (Dec. 11, 2011)

Home owner's insurance, are you really covered?

Here is a great article about your insurance policy and questions you should ask your agent to see what your policy really says.

Flawed Appraisals Killing More Deals, NAHB Says

Home builders across the country are experiencing the same thing. Low appraisals because of not comparing apples to apples. It's a great article but it makes me upset. This has to change if we are going to fully recover from the burst of the housing bubble.

Flawed Appraisals Killing More Deals, NAHB Says

Mantua gets Federal land back for free!

http://www.ksl.com/index.php?nid=960&sid=18414408&title=congress-gives-federal-land-to-mantua-for-free

Are the Holidays a Good Time to Sell?

Here's a great article from Realtor Magazine.

Are the Holidays a Good Time to Sell Your Home?

I would have to agree with this article. I find that my best months for selling homes is November to January. The factors mentioned in this article are spot on. Here are a couple of my thoughts and advice on selling your home during the holiday season.

Now I know that you're thinking that selling your home in Logan, UT in the winter is a different story. Yes, it does get freezing cold but among the reasons stated in the article, I would add that a lot of companies will hire for the new year so that is also a percentage of the "serious buyers" that make it worth while to sell your home during the holidays. Buying a home is also a very emotional thing for a lot of people. So when they see Christmas decorations and smell holiday food in your home they will inevitably start to picture themselves living there and enjoying those special moments with their own friends and family. So make sure your house is decorated but don't go overboard.

I hope this article helps you fence sitters decide to get your homes sold. Happy holidays

Ipad 2 giveaway!

J Thomas Homes is giving away and Ipad 2. Go check out their fan page on facebook to enter. You can also see their floor plans and communities at JThomasHomes.com

It's a great time to build a home in Northern UT! The article below shows Salt Lake is among the top 10 cities for construction activity in the country! Contact me for the latest new construction deals in Logan, UT.

10 Cities Where Home Construction Is Taking Off

Daily Real Estate News | Monday, November 28, 2011

Builders mostly have stayed on the sidelines the last few years in many metro areas while construction permits and housing starts have dropped to only a fraction of what they once were during the housing boom days and even prior to that. But in many areas across the country, housing starts and permits at least leveling off. What’s more, in some places they're rising.

The cities that are seeing the most construction activity in single-family homes and multifamily units are ones that experienced only a mild recession so they have “less ground to make up during the recovery,” as well as areas with population growth, an article at U.S. News & World Reports notes. For example, Houston, Dallas, San Antonio, Texas, and Omaha, Neb., are nearly back to normal construction-permit activity.

"What you're going to start to see is construction activity pick up in parts of the country where, although we have an excess supply of homes nationally, we don't in that location," Stan Humphries, Zillow’s chief economist, told U.S. News & World Reports. "The fact that we have vacant inventory is a national phenomenon, (but) we don't have vacant inventory in certain markets, which means new construction is going to pick up in some of these markets."

The top 10 metro areas by construction activity in the third quarter of 2011 are:

1. Houston

2. Dallas

3. Raleigh, N.C.

4. Omaha, Neb.

5. Austin, Texas

6. Salt Lake City

7. Charleston, S.C.

8. Charlotte, N.C.

9. San Antonio, Texas

10. Tacoma, Wash.

Source: “Where Builders Are Breaking Ground,” U.S. News & World Report (November 2011)

Fiserv study says Logan, UT Home prices rising

Here is a great story from Utah Realtor magazine. It seems that we are beating the odds in Utah and increasing in value while the rest of the country will see a decline.

A new report has good news for
Utah homeowners: statewide
housing prices are set to rise
about 2 percent by summer 2012 and
nearly 7 percent during the subsequent
year. The analysis is part of a report that
forecasted home price trends in 384
metro areas across the U.S.
Based on projections from Fiserv
Case-Shiller and Moody’s Analytics, the
report said Utah will do better than the
U.S., which is expected to have a nearly
4 percent price drop.
For this year, Utah home price gains
will be strongest in St. George, according
to the report. From second quarter 2011
to second quarter 2012, home prices
are expected to rise nearly 8 percent. In
Ogden, the increase is forecasted to be
more than 5 percent. Logan prices are
projected to go up 3.5 percent while Salt
Lake prices will be flat.
Provo-Orem is expected to still be
stabilizing, with a slight drop of about 1
percent.
From the same period in 2012
through 2013, home prices are expected
to rebound in all areas of the state.
The report said Salt Lake prices should
increase nearly 9 percent. Provo-Orem
prices should be up more than 6 percent
with Ogden-Clearfield nearly 5 percent
higher. In St. George, prices should
increase 3.5 percent, and in Logan they
should be up more than 2 percent.
While Utah will fare better than the
U.S., the country as a whole should see
improvement by 2013, with more than
95 percent of all metro areas projected
to see some housing appreciation.