Perfect Time To Buy?

Economy and Market Conditions Create Perfect Opportunity to Buy a Home in Utah


Although the US Economy is still sputtering, the stock market is on a roller coaster ride and a recent report on the sale of homes in the US predicted that 2011 could be the worst year for new-home sales records in nearly 50 years, local Bank of Utah and Metrostudy experts say this has created a perfect opportunity to buy a home along the Wasatch Front. Apparently some Utahns are discovering this. A recent report by the Utah Association of Realtors showed that July home sales rose 16.4 percent higher than July’s 2010 sales. And, according to Metrostudy, a nationwide provider of primary and secondary market information to the housing industry, inventory for new single family homes under construction has increased 7.1 percent since last quarter, signaling a demand for new housing.

“Some people may have been hesitant to buy a home because of the instability of the national economy,” said Amber Wykstra, vice president and residential loan production manager for Bank of Utah. “But, certain favorable conditions in Utah’s housing market have created a great window of opportunity for those anticipating buying a new or existing home. If you have money for a down payment, good credit and a stable income, now is a great time to buy. Mortgage rates have been at record lows, homes are the most affordable they’ve been since 2004, and new home inventory is currently adequate, but these conditions will not stay this way forever.”

In recent weeks, a 30-year fixed-rate mortgage averaged 4.15 percent. Government-backed loans are also very low, averaging 3.36 percent for a 15-year fixed rate mortgage, and a five-year adjustable rate mortgage was recently as low as 3.08 percent. (Freddie Mac National Averages)

The National Association of Home Builders recently reported that Salt Lake City reached a seven-year high for home affordability. In the Salt Lake area, 79 percent of homes sold in the second quarter were within reach of families who make a median income. The Ogden-Clearfield and Provo-Orem areas were also rated as affordable based on mortgage rates, incomes and the median prices of homes. The median price for homes sold in Utah since January has hovered around $175,000. And, if you need to sell your existing home, keep in mind that Salt Lake is one of the top five housing markets in the nation, meaning that home values have dropped the least in Utah.

“Prices for homes will continue to be low for a time, added Wykstra. “However, economists are predicting that both lending rates and home prices will eventually rise, so the time to act is now. There are so many opportunities out there to work with a builder or take advantage of great prices on existing homes due to the lower prices and the number of foreclosure or short sale homes on the market.”

“There is a healthy balance of inventory of newly-built homes within the Greater Salt Lake Market (a seven-county area),” said Eric Allen, director for the Utah/Idaho Region of Metrostudy. “While the annual pace of new home starts for detached single family homes decreased 18.8 percent compared to last year at this time, it’s important to note that last year at this time the market was inflated due to the government tax credit; which means we are comparing inflated demand with today’s real demand, therefore resulting in a larger than expected decrease. Conversely, inventory for single family new homes under construction has actually increased 7.1 percent from last quarter, signaling that there is demand for new housing as builders continue to maintain a very low level of finished vacant home inventory. Of the 2,000 new single family homes currently in inventory, 28 percent are currently under construction and priced below $300,000, and only 18 percent of these homes are finished and vacant. New home inventory for homes above $300,000 is split with 31percent under construction and 13 percent being finished and vacant (with the remaining homes being models).”

“Based on the current pace of absorption, there is a four-month supply of single family homes under construction and only 2.1 months of finished vacant homes, added Allen. “The recent influx of 20 new companies bringing jobs and new residents to the state may deplete the current supply of new single family homes.”

According to Wykstra, if you’re building a new home it’s to your advantage to have your builder and lender work together. There are construction loans that require no down payment and the closing process is fast and easy for the home buyer and builder alike.

Mike Schultz, president of Castlecreek Homes commented, “Our customers have benefited greatly from local community banks, including Bank of Utah, that are willing to lend for construction loans with little or no money down. Their ability to lend has allowed buyers the opportunity to build a new home at a great price and has kept the market going.”

Utahpulse.com