Distressed Sales, Home Ownership, Inflation Trap & The Four Horsemen of Real Estate, St George Conclusions

Real estate in St George Utah seems to be picking up. But while it is perceived by many a realtor, we question why some would want to stay sitting on the fence. The reluctance may be understandable when you look at the national scene. The economic roller coaster continues. Several factors are involved in this mixture, which we evaluate below. Then we summarize with commentary involving the "Four Horsemen of Real Estate", termed by Dennis Torres. Only the 'fourth horseman' is made of iron and like a freight train, although in the distance, is coming right at us- it is called inflation that comes from the weakening dollar. High interest rates accompany inflation.

Distressed Sales

Distressed sales makeup 45 to 50 percent of home sales. The passage of economic stimulus legislation offers hope for market stabilization.

Home Ownership

Home ownership now a days is like raising children. Minor or major tantrums are overlooked by the overall long-term gains in good character development. OK, not a good analogy sometimes, but it works good in theory and in practice overall. To counter my dose of optimism with realism, the National Association or Realtors (NAR) recently analyzed Federal Reserve data and resoundingly show how home-equity snapshots paint a bright picture. My reporting comes from an article titled, "Homeownership Still Pays", by Robert Freedman out of Realtor magazine.

First, home ownership wealth exceeds that of renters by a factor of 50-to-1, the main difference being home equity, of course. What it doesn't say is that earnings also come from working, not just leveraging appreciation in ones home. However, the rest of the article does speak to home equity gains, which is where our real focus is.

Second, even with household's who have owned only since 2003, home equity gains are the rule rather than the exception.

One may ask, how can it be the rule when we've had huge widespread depreciation. Well, if you bought in the middle yes, but ride it out and even in hard hit areas, overall the 10, 15, and 20 years outlook has uniformly enjoyed strong equity gains despite the recent downturn. So much so, are even the 5 year gains across America, that home ownership as a rule, is still a viable and better served ambition over renting. Freedman summarizes, "The data clearly shows that home ownership remains the biggest store of wealth for the typical household, even when markets are buffeted by some admittedly very rocky years."

One argument central to reporting on the economy, that I will take and have gleaned is thus: The housing market, most industries, and the economy are cyclical.

Another consideration bolstering ownership might be the fact that the commodities market involving construction materials to include finishing products has not depreciated, such that value in the materials inside homes sustain themselves.

Now or perhaps in the near future, if the dollar weakens more, it may take more of it (the dollars) to equal that value. Getting that attached number right given inflation may become more a matter of pricing and valueing what is there, rather than a matter of home shoppers speculating on the market, given higher interest rates.

Here in St George Utah, although many distressed sales congregate down in the lower price ranges, I've seen a lot of first time home buyer activity with product being sold, lead to inventory or options shrinking. I'd like to predict that many of these lower price range homes, even older homes, will come to hold there value well, such that even -fixer upper- will begin to become a friendly term again.

If you need a good St George home loan suggestion on qualifying and at what price range I do suggest consulting first before waisting time looking at too many homes. Even some multiple-home investors have become surprised by new governing guidelines, in not qualifying, although it has been made much easier for first time home buyers.

Inflation Trap & The Four Horsemen of Real Estate

Inflation
Lawrence Yun, Chief Economist for the NAR, in an article titled "Efforts to Spur Growth Can Backfire", cites how people are buying less, such that government action to ease the "credit crisis" or loosen stagnation and restore consumer confidence is warranted. However, the Feds infusion of money..., although Yun does not explain how, except to ...explain it like a gas pump- that "if the pump stays open for too long, the result will be upward pressure on prices".

Feeding into our cyclical idea, he does cite history saying that in the 1970's and early 1980's property values rose in tandem with consumer price inflation. Also, while property owners would be clear winners, ultimately buyers will lose because high inflation automatically brings high interest rates. Wait, because nobody wins if consumers can't buy that home of yours because the cost of money is at too high a price or high interest payments. Yun believes that inflation is not inevitable. On the other hand a lot of the government spending is long-term debt, he says. Hello, has anybody checked the national debt lately?

National Debt
The national debt is a conundrum that Frontline with PBS tried to tackle with interviewing several experts on the subject in March of 2009. The special was titled "Ten Trillion and Counting". One noteworthy concern, Paul O'Neill says, we have a bigger problem of $53 Trillion in unfunded liabilities like Medicare and Social Security that is floated debt that the government could possibly default or reneg and send us into what he calls, 'making this last financial crisis look like child's play'. The below is a more moderate response from the same program.

Maya MacGuineas, President of the Committee for a Responsible Federal Budget says:

We know that, right now, if you look forward, the U.S. is on an unsustainable path. What you don't know is when our creditors ... will say, "No more." And that could come at any moment, just like the bursting of the housing bubble almost seemed to come out of thin air. Nothing really seemed to trigger it.
... Is there a chance that our standard of living would decline if this problem were to continue to grow?
The Congressional Budget Office recently came out with a report that says if we stay on the path that we're on right now, our economy will start to shrink. That was almost inconceivable a few years ago. ... The main problem is that we've promised away so much of our economy. We've made all these promises through future programs that we will put our resources here or here or here. That means we've taken away the flexibility from our budget, and we've precommitted resources in ways that will not help grow the economy. And younger generations of workers are really going to pay the price on that.

Weakening of the Dollar
The major concern of many national economists is that the government can't continue to print trillions of dollars to pay for wars and various industry bailouts without devaluing the worth of the dollar.

The Four Horsemen of Real Estate
In the June 2009 addition of Realtor magazine I find one article, by Dennis Terres (Pepperdine University's real estate strategies director of real estate operations) very intriguing. He predicted the downturn in the market and its severity, almost to a "T", when we know many did and would have scoffed. Central to his argument was that the housing market is cyclical. Dennis almost hauntingly pursues his 'cyclical argument' conclusion to another end, saying that he also thinks we are overdue for rampant inflation. Dennis describes this lead up in terms of four horsemen after the four horsemen of the apocalypse.

1. The collapse of the sub-prime loan market followed by losses in the prime mortgage market. 2008 saw an 81% increase of foreclosures over 2007. Economic stimulus legislation offers hope for stabilization.
2. High unemployment, to the tune of 8.9% in April 2009- the highest level in 25 years. No jobs equals, consumers less likely to pay bills, including mortgages.
3. Consumer debt. U.S. consumers carry $900 billion in credit card debt alone, according to the Federal Reserve.
4. Rampant inflation. This is still on the horizon, but many believe it is inevitable. Accompanying inflation are high interest rates.

Conclusions

I guess this would all be a hodge podge without some kind of conclusion and this is kind of my predictions. My predictions will follow Dennis Torres', that we will have a period of stagnation as to real estate prices. I believe it to be a bit shorter than his predicted 3 to 5 years. After which we will see prices climb again and a brief scenario of prosperity. Then I think we will see a weakening of the dollar to become more pronounced leading to rampant inflation. To say it more moderately and to repeat using Maya MacGuineas, President of the Committee for a Responsible Federal Budget, "...we've precommitted resources in ways that will not help grow the economy. And younger generations of workers are really going to pay the price on that. "

The implications on the housing market will be, I believe, to ascertain where value really lies, that home ownership while cyclical, overall contains its own value that proves useful to building some equity or wealth, although accompanying higher prices on a weakened dollar, none the less equals real value. As such, before interest rates rise, if it were me, I'd get in now, while interest rates are low and also in utilizing the next couple years to find a 'permanent' home because it might become awfully expensive to move later, altering your interest rate and payment schedule, being drastically higher.

For retirees, I'd get in now, before house prices go up, where you think you'll secure that final resting place AND I think St George retirement communities are a good place for that. If this article has been of some value to your thoughts toward this, I'd hope to have won your business to be your area St George Realtor of choice.

The thing I'd have people hear about the St George Real Estate Market is this, and I admit it is subjective experience at this point, even as one realtor to anothers predictions can vary in the same city, as well as individual experience, but I do think that the choices on the market are becoming slimmer for either finding that really good deal or even in finding that home or town home that is agreeably fitting ones preferences.

Some troubled waters include how to negotiate the all-complicated Short Sales, "mirages in the desert" (the lower prices are not real), that are inundating the market. Response times to hear back on your offer typically range from 2 to 4 months. Knowing which banks are good and which are bad for getting a Short Sale done, can prove invaluable. While very few fit that category of good now, I think that it will slowly expand as they 'have to' (boy it has always been relative to them and their schedule) get better at it IF they want to compete, mainly because realtors have listed legion, in the ACTIVE for sale market. Foreclosures or REO Bank Homes are much easier to deal with in getting a response to ones offer, usually within 48 hours. We provide a comprehensive list and email updates on area St George Foreclosures. Don't miss out and sign up here to get your 'individually tailored' list now. Or you can shop for all St George Homes for Sale.

National and Local St George Utah Real Estate Update

National Real Estate Update

Will the federal governments mortgage aid program thaw the market? Several reporting facts will help paint a picture and keep you informed regarding the market at large and in how St George Homes for Sale may be impacted.

• According to Moody's Economy, third quarter of 2009 11.8 million U.S. borrowers owed more on their homes than their properties were worth and in the end of 2009 it rose to 13.6 million.
• Government plan persuades mortgage servicing companies to ease up on borrowers who are in financial straits so severe that they risk losing their homes.
• Government backed mortgage giants, Fannie Mae and Freddie Mac, offer to refinance loans for millions of borrowers who may owe more than their homes are worth, even if they are wealthy enough to afford current payments.
• Zillow.com reports 142% increase in number of consumers looking for a loan, 60 percent involving refinancing.
• National Association of Hombuilders reports affordability skyrocketing as home prices decline. Wells Fargo Housing Opportunity Index reveals in the third quarter of 2008, that 56.1% of homes sold were affordable to families earning the national median income of $61,500, while in the third quarter of 2008 that goes up to 62.4% being affordable sold homes.
• California sales had a dramatic upturn of home sales this past winter, although it was accompanied by a corresponding dramatic drop in home prices. A home that costs $254,350 now, used to cost $427,200 in January of 2008. California is on pace to see 624,940 homes sold this year compared to the pace of 311,160 last year this time. "The strength in California home sales in recent months signifies that the market is gradually working its way through the large numbers of distressed sales that have followed in the wake of the troubled mortgage problem," says California Association of Realtors President James Liptak. He adds that affordability "is now at its highest since the start of the decade."

St George Utah Real Estate Update

St George real estate has had a significant upturn in the amount of offers being brought onto foreclosed properties as well as other resales. California used to be a good reflection of how St George real estate itself would be doing as well. Well, a definite increase in buyer activity is felt by many realtor's, not just buyers realtor's, but several listing agents here at RE/MAX First Realty. Particularly first time home buyer price ranges are heating up with activity. You will find Brian Habel on the roster, able willing and qualified to help you with your real estate needs. Also, please avail yourself to getting prequalified for St George home loans, before you waste too much of your time.

How do Property Taxes work for the St George Utah area?

How do Property Taxes work for the St George Utah area? Well, I recently emailed a buyer regarding it and here is what I wrote:

The tax rate is as approximately, .55% (or a 1/2%)per year if it is your primary residence and about double that if you are not (1%). Now, I'm not sure about what values they get derided off of because people were complaining about too much taxation when the values of their homes went down and they were going off estimated values much higher than the new values would be. Some I've heard submit for new value, don't know if that is what can be or is done at the time of the sale or not or if it goes off when it was yearly assessed at a particular time.

I just got off the phone with the Assessor's office to get the full scoop as I've often wondered. My above information is correct. But the house values are not generally reappraised or in other words, reassessed, at the time of sale. Rather, they are off the assessed values off what the county has on record for assessments Jan 1 of each year. So, homeowners do need to... can bring in escrow statement in showing value and depending on the time it is brought in..., taxes reassessments preliminary deadline closes middle of May, so if you brought it in before that time, it could be assessed towards this year. Taxes are due at the end of November, for that prior year- paid in arrears. If people want to pay monthly they can contact the Treasures office and arrange that with a coupon book.

Public notice is given to all St George homes and property owners at the end of July what the taxes are or will be assessed at that year. This can precipitate complaints or petitions in what is subsequently a Board of Equalization that meets at end of Aug and beginning of Sept. So, if a home owner had it appraised it in June (or yes if there has been a sale or a couple comparables on their street sold, could petition at that time), then could go into the Board of Equalization for a look at it, and they could reassess regarding it.

Have a Great Day,
Brian Habel
RE/MAX First Realty
Office: (435) 634-5479
Cell: (435) 632-0250
Home Office: (435) 634-9845
All the Listings: www.SoUtah.com

Stimulus Package Details 2009

Economic Stimulus Package 2009

The following information below details briefly some great incentives that are being offered to buy this year of 2009. For official news and getting it from the source you can visit FinancialStability.gov regarding Obama Administration’s strategy to strengthen our economy.

$8,000 Tax Credit for Home Buyers
The following was reported by a very reputable Lender (call him for more info):

EXCITING NEWS!
It is true! There is an $8,000.00 refundable tax credit for anyone who has not owned a home in the previous three years, who buys a home between January 1, 2009 and November 30,2009. This means that when you file your taxes you will get an additional $8,000.00 with your refund. If you owed taxes your taxes will be reduced by $8,000.00 and if there is any left over you will receive it in the form of a tax refund. MORE GOOD NEWS! The $8,000.00 does not have to be paid back provided that you keep the home for at least three years! There are some income limits and the amount will be reduced if you file jointly and make more than $150,000.00 per year or file singly and make more than $75,000.00. Please call me with any questions. Locally you may call at 674-1090 or toll free at 877-674-1090. You can email me at stevestout@sgimortgage.net
PLEASE REMEMBER! Interest rates have been inching up since the 8th day of January. They are still historically low but notwithstanding all of the government's efforts, the rates are going up slowly but consistently.
Happy House Hunting!

Home Owner Affordability and Stability Plan

Another item that can be important toward forestalling the predicament that some home owners find themselves is part of the stimulus package. It is aimed at making payments affordable for those that would normally be having trouble with their interest rates jumping to troublesome variable rates that leave them incapable of making their payments and being forced to move and give the home back to the bank in a loss.

Current rules have made it difficult for families who own less than 20% equity in their homes- they have had a difficult time taking advantage of historically low interest rates. People who have conforming loans that are guaranteed by Fannie Mae and Freddie Mac are those whom this initiative pertains to. This new plan enables them to move to a new loan for up to 105% of their homes value. This could help lessen the number of foreclosures here in the St George Utah Real Estate market.

Higher Non-Jumbo Loan Amounts Extended

Below are some key points about this higher loan limit extension, announced by the Fair Housing Finance Agency:

• The non-jumbo, middle tier of home loans begins at loan amounts greater than $417,000 for single-unit homes.
• The top end for this tier is $729,750 for single-unit homes.
• The rates for these loans will again be slightly higher than conforming loan rates, but less expensive than the standard "jumbo" loan rates.
• This higher limit on the non-jumbo tier is available in 250 counties across the United States. (I don't think it applies to Washington County- call Steve Stout at (435) 467-1090 to check and find out for sure.)

Stimulus Funds for Utah - Utah Housing Corporation $6000 Credit for Buyer’s

Preferred Lender, Steve Stout has sent this update regarding Utah Real Estate on March 18, 2009:

Hello – I just wanted to give you some information regarding the new Utah Housing Corporation $6000 credit for buyer’s. This is part of the stimulus funds and the state of Utah was given 10 million dollars for this purpose. This $6000 credit is for NEW homes that are unoccupied and never lived in. There are income limitations at $75000 yearly for single people and $150000 yearly for joint. It is not limited to first time home buyers. It is in addition to the $8000 tax credit that is now available for first time home buyers. It is not official yet but this is what we know so far.
More info to come……..

Thanks,
Steve Stout

To update Steve has since told me that it is on the desk of the governor to sign, so as soon as he signs it (SO IT IS NOT IN EFFECT YET). It will be available to buyers as if buying for their primary residence only, to occupy within 30 days after purchase. For official news you can visit the official Utah Housing Corp. page governing requirements. Locally, for the St George Utah area, Steve Stout with SGI mortgage is equiped to make sure you take advantage of these incentives at the time of your purchase.

Initial St George Utah Real Estate Predictions for 2009

Our local St George market has been hit with a little kick-up of buyer interest and activity from my subjective viewpoint in talking to several realtor's and in getting their views on it. One realtor showed property every day through the holidays except Christmas day. Another one who brought a buyer offer on a home I had listed and that I ended up selling through him as the buyers agent, spoke about a huge increase in what he had been seeing in home buyer interests, although harder still to get buyers to commit to something.

St George Utah Real Estate Predictions for 2009
A recent prediction on the 2009 market was sent to me by my Lender, Steve Stout with SGI mortgage who has been doing mortgages for 15 years, and does not lack for business. He remarked to me, 'that these Wells Fargo analysts usually know what they are talking about'. It basically said that some pent up buyer demand is awaiting and that the only thing really forestalling a pick up in buyer activity is when the government dragged out for so long deliberations in bringing excessive attention to "the bail out", and that otherwise it was a huge factor dampening buyer confidence. But with the return of good interest rates and the likes, they predict that the housing industry, will be a goodly part of the impetus for restoring 'consumerism' (as in helping to spur on the economy at large) starting mid 2009. This is one prediction reportedly from Wells Fargo and some subjective viewpoints based on some research, here from the desk of Brian Habel.

That being said, could it not just be the very best time to buy? Prices have reached an all time low following one of the greatest amped up building and housing cycles represented fervently here in our local St George market.

Feel free to visit my site and shop all the listings at St George Utah Real Estate. Let me, Brian, represent your interests. Remember, it is the 'red carpet' when you buy and no burden is put on the Seller or Buyer by having your own agent. With realtor commissions, the listing agent splits his/her commission on all MLS properties from all the real estate companies. Either that or you as the buyer will most likely have the same agent that represents the seller, representing you- then the listing agent pockets both sides. Did you know that? Why would you do that in a market like this when the buyers and their interests have the clout? Plus, you might as well utilize that 3rd party negotiation set-up, provided you for free in the system, as you can often heighten better terms for yourself all around as the buyer. Besides, you will need a realtor to show you all the listings you are interested in, not just the one with the sign in yard. Feel free to contact me, as I can blissfully say without hitch- I'm free! Learn about Brian, your St George Realtor and see testimonials.

New and Existing Home Sale Projections - St George Real Estate Correctly Valued

Economic.com gives us some insight as to where we may be headed as far as real estate sales and values are concerned. First of all, here in St George Utah, home prices are calculated as "Correctly Valued" as to price to income and rent ratios. The following graphs on St George Ut Real Estate Market Statistics will predict that the bottom has arrived for both new and existing home sales and as well as the predicted climb out of that bottom in appreciation of values.

The New St George Regional Airport

The new St George Regional Airport will be an economic catalyst for so many businesses and its arrival is planned for around Nov. 1, 2110. The new airport will likely attract companies looking for a place to land. The current St George airport creates nearly 1,000 jobs and brings in nearly 30 million to the local economy. The new airport manager was reported in a recent article from Utah Business magazine entitled Taking Flight as saying, "This airport will be able to accommodate aircraft, freight, cargo service...these are integral elements in the community". The new runway will be 9,300 square feet, larger than the current one at 6,600 sqauare feet, in order for larger aircraft to land. The new airport will serve as an anchor to Southern Utah's and St George Transportation system.