By Emily Sanderson Olsen
May 20-26, 2013
Forbes magazine’s Kurt Badenhausen was right on in January when he told the Salt Lake Board of Regulators that Utah’s real estate market would perform exceptionally well in 2013.
Homes have been receiving multiple offers after being on the market for only a few days, and sellers can pick and choose who they want to work with. The present seller’s market is caused by two phenomena: interest rates still being close to historic lows and the looming expectation that interest rates could increase at any time. As a result, buyers feel a sense of urgency to close deals now.
“With interest rates at or near historic lows, there has been no better time to buy,” says Steve Christenson, a loan officer at Axiom Financial. “As the economy improves, interest rates will increase.”
Badenhausen based his predictions on the excellent performance of the Utah real estate market in 2012, which appears to have rebounded us from the recession.
In 2012, home sales increased 15 percent in Utah. We also experienced a 6 percent increase in the median sales value of homes, and 80 percent of homes sold were within the affordable range to the median household (the highest level of affordability ever recorded in Salt Lake), according to Jim Wood, director of the Bureau of Economic and Business Research at the University of Utah. This means that homes have become more affordable and income levels are increasing along the Wasatch Front.
Utah’s booming real estate environment is the result of six factors, Wood says.
1. Extreme Affordability. Affordability is attracting buyers to the market and fueling increased demand.
2. Demographic Growth. The Wasatch Front has experienced an increase in job opportunities, which has attracted individuals from outside of the area to settle here. The growth has increased the demand for housing.
3. Rising Consumer Confidence. The recent positive economic news encourages consumers to make purchases, including homes.
4. Higher Rents. Apartment rents increased 8 percent last year, making the expense comparable to a monthly mortgage payment. Rental vacancy rates also dropped below 5 percent in 2012, so consumers are choosing to buy, which will give them more housing options.
5. Low Inventories. Low inventories exist for both unsold new homes and existing homes. The demand is so great that homes are getting snatched off the market sometimes within a few days of getting listed. As a result, sellers can price their homes higher.
6. Low Mortgage Rates. As mortgage rates drop, buying power increases, and buyers want to take advantage of the low rates while they are still available.
Loan guidelines have become more restrictive since 2008 in order to prevent mass foreclosures from happening again. However, Christenson reiterated that despite the new safeguards, there has never been a better time to buy. “Some people are quite surprised how easy it is to qualify for a loan,” he says.
A number of factors play a role in qualifying for a loan. Your credit history and the amount you can put towards a down payment are only two of them. Christenson says many people can qualify for state and federal grants from organizations such as the Utah Housing Authority and Community Development Corp.
In addition to selecting a knowledgeable, resourceful Realtor, one of the best ways that a buyer can be competitive against multiple offers is to become pre-approved for a loan.
“Meet with a loan officer well in advance,” Christenson says. “Even if you think you don’t qualify, you can get an assessment from a loan officer to see what it would look like if you were to purchase now.”
“A loan officer can also set you on the path to purchase later if current circumstances prevent a pre-approval,” he continues. “We can help you improve your credit by taking a few simple steps.”
And if you are thinking of selling your home, now couldn’t be a better time.
“We are experiencing a severe shortage of homes for sale in our area. Our inventory of listings is at the lowest level it has been in many years,” says Chris Jensen, president of Coldwell Banker Residential Brokerage in Utah, in a recent newsletter.
“Buyers are out there each weekend scouring the neighborhoods for homes to buy; buyers are ready to make a move when they find a house to buy,” Jensen continues. “With so few homes available in this market, if you were to sell your home now you could potentially get the highest price since the downturn og the housing market.”
When the interest rates increase, as we know they will soon, the market will be driven by a new set of conditions.
“While you might be able to sell your home for more if you wait, there’s no way to tell what the future will hold,” says Jensen. “When more homeowners eventually decide to come into the market, the balance of supply and demand could change in favor of buyers once again.”
Emily Sanderson Olsen is the marketing coordinator of Coldwell Banker Residential Brokerage’s Salt Lake Office. She has a bachelor’s degree in journalism and a master’s degree in business management.
Flutterbys Blog 