No matter what industry you work in, there is always a year end wrap up and January prediction/ forecast available from some industry expert out in the world. Glass blowers and fuzzy sock makers want to know the prices of materials and demand for products each year just as much as home builders and Realtors want to see into the future of housing. Realtors, economists, builders, commercial agents, banks got together last week in Salt Lake to look at the data and see what this year foretells. Basically, the news didn’t suck.
The bad news isn’t any news at all. New home construction is down 76% from 2005. That means 76% of any construction industry related jobs also went down the economic toilet during those years. Many new home developers do not list their product on the local MLS and thus don’t report sales data to the MLS, but James Wood from Utah’s Bureau of Economic and Business Research says that in 2011 existing home sales were seven times higher than new home sales. What’s that mean for you? That means you can probably get a really really good deal on a newly constructed home and I’ll bet the builder will throw in a lot of bells and whistles to make you happy to buy their home…like paying for your loan costs, giving you upgrades on appliances and flooring, redesigning rooms for free, installing sprinklers and sod, etc.
Wood also reported that there are 480,000 mortgage loans in Utah and that 124,000 of them in 2011 have negative equity or near negative equity. That doesn’t mean those 25% are delinquent on payments. I take that statistic to mean that it would be hard to sell a home without any equity and that logically people would rather stay put than try and sell a home and walk away with no money. If people can’t move up, down or out, they will possibly remodel, which boosts that industry and potential sales at hardware stores for the DIY crowd.
Prices on homes fell 22% in Salt Lake County during the past 4 years and 9.5% in 2011. Pay attention-prices on homes are low and the forecasters predict prices will drop another 3-5% this year. Then prices will STOP falling and bottom out. This doesn’t mean the value of your home is going to start creeping up this summer or for quite a while. It just means your home won’t be losing much more equity. Phew!
Mr. Wood was commissioned by the Salt Lake Board of Realtors to interpret the MLS data for the members. The SLBR is a part owner of the MLS, along with two other Boards in the state of Utah. The data shows for 2011 that the average median sales price of a home in Salt Lake County was $199,000 and the average sales price of a foreclosure property in the County was $149,950. Foreclosures are a great deal but I’m seeing multiple offers on many foreclosures, often cash offers from investors wanting to pick up rental inventory. Keep a watch on both the number of foreclosures and how asset managers will be packaging them this year to woo investors to more easily pick up multiple properties of different types in different locations under one blanket of one offer.