Home prices nationally are at the lowest prices since the bust.  The same goes for Utah home prices.  According to this article posted today by the AP, foreclosures, reluctance to buy, and inability to buy homes are driving prices down.

There is good news, though.  Along with the falling prices, mortgage rates are hovering at record lows, making homes more affordable.  According to Jeremy Plouzek of Security Home Mortgage in Orem, 30 year FHA rates are currently around 4.25%, and conventional rates are around 4.625%.  Good news for a tough market!

So, when will housing prices recover?  Wells Fargo senior economist Mark Vitner thinks it may be another year until prices hit rock bottom.

Whatever the case, if you are in a position to buy, there are great deals to be found out there.  You just need to know where to look.

Check this out!  I never forward this kind of information, but someone sat around for awhile and thought this stuff up!  Pretty interesting stuff.  The best part is that if you share this with 8 people, money will come your way in 4 days! July 2011 Calendar……

Sun Mon Tue Wed Thu Fri Sat 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

Money bags!!!

This year, July has 5 Fridays, 5 Saturdays and 5 Sundays. This happens
once every 823 years. This is called money bags. So, forward this to
your friends and money will arrive within 4 days. Based on Chinese
Feng Shui. The one who does not forward…..will be without money.

Kinda interesting – read on!!!

This year we’re going to experience four unusual dates.

1/1/11, 1/11/11, 11/1/11, 11/11/11 and that’s not all…

Its a mystery, but its worth a try. good luck.

An interesting article published in the Deseret News shows that luxury homes are actually selling in this market.  Granted, the pool of million dollar homes is much smaller than the traditional home, MLS statistics do in fact show that home sales are picking up.  That goes for homes along the Wasatch Front as well as million dollar homes nationally.

So what do the rich know that others don’t know?  Probably they realize that prices are down.  Just like the stock market was down, it bounced back.  The Federal Reserve said in its historic press conference last week that the fundamentals of a strong economy are there.  They are realistic that we are in tough times now, but there are definite signs of a recovery.

So, if you have a million dollars, or if you want a million dollar home at a great discount, contact us!

Click here for link to full article from the Deseret News.

A real estate client was talking about investing his money.  He has potential to be coming into a good lump sum of money, and he said he asked his financial advisor where he should put his money, should it come through.

This caught my attention, and I sat up and waited for the answer.  I wondered what his financial advisor would say he should do with his money.  I know what I would do with it!

“He said I should invest it in a quad.”

Interesting, I thought.  You know, if it really is a nice chunk of money like he claimed, then yeah, why not enjoy life a little!  Go buy a 4-wheeler!  That’s just a small chunk of the sum, and there is definitely something to be said for living life.

But as my friend kept talking, I asked him to clarify.  I thought “quad” was a 4-wheeler.  But his financial advisor had actually suggested investing in 4-plexes.  Income properties.  Real Estate.

Duh.  I’m a real estate guy.  And I liked his financial advisor even more than I did when I thought he was recommending some good times in the mountains on a 4-wheeler with kids!

Interestingly, that’s the same advice that I have told my wife.  If I were to die, and the insurance money were to come in, then pay off any debt, and invest in good income properties.

But then, I started thinking more about this advice over the next few days.  Financial advisors get paid to manage your money.  And financial advisors generally deal with mutual funds, stocks, bonds, etc.  But typically, those moneys are contributed a little at a time, in monthly or annual contributions.  Wouldn’t it make sense, then, for that financial advisor to stick to his guns, and tell my friend to invest with him?

Extrapolate from there.  For large sums of money, if investing in real estate is the best investment, then why wouldn’t the same be true for small sums of money.

Homes in Order says that getting out of debt as quickly as possible is the best possible investment.  Mathematically, we can prove the benefit of paying off a mortgage early.  $1 = 5 Bucks.  $2 = 1,000 Bucks.

So invest in real estate!  And if you don’t have a few $100,000′s sitting around, then prepay $100 today, or $20 per month.  It’s the best investment.

Jeremy Washburn, April 2011

Free entry to the Utah Valley Home Expo!

Print this ticket for admission, compliments of Washburn Real Estate!!!  And print as many as you like for additional admissions.

This is one of the most famous works of art in the world, and it hangs in my office, behind my desk.  (Well, a print of it does!)  This wood block painting is by Hokusai as part of his famous “36 Views of Mt. Fuji” painted over 180 years ago in Japan.  This is the great wave off of Kanagawa.  (I lived in Kanagawa for a short time as a missionary for the LDS Church.  It is a beautiful part of a beautiful country!  My heart goes out to my good friends in Japan as they deal with disasters at this time.  If any country can recover, it is Japan!)  ガンバレ日本！

So, what does this have to do with Real Estate, and why is this on my blog at Washburn Real Estate? The tsunami in Japan has left a strong country fighting to recover.  I want to be extremely sensitive to the devastation happening in Japan at this time, and I do not want to make light of a serious situation.  That being said, I know that Japan prides itself on “kaizen,” or “continuous improvement.”  Kaizen is a term that says there is always room for improvement as well as continuous self inspection.  I know that even as I type, the Japanese are looking for way to improve and to prepare for the next tsunami.  Likewise, what better time than now to look at the huge wave and crash that is our real estate tsunami?

Every day when I come to my office, this painting greets me.  I was shocked the other day when I was analyzing real estate data to find this painting replicated in our real estate market.  Flip our market report around, and you have the Great Wave.

Everybody asks, “How is the market doing?” As my friend Rob Rahter (Keller Williams in Orlando, Florida) noted, the answer to this is:  ”Why do you ask?”  The market is a great market right now, if you are trying to buy.  It is a very tough market if you are trying to sell, especially if you bought or refinanced a few years ago during the boom.

Here is a graph of how real estate is actually performing in northern Utah right now.  This is MLS statistics, and it goes back to 1996 — approximately when our MLS started keeping stats.

Salt Lake, Utah, and Davis Counties in Northern Utah. Home Sales 1996 to current.

Notice the remarkable likeness to “The Great Wave.”  The problem with the graph, though, is that it is still incomplete.  What do you think the answer to the market is?  Has the market stabilized?  I don’t think so.  Are home prices going to be going up any time soon?  I don’t think so.  Then again, how much further could they go down?

If you look at just the averages, while the average home at the peak in 2007 was around $245,000, the current average price is around $196,000.  What does that mean?  The average homeowner has lost about $49,000 in paper equity.  And for many, that’s real equity.

You don’t have to be a statistician to see the trend.  It’s not a good one!  And the scary part is we don’t know exactly when this wave will bottom out, and what will happen then.  According to an article I read recently (sorry, no reference), 23% of homeowners are underwater in the US today,  That’s right.  Count down 4 houses on your street, and chances are, one of those are under water.  That is if you are typical.  If you happen to live in Nevada or Arizona, nearly 50% are underwater.

That’s a great wave.  But the optimistic side is this.  It will come up.  And there are great opportunities to buy right now.  Many houses on the market are selling now for far less than you could ever possibly build them for!

Surf’s up!  If you know what you are doing!  There are always opprotunities.

Click to go to interactive map.

If you are a homeowner, then life might just be tough for you right now.  According to this article’s statistics, 23% of US mortgages are underwater.  21.1% of Utah mortgage holders are underwater, only slightly below the national average.

If Utah’s 21% isn’t bad enough, our neighboring states Nevada and Arizona have staggering rates:  69.9% and 51.2%.

Click on the graphic to go to the article and search the US.

How is the market?  Are home prices still coming down?  When are they going to be going back up again?  Is real estate still bad?

Utah County Quarterly Sales, MLS. CLICK ON IMAGE to view full size.

These are questions that we hear as Realtors every day.  Here locally in Utah County, there are still hundreds of homes selling every month.  Notice the attached chart of home sales here in Utah  County.  This is the definition of “a bubble.”  Notice how home prices were steadily increasing for years and years.  Suddenly, the government started allowing crazy loans, and prices and quantity of homes sold ballooned.  However, what goes up must come down.  Why?  Basic economics.  Supply & Demand.  There are more homes for sale right now than buyers to buy them.  And that means, with a lot of competition, sellers need to drop the prices of their homes.

So, a deeper question is this:  What happened to the buyers?  During the boom, crazy lending led to crazy borrowing.  Anybody could get a home, and a lot of people were buying homes.  However, many of those buyers were speculators, looking to make a quick buck “flipping” homes.  A lot of people made a lot of money.   So what happened to the buyers?  1)  A lot of the buyers during the boom were speculators.  2)  A lot of the buyers during the boom got easy loans.  3)  A lot of the buyers during the boom lost their homes and now won’t qualify for a loan and are renting.

So, when will the economy recover?  The best answer is this:  the economy is recovering.  There is a big correction that needs to take place, and it’s painful.  But there is a science behind the economics, and the basic elements of economics won’t change.  Price, Supply, Demand.

So, when will prices level?  That’s a great question, and probably nobody knows for certain.  However, in Business School, they teach a concept called “Multiple Regression Analysis.”  Simply put, if you have a graph of data points (and we have an excellent pool of data points!!), if you were to lay a ruler down and try to draw the straightest line between the dots, that’s what multiple regression is.  If you were to put a ruler on the blue points on the graph for the first 2/3 of the graph before the obvious bubble and continue the line forward, that’s what they call “extrapolation.”  If you extrapolate from the original dots, in my opinion, I think that’s where the “natural” price of homes should be.  So, our correction is taking us in that direction!  However, I don’t think we are there, yet.