Common Housing Market Questions-

Common Housing Market Questions-

Common Housing Market Questions

President's Message

Chris Sloan

As we near the end of 2009, we find that housing markets nationally as well the Utah housing market are in much better shape than they were last year at this time. The combination of low home prices, bargain mortgage rates and government tax incentives has created a momentum and demand for homes that is likely to continue into next year and hopefully break the cycle of bad news.

If you're thinking about buying a Utah home in the next few months, you're likely to have a lot of questions about home buying and current market conditions. Here are answers to some common inquiries:

When will the housing market recover?

We're already seeing some signs of recovery for housing. On both a national and a state level, sales appear to be on the way up. In Utah, third quarter home sales were up 2 percent compared to the same period a year before, the first quarterly rise since second quarter 2006.

Experts have mixed opinions, however, about the direction of home values next year. Lawrence Yun, chief economist of the National Association of Realtors, believes U.S. home prices will get a 3-5 percent boost, while Mark Zandi, chief economist and co-founder of Moody's Economy.com, believes prices will see more declines as new foreclosures come on the market.

The fact is there is no consensus on when the bottom will be and no home buyer will be able to time it perfectly. Buyers should be aware that price drops or gains will vary significantly depending on the location and the price of homes. In fact, some homes (like lower-end homes or houses in prime locations) have likely already seen their values stabilize.

Likewise as we have said many times on this blog, houses for sale in Grantsville Utah, can stabilize at a diferent rate than homes for sale in Stansbury Park, just 12 miles away.

Proof of this is the dramatic price differential between horse property for sale in Tooele and Homes for sale in South Jordan that allow horses.

Is it a good time to buy a home?

Yes, it's a good time to buy a home depending on your circumstances. If you have a stable job, steady income, good credit and are planning to stay in the house for at least four or five years, then a home purchase in Utah may be a wise decision.

Today's Utah home buyers have tremendous advantages. In many areas, home prices have come down from their peaks and are incredibly affordable when you take into account the super-low mortgage interest rates."The market is just about as affordable as it's ever been at least based on incomes," Zandi told attendees at a National Association of Home Builders conference.

The federal government's home buyer tax credit is also a significant incentive. It's worth up to $8,000 for first-time buyers and $6,500 for existing homeowners who have lived in their homes at least five consecutive years out of the past eight.

While consumers shouldn't rush to make a home purchase if they are unprepared for the financial commitment, buyers who are ready to get into the market shouldn't procrastinate too long. The extended tax credit ends April 30, and experts expect interest rates will begin to rise next year.

How do I know my local market is improving?

One of the best indicators for knowing which way the market is headed is to look at the supply of inventory. In other words, how many months it takes to sell the current inventory at the current sales pace.

Generally speaking, this is about 6 months in a balanced market. On a national level, Yun reports that it would take about 6 months to sell the current supply of inventory for homes less than $250,000, but it would take about 14 months for homes priced higher than $500,000. To get a better gauge on your own market and price range, talk to a local Realtor about whether inventory is trending up or down.

If you don't have a Realtor, give us a call @ 435-840-5029 we'd be glad to help.

What happens if home prices fall after I buy?

As long as you can afford your mortgage payments and don't need to move anytime soon, a dip in prices probably won't affect you too much. It could have an effect on your ability to refinance, but with today's super-low rates you likely wouldn't be able to refinance to a significantly lower rate.

Also keep in mind that homeownership is a long-term commitment, and home values tend to rise over the long run. For example, data from the National Association of Realtors show that home values tend to rise at the general rate of inflation plus 1.7 percentage points in a balanced market. That means homeownership is usually a pretty safe bet for those who are in it for the long haul.

Nevertheless, it's important that you not overpay for your home. Before you make an offer on a property, make sure to talk to your Realtor to make sure the price you're paying is in line with current market values. Also talk to your Realtor about any concerns you have about the home-buying process and ask for information about local market conditions.

For more information on the home-buying process, and homes listed for sale in Utah, visit Utah Homes For Sale and get up to the minute Utah Real Estate information.

Or give us a call to answer any Utah Housing market questions. 435-840-5029.