Real Estate Information Archive

So in case you've been living in a cave or as Castaway on a far-away island, you're very aware that the US Housing Market crashed big time in the past few years. There have been many, many arguments over "why" this foreclosure crisis is the way that it is.

Some have blamed Lenders, others Real Estate Agents, many the government, and of course many feel is was just our good old fashioned American "greed" that caused the markets to puff up like the Goodyear Blimp. 

Did banks prey on unwitting consumers, or did households “overreach” and borrow more than they could afford? Economists at the University of Arkansas recently completed a study to answer that very question.

So what did they find? While they do NOT excuse the behavior of banks and other predatory industry idiots, they found that the #1 cause of the foreclosure crisis was that CONSUMERS JUST PLAIN OVER-REACHED in their borrowing. Here is a link to the full report: University of Arkansas Foreclosure Study

I'm not surprised. I happen to know a little bit about consumers since I AM ONE!

What you can AFFORD vs. what you QUALIFY FOR

That is the real question of the day, and the two are very different. Understanding the difference, will make the difference in being a happy, contented homeowner pursuing the American dream, and one who is facing the pains - financial and social, of foreclosure.

Here is a fantastic video clip by one of my favorite Mortgage Professionals in the world, (Blake Bench of First Colony Mortgage), on how to avoid that very same over-reaching. Check it out!

Click on this link:  How Much Can I Qualify For?

Lesson? Know what you can really afford, not just what some online mortgage calculator says you qualify for, then stay within that affordable range on your next home purchase!

Feel free to contact me directly with questions - larkin@gostgeorge.com, or shoot Blake Bench an email: blakeb@firstcolonymortgage.com

There has been alot of talk about Washington County, Utah foreclosure rates - we're currently boasting the highest rate in the state! So I guess we now have the weather, national parks and foreclosures.....but I digress.

I spent an entire afternoon recently with Paul Foy, an Associated Press (AP) writer who came to town looking for the "foreclosure scoop." You can read the full KSL.com version of the story HERE.

I think he was surprised at several things: 1 - just how many distressed properties there are around here, 2 - how "nice" many of the homes are, and 3 - that the community is still vibrant.

Of course it is, it's St. George! All sugar-coating aside, we have a terrible foreclosure problem that has affected nearly every person in the county, but has also brought with it INCREDIBLE buying opportunities....time to go shopping!

In this week's episode, I join forces with Bank of America's Blake Bench upon the StGeorgeForeclosureTour.com shuttle to talk foreclosures, our upcoming foreclosure tour, and take a brief outside look at a HOT foreclosure that sold in 6 days. We even made a pit stop at In N' Out Burger!

Join us as we kick off the fall 2009 Foreclosure Tour season on September 5th. It is fun, short, FREE and should be enlightening! Details and registration at www.StGeorgeForeclosureTour.com OR www.SoUtahForeclosureTour.com.

Did you get your property tax notice this week? Many have and most are wondering why their tax bill is STILL so high after property values have dropped.

Patrice St. Germain with the Daily Spectrum wrote a great piece about it HERE.

Today we discuss "why" that is happening and how we can help you appeal your tax notice - IF APPLICABLE. I like to think of it as my annual "pro-bono" real estate work!

Enjoy and be sure to visit www.DixieHomeValue.com after watching the video if you feel that the assessed value (not tax rate) of your home is still too high. If you do send me a request for free value analysis PLEASE state "property tax appeal" in the comments!

The tides are a turnin' in many parts of the St. George area real estate market this month! Friends and clients on my mailing list have been hearing about this for the past few months and the positive news keeps coming.

In an article from today's "Spectrum" newspaper titled "Local Economy Stabilizing", local & regional economist Lecia Langston said Washington County's economy is beginning to stabilize. Well it's about time!

For so long our area was "insulated" from the major ebbs and flows of the economy, feeling only a percentage of the cyclical changes that may have been felt in other major metropolitan areas. Why? Well if you live here you know the answer, and if you are moving here you also understand. Great location, weather, scenery, national parks, low crime, the works!

Outside of all the economists' hard-to-understand charts and graphs, what we are seeing "on the ground" is this: Properties hitting the market and selling in a few days or less for list or even above list price, with the final price and terms being determined through a "bidding war." (see this WSJ article on just that: BIDDING WARS)

Here are some hard figures to consider:

1. "Pending" sales up nearly 40% since February. All of the major financial and housing experts use pending sales as a major indicator of housing market health.

2. "Active" listings down 12% in that same time frame. Real estate, just like handguns and hammers, is about supply and demand. Lower supply is what we want.

There is still a TON of foreclosure inventory coming, but I think this is a good thing. Why? Because every well-priced home that hits the market right now, especially under $300k, is selling in just a few days. This tells us the public is finally ready to pull the proverbial trigger and get into the housing market.

Housing has always driven the rest of the financial markets. When people are buying, sellers are getting paid and spending that $$ on other homes, goods and services. In that process, real estate agents, title and mortgage people also get paid. They in turn spend money, and the eternal sales cycle continues.

Please feel free to comment or ask questions on this page about the figures above, as well as your personal opinions about the market. Onward!

Some time back I posted an entry titled "If I Gave you $10,000  to Buy a House, would you do it?"  I was of course referring to the St. George / Washington County Home Buyer "grant" of $10,000. It was exciting news for sure.....at the time.

That news now pales in comparison of the combined incentives available for buyers in this current market, particlularly FIRST TIME home buyers (defined as anyone who has not owned a home in the past 3 years.)

Let's take a brief look at those options:

$8000.00 First-time home buyer tax credit - Detailed summary HERE.

You literally get either an $8000.00 check from the US Govt, or a credit in the same amount against your tax liability if you buy a home between Jan 1, 2009 and Dec 31, 2009. (Assume you owe nothing in taxes, you're getting $8k. Assume you owe say $4000.00, you're getting $4000.00)

Who gets it? First-time home buyers only. Does it have to be paid back? NO. The "old" tax credit (from way back in the pre-historic age of 2008 and President Bush) was $7500.00 and had to be paid back. Not this one, it is yours to fix your home up, go to Disneyland, stuff in a mattress, whatever.....forever. Income qualifications are broad and very few will make too much for this.

$10,000 Home buying grant in Washington County / St. George -Email us for Details

This is an income qualified "grant" and also depends on how many people in your household. If you are couple with no children, $32,000 is the cutoff. I believe it goes up $5000.00 per child thereafter. The key stipulation with this program is that is has to be paid back in full if you sell or refinance the home in the first 15 years after.

$6000.00 Utah "Home Run" New Homes Grant - Just signed into law LAST NIGHT by Governor Jon Hunstman. Detailed summary HERE.

There are only 1600 of these babies available and then the pot of gold is gone. The funding comes from President Obama's stimulus package and the $$ that was allotted to Utah. The premis is this: Offer a $6000.00 incentive to those who buy a vacant, never-been-lived-in home, so we can get some of this vacant inventory "mopped up.'

Unlike the Washington County incentive, this does NOT have to be paid back and income limits are HIGH: $75,000 for individuals and $150,000 for married couples.

Total Incentives to buy: $24,000

Kind of makes me wish I were buying....

Not only that, it has also upset alot of people who feel like their hard-earned tax dollars are being used to pay their neighbors an incentive to go buy a home. There is some truth to that I'm sure, but as a member of the industry who looks at vacant homes all day long I have to support these measures.

Additionally, we have actually arrived at a place where owning IS cheaper than renting for many people, and if not literally so, it is effectively the case based on all of the tax benefits of owning a home. (not to mention getting an $8000.00 check after closing!)

Sorry to sound like just another home-peddling realtor, but we are truly heading into the "Perfect Home-Buying Storm." I read a report this week that showed the following: Since they began tracking interest rates in 1971, obtaining a (legitimate) loan has never been more affordable....ever. Add to that (now) low pricing and these incentives and I can't see why a qualified individual would wait.....for what?!

In closing, let me illustrate how these incentives "hit home." I put a contract together on a foreclosed property with a young first-time buying family just yesterday. The home had been on the market JUST 1 day and will need several thousand in maintenance items to be really "livable" by most people's standards, (carpet, paint, some appliances, yard cleanup, etc).

Now the average family buying their first home will do everything they can to come up wtih their downpayment, but as for making alot of repairs, which almost all foreclosures require, most people don't have it!

As a young family with 1 baby and consistent, but "limited" income, that $8000.00 will come in very handy for them.

What say you?

I love good news, don't you? In a period of NEVER-ENDING financial pain, death, destruction and just generally bad news once again my beloved Beehive State is a ray of light.

In second edition of a report called "Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index", Utah was just ranked #1 in terms of its' forecasted ability to recover economically.

Here are the top and bottom 5:

Sorry New York - things don't look bright for you. And they beat up on California of course for more over-spending, tax hiking and general stupidity in policy-making.

Full Article HERE.

I’m sure I’m going to take some heat from my peers for this, but I’ll take that risk to present the following long-range views on the subject.

There’s a lot of “buzz” in the St. George real estate market right now about the upcoming “Utah Real Estate Auction”, (www.UtahREA.com). I’m not sure what that buzz looks or sounds like outside of my professional peer group, but it seems that every time I turn around this week another agent is talking about it. 

The concept behind the auction is quite simple, and on the surface, makes complete sense: Put together a huge list of properties that are (supposedly) distressed and ripe for deal-seekers. Compile them all into a big online database, roll out the direct mail and billboards announcing “deals of the century”, and set the “contract room” up for hungry Buyers and elated Sellers.

In theory, everyone wins. Sellers get what they want, Buyers the same, and any involved Realtors pick up a quick, albeit reduced, commission.  So what’s wrong with the program?

Nothing, perhaps, but if you take a long-term view of the market and the perceptions that get created when things like “auctions” take place, there are some potential pitfalls. Here are a few to chew on:

Potential Pitfall #1: Buyers’ perception of possible savings become distorted.  For months and months now, the average home in Washington County has sold for 85-100% of the list price. Now hold on for the next part: many homes, almost all bank foreclosures, are selling for 100% of the list price or MORE! I am hearing weekly of “bidding wars” being created on homes priced so aggressively that multiple buyers are trying to get in on the action.

With the hype of an auction, buyers, especially out of town buyers, get the idea that they can come to town and “name their price” when the reality just isn’t so. This creates disappointed buyers and lots of wasted time.

Potential Pitfall #2:  3^rd-Party lender and lien-holder buy-off. Many of these homes are “short-sales” and lack the required 3^rd party approvals at their current prices….what happens when bidders come in and offer another 25% lower?

What happens is more disappointment. We saw this happen in the past 90 days in Northern Utah. It was all over local and state news. Would-be deal seekers showed up an a similar commercial auction, made their bids and had them “accepted” at the auction…only to find out later that the banks and 3^rd-party lien holders wouldn’t buy off on the high bids. I saw some ANGRY people on the news that day……whoops.

Potential Pitfall #3: The “perception” of a good deal does not a good deal make. I am always reminded of the story my Keller Williams Sales manager told me about his first iPod purchase on eBay. The poor guy stayed up ½ the night to ensure a winning bid, only to find out later he had paid higher than retail price!

In a KSL piece dated August 6, 2008, Paul Nielson wrote about the fact that real estate auctions are not always a good investment. This goes back pitfall #1. Read the following excerpt from that article: “As for those great deals where people can buy a home at auction for less than half it's worth, some attorneys say that's not really happening in Utah right now. Sometimes at foreclosure auctions, the bank will charge what it is owed, even if it's more than what the house is worth.”

Well that’s interesting. Unfortunately, just as there is always a dummy who will respond to an email from the “Princess of an African King” to make a few million dollars, there will always be people who will show up to a real estate auction and over-pay for a property due to the inherent “perception” of a good deal.

Now can I be completely frank with the following? When you go to the auction website you will see the "Estimated Value" vs. the "Opening Bid." There are very "Estimated Values" that I can comfortably say are the "Actual Values." From my personal observation, many of those estimated values seem high to the tune of 5-15%. In many cases the "Opening Bid" is just about the actual current market value. DO YOUR HOMEWORK!

And don't forget that they are tacking a 6% "premium fee" on top of the winning bid price!

Here is a link to the auction inventory which stands at 72 properties at this writing: http://www.utahrea.com/auctions/properties.php?auctionid=14

So why go?

Lots of reasons. Sheer Curiosity and the fact that you really might find a sweet deal are two really great reasons. Another is that you will just learn a lot in the process as a bystander.

The Utah REA people and their local contacts are doing a super job promoting the even and all of the potential pitfalls aside, it is great exposure for our local market.

The other thing I really like is that in a market of "bystanders," these people are actually out making it happen. There is also the potential to move a large volume of inventory in a very short period of time....very cool.

Here are some useful tips to make sure you don’t end up as one of the “dummies” I described above:

1. Do your homework first. This means contacting a good local Realtor who has solid contacts with people like home inspectors. Get out and physically view the properties in advance, ask questions, and have your agent run some “comps” (comparable sales data) to determine what would be a good price for the home.

If you’re concerned about how your agent, as well as “listing” agents get paid (cause you don’t want to pay more than you have to, right?), contact me directly for a copy of the auction company’s rules, forms, etc.

2. Pre-determine your absolute max asking price in advance. This will also ensure that you don’t get caught up in the wave of emotions that can come along with an auction-type setting.
3. Be sure about your big “why” before bidding. Do you need a home or are you just someone who buys 5 pallets of Diet Coke at Costco because it’s “on sale?” Real estate investment may be the greatest long-term wealth building tool in the world, but buying and “flipping” homes like the masses did in 2005 is a dangerous game nowadays, so but be sure you have a solid game plan put together before bidding at an auction.

Auction Date: Thursday February 13th - 7:00 PM.

Location: The Dixie Convention Center - 1835 S. Covention Center Dr., St. George.

I will be there. We will be driving the SoUtahForeclosureTour.com shuttle…you can’t miss us! Please chime in with your thoughts and opinions about the auction process. Good? Bad? Indifferent?

Very few people I know HAVE NOT seen the image below by this time. I had it emailed to me (literally) by 6 different people - thanks for thinking of me!

That said, it is hilarious and tragic all rolled into one. It is, however, the reality of our current market and will be for some time as far as I can see.

The flip side of all this pain and suffering is the load of purchase opportunities that pop up when "blood is running in the streets." Of course.....I do not know when the "bottom" nor do I dare predict it.

One thing I DO  know for is the fact that we will ALL know where the bottom was once it starts going up......hindsight is interesting, ain't it?

I am personally trying to make the best of this market with our very first "Foreclosure Tour" this Saturday which I wrote about last week. This is NOT a "sales tour." The intent is to provide buyers with they want, access to bank foreclosures, and educate all on tour about both the opportunities as well as risks involved in buying a foreclosed home. We will have our Home Inspector & lender there to field pressing questions.

Additionally, I'm sick  and tired of so much negative press, doom, gloom etc. This is my way of saying "hey, le'ts do something about this problem" by getting this inventory in front of today's buyers.

I spent the afternoon today previewing  properties for the tour and narrowed down the 8 we will be touring. A couple of these homes probably ARE haunted....they have certainly been let go.

On the low end is an absolute "beater" that is essentially a duplex and has ALOT of opportunity for  an investor, currently priced at $153,900. A perfect example of a home that needs a bunch of work but could be a killer rental.

On the high end is a luxury home in Green Springs at $495,000 that would have easily sold at $700k+ in the peak of the market. All this home needs is a fresh front yard and installation of the back. Many bank foreclosures are in almost mint condition but the builder got under water and just couldn't resurface for air.

We have seen great interest in the tour, but are still taking registrations. We would love to see anyone who is intersted in either capitalizing on, or just simply learning about this market. Check it out here: www.SoUtahForeclosureTour.com.

To all of our readers out there, keep fighting! This market is tough and we are going to have to "hunker down" before it gets less tough, but so much good will come of it. It is our chance bring America back to reality on 3 key issues:

1. Home Values. 2. Credit (as in not giving it away like business cards) 3. Consumer spending.

Until then, keep smiling.

I guess they may not MEAN to ruin our lives.....they just want to sell papers, TV time, increase Internet viewing. But they are ruining our lives anyway.

If you don't belive me, consider the following "incident" experienced by one of my Seller clients this week:

• They listed their home with us a few months back and after a relatively short time on market, we placed the property "under contract" with a ready, willing and able buyer to close yesterday, October 9th.
• They day before closing, October 8th, all parties were ready to go with a fully approved loan, documents waiting at the title company. My clients had moved 90% out with the exception of their beds to a rental home.
• Mid morning the Buyer's agent recieved the following letter from their buyer: 

My husband and I have been watching the news very closely and it seems just too risky to buy a home. We know that the appaisal came in above the purchase price but we heard that houses went down 16% yesterday making this purchase worth way less than the price before we even buy it. For this reason I do not want to go through with buying the home."

Wow.

THE OUTCOME: Since (like most normal people) the Seller couldn't afford to pay both rent and a mortgage payment, they are now moving BACK in to their home without the proceeds they really needed to pay off some debt, etc. The Buyer missed out on a great buy on that home (truly), neither agent got paid, nor did the mortgage lender, nor did the title company, and the profit that everyone DIDN'T make DIDN'T go back into the economy.

Oh and by the way, houses didn't fall 16% in 1 day, nor have they ever done so in 1 single day, but the Buyer thought they heard that and the rest is history. That's a funny statement though.

As if the Country isn't already facing a huge economic crisis, the Media compounds the issues 40x over by printing headlines such as:

• "Is your Wall Street Money Safe?" (CNBC.com) - How do you think that headline affects the markets? Do you think many people ran to their broker and said "CASH OUT!!"?..I'll bet so.
• And my personal favorite: "Credit Markets Frozen!" (just about every news outlet in the world....) - How many totally able people may decide to not even try to make a home or other purchase by hearing that? "What's the use?" they probably say...

That's strange about the credit situation..my credit card still works, my home equity line is still completely open to me and people continue to buy and sell homes, cars and everything else under the sun right now.

Let's take this 1 step further. Been to Wal-Mart lately? How about In-N-Out Burger? What did you find? TONS of people spending money, that's what. People washing their cars, shopping at Kohls, fueling up, going to movies, going to DISNEYLAND!! (I LOVE Disneyland). I was in Costco today and the place was ABSOLUTELY PACKED.

The world of commerce has not stopped turning as near as I can tell.

Look, I DO NOT have a crystal ball, but many of us may be wishing we had lots of cash to buy up real estate, stocks, diesel trucks, whatever during this period. There are GREAT buys in the market on alot of items.

The world has not ended. On the contrary, it is actually revolving quite normally in so many regards. But we DO face some tough challenges in the short term. You may just have to unplug the news and stop reading the paper to survive this moment in time.....I know I have.

I'll keep this short: Existing-home sales rose from the first quarter in 13 states, apparently from buyers responding to discounted home prices, according to the latest quarterly survey by the National Association of Realtors®. Nearly 25% of metropolitan areas showed rising home prices in the 2nd quarter from a year ago, with greatly mixed conditions continuing around the country.

In the West, the median existing single-family home price was $290,600 in the second quarter, which is 17.4 percent below a year ago. After Yakima, the strongest metro price increase in the West was in the Salt Lake City area, at $234,200, up 0.5 percent from a year ago; all other metro areas reported for the West were down from the second quarter of 2007.

What does this mean for Washington County? Perhaps nothing as "all real estate is local", but perhaps something based on the general activity level that exists currently in our local market. In the marketing of our Larkin Group Listings, we use a varitey of tools to track everything from the total number of buyer calls and visits, to the media source they originated from. (I often feel a bit like "Big Brother...")

From this data I can that the Buyers are OUT THERE. They are calling, surfing the web, following prices, trying to figure out "what to do."  Whereas 1 year ago there was just a sense in the "trenches" of the business that the Buyers were hiding out.

I'd love your opinion.....has anyone else out there gotten the sense that prices have finally reached a level that actually makes sense for today's fence-sitting buyers?