04 January 2009

UAR Presidents message 1/3/2009

The Utah Real Estate landscape in 2009

President's Message

Chris Sloan

            As we begin this new year, I am excited to share with you my perspectives on Utah Real Estate and housing. If you're looking to buy or sell a home within the next year, I hope these weekly columns can provide some help as you look to conduct this significant transaction.

            With 2008 and its economic roller coaster behind us, we are now wondering what the new year will bring. My clients in particular are wondering what they can anticipate with regard to Real Estate in 2009. Here are four things I think we can expect to see in the next 12 months:

           

1. A bottom in home prices

More and more there seems to be a buzz among economists and others that housing prices will finally see a bottom in 2009. Experts disagree about the timing of the bottom, but some predict the low could come as early as the middle of the year.

In a speech to the National Association of Home Builders in October, Mark Zandi, chief economist and co-founder of Moody's Economy.com, said home prices will stop falling in July 15, 2009. And more recently after the Federal Reserve's unprecedented rate cut a couple weeks ago, stock market guru Jim Cramer said on his CNBC show, "Mad Money," that he believed home prices would see the bottom at the end of June. Others are saying the bottom will come closer to the end of the year as long as the economy doesn't have a weaker-than-expected performance.

Regardless of the predictions, one thing is sure: The bottom will vary depending on your state, city and neighborhood. That why it's a great idea to contact a local Realtor if you're thinking about getting in on this market cycle. He or she can brief you about local market conditions in the areas in which you are interested.

2. Low home prices and low interest rates

            This is an unprecedented buyer's market. In 2008, just about every home-buying factor turned in favor of buyers: Mortgage interest rates hit lows not seen in decades; reductions in home prices increased affordability; a large selection of inventory meant plenty of choices and lots of negotiating power; and the government created its own buying incentives, including a $7,500 tax credit for first-time buyers.

These advantages will continue into 2009, with prices and mortgage rates possibly inching even lower. But serious buyers won't want to wait until the last minute to start the purchase process. Because house hunting and qualifying for a mortgage take longer these days, you may want to start shopping for a home now while the deals are still plentiful. Those interested in the tax credit will also want to avoid procrastination because this incentive is set to expire June 30. 

3. Strict lending standards

            The days of easy money are gone and are unlikely to return anytime soon. If you're applying for a mortgage, expect to have an excellent credit score, money saved for a down payment and lots of documentation for your employment and financial information. You'll also want to conduct a careful review of your finances to determine what payment you can comfortably afford.

            If you don't meet conventional lending standards, consider getting an FHA loan. The government-backed mortgages have smaller down payment requirements and cater to those with less-than-perfect credit, although good credit is still required. Other local programs, such as those offered through Utah Housing Corporation, provide down payment and closing cost assistance to qualified buyers. For more information on these types of programs, visit the Utah Bankers Association's HomeSweetHomeUtah.org Web site.

           

4. Government action

            President-elect Obama has already signaled that helping the housing market and the economy will be a top priority for his administration. So far, there has been talk about creating and preserving jobs as well as preventing more foreclosures from coming onto the market.

Trade groups, such as the National Association of Realtors, are also calling on Congress to include housing assistance in any future economic stimulus package. The NAR plan aims to increase home-buying demand by having the government buy down interest rates, increase FHA and conforming loan limits, and eliminate the repayment feature on the first-time home buyer tax credit and expand it to all buyers.

            While the exact government action remains to be seen, one thing is clear: With or without additional stimulus, this is a once-in-a-lifetime market for home buyers. To find a Realtor who can help you take advantage of today's opportunities, visit UtahRealtors.com. 

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