The real estate blog.

You’ve probably seen the news this week about builder confidence reaching a 23 year low and housing starts and completions going down across most of the nation. Even Utah is not immune to this building downturn.

Yesterday’s Tribune reports -

The news just keeps getting worse for home builders along the Wasatch Front, where demand for new homes in September plummeted to the lowest level since 1990.

Builders took out permits for the construction of 485 homes locally last month, down from 1,191 in September 2006, according to Construction Monitor, which tracks building activity throughout the West. The last time residential building activity along the Wasatch Front was this low was 17 years ago, when builders pulled 396 permits for new housing units.
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Utah’s job boom appears to be coming to an end. One of the factors driving Utah’s real estate markets has always been plentiful jobs and attractive quality of life which has kept the flow of people from other states steady. Signs of a slow down are imminent.

Utah created 53,500 jobs in the year that ended in September, for an employment growth rate of 4.4 percent, the Utah Department of Workforce Services reported Tuesday. Although that rate remains higher than all other states, it is down from 4.5 percent in August, 4.7 percent in July and a peak of 5.4 percent in June 2006.

Utah’s rate will continue to slow down, said Workforce Services economist Mark Knold, who predicts employment growth will drop into the 3 percent range by next year.

Utah’s economists
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Get ready for a wide range of mortgage fraud reports as the Utah housing market begins its slowdown. The latest person to get entangled is Eagle Mountain mayoral candidate Richard Culbertson who is also a real estate agent…or was.

The Daily Herald has the scoop -

“Culbertson forged signatures, falsified loan papers and used a straw buyer in equity skimming scheme,” said state officials in a media statement. “According to the Division of Real Estate’s investigation, Culbertson admitted to using a ’straw buyer’ (i.e., using a false identity or the identity of another person) to purchase a home for his personal residence. He also admitted using a straw buyer to purchase other properties at artificially inflated values in order to obtain money in excess of the sales price and acquire cash at closing for his personal benefit.”
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Excuse me as I put on my tinfoil hat today to discuss some of the economic calamities the United States is currently experiencing.

We’re hearing news today with such headlines as Housing starts, permits plunge and More price drops, more layoffs. The dreaded “recession” word is being talked about a lot more often. It sounds like things could get real bad, real soon.

I was referred to an article this week that I read with interest. It starts out -

The many parallels between 1924 Germany and present-day United States are cause for concern. Though the U.S. has not yet reached the depths to which Germany descended in that era, few can look at the constant depreciation of the dollar since the early 1970’s and fail to be alarmed. It seems contemporary America differs
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I’m not surprised by an article late yesterday covering the Mortgage Bankers Association convention in Boston. The article said FHA is coming to the forefront of loan choices for people with less than perfect credit.

With the real estate slowdown causing everyone to find someone to blame for the problems, mortgage brokers are taking a huge share of criticism. Now, I’m not saying some brokers deserve this. There was and is a bunch of nonsense going on out there.

However, for reputable mortgage brokers, some of this criticism has turned into much more. In Utah for instance, the vetting process for mortgage brokers is pretty intense, especially compared to other states. The licensing process in Utah was born out of high rates of mortgage fraud in the state. When politicians talk about adding to the restrictions simply because they’re facing election and real estate is a hot topic, I have a problem with it.

Consider Chris Dodd, Senate Banking Chair and aspiring Democratic Presidential Candidate, who last month proposed a “Predatory Lending” bill.
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I’ve been noticing a lot of inbound traffic coming about some of the pending mortgage related legislation designed to reduce the number of foreclosures.

There are three key pieces of legislation pending. All are at different points in the process.

H.R. 1852 - Expanding American Homeownership Act of 2007

This is the key FHA reform legislation. It has passed both the House of Representatives and the Senate Banking Committee. However, it will probably not go before the full Senate until next year. Due to substantial differences in the House and Senate versions, it may never become law.

H.R. 3648 - Mortgage Forgiveness Debt Relief Act of 2007

Designed to eliminate the tax burden of forgiven mortgage debt for those homeowners who do lose their homes through
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Examining why you are not always rational when purchasing real estate__________________________________________
Neoclassical Economics is built on the assumption that humans are rational beings who have a clear idea of their best interests and, moreover, strive to extract maximum benefit -or “utility” as economists are fond of saying – from any situation. Seeing from this viewpoint, price helps people decide which combination of work, spending and saving suits them best. In real estate, however, things are not quite this simple.

Theory of price asserts that the market price reflects interaction between two opposing considerations. On the one side are demand considerations, while on the other side there are supply considerations. In real estate, however, there is another factor
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Sub-prime mess, foreclosures, sliding home prices - today’s market conditions are causing sleepless nights for some but others are smelling the opportunity to make a quick buck.  That’s great for enterprising investors because in markets like this one opportunities abound.  But, unfortunately, it also creates a fertile feeding ground for hucksters and sham artists waiting to defraud novices. 

Your mom’s advice, general speaking, was pretty good: if it looks too good to be true it probably is.  But it’s worthwhile to understand the mechanism of the basic real estate swindle.  There are many variations to this general scheme, but if you’re considering a deal that in any way resembles this shell game then hold on to your wallet. 

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Travelling to the west this time…

Australian real estate investing in Perth has continued to show excellent results in terms of capital growth and good rental yields.

In the final quarter of 2006, ending 31st December, median house prices in Perth rose by nearly 5 per cent to $325,000. Over the past year, Perth house prices have increased by 18 per cent and rents have also risen by 25 per cent. The supply of new homes has slowed although demand is still strong.

Perth vacancy rates for rental accommodation have stayed steady at about 1.6 percent for the second quarter in 2007. The median rent in Perth has risen by approximately $44 per week since 2004. Perth has the fourth highest median house prices of Australian capital cities, with Sydney first followed by Melbourne and Canberra in that order.

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