The real estate blog.

November saw a slowdown in job growth for Utah where a trend is now developing. Job growth in the state has slowed since August of this year, when the subprime mortgage mess blew up on Wall Street and banks and lenders started hoarding cash.

Utah’s homebuilders are slowing down, but commercial builders, including government projects, are increasing their payrolls.

Builders along the Wasatch Front took out 382 permits for the construction of new homes in November, down from 1,048 in November 2006 and the lowest total since 1990.

Construction industry employment is up 8.7 percent over last year, with commercial construction more than compensating for a downturn in residential construction, Knold said.

Financial activities employment - a category that includes mortgage and title company personnel, and real estate brokerage employees - is up 5.2 percent over last year.
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The Salt Lake Tribune reported today that Utah’s foreclosure rate for November increased over last year by 7.2%.

Foreclosure filings in Utah rose 7.2 percent in November, compared with the same month one year ago, reversing a trend of declining foreclosures in the state, a new report shows.

The data for this story came from RealtyTrac, a primary source for this sort of information. RealtyTrac’s press release led with the title “Foreclosure Activity Decreases by 10% in November.”

Sadly, the fact is foreclosure activity in the United States increased 68% year over year. Only seven states in the country saw a decrease. Utah moved up to #17 per capita in the foreclosure statistics.

It’s been said over and over that Utah’s strong economy will keep home
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A few weeks ago I wrote about the rising popularity of lease options as a way to rent/buy a home. Even builders are offering this method of financing to move their homes.

Like any method of financing, every type of creative purchasing has advantages and disadvantages based on the market and the individual purchaser. A wrap around contract isn’t always the best way to handle subject to financing. Likewise, a lease option isn’t always the best way to purchase real estate.

Considering the local market conditions, lease options are looking pretty good in my estimation. The biggest concern any home buyer should have right now is whether their home will lose value. With the latest housing boom clearly coming to an end, that’s a serious concern. A lease option alleviates that
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A lot has taken place in the last 24 hours on the real estate front. The biggest news is the five year interest rate freeze for certain types of homeowners that will forestall hundreds of thousands of foreclosures. I’m not going to talk about that here.

Instead, let’s go local and really see what’s happening with Utah real estate. As far as foreclosures go, Utah is doing better than most of the country. We do have to remember that prior to this recent housing boom, Utah has tended to lead the nation in three categories; mortgage fraud, personal bankruptcy and foreclosure. This is not a good record for us as a state, and I suspect should our economy turn sour, we’ll remain at the top of the foreclosure list.

For now, we’re doing well.

Only 0.66 percent of Utah
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Normally on Fed meeting day, a big deal is made as to whether the Fed will cut, hold or raise its key overnight lending rate that affects interest for credit cards, auto loans and certain types of short term mortgage rates.

Today, I don’t really care.

It’s already a foregone conclusion the Fed will cut rates, the question is how much: .25% or .5%. Either way it doesn’t matter too much.

The way the mortgage market is turning out, only the borrowers with the best credit are going to get the best rates. For “prime” borrowers with average credit scores, rates have jumped. The Fed can’t help them.

Subprime rates are fairly static, so a Fed rate cut doesn’t help those kinds of borrowers either. The only rates that may be substantially affected by the Fed are FHA loans…ARMs in particular. And who wants an ARM these days?
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The mortgage fraud scheme that ensnared local sportscaster Dave Fox has reached the top level. A federal indictment implicating Bradley Kitchen and five others was unsealed today.

Accused of recruiting straw buyers to profit from falsely inflated home values in the Provo Riverbottoms neighborhood, this case has gained notoriety not only for the prominence of the individuals involved but the losses involved in the case. Tax values were so skewed, the agency involved with assessments has had to revalue the entire neighborhood.

So far, Dave Fox, a TV sportscaster and Clark Blaisdell have been the most prominent. Today’s indictment reached new levels as a well published medical doctor, David Bolick was indicted as a ringleader. Four other people, Steve Cloward, Ron Clarke, Jeffery Garrett and Rebecca Hadlock were also named. One other straw buyer, Mark Atkin, has pleaded guilty to communications fraud like Blaisdell and Fox.
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One can hardly visit a news site or open a newspaper without hearing some discussion of the problems in housing. In many instances, some magic bullet solution is proposed to solve all the problems that exist. Unfortunately, the real estate problem was caused by many factors and one solution, one action, one piece of legislation isn’t going to fix it. It certainly won’t be fixed overnight.

The latest magic bullet solution comes from Treasury Secretary Henry Paulson who is proposing a freeze in rates for those home owners with adjustable rate mortgages.

If you’ve got a 7% adjustable mortgage that’s about to skyrocket past 10%, getting a break may get a lot easier. One solution to the foreclosure problem gaining traction would freeze rates at lower levels.

The
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One of the things I try to do on this blog is to listen to my readers and try to provide information or insight that can’t be found elsewhere.

A comment I took to heart a while ago concerned keeping this site about Utah real estate, Salt Lake in particular. After all, that is the name of this blog. To help accomplish that goal, I established a more generic blog Easy Mortgages to try and provide a larger scale view on the lending industry.

Building an audience takes time and after three months of posting over there, I don’t feel I can justify writing for that site anymore. The readership at this site developed in the past 14 months is of a higher quality and higher quantity than any other blog I’ve created since then, save one.

With that being said, I am going
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I had a bit of an “Oh crap” moment this afternoon when I got an email from one of our lending partners.

The subject line said - LOCK YOUR AGENCY LOANS TODAY- Changes Coming!

The body of the email said -

We’ve learned that we will have increased delivery fees that will impact our pricing effective as early as tomorrow morning. Please lock your floating pipeline on our website now! I have attached the FNMA announcement. All loans with FICO’s less than 680 and LTV’s greater than 70% will have significant price adjustments.

Curious, I read the attached announcement from Fannie Mae. I’m not going to reprint the entire three pages, but the key facts are these -

Fannie is very concerned with dropping house prices and the traditional 20% “buffer” lenders use has now been bumped up to 30%.
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I’ve seen comments on this blog time and time again suggesting Salt Lake is merely behind the times when it comes to following the national downward trend housing is currently facing.

In the back of my mind, and I’ve said this over and over again, I can’t see a major downturn without major job losses. It would seem that an economy built on housing, as ours has been over the past five to seven years has been, would suffer a downturn when housing declined. So far that hasn’t been the case.

Residential construction jobs have been replaced with commercial construction jobs. Many of the jobs lost within mortgage lenders have been moved from wholesale to retail with poor employees left to consider a new career. Unemployment has only risen slightly in the country and in Utah. New numbers come out next Friday that will influence the Fed’s rate decision when it next meets December 11th.
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