The real estate blog.

Utah’s real estate market has slowed considerably and foreclosures are starting to rise. According to RealtyTrac, foreclosures in Utah increased by 4.99% in January compared to the previous year. This was a 16.49% increase over December, 2007.

Compared with the rest of the nation, Utah is firmly in the middle, ranking #22. Historically, Utah has ranked very poorly in financial metrics including bankruptcies, foreclosures and mortgage fraud. 200 homes began the foreclosure process in Utah last month and nearly a 1000 are bank owned or REO.

Besides new homes, foreclosures can present some opportunities for real estate investors, but they also present pitfalls. I was looking at an REO the other day in Sugarhouse. It was obviously a failed flip as this two unit home had the
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They say that all real estate is local. Of course right now the underlying credit process has problems nationally, but for Salt Lake real estate the market is better. One indicator that demonstrates this is rents. In the most bubblicious parts of the country rents have declined as unsold homes flood the rental market and condo towers are converted to apartments.

Despite a rise in the number of new homes for sale in Salt Lake, rents in 2007 increased 8.8%. Vacancy rates declined significantly as well, meaning real estate investors in Utah should be doing quite well. Rents are expected to rise again this year.

Vacancies in Salt Lake County fell from a high of 10.9 percent in December 2002 to 4.5 percent at the end of last year, the lowest in more than 10 years.

The apartment market is considered fully rented when the vacancy rate is 5 percent.
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You can’t open a newspaper or watch TV without hearing something about the credit crisis, the housing crisis or the mortgage crisis. Once thought to be contained to only people with bad credit or subprime loans, it’s become clear that it’s not.

In England an online credit card provider just yanked thousands of credit accounts from high risk borrowers. The risk? These borrowers paid off their accounts each month and didn’t pay interest.

Over here Bank of America (BAC) and Washington Mutual (WM) are raising interest rates on customers who pay their bills on time.

CNN reported yesterday -

Consumers have racked up more than $2.2 trillion in purchases and cash advances on major credit cards in just the last year. And it’s become a habit for them to spend
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An article about new homes in Utah states the number of permits taken out in January are at a 17 year low and 74% below last year. On top of that, the number of unsold new homes is also at a record high.

Even with the drop in new-home construction, though, Newreach is estimating that it will take 10 months to sell the county’s inventory of new, unoccupied homes - even if no new homes were constructed during that time period.

Enter Daybreak, the master planned community on the West Bench that is owned by Kennecott Land. This is a popular community with a number of contributing builders offering a wide range of housing from condos to large homes. All the builders, save one, are offering price guarantees in a promotion that started in January.

Many builders,
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The mortgage markets are quite volatile right now with rates ebbing and flowing up and down. To get the best deals, one has to be prepared and be prepared to act quickly.

Two things any borrower must factor in are personal preparation and rate locks. Reader Kirsten writes: Nigel, when you refer to organizing your personal paperwork and having a “clean file,” what does that mean? If I plan on making the mortgage app leap at some point, is that something I should know about?

Good question. The amount and type of paperwork you’ll need depend on whether you are self-employed, commissioned or a regular W-2 employee. Regular employees have it the easiest as they need only bring in two years of tax returns, the last two pay stubs, financial information substantiating assets like bank statements, 401k statements and the homeowners insurance agent information.
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So I was driving in Provo yesterday and stumbled across this real estate sign. It belongs to none other than Ron Clarke. You know, the Ron Clarke facing a federal indictment for mortgage fraud by manipulating prices on the MLS.

I love the Constitution and believe very much in due process of law. Innocent until proven guilty. However real estate licensing and civil proceedings fall outside of that realm a bit. Surely the Division of Real Estate should be investigating Mr. Clarke as well?

We already know Bradley Kitchen is still trying to scam people. It appears the DRS is allowing Ron Clarke to continue as well. What I’d like to know is who are the people continuing to do business with him? How does he explain away a Federal indictment to potential clients? Why would you
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Sometimes a picture is worth a thousand words. I saw this sign in Orem, Ut yesterday while I was down there on business. The times sure have changed.

It’s funny they would take this approach as Utah’s foreclosure rate has dropped over the past two years. Maybe it’s a marketing tactic given all the bad news in real estate?

A new plan to help struggling mortgage lenders was released today. The plan calls for homeowners that would be forced into foreclosure or a short sale to issue an IOU for the difference between what they owe and what their home is currently valued. In turn the lender would reduce the loan amount and loan payments. Should home values rise again, the IOU would be exercised by the lender.

But instead of having lenders forgive the difference between the old mortgage and a house’s current resale value, called a short sale, the OTS advises that lenders issue a warrant or “negative amortization certificate” for the difference. If a home regains its market value and is then sold, lenders have first claims to the profits.

Like the super SIV plan that failed in December, I think
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A common question I see on message boards and blogs concerns saving versus paying off debt. This is of particular importance when the savings is being used as a down payment on a home purchase.

With low returns on savings and high borrowing costs it would seem on its face to be an easy question to answer - pay off the debt. But with uncertain economic times, it feels safer and therefore smarter to keep a stockpile of cash.

Let’s take a look at it from a mortgage perspective. I put together the following scenario that really hammers home the importance of debt reduction in comparison to down payments. The loan scenario is an FHA loan purchase with 3% down. The borrowers have a lot of consumer debt together and have enough extra money to pay off a car costing them $300 per month.
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One of the unknowns about the stimulus package is whether the newly raised conforming loan limit would have the desired effect of allowing homeowners in higher cost real estate markets to refinance or purchase using lower priced conforming interest rates.

We got the answer today; NO! Well, it’s part of the answer anyway.

The Securities Industry and Financial Markets Association, a banking industry group, said those larger loans above the former limit of $417,000 will not be allowed on a widely used trading market, known as the “To Be Announced” market, which permits investors to buy and sell mortgage-backed securities before the loan pools are put together.

You may recall the implications and explanations of this were discussed previously. Essentially the SIFMA
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