By any measure 2015 was a “very good year” for Salt Lake County’s residential real estate market. The year saw significant increases in the number and value of homes sold, home prices and sales commissions. The strength of the market was somewhat surprising given the rather average performance of 2014. The gains achieved in 2015 were driven primarily by exceptional market fundamentals; strong job growth, improving income and wages, solid demographic growth and, of course, very favorable mortgage rates
A 2015 summary of the county’s sales statistics show:
In 2015, existing single-family home sales totaled 13,300 units, the highest level in nine years and the third highest in the county’s history; exceeded only by the pre-recession years of 2005 and 2006 Figure 1. The strong demand for housing was not limited to single-family homes. The sale of multifamily units (condominiums, town homes and twin homes) set an all-time record of 3,800 units and accounted for 22 percent of all residential sales; the highest share ever over the past 20 years multifamily sales have averaged 18 percent of residential sales.
Residential sales, as usual, were concentrated in Salt Lake City. The city accounts for 21 percent of all households in the county but captured 27 percent of residential sales. In this case the disproportionate share of sales in Salt Lake City highlights the locational advantages of the city regarding proximity to employment, transportation and community amenities. Other cities with a significant number of homes sales were West Jordan, Sandy, West Valley and South Jordan. These four cities along with Salt Lake City accounted for two-thirds of all homes sold in the county. Salt Lake City was also the leading city in multifamily sales with 28 percent of all condominium, town home, and twin home sales. The second tier cities for multifamily sales were South Jordan, Midvale, Murray, and West Jordan; each had just over three hundred multifamily sales in 2015.
An important indicator of housing demand is the measure of cumulative days on market (CDOM) of “for sale” homes. At the depths of the Great Recession (2009) the median cumulative days on market for a single-family home swelled to 81 days. But as the demand for housing slowly recovered the CDOM steadily declined. By 2015, the median CDOM had dropped to 21 days for single-family homes and 29 days for multifamily units. In both cases, it was the lowest CDOM since 2006. The very low median cumulative days on market data provide a clear-cut sign of a strong seller’s market particularly for moderately price homes. For a home priced in the second quintile of homes sold ($200,000 to $250,000) the median CDOM was only 14 days. In contrast for homes priced in the top 5 percent (over $600,000) the median CDOM was 67 days.
Housing price increases accelerated in 2015 as the median sales price of a home increased 6.7 percent to $272,000 and the strong demand for moderately priced housing pushed the median sales price of multifamily units up 8 percent to $189,000 Table 4. While 2015’s price increases were not as notable as some years the increases represent solid, sustainable gains. The average annual growth rates for housing prices in Salt Lake County are 4 percent for single-family homes and 3.8 percent for multifamily units. These growth rates, however, are not adjusted for inflation. Adjusting for inflation makes a huge difference in calculating the average annual growth rate. For example, the inflation adjusted (constant dollars) annual growth rate in singlefamily prices from 2000 to 2015 is 1.8 percent compared to the non-adjusted (current dollars) growth rate of four percent. It’s fair to say that housing prices in Salt Lake County increase at about 1.8 percent annually in constant or inflation adjusted dollars. Using constant dollars is a much more accurate measure of housing price performance over the long-term.
Table 3 shows both constant and current median sales prices for single-family homes in Salt Lake County from 2000 to 2015. Over this period housing prices have been extremely volatile. Using the inflation adjusted prices (constant 2015 dollars) the median sales price of a home increased by 38 percent during the housing boom, followed by a 27 percent decline during the Great Recession and then a 29 percent increase in the four years of recovery. But even after four years of price recovery the median sales price of a single-family home still remains about 5 percent below the inflation adjusted peak price of $287,750. It appears the market will need at least one more year to break the previous inflation adjusted price peak. In 2015, the median sales price of a single-family home increased in 14 of the 15 cities in Salt Lake County; a much stronger performance than 2014 when five cities had prices declines. Cities with moderately priced housing were leaders in price increases in 2015. Four of the five cities with double-digit increases are moderately priced housing markets; Murray, Taylorsville, West Valley, and South Salt Lake. The strength of prices in these cities indicates heightened demand for homes priced below $250,000.
The recent increase in housing prices benefitted those homeowners with underwater mortgages. In 2010, 21 percent of all home mortgages in Utah (80,000 homeowners) had negative equity, i.e. their mortgage debt exceeded the price of their home. Consequently, these underwater homeowners were locked into their current home, they could not move-up. This loss of much of the move-up market severely reduced the demand for housing and resulted in downward pressure on housing prices. But this condition has been reversed with the recent gains in housing prices. The number of homeowners with negative equity has now dropped to about 4 percent of all home mortgages or 15,000 households. Hence, in 2015 the moveup market was back supporting higher levels of sales, which put upward pressure on prices.
Another beneficial aspect of the improving market conditions and one that bodes well for housing prices in 2016 is the huge reduction in the sale of distressed homes (short sales or foreclosed properties). For five years the “fire sale” prices of distressed homes dragged down overall housing prices. In 2011, one-third of all homes sold in Salt Lake County were distressed properties and it’s no coincidence that 2011 was the year of the largest decline in prices; 9.5 percent. The near elimination of short sales and REO sales by 2015 was a contributing factor in the acceleration of price increases in 2015.
For those who can qualify, housing is still relatively affordable in Salt Lake County. According to the U.S. Census Bureau, the median household income in Salt Lake County in 2014 was $62,672. Assuming a household with median income devotes 30 percent of their income to a mortgage payment (including taxes and insurance) that household could carry a mortgage of about $290,000. In 2015, 56 percent of single-family homes sold in the county were priced under $290,000 for a housing opportunity index of 53. An opportunity index number below 50 indicates less affordability; above 50 indicates more affordability. Overall, the local housing market, despite the rebound in prices, is not overvalued. There is still room for moderate increases provided mortgage rate increases are incremental and gradual. Mortgage rate forecasts from a number of organizations show a consensus 2016 forecast of rates moving between 4 and 5 percent with a firm ceiling at 5 percent. In 2016, homebuyers will continue to enjoy some of the lowest mortgage rates in the past 45 years.
Local market fundamentals and conditions will be favorable for the real estate market in 2016. Job growth is expected to slow slightly but this will be offset by higher rates of net-migration and improving wage rates due to a tight labor market. There are no signs of a bubble; both sales and prices are at sustainable levels. The market and particularly prices are now largely free of the harmful effects of foreclosures, short sales, and underwater mortgages, which held back demand and prices. And there is no indication of waning demand as demonstrated by the extremely low “days on market” data. On the supply side the inventory of existing home listings shows demand outpacing supply and there’s little concern about competing unsold inventory from home builders; their inventories are very low as well. All these positive local conditions will be supported by a very healthy statewide economy in 2016.
But beyond Utah’s borders, both nationally and internationally, there are some potential dangers. Most prominent is the slowdown in the Chinese economy and the possible unraveling of their debt bubble. China’s problems have contributed in part to the recent selloffs in stock markets internationally. Declining oil prices have also negatively affected financial markets and put fiscal and political pressure on oil producing countries; Brazil, Saudi Arabia, Russia, and Nigeria. These worrisome international conditions have raised talk by some of a slowdown in the U.S. economy and perhaps a recession. The U.S. economy is now in its 77th month of expansion, a little long in the tooth as expansions go. The average post World War II expansion is 62 months, just over five years. The longest U.S. expansion was 120 months (1991-2001). It’s important to note however, that recent expansions have been getting longer due to structural shifts in the economy (more service oriented) and technological advances in inventory management.
International and national conditions are legitimate concerns but over the next 12 months, barring a cataclysm in China or the Mideast, they will have little impact on the local residential real estate market. Total residential sales will increase from 17,100 in 2015 to 19,000 in 2016 an increase of 11 percent. Sales of single-family homes will be up 10 percent and multifamily sales a little stronger with a 13 percent increase in sales. The median sales price of a single-family home will increase in the range of 5 to 7 percent while the increase in the price of multifamily units will be higher at 8 to 10 percent. In 2016, the median sales price of a home will be near $290,000 and near $205,000 for a multifamily unit.
Clutter in a home depleates the space making it look smaller and less valuable. Learn how you can increase the value of your home, by maximizing the space in 5 areas of your home.
A disorganized closet screams to buyers that there is NO SPACE! Buy shelves, drawers, and shoe racks to take control of your clutter and show the optimal space your closet has to offer!
Your attic should not be a place to store unwanted junk and boxes. Turn this underused space into a storage heaven, or better yet a bonus room for guests!
If your basement is unfinished use it for organized storage space, or finish your basement and turn it into optimal living space. A finished basement is an instant home value booster!
As cooking at home is becoming more and more popular to homeowners, a kitchen pantry has become a very valuable asset to the home. Adding products such as spice racks, and canned food organizers is sure to be a plus to prospective buyers.
LINDA SECRIST - LINDA SECRIST & ASSOCIATES - EVERYTHING THEY TOUCH TURNS TO SOLD!
Looking for ways to benefit as a Real Estate Investor? Well, tax season is here and we have provided some tax tips for Real Estate Investors that will help you get the most out of your real estate holdings.
If you turn your investment property into a primary residence. you can avoid capital gains tax altogether. To make this work, you must spend 2 years (or 730 days) living in the home in the last five years. The time doesn't have to be sequential. You just need to establish residency, then you're eligible to sell the home and can make up to $250,000 in capital gains ($500,000 if married filing jointly) without paying any taxes.
TV shows glamorize quick house flipping techniques as they flip a house in a matter of weeks, however when this happens so quickly a large portion of the profit will go straight to the IRS unless you hold a property for a year or more.
Captial gain is considered to be any investment profit and is tax based on the amount of time you've owned the property and on your income.
You'll be charged the income tax rate of 35 percent or more if you hold an asset for less than a year. If you keep a property for more than a year, you'll qualify for long-term capital gains taxes, which normally top out at 15 percent.
Don't be surprised if the IRS consider your several real estate transactions per year as business or trade rather than an investment strategy. While the circumstances may vary from case to case, if you're earning more than half of your income from real estate, your earnings will change from 'capital gains' to a means of producing income that's subject to ordinary tax rates. Plus, there's an additional 15.3 percent in self-employment taxes.
A like-kind exchange is a good option if you are wanting to avoid capital gains taxes, but you want to get a new property. The provision (also known as section 1031 exchange) allows you to 'exchange' one property for another of similar value and defer the tax bill.
Both the property you give up and the one you receive must be used for investment purposes, trade or business in order to qualify. The exchange of any real estate for another piece of real estate, regardless of either's quality is like-kind. It also must be 'like-kind,' or an exchange of two. While you can exchange a parcel of land in the city for a dairy farm in the country, you couldn't exchange that same city parcel for say, a flat-bed truck.
You can also do a tax-free exchange of a rental property that has been used for personal purposes for a similar piece of property, (this came into effect back in March of 2008.) You must have owned the property for 24 months before the exchange, and must have rented the home for 14 days or more in order to qualify. You also cannot have used the property for more than 14 days or 10 percent of the time it was rented in the past two years, whichever is greater.
Remember if and when you decide to sell the property you exchange for, you'll likely owe taxes. Like-kind exhanges will only defer your tax bill.
LINDA SECRIST - LINDA SECRIST & ASSOCIATES - EVERYTHING THEY TOUCH TURNS TO SOLD!
It is easy, especially in this economy, to be tempted to delay or even skip minor home maintenance repairs, cleaning jobs and inspections in your home. But don't be penny-wise and dollar-foolish. That $200 or $300 you save today could result in expenditures of $3,000 or even tens of thousands next month or next year if hidden problems in your home go unnoticed and become worse.
Consider coughing up a little dough to take care of these small jobs before they morph into gigantic, expensive jobs later.
Cost: $200-$300, depending on where you live.
How often: at least once a year.
When: spring or fall. Heating, ventilation and air conditioning, or HVAC, companies aren't as busy, and you're not in dire need of heat or air conditioning.
What an inspection might find:
The furnace blower is not working properly. Cost to repair or replace: $100-$150. Possible consequence of letting it go: a broken heat exchanger. Potential savings down the road: $300-$1,000 to replace the heat exchanger or $750-$3,500, depending on the energy efficiency, to replace indoor or outdoor furnace components.
The reversing switch in the heat pump is broken. Cost to repair or replace: $100-$300. Letting it go results in no heat from the heat pump, and the system switches to a more expensive auxiliary heat. Potential savings: lower heating bills.
Cost: $65 for an inspection; $150 for inspection and cleaning, including removal of creosote buildup, which may lead to a chimney fire.
How often: once a year.
When: before your first fire in winter.
What an inspection might find:
There's no chimney cap. Cost to add: $150. If you let it go, rain water can get into your chimney, damage the chimney liner and damper, and even saturate mortar joints -- causing mold. Potential savings: $2,000-$4,000 to replace the chimney liner.
Other problems may include: a cracked chimney crown, which can be repaired for $300-$500; chimney flashing that needs caulking, which can be done for $80-$100; and waterproofing the exterior brick, $350-$600. All these fixes will prevent rainwater from getting in and mold from forming.
Cost: $75-$200 for an inspection; $200-$300 for a termite protection contract for qualifying homes with no current evidence of termites to cover treatment and repairs for any later infestation.
How often: once a year.
When: any time, although termites are more active in spring and early summer.
An inspection might find subterranean termites that come from the ground or flying termites. If left untreated, these bugs damage framing, trim, drywall, furniture, carpet, copper and other soft metals. Termites cause more than $5 billion in damages a year in the U.S. The average homeowner loss for termite damage is $3,000, but losses can be as high as $30,000 or even $80,000. Most homeowners insurance does not cover repair of termite damage.
Cost: $100-$300 for a 200-square-foot deck, more for a larger deck.
How often: every one to three years, depending on the amount of traffic, moss and mold.
When: any time in sunny weather.
Power washing gets rid of stains, algae, mold, mildew and moss. Algae and mold can make your deck slippery and dangerous. Sealing your deck after it is cleaned helps prevent water damage. Wood soaks up rain like a sponge, expands and then shrinks, Lee says. Sealing makes the water bead up and roll off. And let's not forget -- your deck will look nicer, too.
If you let it go, your deck will warp, nails will pop out and the deck won't last as long.
Potential savings: $4,000 to $20,000 or more to replace your deck, depending on size.
How often: every year.
When: a sunny day.
The purpose is to get rid of lint buildup. If your dryer is not on an exterior wall, it's likely that the vent leading outside is clogged up, says Gessner of A Step in Time Chimney Sweeps.
If you ignore it, the result could be a disastrous fire. Once the vent gets clogged, the dryer starts overheating and it can catch on fire.
Potential savings: your home, your furnishings, your belongings and your life.
Cost: about 50 cents per square foot for hot water extraction cleaning, or $500 for 1,000 square feet of cleaned carpet.
How often: every 12 months; more often for high-traffic areas and homes with small children, pets or smokers. Manufacturers' warranties may require cleaning every 18 to 24 months. You can save money by focusing on regular cleanings for high-traffic areas and waiting up to two years for the entire carpet.
When: any time.
If the carpet looks dirty, you've waited too long because some soil can't be removed with vacuuming. This soil will bind to your carpet and dull the texture, shortening the life of the carpet.
Your home also will be healthier with pollen, bacteria, insecticides and dirt removed, says Howard Partridge, founder and president of Clean as a Whistle, a cleaning company outside Houston.
Potential savings: extending the life of your carpet. Replacing 1,000 square feet of medium-grade carpet, including padding and installation, costs about $3,000.
First-time homebuyers almost always make a few mistakes when buying their home. Whether they simply paid too much, chose the wrong type of mortgage or forgot to budget for needed home improvements and repairs. Working with a trustworthy, experienced lender can help prevent such mistakes. But consumers also need to take responsibility for their budgets and choices.
Following are the four biggest financial mistakes of first-time Utah homebuyers:
Lenders qualify buyers based on their incomes and debt-to-income ratios without considering how much the borrowers spend on items such as transportation, savings, food and other necessities.
1. Too many first-time buyers believe their income will continue to grow and are so excited about buying a home that they borrow the absolute maximum they can afford instead of allowing themselves wiggle room for a partial loss of income or for future expenses such as potential flood or other household disasters, children or health problems.
It's a good idea to review how much you want to spend each month on housing prior to meeting with a lender. In other words, create your own individual budget and know your limits at the time of purchase. It's not a good idea to spend more on a home on prospect of potential increased future income.
Meeting with a lender for a buyer consultation and prequalification for a mortgage should be the first step toward homeownership. Yet many first-time homebuyers wait until they are ready to start house hunting before contacting a lender.
2. It is never too early to set up a free buyer consultation with your lender. Every buyer needs to get prequalified early enough in the process so that they can make some changes if they need to or correct errors on their credit report. Some buyers may need to spend a year saving more money for their down payment, increasing their incomes or cleaning up their credit before making an offer on a home.
A score of 680 to 720 can get you good mortgage rates, while a FICO score of 620 is usually about the lowest score to qualify for most loans and will not earn you the best interest rate.
While most consumers know it's important to have a high credit score, not everyone understands how costly a low score can be. All mortgage lending is done with a tier of interest rates and terms based on consumer credit scores. A credit score of 720 or above will earn you the best rates and can potentially save you thousands of dollars over the term of the loan. Websites such as Bankrate provide information about how to improve your credit score.
3. Another important thing to avoid that is often overlooked: Even after a mortgage approval, consumers must AVOID applying for new credit or taking on new debt, because a second credit check is often required before settlement.
4. Get the loan that fits your needs. No need to pay a premium for a 30 year fixed rate mortgage if you know your company will relocate you within 5 years. A 5/1 Arm may be your best option in this case. First-time homebuyers today typically opt for a 30-year fixed-rate mortgage. Their conservatism is a reaction to stories about the dangers of interest-only mortgagesand adjustable-rate mortgages. Home loan alternatives to a 30-year-fixed sometimes make more sense.
Homebuyers eager to build equity in their homes or who are older and want to live mortgage-free in retirement should consider a 15-year fixed-rate loan or, if they can afford it, even a 10-year mortgage to reach their goals.
Draper and the homes therein enjoy one of the most beautiful settings of any city along the Wasatch Front. As a business community Draper and its real estate is poised to become an economic powerhouse in the next few years, due to its geographic location halfway between Salt Lake and Utah Counties. “Whatever your needs, Draper is a great place to visit, a great place to do business and an even better place to live!” Draper homes are second to none.
Salt Lake is located midway between Ogden and Provo. Salt Lake City is the capitol of Utah, comprising many communities and neighborhoods, from the sleek downtown condo to the urban ranch home with adjacent stable for the horses. Real Estate in Salt Lake makes the perfect investment in your future. The “Greatest Snow on Earth” isn’t just a saying in Salt Lake, it’s the truth. People come from all over to experience the powder that is unlike anywhere else.
While living in Salt Lake you will experience all four season. A snowy winter, a beautiful spring, warm summer, and a colorful autumn. Many potential buyers love Salt Lake real estate because you can have a white Christmas. And having a ranch with attached garage makes the snow even more fun. Real estate in Salt Lake offer great views, in a valley surrounded by mountain ranges it’s hard not to love what you see.
In Holladay you get the best of all worlds. It’s a great place to live work and play! Buy homes for sale in Holladay and see what all the hype is about. The educational system is one of the finest in the United States.
The community is friendly to newcomers, so don't be at all surprised if you're hailed on the street like an old friend, while someone you've never met whiles away a few minutes discussing the state of the union.
Holladay has a lot to offer the newcomer to their community, and welcomes you for a visit to find out why we're one of the best little towns in Utah. When it’s time for you to relocate, or you simply want a break in a friendly community, why not come home to Holladay?