Pick up a copy of the Tribune today and the whole front page talks about the .5% rate cut the fed just announced and how Utah’s job growth represents 5% of the entire country’s job growth. What does this mean for our local real estate market? Not much, actually. People with adjustable-rate mortgages will have some relief and people will get lower rates on home-equity loans and, but our job growth has been leading the nation for over a year, interest rates are a very low 6.25% right now (locally) and our local economy has been super strong for a while now. Local unemployment is still at all-time record lows for the state and people are moving into the area. But none of that really matters because many people need to sit and wait, wait and see, see and watch, watch and wait…
Our challenges are not interest rates- it’s inventory levels, lender restrictions, and the overall “Chicken Little” message the media is pumping out about the sky falling. Every factor is strong for our economy and real estate market, but these thiree things are causing people to stall. So it will take a few months of the media shutting up and things to calm down until people will be able to see how great a time this is to buy.
About the news today;
Ben Bernanke, of the Federal Reserve, cut its benchmark interest rate by a half point, which caused the Dow to shoot up more than 300 points (it’s biggest one-day jump in over five years).
Last year 54,500 jobs were created in Utah, representing 5% of all jobs created in the country. Not bad for a state that only has 1% of the total US job force. When jobs are created and unemployment is 3-4% how do you fill all these jobs? People move into the area. And where do these people buy homes? Locally of course. So if people are moving into the area to fill tens of thousands of jobs that are being created, do we have a housing slump?
Just because every listing isn’t flying off the shelves the first few days they are on the market doesn’t mean everything is bad. It’s not supposed to take two days to sell a house. In “normal” healthy real estate markets it takes 30-90 days to sell good homes. What is our “average” time on market right now? It’s 36 days- not exactly sky-is-falling, but up ten days from the beginning of the year when things were crazy.
Every day there is some other news about real estate in mass media and that itself is the problem. The market can’t be normal because it’s getting too much attention. It creates excitement- good and bad, and strong opinions from dads and sisters and uncles and friends who all “know” what they are talking about and all have different opinions they are telling buyers and sellers. “Offer 90% under market-value” or “things are going to get worse” or “Buy anything with at least 8 bedrooms”. This advice makes them feel important as though if not for their input these buyers would make the biggest mistakes of their lives and it’s good thing they get this valuable
Those of us who know the market and watch indicators and trends and have been through market cycles know better. We know the stability inherent in housing (everybody needs a place to live) and the appreciation of real estate prices over a sustained period of time (all land in populated areas will go up in value). Real estate is an appreciating asset, and right now buyers can find some great homes with good prices in the Salt Lake area and with such a strong local economy and job growth, it’s a fantastic financial investment to buy right now- just make sure you have a good agent so you buy smart.