buy? sell? wait? rent? lease? what should I do?

It's an interesting time in real estate right now. values have quickly dropped and may continue. Some find themselves below what they bought for forcing them to look at renting or leasing out.

The number show we over built. Population grow has been moving along at a constant rate. But, home production was up through the roof at all time highs. How did we all not see the bubble coming? When everyone you talk too owns 2 or 3 spec homes you'd think it would be a sign. I find the interesting opportunity to be what's going to happen in 5 years? in the Salt Lake and Utah Valley's new construction has almost completely stopped. Besides some condos, townhome, and commercial projects I don't know of anything else being built right now.


How long will it take for demand to catch up with supply? In the past year I have seen hundreds of homes just sit there with no interested buyers. Many have been stuck behind layers of liens, defaults and banks that have no idea of what to do. But in the past 2 months I've seen a handful of these homes being picked up. By what I'm seeing and the rate things are moving I have to ask: how long till these sitting ducks are all gone?
I'm guess 2 years but predicting an amazing opportunity in 2 years when that happens. supply and demand will meet and homes will need to be quickly built. land will continue going down and prices will flatten.

LOWER THE RATES... THE ONLY WAY

Bailout, Bailout, Bailout! You hear it everywhere right now. But what is it? The treasury to hurry and buy bad debit?

Everyone agrees the the catalyst for this whole problem is the housing market. Prices went up quick, everyone with a shovel became a builder, supply rose and prices flattened. To make matters worse many loans reset and their rates where too high for many to afford... supply rose again. Now we are facing job layoffs...

I have been in the middle of this storm for over a year and a half. Real estate has become a job again instead of easy money like many before me. I see this storm just finally hitting other markets and sectors now.

My big question on the bailout is how it will solve the housing market? How will it help the people on the edge right now? They are struggling to make their payments right now but are upside down and not working as much as they were. How will it help them?

I have been criticized for saying this but I'm convinced that the only way out is to lower the rates. I know we are at all time lows already and the risk of inflation is huge and I agree. However, lowering the rates is the only way to stimulate the housing market and save the people on the edge right now.

If I'm wrong please comment I would love to hear other ideas.

state of market

I must say I've been pretty shocked lately. A year ago I was working for a builder. A year before that the builder was on top of the world. Now the builder is completely under. The interesting thing has been watching the complete doom and gloom. I must say watching the builder go under was depressing. watching him loose so much money on deals made me sick. But it woke me up quickly to the reality of our situation. I reality that I maybe saw before most agents being in the new construction which was earlier and harder than the rest. 

So August 2008 marks 1 year of the credit crisis and I wanted to talk about some of the things I've seen and learned. 

1) We are stronger than I ever imagined. Sure I'm not saying we as a nation are indestructible, just stating the fact that we got hit hard and we are little standing. I never imagined that the entire world would feel the effects of the crunch... but they have. 

2) USA still effects the rest of the world in a big way. I remember hearing experts saying a year ago that we are a global economy and that the rest of the stocks won't be effected by the housing slump.... they were wrong. 

Lately, I've been seeing a lot of building start up again. Not anywhere near the levels of a year ago. But new construction non-the-less. Most of the projects are in the condo townhome range. 

I have as many buyers right now as I ever had. They are all really looking closely at the market and feel that they need to see every home out there in their price range. 

The difference is I can't believe how many strong cash buyer I've got right now. Perhaps other investments seem risky still right now and people with big cash pools are thinking why not buy while things are down. 

My over-all feel of the market right now here in Utah is a "B" confidence is down still too low to be an B+ but people are still out there. They are looking! I'm getting lots of calls. Well priced homes are moving quickly and people are writing offers. Banks and all the short sales are slowing things down still... people are getting easily distracted by really low short sale listing that the banks deny after 3 months and 6 offers. 

Things to watch for. I would really watch the rents here in the future. They went up quickly last year but have seemed to level off due to many desperate spec owners offering low rentals, lease to own, and owner financing. I'm convinced that it will still take a year or two to clear up existing home inventory. But when it does expect it to go quickly and not have many builders ready to catch the shortage which will push the rents up higher, closer to where they should be. 

Home values need to be looked at closely with possible rents. Right now most homes will cost a lot more than you could ever rent them for. Which in my mind either means they are still overpriced or rents have to come up. We have recently been hit really hard and caused a credit crunch. With population increase, time, and credit improvements inventory will only decrease. Prices have and will continue to stabilize and rents will be forced to increase.

James LeVoy Sorenson Died at the age of 86

Utah lost one it's great people Sunday. James LeVoy Sorenson died of cancer Sunday at the age of 86. Unfortunately, I never had the opportunity to meet Mr Sorenson personally, but he still remains one of my heroes. There have been few people who have lived a life so full of meaningful inventions, businesses, real estate, and philanthropy endeavors.

He was born during the depression. A fact that I believe can never leave a person. Through his hard work and thriftiness he created useful businesses and bought land. My impression of him from years of newspaper clippings and magazines on one of Utah richest men has been: 1) His ability to create something useful and innovative. This is the man that invented the disposable surgical mask... something ever person in America has seen. 2) At the age of 86 it doesn't sound like he slowed down much. I've been hearing about him all over the place in recent years. I'm intrigued with anyone who is still accomplishing things past the age of 70. 3) He sounded like a really down to earth man that didn't live his billionaire status on his sleeve.

ABOUT FREAK'N TIME

The Federal Reserve announced a rate cut of 3/4 a percent today. ABOUT FREAK'N TIME. Our banks, businesses, and people are in need of cash. And yet, I still think we need to lower the rates more.

This whole slow down has been related back to the house bubble and credit crisis. Banks have been bleeding for the past 8 months, and the housing market is in complete confusion. "How much is a house worth?" has become a good question. You mean how much was it worth last year? Last month, or today?

The only way I can see us getting out of this mess is to 1) lower the rates in a huge way.Get more money into the system, get investors picking up inventory homes and sitting on them instead of letting all these builders and tight owners loose their shirts. 2) Get this credit mess in check. To be honest, this is a huge mess and I haven't come up with an answer I love yet. There are still horrible loans out there available for people who don't have the credit, income to debt ratio, or understanding. I'm working a short sale right now where I'm just sick to my stomach on the debt these people have and how easily they can go pick more up tomorrow. The entire industry needs to be cleaned up. I don't necessarily mean government regulation or intervention.

This whole credit crisis is enormous! And will not end because some huge banks are going under.