I'm kind of a real estate junkie. I'm not sure why, but it's in my blood.
I regularly visit several geeky real estate websites. These are my favorites:
http://www.utahrealestate.com/ (I wish every state had a free MLS search like Utah does. In other places, you actually have to work through a realtor.)
My brother is a home builder and I love to go talk shop with him. Travertine, marble and custom cabinetry never cease to tantalize me.
I love driving around my valley, getting a feel for the neighborhoods and business sectors. I could have told you eight years ago which neighborhoods would have sharp increases in value. And I would have been right, because I fingered all the developments that are hot now and were vacant no-mans land then. If only I had the cash to put my money where my mouth is. That's essentially what my brother does full-time and he is amazingly successful at it. Like I said, it runs in the blood.
Two or three years ago I asked my brother if he was worried about the "bubble" that was then threatening to burst. He shrugged it off and gave me two solid reasons why he wasn't concerned about the market here in Utah:
1. Home prices in Utah were rising more gradually than places like Phoenix, Las Vegas and numerous west coast metropolises. Places that spiked quickly were ripening for trouble.
2. Because prices were spiking in other locations, people were being drawn to a place like Utah where you could still get a lot of bang for your buck. Hence a steady influx of people moving out of sunny Phoenix and California to a place where they could afford a home of their own. By his logic, the higher prices rose in other markets, the more stable the Utah economy would continue to be.
I talked this theory over with a realtor friend and he concurred that the "bubble" rising nationwide would not affect us here in Utah. That was before the figurative bubble burst. Now most people know that home prices are "regulating" in those areas where they rose so dramatically a few years back. It's in the news all the time. And if you haven't noticed, I wonder: have you had your head in the sand?
So what has happened in Utah after all the speculating? Several interesting things from the last 12 months, but I'll just post the most recent one. CNN reported today that prices have dropped nationwide in 52 major markets. (Comparing the three months ending June 30th, 2007 with the same period 12 months prior, if I read correctly?) The article then lists the percentage change and median home price in 149 different markets.
If you click on the "% change" column, you'll find some good news for Utahns. It looks like this:
Metropolitcan Area Median Price % Change
Salt Lake City, UT $233,100 21.9%
Binghamton, NY $111,200 19.8%
Salem, OR $227,900 16.7%
Farmington, NM $201,900 14.0%
Allentown-Bethlehem-Easton, PA-NJ $274,500 12.8%
What it means is that Salt Lake City is reporting the HIGHEST home value GAIN in the nation. Earlier this year, we were predicted by the same source to make one of the highest increases in the nation and I celebrated. Now it appears that the good news keeps rolling in.
If you want to make this practical, let me put it in simple terms. If you bought a home one year ago for $100,000, then it would sell now (theoretically speaking) for $121,900. And if you were wavering a year ago but chose to continue renting, you're now $21,900 farther from that $100K condo you were looking at.
The news gets better and better for homeowners (and worse and worse for renters) the higher the stakes. If you owned a home worth half a million, you've just added a smooth $100K to your home's value by simply living in it another year. Nice. (I'll have to blog another day about whether or not we should worry about a late-onset "bubble"' in Utah?)
People so often worry about the expenses of buying a home that they worry themselves into putting off home ownership. But if you look at the whole picture, can you afford not to buy a home with prices ever rising? That is obviously an over-simplification but it's also reality to a lot of people. Mull it over and tell me what you think.