Affordability Issues and a Steady Stream of 1st Time Buyers
October 4th, 2008 Categories: Real Estate News
We keep hearing all the talk about Salt Lake having an affordability issue and it is said that is going to make prices come down.
It is true we have an affordability issue. I think some prices are going to plummet and some are going to stay where they are.
Let’s look at a couple of price points. Now on the higher end I couldn’t agree more prices are going to come down. In Draper there are 133 active listings in the MLS alone that are $750,000 and above. The last 30 days only one closed. That is a 133 Month supply just in Draper. Now there is a segment that is hurting and a lot of banks are going to lose I mean the tax payers are going to lose their share of the $700 Billion.
Now let’s look at the entry level. The median income can afford up to $225,000 home, the median list price is $290,000. This would lead you to believe that that those prices are going to come down.
Here’s the twist, Salt Lake County has approximately 300,000 people between the ages of 6-18 years old. Divide the 300,000 by the 12 year bracket and that means we have approximately 25,000 people per year entering the housing market. That demand is going to keep the prices from coming down in the entry level market, there is just too much demand.
So what is going to happen, most are going to be shut out. I don’t really see $250 -275,000 house dropping $25-50,000, maybe 3-6% at the most.
I think it is going to cause the price of land to come down, because the only thing a builder can sell is an entry level home, that is where the demand is and the supply short. To bring the entry level price down there would have to be a whole lot of building in the very near future. Now we know that is not going to happen till the land prices come down and builders can get loans. By the time that begins to take place the backed up demand for that product will cause the prices to stay steady.
I have some fans that say I don’t write truth. They always want me to compare this year’s numbers to last year’s numbers. I don’t use those numbers because they were not normal numbers. They were so above normal that to compare to them is silly.
Over the last 13 years the average monthly sales volume for Salt Lake County is right around 1,000 homes. The highest number of homes sold in a single month is around 1,900 and the lowest month being around 500. We are a lot closer to the average then to the low.
It doesn’t mean we are not without our problems at all. I never claimed that, I just claim we have more than one market in Salt Lake and you cannot lump all together.
I encourage and welcome discussions on these topics.
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How badly You guys have done for our economic. You guys are part of those failed bank system. How can you guys ruin our United State economic. FOX NEWS show how you gays play the deadly “GAMES” for ruin our economic.
Who are you guys? real estate agents?
“how you gays play the deadly”
What are you talking about?
The economic mess is a far deeper then most people know.
You should know “you guys” mean, Which real estate agents and lander work together. This deadly games started passing to bank, Wall St…and destroyed Main St. You guys should know how this deadly games work and detail! Most people didn’t know how this work that is why you guys can fool around the real estate market.
Again with the “you guys”.
If you want to have an intelligent dialogue you are going to have to be a little more specific.
I am going to try to interpret you. “You guys” meaning a real estate agent or perhaps you mean me, and a “lander” I guess you mean a loan officer. We got together and we caused investors all over the country to buy and flip deals, we concocted a scheme that caused the leaders of Fannie Mae and Freddie Mac to cook their books, contribute hundreds of thousands of dollars to political funds. We caused Bear Stern and the Lehman Brothers to poor billions of dollars into the mortgage pool. Is that what you mean?
If you want discuss these issues then please offer up some reasonable discussion, not a blanket and generic blame on how some real estate agent in a small market crippled the US.
If you have any particular transaction that I was involved in that is considered unscrupulous or shady and someone got hurt, I am listening.
Lease Purchase Homes…
I agree totally. Wouldn\’t it be nice if everyone was this clear headed….
I agree totally. Wouldn’t it be nice if everyone was this clear headed.