Utah Real Estate Stories

Rising mortgage rates are causing some would-be buyers to pause their decisions until they determine whether rates are going to come back down.   While it may be possible, the probability is that prices are going to continue to increase. On December 23, 2021, the 30-year fixed-rate, according to Freddie Mac, was 3.05% and is at 6.29% as of September 22, 2022, a 3.24% increase. On a $360,000 mortgage, the principal and interest payment went from $1,528 to $2,226.   The $698 difference represents a 46% increase in the payment. It seems understandable to pause and see if rates will come down again, especially since they went up so fast, but it probably isn't going to happen anytime soon based on the Fed's position on controlling inflation. The fact that inventories are growing slightly, and market times are increasing doesn't negate that supply cannot keep up with demand and homes are continuing to appreciate, albeit, not as much as they did in 2021. If a person ...

Owners directly control four of the five factors that affect the sale of any home: price, location, condition, terms, and the agent you select.   The one thing you can't control is the location of the home, but you can adjust the other factors to compensate for failings. The seller controls the price of the home which determines its positioning in the marketplace.   If is priced too high, it will take longer to sell and, in some cases, for less than what it should have sold for because when it doesn't sell immediately, it is assumed that there must be an issue with it.   If it is priced too low, the owner will not realize as much of their equity as they should. Not pricing the home in the proper search brackets could keep the property from being exposed to potential and likely, buyers.   For example, if a home is priced at $399,000 to follow an age-old retail marketing principle, many of the most likely buyers will never know about it because they are se...

The limit for tax free gifts for 2022 is $16,000 and no tax is due to the donor or the donee.   There are provisions that would allow gifts higher than this amount providing the total lifetime gifts above the annual exclusion of $12.06 million for 2022 has not been met. The donor and donee can be separate persons so that the aggregate tax-free gift for one-year amounts to more money.   For instance, a father and mother can gift $16,000 each to their married son in 2022 and an additional $16,000 each to the daughter-in-law for a total $64,000. If the son and daughter-in-law used the money as a down payment to purchase a home, depending on how recent the gift occurred, the mortgage company might require a gift letter from the parents stating the amount was a gift and is not expected to be repaid.   Lenders may ask the exact amount of the gift, where it came from and the relationship involved. Family members and friends with financial resources can become the ca...

Housing Affordability is negatively affected by both rising home prices and mortgage rates.   A 20% increase in nominal home prices and a 2% increase in the 30-year fixed rate mortgage since January have contributed to a 46 point drop in the NAR Housing Affordability Index. The Index was 143 in June 2021 and is 98.5 in June of 2022. The Housing Affordability Index indicates whether a median income family can qualify for a mortgage loan with a 20% down payment and 25% qualifying ratio for monthly housing expenses to gross monthly income. 100 points is considered the tipping point.   As the Index rises above that point, housing is considered more affordable and as it declines, it is considered less affordable. With affordability threatening to limit buyer's ability to purchase, more borrowers are considering an adjustable-rate mortgage.  For the last ten years, fixed-rate mortgages have been so low, only about 3% of borrowers used adjustable-rate mortgages...

Married couples who own a home as joint tenants with rights of survivorship, the surviving spouse inherits the home, along with their basis, and it does not trigger a taxable event.  Unfortunately, the capital gain exclusion is reduced to a single person's share unless the survivor disposes of the property in the granted time. Married couples, filing jointly, have up to $500,000 of capital gain exclusion on qualifying sales.  As a single taxpayer, the survivor is only entitled up to $250,000 exclusion of capital gain.  For instance, if the home at the time of death is worth $900,000 with a basis of $400,000, the gain is $500,000.  If the surviving spouse sells the home, their exclusion is only a maximum of $250,000 which would make the other $250,000 subject to long-term capital gains tax. However, there is an exception to the rule that if a sale occurs within two years of the death of their spouse, the survivor is entitled to the $500,0000 exclusion if t...

One of the most talked about questions in the real estate market has to do with "Will prices continue to rise now that interest rates have increased dramatically this year?" It is understandable to think that if the Federal Reserve is using interest rate increases to slow consumer demand, that it would also slow homebuyer demand to moderate prices.   Unfortunately for would-be homebuyers, it isn't the case.   High inflation, strong economic growth, low unemployment, and increased wage growth have been associated with high home price appreciation. In a recent newsletter from First American, Chief Economist, Mark Fleming stated that historically, 90% of total inventory is from existing homes and homeowners are not moving as often as in the past.   Prior to 2007, the average tenure was five years.   After the housing crisis, between 2008 and 2016, the length of time spent in a home went to eight years. Lawrence Yun, Chief Economist with the Nati...

With all that is going on in the world, a global pandemic, supply chain issues, highest inflation in 40 years, the economic effects of a war in Ukraine, it can be overwhelming to think about when the right time is to buy a home. On a local level, there is a pent-up demand for homes that have been building for years.   Builders haven't kept up with demand for new housing for almost 15 years.   Low inventory, especially in the past three years, have driven up prices nationally in 2021 by 20% and even though, the rapid appreciation seems to be moderating, in June, NAR reported that the median price home was up 13.4% from one year ago. Then, of course, there are mortgage rates that have gone up by 2% since the beginning of 2022.   Appreciation and rising interest rates are a double whammy for people looking for their first home or to move up. It is completely understandable that many people are faced with so much that they are sitting on the sidelines waiting to s...