Saturday, June 7, 2008

Housing market will rally

Real estate guru says sales and prices will rebound this year
By Steven Oberbeck
The Salt Lake Tribune
Salt Lake Tribune
Article Last Updated:06/06/2008 11:31:43 PM MDT

PARK CITY - Utah's rising foreclosure rate and its moderating or declining home values has not dampened Lawrence Yun's optimism.
As the National Association of Realtors' chief economist, Yun offered Utah real estate agents gathered in Park City on Friday a cheery message on the future direction of Utah's residential real estate market.
Home sales and prices are poised to rebound later this year and may reaccelerate in 2009, he said.
"We went through a period of overly optimistic exuberance," Yun said, adding that he now believes the pessimism that followed the end of the national housing market boom has gone way too far.
It was just what the real estate agents wanted to hear. In an hourlong speech - the keynote address at the Park City Board of Realtors' sponsored Rocky Mountain Resort Alliance Conference - Yun laid out his reasoning.
Nationally, mortgage rates and unemployment are low while corporate profits are strong, he said. And relatively speaking, home prices in Utah are still affordable compared with many other areas.
Yun said in Utah there are many potential buyers who have the financial wherewithal to buy a home but are afraid to jump into the market. And getting those "fence sitters" into the market will be one of the keys to a turnaround.
Real estate agents need to get the message out that it's a buyers market. There is a high inventory of homes and mortgages are at or near historic lows, he said. Buyers have a lot of negotiating strength.
Laying the blame for the current real estate crisis on the subprime crisis, Yun pointed out that such loans made up only 9 percent of the mortgages in the United States but have been involved in 53 percent of the foreclosures across the country.
In many cases, the impact of the subprime meltdown is reflected neighborhood by neighborhood, he said. Home prices in areas where many houses were purchased using subprime mortgages are well down compared to neighborhoods where such financing didn't proliferate.
In Park City, an area where subprime mortgage financing wasn't widespread, real estate prices have held their value, said Tyler Richardson, president of the Park City Board of Realtors. The median price of a single-family home during the first quarter of this year was $649,140, nearly unchanged from the median price of $650,000 in the first quarter of 2007.
"We're weathering the storm very well," Richardson said. "While the volume of transactions is down, we're not seeing the dramatic fall in prices. We've also only seen a slight increase in foreclosures."
Looking at the long-term trends in the Utah real estate market may prove a benefit to those buyers who are waiting to make the leap to home ownership.
"People need to make their [home-buying decisions] not on short-term trends but on long-term trends," Yun said. "Five years from now 99 percent of the markets will have higher values than today."
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