MEDIA MAKES UTAH HOUSING MARKET WORSE
December 13th, 2007 by Carl The CriticThere’s no question about it … the red hot real estate market in Utah is slowing down.
Painful as it may be, this correction will, over time, make for a healthier market that’s less dependent upon speculators, sub-prime mortgages and double digit appreciation.
With all that being said…NOW is the time to buy…isn’t it?
Remember the old adage…buy low…sell high? And yet, the local and national media seem hell bent on convincing consumers NOT to buy a home.
Every day, there’s a steady stream of national stories in the local Utah media reporting the decline in home sales…and the accompanying decline in prices. This only serves to feed a self full-filling prophecy…creating a chilling effect in the market place.
Here’s the bone I have to pick. The media does a poor job of making the distinction between the national picture, and the local scene, which isn’t as dire as the real estate markets, i.e. Florida, California, Arizona and Nevada (ask Jason Eldredge from Newreach Marketing, an independent Salt Lake City research firm that compiles statistics on Utah real estate).
True, the Utah market has slowed. But not to the extent that it has on a nation wide basis.
We are still seeing appreciation in Utah real estate values. Instead of 20% appreciation, our rate may drop to 3-5%. The point is…HOMES ARE STILL APPRECIATING IN UTAH (unlike the situation in neighboring states). Mis-leading information only serves to adversely impact an industry that arguably encompasses 25-30% of our economy.
The real estate slow down won’t just affect realtors and builders/developers. Everyone who works in the trades or supplies materials is also feeling the affect. And those people will spend less on other products and services…like cars, clothing, entertainment, vacations, etc., etc., etc. The ripple affect is staggering.
And yet, the media continues to pour it on. Having spent a great deal of time working
in newsrooms, I understand the mind set. The editors who decide what is and isn’t “news,” have decided that the declining figures are important information that the public needs to know. But by the very definition of the term…these stories are not “news.” Real “news” regarding real estate will come when the market turns and improves.
The media can and does influence stories…and in this case, the media is making things worse. When Jim Cramer from MSNBC looks into the camera on the Today show and tells millions of viewers “don’t you dare buy a home…” he’s simply feeding a self fulfilling prophecy. So are the daily headlines of doom and gloom, which fuel the perception that this is not the time to buy real estate. In fact, the Utah economy is as strong as ever. Judging from the economic fundamentals in our state, real estate should still be going strong. And in many areas, it is. But you’d never know that from the news coverage, especially in the print media.
Will home buyers get a better price if they wait another 6-12 months to purchase? Maybe…and then again, maybe not. The same experts who advise investors not to try and “time” the stock market, are essentially telling home buyers to do exactly that. And while it’s true that home builders are making some concessions in price, and/or are offering greater incentives, nobody is going to give a home away and just hand someone the keys. Owners of existing homes will simply pull their homes off the market and wait for times to get better. And eventually, the inventory of homes in foreclosure will dry up too.
Real estate is still, at this moment, a good investment for the future…IF you’re willing to buy and hold the property. If you’re a “flipper,” and you want to turn the property in 30 minutes and make a $50,000 profit…no, real estate is not a good investment. Morale of the story? If you want and/or need to buy a home…pull the trigger and just do it. Hold on to the property for a couple of years, and judging from history, you’ll see an increase in your equity.
Listen to the media…and heed the headlines…and you’ll be just like those buyers a year ago who couldn’t write checks quickly enough to get in at the top of the market…and are now seeing a slight decline in the value of their property because they bought when prices were higher.
It will take some time for real estate to rebound and reach the same lofty heights we all enjoyed during the run up of the past few years. But it will take a lot longer if the media keeps piling on. Funny they don’t understand that they’re shooting themselves in the foot. If the media sends real estate into a deep recession, and the rest of the economy follows…guess who’ll see a decline in advertising revenues???
Don’t misunderstand…I’m not suggesting that the media paint a pretty picture. I’m not asking the media to mislead the public. What I am asking for, is for editors, reporters and writers to do a better job telling this story. Do a better job of interpreting the numbers and what they really mean. Accuracy should be the number one goal…especially when so much is at stake.
The public absolutely has a right to know…but the skewed stories coming out are only hurting the public even more. The media’s reporting on real estate isn’t making things better…it’s making it worse.
December 23rd, 2007 at 7:35 pm
How can you sleep at night posting this garbage. You know that Utah is on the same path as California, Vegas, and Arizona just a year later. Anyone who buys a home right now with be upside down by at least 20% by the time the market hits bottom in many years. The current prices have been inflated 40% by investors, appraisers, real estate agents, and other criminals. You can post this crap all you want, but the bottom line is people can’t afford to buy a house in Utah at current prices without a B.S. negative am loan. Thank God the media is doing something because you lying scum would never tell the truth about the housing disaster. To all Real Estate Agents who have lied, cheated, and stolen the last few years. CARMA is coming with a vengence, I hope you have some other skills.
January 6th, 2008 at 2:44 pm
I agree with Adam. I just moved from Arizona last summer and the signs that I see in the Utah market right now are very reminiscent of one year ago in AZ. Arizonans used the same arguments that I hear now in UT as to why UT is immune to a down turn (fastest growing state in the country, strong economy, job growth, etc.). Home owners were in denial and I see it in UT now. Timing the market is impossible, but I agree…only buy now at 20% discount.
January 7th, 2008 at 11:07 am
It’s not a buy and flip market anymore… That’s for sure. I agree with ‘Carl the Critic’, I don’t think you should put off buying. BUT buy smart and plan for a long term investment. The market is reverting back to normal.
January 15th, 2008 at 12:59 am
It is ashame that there is no checks on a real estate salesman’s conflict of interest. Shame on the author of this article. There will be a small bump in sales this spring, not as much as realtors are hoping for, and then the big tank in prices will come. These same people told me the it was a great time to buy last July (the height of the madness). Good thing I didn’t listen to salesmen about economics.
January 17th, 2008 at 3:50 pm
Adam is right. Funny how I didn’t hear anyone in th real estate industry crying “foul” when the media was hyping the real-estate markets throughout the country. The message back then was “Buy now or you never will.”
January 25th, 2008 at 3:21 pm
Carl the Critic provides great evidence of the lack of barriers of entry to be a real estate agent. Carl, go study economic cycles and even the history of your own industry and then come back with an honest, non-selfserving analysis of the current real estate environment.
Now is the time? Because it’s lower than it was yesterday? Have you ever heard of buying low… and selling lower? Of course, this is fine for you, because you get a commission whether or not they make a good decision.
I’m no fan of the media, but you imply that only good news is real news when it comes to your industry. News is supposed to inform people of current events. The lagging real estate market is currently an event. When it turns in 12-18 months, that will also be news. In the meantime, the troughing market is what you’re going to hear about.
Check out inventories, brother. Check out prices. Check out rents. Utah is not as extreme as other places but national prices need to drop 27% nationally to be in line with rents. Listening to you, one would get the impression that Utah prices need to rise to be in line with rents.
What is, is what is, no matter how much you say it isn’t. My guess is you’ll be in a different industry before long.
January 25th, 2008 at 3:28 pm
Once, just once I would like to hear a realtwhore say, “You know what, right now isn’t a good time to buy.” When the market was taking off, it was “Buy now or be priced out forever.” Now it is “Buy while prices are low”.
According to them, it is always a good time to buy.
Is there ever a time that they will be held accountable?
January 25th, 2008 at 6:44 pm
You are your own protection, insurance, and security. Criticizing the ethical choices of someone else is one thing, but using that same criticism to absolve yourself or others of poor financial choices is another entirely. The fiscal wisdom of this country - collectively - has never been lower. Markets have a way of slapping stupidity in the face. Let it happen.
January 27th, 2008 at 5:10 pm
SL County 2007 Single Family Average Sales Price - 3rd Quarter $310,567
SL County 2007 Single Family Average Sales Price - 4th Quarter $286,250 -8.50%
Source: WFRMLS XL Quarterly Comp Reports
February 10th, 2008 at 2:11 am
I was very pleased with our purchase and we will not be moving anytime soon.
February 11th, 2008 at 9:28 pm
To answer one of the posts above…
I have a friend who ACTUALLY is a real estate agent. Guess what, he told me the other day TO NOT BUY. He thinks things might pick up a bit in spring, but then it will take another big dive.
So there you have it, a realtor who actually said don’t buy.
February 12th, 2008 at 10:33 pm
Articles like this make my blood boil!
February 13th, 2008 at 6:59 pm
James,
you are not going to be very pleased when you house drops 30-40%. It’s already dropped 10.
Keep your realtors number, I’m sure you will want to thank them in ‘09
February 23rd, 2008 at 10:29 am
I hope that when the majority of the markets recover before Utah and the national media hypes the recovery, the Realtors of Utah don’t turn their position and point to the national media. I expect the honest realtors to say “don’t listen to the national media, the Utah housing market is still in the tank and will be for a couple more years.” I just have a strong feeling the comments won’t go the other way!
May 5th, 2008 at 8:42 am
The future is uncertain, no one has the magic crystal ball to precisely predict the real estate future. Buying a house is a risk investment just as any other risks, stocks and bonds. But on the average, a house is a more secured, long-term investment. This article is insightful, it helps to know some knowledge of the current market and possible discounts. Just in case it goes South, is 20% off the listing price is a good cushion for Utah’s homes?
May 6th, 2008 at 4:06 pm
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May 11th, 2008 at 3:13 pm
Minh,
The answer is no.
May 28th, 2008 at 4:49 pm
Thanks Carl,
Great article!
The Media has too much power over our thinking. Read “State of Fear.”
Real estate is soft to sucks depending on price range. At the lower end it is moving along at a fairly brisk pace with normal concessions for those that can qualify for a loan. At the upper end it is very slow with big concessions.
Is now a good time to buy? Yes and no. The problem is no one knows where the bottom is. Waiting for the bottom is futile because you only know it was the bottom and then it is too late. If you look at the last 2-3 years in Utah, the housing market took huge increases. A bubble if you will and that bubble, which was inflated by out of state investors and EASY money is now deflating. If you look at the historic rise in Utah real estate values and take out the “bubble years,” it is still on track, after the deflation of the bubble, to historic trends. That means, basically the last two years of price inflation has already been wiped out. I believe that the average house is now worth about what it was in 2006. The only thing is that if you bought during those years, you have lost equity. Real estate is a commodity but it is limited, therefore in the long run it will always go up in value.
People act like this is the first time in history that real estate has lost value. It is not. The secret is to hold it for a few years and stop worrying about it.
One of the reasons that there is so much property on the market is that many sellers have not yet gotten the message that real setae has softened. Some still think it is yesterday and are not pricing there properties at current market levels. Those that have to sell and are being realistic are selling. Those that are not, are not.
Back to “is this a good time to buy?” If you can get financing and you are in the 400k or below range, it probably is. The pricing and concessions are good and the market is flat to small increases. Also, interest rates are good now and to most people it is not the price of the house but the monthly payment that really matters. Waiting for the decrease in price could cost you in payments when the rates start moving up. You could actually pay a higher payment for a cheaper house when the FED decides to attack inflation. I remember the 80’s and 18% mortgage rates.
If you are looking in the higher range, I suggest cautiously shopping. There are some great deals out there. If you want a great house and are planning to live in it for several years, now could be a great time to buy. Again, interest rates are good and with the temporary FHA and “Conventional Jumbo” loan limits to 729,750, it may be years before you can match the loan terms now available. (ends 12-31-08)
OK, I am in the industry. The interesting thing is that Carl is not. If you bought in the last two years and it is your home, I’m sorry. Just hang in there and it will work out. If you are an investor, you were taking risks to gain a reward. You were gambling. Unlike Vegas, you can still get your money back and a profit. It will just take longer that you thought.
June 13th, 2008 at 10:53 am
[...] has slowed. And the media continues telling a self fulfilling story of gloom and doom in the housing industry. With inventory to sell, builders are offering steep discounts and generous incentives, foregoing [...]
June 21st, 2008 at 9:13 am
Davybob,
The answer is no. It is true that it is difficult to tell where the bottom will be but a buyer can get in an acceptable range. Does it make sense to buy a candy bar for $100? No. It isn’t in an acceptable range. Although the housing market isn’t that extreme it is hugely out of balance and has to fall quite a bit to be in an acceptable range. You are either lying to yourself or lying to others. Pure Realtwhore propaganda.