Utah Real Estate Market Continues to be Strong

All the recent talk of a bubble and the cooling off of the markets on left and right coasts seems to have only strengthened the local market for Utah. Many of the people selling in the coastal regions are moving inland, away from the natural disasters and high cost of living and realizing how beautiful a place like Utah really is. And real estate is local and is effected by local factors as much as by general factors, such as interest rates.

Here's the most recent story about the Utah market from the Salt Lake Tribune. They mention that some areas have appreciated more than 40% during the last twelve months, but don't let that fool you into thinking that the market is headed for a bubble. It's not- and here are some reasons why:

First, the Utah market is not only appreciating- it's correcting from the last few years of being flat while the rest of the country went up in value.

Secondly, being undervalued has brought in some investors, but most of the homes are being sold to homeowners. When markets get too many investors buying and flipping properties, like what's happened in Vegas the last couple years, the appreciation is hollow. It's self-created by the market and doesn't have a solid foundation, so eventually the market has to correct downward. Utah's market has not been mainly because of investors

Job growth is stronger than normal now and will continue to be during the next few years. An influx of businesses moving to the area and the low employment rate mean that there is, and will be a need for homes. This is a natural and healthy way for a market to appreciate.

Utah has the youngest median age of any state in the nation. Larger families and more children means more future housing needs for the area. A large percentage of the population in any area will continue to live in that area even after becoming adults, but the rate is higher than average in Utah, probably in large part because of the focus on family in the state.

There is still room to grow. Many areas around the country are running out of room, but Utah is still relatively rural and the metro areas, such as Salt Lake, Provo and Ogden still have some elbow room that allows new communities to be built and allows for homes in the first time buyer range to be built, getting these kids and young families started in the market so they can later move up (and pay more) for a future home.

What this all means is that the overall market in Utah is healthy and will continue to be strong for a while, regardless of what happens on the coasts, where most media is focused.

How the Salt Lake Real Estate market Got Hot

I remember my first few years selling real estate here in the Salt Lake area. It was a good market back in the mid 1990's with a lot of people moving in from out of state and the market appreciating well. We would list a property and do some good marketing and the average days on market was around 45- 60 days, which suited my sellers fine.

Once a home went under contract we would schedule an appraisal and then didn't even think about it again because the appraisal always came in fine. Not even once did I even consider that an appraisal would be anything less than what the sales price was.

So I left the state to work in Colorado and then went to California and about five or six years ago I came back to Salt Lake and the market was totally different. It was slower and homes were taking longer to sell.

Then, about four years ago or so when Utah was ranking as one of the worst states in the nation for foreclosure rates the state decided they needed to do something to slow down these foreclosures. Well, they couldn't tell home sellers what to price their home at and they couldn't tell Realtors how much they could list a home for, so the only control they had was with the appraisers. So they started fining and suspending appraisers and taking away licenses and in a few years the numbers of appraisers in the are went from over 2000 to less than 900. And the appraisers were all so worried about audits and getting in trouble that they wouldn't appraise anything anymore.

You could have three homes in your area sell for $200,000 and one sell for $201,000 and one more sell for $203,000 and try to sell a home that was upgraded to the hilt with granite and stainless steel appliances and new windows and a new roof and upgraded hardwood floors and put it on the market for $215,000 and you would get an offer for $215,000 and the appraisal would come in at $203,000. So we would call the appraiser and explain about all the upgrades but the appraiser still woudln't change their value because they were scared. So the Salt Lake market didn't appreciate for years. For a few years the market was just flat because no matter how much a buyer and seller were willing to negotiate- the appraisers wouldn't come in with a value that was more than what had already sold.

Then, finally, last March or so some news channel broke a story about how the Salt Lake market was the most undervalued market in America. And then another story followed and then another and pretty soon we had a bunch of investors and people from out of state buying property here in the area. And the best part was that many were paying cash. They would sell their home in California for over a $Million and take their $500,000 and buy a home twice the size for cash. So the appraisers didn't have any say in it. The sellers could sell and actually see some appreciation, the buyers could buy the home they wanted, and everyone would win. And the market started to appreciate.

Now the market is hot and homes are selling, but it's a very healthy, steady appreciation (around 14-18% in most areas) and it's fueled by job growth and people moving into the area, not just investors, so it should stay healthy for a while. Even with the market appreciating the appraisers are doing their best to be conservative, which can be tough for everyone else. It sure is nice when we get cash buyers who care more about getting a good home at a fair price then they do about one person's opinion.

When appraisers sell their own homes hopefully they realize how frustrating it can be when some stranger decides to choose certain homes for comps and not other homes and the value comes in low. At least I hope they feel that so they can appreciate what everyone else has to go through...

There's Enough Real Estate Business for Everyone

So many different business models- different value propositions, different benefits, different strategic unfair advantages... Everyone has their own reasons why they are the best or they are the right choice but really, does everyone have to be the one and only? Gets sort of tiresome to me.

Sure, we all have our strengths, but there is no one and only choice in any industry, especially an industry like real estate where most companies are the same. Thank goodness for the new models coming into real estate- talk about a breath of fresh air.

When the consumer has informed choices they'll choose what's right for them. The best advantage is in having choices that many consumers will like- and not because they were persuaded it's the right choice, but because they know their options and they understand the differences and then they choose you.

Some people think that if one person or company does well, then it must mean that they won't/can't and that's just silly. There is plenty of business to go around. And it helps to be supportive of your competition. When sales people talk down the competition it only makes them look desperate and unprofessional. It's good to point out differences and explain options, and then leave it with them deciding what they want.

I hope the days of the "hard close" are over for most sales people. Nobody likes to be pushed and everyone likes to have options. So let's give them options. Oh,and good service would be nice, but that's a whole different post.

To all the business owners- good luck- may we all do well, Cheers!

Realtors shouldn't be worried about BlueRoof

I was speaking to the broker of a large local real estate company earlier today and he was telling me that his agents were looking at BlueRoof and talking about how we might impact the industry in Utah. And he told me that one of his agents made a comment about getting out of the business because we would take all the clients. And while that's flattering, especially since I know the agent who made the comment and she is a good agent, it's not something I believe anyone is really concerned with, or something that anyone should be concerned with. Sounds like a natural curiousity of the unknown.

The traditional brokerage is not going away and I don't think that's a bad thing. If people have relationships with Realtors they have known and trust and they don't mind paying whatever the commission is than that's a win-win. It's not only about commission, it's about value. And how do you place a price on working with someone you know and trust and like? Redfin is a company that I really like and they're doing some great innovative things but other local companies in Seattle like John L Scott and Coldwell Banker are still doing well also. And buyers who work with Redfin save a bunch of money and buyers who don't maybe would rather work with an agent they know and like already instead of saving money.

BlueRoof is about giving the consumer more options. Some will like our options and some won't and that's why it's good to have the choice in the first place. For too long the industry has been the same and the consumer didn't have much choice- they could either pay high commissions or they could go it on their own.

And part of our model is to help identify those For Sale By Owner sellers who are willing to pay a buyers agent, which hopefully will help agents by giving them more homes to show and help the sellers if they don't want to pay a listing fee and help the buyers because they'll have more homes to see. And hopefully local appraisers will be able to use some of our FSBO sold comps for their appraisals so their appraisals don't have to kill so many sales.

Everyone working at BlueRoof is a licensed Realtor and I take pride in that. Realtors have a larger role within the community than just showing homes and just like every profession there are good and bad. I think blogging will help weed out some of the bad and sites like Homethinking.com will help promote the good. And that's definately a good thing!

Start ups need extra love

Before launching last week I had read a few books, countless blogs and spent thousands of hours researching everything from CPM to market on TV vs Billboards (Billboards are better for long term branding) to where to buy staples at the best price (Staples). I prepared and thought, analized and deliberated, argued and conceded, and when I finally started putting it all together it seemed like it was going to be much easier than I expected. That was two weeks ago...

Switching from being the broker at a large real estate company (Coldwell Banker) to my own smaller company has been a big pain in the ass. I left on good terms, of course, so I have had to wait until my replacement was ready to take over the office (tomorrow) and I've had to switch over everyone's real estate license from the old brokerage to the new and file with the Division, who are so backed up with new applicants for real estate licenses that it usually takes days to get a phone call returned, and then the logistics.

Wow- it was a lot more work than I thought. Just the details, like setting up the computers and switching all the operating systems to be the same and networking the printer and organizing where the fax machine and copier will go and parking and coordinating business cards for 13 people at the same time and getting the new for sale signs designed and, and, and... and then the website. Oh, my word- the website... there have been glitches and problems and delays and today it went down for a few hours from the server being overloaded (which is good) and noone warned me (which is not good) and there just seems to be a million little things that need to be changed all the time.

And it's expensive starting a new company with office space and IT and marketing and everything else you can think of. You plan for the expenses but then when you actually see the money leaving your account it's scary. And I'm self-funded so I can't call up my investor and calmly ask for more.

The emotions of helping all these people with their anxiety and the stress that naturally comes with change has been easier than I thought- everyone has either been really good about it or they've fooled me into thinking that they are handling it all well. And either way I'm just grateful.

Every person that goes to the website is so important to me and every contact from someone is so important that I can't imagine how so many companies have such crappy service. My hosting company has the worst service times in the history of the known universe and they don't seem to care. Being an owner of a business that blows me away, even if they are a large company- I would think they would hire more people to make sure they don't lose clients, but obviously they don't.

The support I've received from the local real estate community has been great and it means a lot to hear people saying good things, and the critique's that come with a new idea can be brutal and very helpful. Anyone reading this please go to www.blueroof.com and let me know any suggestions and if you're looking to buy or sell a home in Northern Utah let me know. You'll be smothered in attention.

Greg

Real Estate is Not Like the Stock Market

In every city across America right now there are people investing in real estate. In markets where the so called bubble has burst (dumb cliche) there are people buying up the land, bidding at the sheriff's auctions, and making offers on run down homes. These are investors who understand real state. Real estate is always a safe investment if you own for more than a decade. Always.

The real estate market goes up and sometimes creeps down, but it is not like the stock market. It doesn't have the huge upswings and downswings that the stock market has. And real estate investors aren't nearly as sensitive about things. A stock investor sees the CEO of a company wearing the wrong color tie and they freak out and it's SELL! SELL! SELL! A real estate investor looks at the cycle the market is in and buys, sells, or holds accordingly, but it's not a right now or you lose everything proposition.

And real estate never goes out of business. No matter how bad things get with a local market the land is always worth something. After Katrina hit New Orleans the whole place was devastated, but now, even with everything destroyed, people are snatching up as much land as they can get their hands on because they understand that in ten years that land is going to be worth a lot of money. More money than ever before.

There is no place in America where the land is not worth more today than it was ten years ago. Nowhere. When California crashed in the early 90's a ton of people bought up property and waited. By 2000 that property had doubled in value and by 2005 it had doubled twice more. And now that the market is cooling it will still never be less valuable than it was in 2000.

And when the real estate market does come down it comes down much slower than the stock market so people have plenty of time to sell if that's what they are going to do. If interest goes up it won't go from 6.5% to 13%- it will be much more gradual ad there are many indicators that can tell when a local real estate market is heading up fast or slowing down. Job growth, interest rates, the commercial market, availability of land, and other factors all gives us an idea of where the market is going.

The "Bubble" is the stock broker's way of projecting their bad hype on to real estate. And it makes for good reading so of course the media loves it.

In markets like Utah is going through right now people are buying run down homes to fix up and flip for profit. And they're making a ton of mone. My sister-in-law just bought a new build home here for $1Million and sold it when it was completed for $2Million. Not a bad way to make some money, figuring they didn't have to do any of the work.

And with our job growth we're looking pretty good for a while. And even if interest rates go through the roof and a tornado rips the city apart people will still be making a lot of money investing in the local real estate market.