more on the buying frenzy in sw utah
pricewaterhousecoopers.fuckedcompany.com
Topic: Are Housing Speculators Fucked?
--------------------------------------------------------------------------------
The Deseret News reports on the housing bubble in Utah. “Land speculators, a wave of retiring baby boomers and second-home buyers are fueling the biggest real estate rush in the Washington County’s history. ‘In absolute terms there has been no period like the past three years in Washington County history,’ James Wood said. ‘It’s a frenzy. That’s all anyone talks about is housing prices and how much money they have made.’”
“‘We are probably 20 to 30 percent cheaper than the average view lot around the county,’ (developer) Doug Rogers said. ‘I’m sure that over the next six months there could be some price raising. Any lot that is bought right now, my guess would be that they’ll gain 20 to 30 percent over the next one to three years.’”
“But with runaway appreciation, even modest homes in Washington County are becoming expensive. Home prices in St. George increased an average of 35.27 percent in the fourth quarter of 2005 compared to the same quarter in 2004. Many homeowners are wondering how long the party will last. According to some experts, it may be over already.”
“Allan Carter, of Southern Utah Title Co., said you don’t have to look far to see that real estate price growth has slowed. ‘As you go up in the price of a home, it is taking longer and longer to sell,’ Carter said. ‘For example, if you’ve got a home to sell at $1 million right now, it will take you 27 months to sell it. In November, it took nine months to sell that same home. We have a huge glut of overpriced homes on the market.’”
“By the end of this year, Carter expects 6,000 more building lots to be recorded in Washington County, a 62 percent increase over the 3,710 lots that were platted in 2005. ‘We will need 3,500 of them,’ Carter said. ‘Already we are seeing a deduction in pricing on lots of about 10 percent. There are selected areas where lots will fall 20 percent.’”
“Vardell Curtis, CEO of the Washington County Board of Realtors, said a glut of new real estate inventory has flooded the market over the last six months, which may result in a ‘tapping on the brakes’ in 2006. ‘We’re transitioning from a period of time where you might have had eight people that wanted to buy your home, now to a period where you might have to have a little help to find a qualified buyer,’ Curtis said. ‘With more inventory, I think what that’s going to mean to sellers are they might now have to allow for a contingency or wait for a buyer’s closing until they sell their home.’”
“(Developer) Joe Larsen said some people are blaming high-end buyers for Washington County’s escalating home prices. ‘People would come out here and say, ‘Gee, they’re getting $700,000 to $800,000 for a 2,300-square-foot house.’ In other parts of town a 2,300-square-foot house was $300,000. So people would say, ‘Look, they’re the ones that have made this happen.’ But obviously not all 2,300-square-foot homes are created equal.’”
“James Wood, of the University of Utah, said most people in Washington County blame the presence of investors and speculators over the past 18 months for high land and housing prices. ‘Unfortunately, there are no data on speculators or investors,’ he said. ‘Those working in the market are convinced that hundreds of people have made big money buying and selling land. However, the bloom is off the rose. Since prices have escalated so fast, it is very difficult to find developable, cheap land or to rent investment property and generate enough revenue to cover high mortgage payments. And the farmers have wised up. They want top dollar for their land.’”
“Brett John, vice president a St. George-based excavation company, blames last year’s land speculation partly on people who took out home equity loans and bought up land in hopes of flipping it at a profit. ‘It’s been artificially inflated, but it’s going to correct itself without a doubt,’ John said. ‘It’s absurd to think that a $125,000 home in 18 months rocketed in value to $460,000.’”
“Stephen Wade, who sits on the board of directors for Sun First Bank, said St. George’s real estate market is overvalued right now. ‘There are people out there that are speculating, and they don’t know what they’re doing. Our bank is really nervous about that,’ Wade said. ‘I had a guy call me from Salt Lake and say, ‘Stephen, I’ve got an extra $30,000 to $40,000. Will you help me invest it in St. George so I can make some money? But I’ve got to have my money back in six months.’ Well it doesn’t work that way. You may have to get it back in six years.’”
thehousingbubbleblog.com
|
