Are We Headed for a Housing Crash?

The media has been throwing around the idea that we’re headed for a housing crash. But is this really the case? To answer this question, we need to look at the number one law of economics: supply and demand. Demand is measured by Household Formations, meaning someone is occupying a new property without relinquishing or selling one, like a kid who’s moving out of his parents’ house for the first time. Right now, in the US there are 1.4 million households being formed per year. Then we have supply, which comes in the form of new construction. Here we look at Housing Completions, or homes ready to move into, which currently equals 1.2 million, after counting for those being replaced. This means that demand for homes remains greater than available completed inventory or supply, which bodes well for home prices being supported. What does appreciation look like in your area? Just put your zip code in the comments and I’ll send over a report with your local data.

Now Offering Utah Housing!

We are excited to announce we are now offering Utah Housing for first-time home buyers!

Due to the highly competitive market, it’s a harsh reality that first-time buyers might need an extra boost to gain entry into the market. This Utah Housing program can give them the support they need!

The program is dedicated to increasing accessible and affordable housing throughout the state of Utah, which is why they offer several mortgage loan programs to help first time buyers be able to purchase a home. These 30-year fixed-rate loans range from FHA and VA loans to conventional loans.

If cash at closing is a problem for you, the Down Payment Assistance Second Mortgage program could help you purchase with little to no cash investment. Basically, it’s like taking out a first and second mortgage, and the second mortgage covers your down payment.

A client of ours that used the Utah Housing program for their down payment had this to say, “Working with ALV made the initially terrifying process of buying my first home feel so much more doable. They connected me with a great program that assisted me with my down payment, which made all the difference when I submitted an offer on the home we loved. I’m grateful for the team’s patience in explaining everything to me and always being available for phone calls when I needed clarification. ALV did a great job working with us through the process and helping us make our first home purchase a possibility.”

We can provide the same experience for you! We’ll take the time to explain the ins and outs of the program and be readily available to answer any questions you may have throughout the process.

If you are worried that your lack of down payment may affect your chances of competing in the market, although it can be a challenge there are programs like this out there that are dedicated to helping more first-time buyers get homes.

If you think you or someone you know could benefit from this program, reach out and let’s review your situation, and get you qualified so you can begin your home search!


Market Update: More Inventory Available

In the last month we have seen the housing market start shifting and we are seeing early signs of the market cooling off. People keep asking if the market is going to crash, and I don’t think it’s going to. It feels like the we have hit a plateau in pricing and that the market is beginning to soften. We are still very much in a seller’s market, but we are seeing the market start shift and make strides towards a different environment, one that puts an ease on purchasing. With more inventory becoming available on the market in the last month there is now twice as many homes for sell! As you can see from the chart at this time last year there was only about 2,700 active listing available for purchase. At the end of May this year we had over 5,000 active listings. This means purchasing today may be easier than it was at this time last year. There are twice as many homes to choose from, which means more opportunities for buyers to purchase! I spoke with a realtor recently who had two listings that lasted on market for 13 days, which is twice as long as the usual turn time we have been seeing the last two years. When they did finally receive offers for these listings each home only got one offer each. Interestingly enough each offer was still above list price. All of this together is equating to a calmer market for buyers to compete in. There are more options today, which means it could be much easier to go under contract. Although it may feel like a challenging time to purchase, it’s not impossible. This increase in inventory has already brought a positive shift to the market and eased some of the heat from the overwhelming seller’s market buyers have been caught in the last few years. If you got demotivated last year because you couldn't find anything you liked, there is more inventory available today giving you the opportunity to find exactly what you are looking for. We always say the right house comes along at the right time and this increase in available inventory could be the moment you’ve been waiting for!

Dealing With Rising Interest Rates

Since the beginning of the year we have seen rates slightly increase, however rates are still low when compared to the rates before the pandemic.

I highly recommend acting sooner than later if you are wanting to make a change related to your mortgage.

My team is watching the market daily and listening to reports from experts, to help you navigate the market and find the opportune time to move forward with your refinance or purchase.

If you have any questions about the market, purchasing or refinancing feel free to give me a call. I am here and happy to help!

Budgeting in 2022

My goal to help all my clients make smart financial decisions, retire wealthy with their home paid off, and be able to leave their children's children an inheritance; setting up and keeping a budget is the first step to this. There are a lot of budgeting methodologies out there from the envelope method to the Zero-Sum Budget, to the “traditional” Line-Item Budget method. All budgets are good and can be great at different times in your life. However, my method is a little different. I believe that you should get to a place in life where you can have a loose budget. This is where you review your spending at the end of every month and compare your spending categories to your suggested budget categories. If any category is over the budgeted amount look through all expenses in that category and understand why. Ask your self is that ok? Did you overspend and need to work on reducing that category? Is the budgeted amount for that category not realistic for your lifestyle and needs to be increased? In general, it is best to stick to the budgeted amount, however life happens, and life doesn't stick to a budget. Sometimes events out of your control will cause your categories to be lower and some higher. The important thing with a budget is to review it monthly and understand where you are over and under spent. The ultimate goal is to live within your means and spend less than you make, while saving 20% of your income. If you save 20% of your income for your entire life you will be set for retirement. My rule of thumb is if you save 20% of your income you can spend the rest on whatever the hell you want. But the first step to get there is setting up a budget. My favorite budgeting software is Quicken. There are a lot of other more modern or online tools out there and they basically all do the same thing. Whatever program or system you choose to use here are the steps to help you get started: First - create your budget categories. These are all categories that you are going to spend money on every month. Every dollar you spend needs to fit into one of these categories. It is ok to create a miscellaneous category as a catch all. The software you select should come with a default category list. You’ll want to edit and rename the categories to fit your lifestyle. For example, one category for "Bills and Utilities" rather than multiple categories for, cell phone, internet, power, gas, sewer, garbage, etc. There are other things I want to get more granular on and track, for example eating out. I use a few categories, "coffee shops", "fast food", "restaurants". I do this because I want to track and improve the amount I spend on fast food. For both financial and health reasons I want to make sure I limit myself in these areas. Remember, keep your budget simple, do not include categories you are not actually going to use. Second - Set up your accounts and import all transactions for the past 60 days. All software will allow you to connect to your banks and import your transactions. Import the last 60 days’ worth of transactions. Once all of your transactions are in the software you will need to go through and categorize them to the categories you set up. If you run into some transactions that don't fit into any category but will occur regularly, make a new category. If it will happen rarely add it to the misc. category to keep things clean. Review that and determine what your monthly budget should be for each category. Some should be what you have averaged spending the past two months and others you will instantly see that you are spending too much and needs to be lower. (For many it’s the fast-food category) Create general monthly budget amounts in each category in your budgeting software budget tool. Set up a reoccurring reminder on the first of each month to remind you to go into your budgeting software and review all transactions. In the future most transactions should auto categorize so it should only take 15 minutes to review the transactions that were auto categorized as well as categorize anything new or anything that didn't get categorized. Once everything set up in the proper categories then go run the previous month budget report so that you can see what you spent in each category next to what your budgeted amount was. Print this out and spend a few minutes reviewing it. The last step once your budget is set up is to create your financial goals. This could be a certain savings amount by the end of the year, paying off any loans you have or paying down a credit card. Most budgeting software will have a goals section where you can input a goal and then visually watch your progress. You always need a goal. Having goals paired with a budget will change how you look at your money. You'll start to see how every decision you make matters to your greater financial health. Again, there are times in your life where a strict envelope or other budgeting style is required. My goal is to get you to the point in your life where you are saving 20% of your income, living under your means, and can buy whatever you want with the other 80% of your income. Once you get to this point, a loose budget and a budget review every month is all you need. If you need advice on what you can do to fit your real estate or investment goals into your planning for the year, reach out! I would be happy to review your situation to get you where you want to be at the end of 2022.

Refinance Fee Dropped

Recently the FHFA announced that it would be eliminating the adverse market refinance fee from Fannie Mae and Freddie Mac home loans delivered after August 1st. Originally this fee was designed to cover projected losses from the pandemic. With the fee borrowers were paying an extra $500 for every $100,000 they refinanced. However, the effectiveness of the market warranted "an early conclusion" of the fee. Now couple the fee being gone with the low rates we have been seeing this month and there has never been a better time to refinance. In fact more borrowers than ever can benefit from a mortgage refinance right now! If you have been considering refinancing, now is the time! Give us a call and let's see if you how much you could benefit.

Importance of a Pre-Approval Letter

In a market as hot as this one sellers can be more selective when it comes to choosing what offers they’re willing to accept. If you've found a home you love it's important to make your offer stand out to the seller. A pre-approval letter is one of the most important things you can do to let a seller know you are a vetted and qualified buyer.  
The path to your dream home is easier than you think with an expert to guide the way. When you connect with our team, we can help you determine a budget, loan program and rate that works for you.
If you have been considering purchasing this summer and have not been pre-approved give me a call! Our team would be happy to walk you through the process.

2021 May Be a Dry Year for Utah

A recent article published in the Salt Lake Tribune outlines that with Utah’s snowpack being below normal levels, the state is heading for a dry year.  Reducing your water use can help ensure the state has enough water to meet everyone’s needs throughout the year. Here are some ideas for ways you can help conserve water this year.

How to Save Water at Home:

  • Repair leaky plumbing and faucets.
  • Reuse cooking water in the garden.
  • Scrape dishes into the trash and soak pots and pans before washing.
  • Thaw frozen foods in the refrigerator, not under running water.
  • Use the same glass all day for drinking water.
  • Cut shower time.
  • Replace an old washing machine with low-water models. It can pay for itself through energy savings, while using half as much water.
  • Turn off the faucet while brushing teeth.

How To Save Water Outdoors:

  • Mulch your plants.
  • Avoid overwatering.
  • Remove unwanted weeds.
  • Adjust the lawn mower’s blade height to a higher setting.
  • Select drought-tolerant plants that require less water to thrive.
For more info on way that you can help save water this year check out Utah’s Slow the Flow campaign and the Utah Division of Water Resources. Check out the full article here.