Salt Lake Realtor®

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David Weekley Homes Team Member with Valerie Manis and Real Estate Agent Shanni Lo

Will the Fed Thaw the

of the Salt Lake Board of Realtors®

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Rising Above the Waters: Harnessing the Power of Civility in Times of Crisis

Natural disasters often reveal the true strength of human kindness and civility, as communities come together to face adversity. Two such stories demonstrate the resilience of human compassion and the impact it can have on those affected.

In 2005, when Hurricane Katrina devastated New Orleans, a local television station issued a plea for help. CBS News reported that instead of the anticipated 24 to 25 boats, an astounding 350 to 400 boats and their owners responded. This group, known as the Cajun Navy, rescued thousands of people trapped by floodwaters, ultimately saving 10,000 lives. Louisiana Governor Kathleen Blanco praised the Cajun Navy as “true heroes,” stating, “Louisiana people saved Louisiana people.”

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Similarly, in the spring of 1983, Utah faced a catastrophic flood that united communities in an extraordinary display of civility and cooperation. Mudslides destroyed homes, rivers surged past their banks, and streets were transformed into makeshift waterways to divert the rising waters. Over 300,000 sandbags were used to combat the flooding. However, what was remembered most was the way the community rallied together, with thousands volunteering to sandbag streets and protect homes and businesses.

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Paula Bell Paul Nicholas

Today, Utah faces the possibility of another crisis as one of its snowiest winters on record draws to a close. With Alta Ski Resort reporting a record-breaking 800 inches of snow in late March, Salt Lake may soon have to confront similar challenges as in 1983. If history has taught us anything, it’s that our communities will band together to face adversity with grace and resilience.

Salt Lake Board: (801) 542-8840

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As we prepare for the potential challenges ahead, let us make it our mission to reach out and support one another. Realtors® are known for their generosity, and we have the power to make a significant difference in our communities. In times of crisis, our collective strength and civility will guide us through, ensuring that we rise above the waters together.

handicap,

The Salt Lake REALTOR is the monthly magazine of the Salt Lake Board of REALTORS . Opinions expressed by writers and persons quoted in articles are their own and do not necessarily reflect positions of the Salt Lake Board of REALTORS®

Permission will be granted in most cases, upon written request, to reprint or reproduce articles and photographs in this issue, provided proper credit is given to The Salt Lake REALTOR as well as to any writers and photographers whose names appear with the articles and photographs. While unsolicited original manuscripts and photographs related to the real estate profession are welcome, no payment is made for their use in the publication.

Views and opinions expressed in the editorial and advertising content of the The Salt Lake REALTOR are not necessarily endorsed by the Salt Lake Board of REALTORS . However, advertisers do make publication of this magazine possible, so consideration of products and services listed is greatly appreciated.

REALTOR is a registered mark which identifies a professional in real estate who subscribes to a strict Code of Ethics as a member of the NATIONAL ASSOCIATION OF REALTORS

The Salt Lake Board of REALTORS® is pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout

the nation. We encourage and support the affirmative advertising and marketing program in which there are no barriers to obtaining housing because of race, color, religion, sex,

familial status, or national origin.

Rob Ockey President

Happenings In the News

Homeownership Matters

The Salt Lake Board of Realtors® is giving first-time homebuyers the opportunity to win a $5,000 American Dream Grant. The grants help buyers with their down payments on the purchase of a home. In 2022, the Board awarded 24 grants valued at $120,000. These grants have helped single parents, first responders, school district employees, veterans/military personnel, and others in achieving the dream of homeownership. In 2023, another 24 grants will be awarded. Funds for the American Dream Grants come from three sources: direct donations from Realtors®, a portion of the Realtor® license plate fee, and interest from the trust accounts of participating real estate brokerages. Visit www.slrealtors.com/grants-awards for more information and eligibility for the American Dream Grant.

Benefits of Staging a Home

Nearly half of seller’s agents (48%) reported that staging a home decreased its time on market, according to a new report by the National Association of Realtors®. For both buyers’ and sellers’ agents, one in five (20%) said home staging increased the offer price by between 1% and 5% compared to similar homes on the market that weren’t staged.

NAR’s 2023 Profile of Home Staging reveals the role home staging plays in the real estate transaction, including the perspectives of buyers’ and sellers’ agents, the impact of television shows and buyer expectations.

“As days on market has lengthened for home sellers, it is not a surprise to see the return of home staging as a tool to attract potential buyers,” said Jessica Lautz, NAR deputy chief economist and vice president of research. “Buyers want to easily envision themselves within a new home and home staging is a way to showcase the property in its best light.”

Two Housing Markets

The Wall Street Journal recently reported that the United States is a country of two housing markets. “In one, home prices are falling from a year ago. In the other, they’re still posting annual gains,” the article said. “That division runs right down the center of the U.S.” In fact, in all the 12 major housing markets west of Texas, plus Austin, home prices fell in January on an annual basis, according to mortgage-data firm Black Knight Inc.’s home-price index. In the 37 biggest metro areas east of Colorado, except Austin, home prices rose year-over-year. In Salt Lake County, home prices have been falling year-over-year since June 2022. In May 2022, single-family home prices peaked at $650,000. By February 2023, the median single-family home price had fallen to $560,000, a 14% decline.

Four out of five buyers’ agents (81%) said staging a home made it easier for a buyer to visualize the property as a future home. Staging the living room was found to be most important for buyers (39%), followed by the primary bedroom (36%) and the kitchen (30%).

Almost a quarter of sellers’ agents (23%) said they staged all sellers’ homes prior to listing them for sale, while 10% noted they only staged homes that were difficult to sell.

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Top Golf for RPAC

The Salt Lake Board of Realtors® held its annual RPAC fundraising event at Top Golf in March. RPAC continues to promote the election of pro-Realtor® candidates across the United States. The purpose of RPAC is clear: voluntary contributions made by Realtors® are used to help elect candidates who understand and support the real estate profession. These are not members’ dues; this is money given freely by Realtors® in recognition of the importance of the political process.

Photos: Dave Anderton

Rob Ockey

2023 President of the Salt Lake Board of Realtors® COO Presidio Real Estate Company

1. Why is increasing civility one of your goals as 2023 president? The world seems to be on edge these last few years. People are more aggressive and seem to have the opinion that if you do not agree with me, then you are my enemy. People are unable to disagree with each other nowadays, and if you do disagree with someone, you are a racist, bigot, or anti-something. Politics is very nasty right now and everything has an agenda! So, I want to be more civil with people and hope others will choose to do the same.

2. What are some ways Realtors® can promote civility in the workplace? Try to understand the person you are talking to, versus trying to judge the person. Be kind, versus trying to argue.

3. What events led you to a career in real estate? I decided to get my real estate license while I was searching for what degree I wanted to get. So, even after I graduated in finance, I eventually chose to make real estate as my full-time career.

4. What qualities make a Realtor® successful? Passion, desire, hard work, commitment.

5. Tell us about your family. I have three children. A 21-year-old daughter and two crazy boys that are eight and five years old, and the most amazing, beautiful wife a guy could ask for.

6. What are your interests? What do you do for fun? I enjoy spending time with my family. Love to

travel, golf, water ski, go to the beach, and play all kinds of games.

7. What advice do you have for new agents just starting in the profession? Treat this career as a job and be prepared to work hard. If you do, it will be one of the most rewarding decisions you will ever make.

8. In what ways does the Salt Lake Board of Realtors® help its members and serve the community? Curtis Bullock, CEO, and his staff at the Board bend over backwards to help the members and constantly search for ways to serve

the community. For example: in 2022 the Board awarded 24 grants, valued at $5,000 each, to first-time home buyers and first responders or teachers. The staff provide several opportunities to the members each month to receive education or CE credit or constant updates via social media. The staff handle thousands of customer service questions, issues each year and do it with a smile.

9. What advice would you give to first-time buyers who are facing today’s high interest rates? Understand that the rates are not very high compared to historical averages. For example, since 1971, the average mortgage rate is 7.76%. So, our

Photos: Dave Anderton

people made most of their money during difficult economic years. So, if that is true, then this could be a huge opportunity for Realtors®. Realtors® need to learn how to work again. The last few years, I believe, have created some bad habits. Realtors® have been able to make a very good living without developing necessary skills that are crucial in this industry. The challenges of this year will require ® to develop their skills, which is a great

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Baby Boomers Edge Out Millennials as Top Buying Force

Older adults who have built equity over many years are in the best position to purchase homes in today’s roller coaster market.

By Melissa Dittmann Tracey

Baby boomers are proving to be the big movers in real estate, comprising the highest share of buyers and sellers nationwide, according to the National Association of Realtors®’ 2023 Home Buyers and Sellers Generational Trends Report. Older adults may have been more insulated than other generations from the roller coaster housing market over the last year, tapping into record equity to sell their homes at premiums. Baby boomers also have been motivated to downsize and move closer to family.

Baby boomers—people ages 58 to 76—accounted for 53% of sellers and 39% of buyers between July 2021 and June 2022, the most of any generation, NAR’s report shows. “Baby boomers have the upper hand in the homebuying market,” said Jessica Lautz, NAR’s deputy chief economist and vice president of research. “The majority of them are repeat buyers who have

housing equity to propel them into their dream home, be it a place to enjoy retirement or a home near friends and family. They are living healthier and longer lives and making housing trades later in life.”

Millennials, once the leading drivers of the housing market, are now playing second fiddle, comprising about 28% of buyers, according to NAR data. Millennials were the largest homebuying force from 2014 to 2022. First-time home buyers, who don’t have the advantage of leveraging a previous sale for a down payment on a new home, have faced headwinds in the latest housing cycle, like higher mortgage rates. Seventy percent of younger millennials, ages 24 to 32, and 46% of older millennials, ages 33 to 42, were first-time home buyers. These age groups were more likely to fall within this segment of buyers than others, according to the report.

Baby boomers, who are most likely to use equity from a

Kerkezz ©/Adobe Stock

past home to make a new purchase, may be in a better position to move. They’ve tended to be in their current home the longest, which lends itself to being in a better equity position. They’re highly motivated, too. Baby boomers increasingly say they are purchasing a home to live closer to friends and family due to retirement or a desire for a smaller home. Eighteen percent of home buyers ages 68 to 76 say they purchased a multigenerational home, according to the study.

They also tend to be drawn to newer homes. The typical home purchased by a baby boomer was built in 1996, which is a newer property than those purchased by other generations. The national average age of a recently purchased home was 1986, according to NAR. Boomers tend to be drawn to newer housing inventories because they want to avoid renovations or potential problems with household systems, like plumbing or electricity. Baby boomers also are more likely than other generations to say they’re purchasing their “forever home.”

Relying on Real Estate Agents for Help

All generations favored working with real estate agents to help buy or sell. Eighty-six percent of home sellers worked with a real estate agent to sell their home, a consistent percentage across all age groups. Referrals from a friend, neighbor and relative were the

most common method for finding an agent, according to the survey.

All generations also pointed to numerous skill sets they look for in an agent. Buyers indicate they want an agent who can educate them about the homebuying process, point out unnoticed features or faults with a property, provide a list of service providers, and negotiate better terms in a sales contract. Sellers say they favor agents who have a strong reputation, are honest and trustworthy, are a friend or family member, and understand the seller’s neighborhood.

Reprinted from Realtor® Magazine Online, March 2023, with permission of the National Association of Realtors®. Copyright 2023. All rights reserved.

What Buyers Want Most From Real Estate Agents

Will the Fed Thaw the Ice-Cold Housing Market This Spring?

While it is not a buyers’ market just yet, because of affordability challenges, buyers currently have more leverage than sellers.

By Dejan Eskic Chief Economist Salt Lake Board of Realtors®

The New Year started with healthy declines in the 30year mortgage rate. According to weekly data from the Mortgage Banker Associations, rates declined approximately 100 basis points from early November to the first week of February. This decline was welcomed, especially in January, as homebuilders saw better-thanexpected sales. This also helped buyers lock in lower rates for the expected February closings.

However, a robust job report and higher-than-expected inflation readings pushed treasuries near 4% in the second part of February, resulting in interest rates inching near 7% again. This shocked the mortgage purchase applications across the United States,

resulting in a decline of 6% from the week prior and 44% from a year ago. This drop has pushed application data to levels not seen since 1995.

The solid economic data all but confirms that the Federal Reserve will continue with rate hikes. Expect mortgage rates to stay elevated until new job reports show negative readings and unemployment claims continue to rise.

The silver lining is that we saw just how responsive buyers are to lower interest rates. While the median single-family home price in Salt Lake County declined 9% from January 2022, some areas saw prices increase. In Salt Lake County’s Canyon Rim area (84109), the

single-family median home price increased to $1.1 million in January, up 36% from $810,000 in January 2022. In Holladay (84117), home prices increased to $860,000, up 4% from $824,000 a year earlier. In West Valley City (84119), prices increased to $435,000, up 0.3% from $433,900

This begs the question, how will the spring home-buying season pan out? The answer to that, of course, depends on the direction of interest rates. A rate decline is likely to result only if the economy experiences weaker economic data that inches us closer to a recession.

However, expect seasonality to return this spring, albeit tepid to years past. February new listings on UtahRealEstate.com were 23% below 2019 levels and 15% below last year. However, active listings are well above the 2022 figures but still about 17% below 2019.

While I am not ready to call it a buyers’ market just yet, because of affordability challenges, they currently have more leverage than sellers. I say this primarily because the median days on market in February averaged about 51 days (a figure not seen since 2015), which is significantly higher than the six days experienced in 2022. Additionally, we see a spike in concessions such as

sharing closing costs and sellers buying down rates. While the market is still chaotic, there are strengths in consumer finances that will dampen some of the headwinds. For example, household reserves remain elevated and growing. Data through Q3 of 2022 shows US households combined hold over $5.1 trillion, which is multitudes greater than the $0.9 trillion before the beginning of the pandemic

While the recent price declines have erased equity, most existing homeowners are in a strong financial position and still have a healthy equity buffer to absorb significant market shocks. Not to mention that over 75% of residential mortgages in Utah are locked into a rate of 4% or lower. The fact that we have existing homeowners giving up their low rate and purchasing a new home at a much higher rate should give us all a pause to think about just how strong the finances of current buyers are.

So, will the Fed thaw the ice-cold housing market this spring? No, quite the opposite, I expected them to try and keep it cool for a while, but I do expect the spring to thaw it a bit.

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When the Seller Says, ‘Please, Take My Mortgage!’

An assumable FHA, VA or USDA mortgage adds a nice bow to your marketing package.

By Stacey Moncrieff

When interest rates rise, buyers are often forced to make hard choices about the cost of housing. Higher rates, coupled with the significant rise in home values over the last few years, have forced many buyers out of the homebuying market entirely.

However, one segment of the real estate market—the mortgage assumption market—has the potential to outperform the rest. Smart agents can leverage their knowledge to bring some payment-sensitive clients back into the hunt for a new home.

A mortgage assumption takes place when the buyer takes over the seller’s existing mortgage at closing in lieu of getting a new loan. Currently, the only loans in the market with a standard qualifying assumption clause are VA, FHA and USDA loans.

Deborah Baisden, CRS, GRI, a sales associate with Berkshire Hathaway Home Services in Lynnhaven, Va., has seen an uptick in VA assumptions in her market.

“About 22% of our population is military,” she said. When Baisden started in the business in 1989, assumability was very desirable, “but it was a fairly lengthy process. They’re expediting it now.” She recently closed a sale in which a veteran buyer assumed a 3.5% loan. The sale closed in 45 days.

“Many of these loans were originated or refinanced after March 2020 and carry extremely low interest rates and payments,” said Craig O’Boyle, broker-owner of O’Boyle Real Estate Group in Colorado Springs, Colo.

Listing agents selling these properties still need to focus on the traditional big three marketing items— location, home features and the overall condition of the home— but they should also be marketing the savings buyers can realize if they qualify to assume the existing lowrate mortgage, O’Boyle said. Assuming a $300,000 loan at a 2.5% interest rate versus getting a new loan at a 6% interest rate represents $614 per month in savings.

fizkes ©/Adobe Stock

For most real estate professionals, there’s an education gap regarding mortgage assumptions, said O’Boyle. That’s understandable considering assumptions haven’t been common since the 1980s, a decade when interest rates averaged 12.7%.

Like Baisden’s market, the Colorado Springs area is home to a number of military bases, as well as the U.S. Air Force Academy—and interest in VA assumptions started to pick up in 2022. Bill McAfee, president of Empire Title in Colorado Springs, saw assumable purchase contracts coming into the office. “But there was no real clarity in the agent community on how to complete one successfully,” he said.

McAfee and O’Boyle, who’s been in the business 27 years, teamed up to create Assumption Solutions, focused on helping agents get buyers and sellers through a VA mortgage assumption. O’Boyle said agents should know these important points about mortgage assumptions.

VA, FHA and USDA mortgages all carry a qualifying assumable clause, which means any owner-occupant buyer can qualify using the same standard the loan was issued under with the existing mortgage servicer. Investors cannot assume these loans.

VA loans can be assumed by both veterans and nonveterans. Veteran-to-veteran assumptions allows the buyer to substitute their VA entitlement onto the loan and release the seller’s entitlement for use on a future VA loan. Veterans who allow an assumption by a nonveteran leave their entitlement behind until the loan is paid off—while others will only sell veteran-to-veteran. The FHA & USDA have no such entitlement issues. Each circumstance is different. In all cases, sellers should have qualified legal counsel to ensure they aren’t liable if buyers default on the mortgage.

Assumption Solutions refers to the difference between the purchase price and the assumable mortgage amount as the “assumption gap.” In theory, that gap could be financed but, since buyers are being qualified by the existing mortgage servicer, any additional financing may affect the buyer’s ability to get approval to take over the mortgage. O’Boyle said, for almost all the files processed by Assumptions Solutions so far, the gap has been covered with a cash down payment. Every buyer who has tried to finance the gap has been denied by servicers.

In Baisden’s sale, the veteran buyer brought $25,000 in cash to the close. When buyers bring a hefty sum of cash to closing, Baisden reminds them that future value is never certain. “We’ll see some growth in assumptions if sellers are realistic and bought before the big runup,” she said. “I always caution people who bring cash that there’s no guarantee they can get that cash back out when we sell.”

To help real estate practitioners understand the many nuances of marketing assumable assets, Assumption Solutions is offering webinars, podcasts and local training to agents across the country.

“We are seeing demand for assumptions grow exponentially,” O’Boyle said. “Although most of our activity is in the Colorado Springs area, we’re currently processing deals from Alaska to Florida.” In the process, he and McAfee are not only serving agents but also easing the process for servicers who aren’t up to speed on the process. “In many cases they’re giving incorrect information to consumers,” O’Boyle said, “and we help combat the errors.”

Stacey is executive editor of publications for the National Association of Realtor® and editor in chief of Realtor® Magazine.

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How 3 Recent Bank Failures Could Impact Housing Market

The collapse of Silicon Valley Bank and others may drive mortgage rates lower, said NAR Chief Economist Lawrence Yun.

By Melissa Dittmann Tracey

The demise of three banks in March has been sending shockwaves through an already fragile economy. Could it have an impact on real estate, too?

“The Silicon Valley Bank failure, along with a few other banks, means that the Federal Reserve cannot be so aggressive in raising its short-term interest rates,” said Lawrence Yun, chief economist of the National Association of Realtors®. “Therefore, mortgage rates will decline.”

Mortgage rates had been steadily rising in recent weeks, with the 30-year fixed-rate loan averaging 6.73% last week, according to Freddie Mac. The Fed has been making a series of aggressive rate increases, which may indirectly influence mortgage rates, over the

last few months. Home buyers have been up against affordability woes, as mortgage rates are nearly double what they were just a year ago.

But as of Monday, mortgage rates had fallen about 50 basis points lower than last week. Yun says that when there is a panic in the financial market, investors often shift money toward safer assets, which tends to be U.S. Treasury notes and bonds. Mortgage rates lately have tended to follow the movement of Treasury yields, which are falling.

“So, a panic in a sense leads to an automatic stimulus to the economy from lower interest rates,” Yun said in public comments on LinkedIn. “The housing

sector nearly always responds to falling mortgage rates, especially when there are job additions to the economy.” And if rates do head lower, more home buyers undoubtedly would still enter the housing market in response, he added.

The shutdown of Silicon Valley Bank became the second largest bank failure in U.S. history and the largest since the 2008 financial crisis. The bank was known as a large supporter of tech startups. About 15% of the loans in Silicon Valley Bank’s portfolio were residential and commercial mortgages, The Real Deal reported. Signature Bank and Silvergate Capital, both big lenders in the cryptocurrency space, also shuttered their doors. To help avoid mass panic, the Federal Reserve, Federal Deposit Insurance Corp. and Treasury Department created an emergency program to backstop all deposits using the Fed’s emergency lending authority. That granted depositors full access to their funds, and the agencies vowed to make all depositors whole. Usually, banks only insure up to $250,000 per account

ownership category through the FDIC, an agency that was created in 1933 after thousands of bank failures. In this case, the federal government’s move to backstop uninsured money has been viewed as an unusual step. President Joe Biden has been offering assurance to Americans that banks are safe. He vowed on Monday to “strengthen oversight and regulations of larger banks so that we are not in this position again.”

Meanwhile, the bank failures may be a sign of trouble ahead for the tech industry. “Some businesses reliant on funding from Silicon Valley Bank [and others] may lack capital to continue its business or have to cut back,” Yun said. There could be some job losses ahead as a result, especially among some California tech companies, he added. Local housing markets may be hampered by those job losses. But “broadly across the country,” Yun said, “more home buyers will enter the market [because of] lower mortgage rates.”

Melissa Dittmann Tracey is a contributing editor for Realtor® Magazine

Andreas Prott©/ Adobe Stock

HOUSING WATCH

Mortgage Rates Slide as Financial Markets Roil

The collapse of three regional banks and uncertainty in the financial markets pushed mortgage rates down to 6.42% as of March 23. Falling rates have helped curb the slide in home sales. While closings in Salt Lake County remain down compared to last year, they are falling at a slower pace. In February, there were 762 sales, down 24% compared to 1,003 sales in February 2022. In previous months, sales were down by as much as 49%.

“Mortgage rates continued to slide down as financial market concerns came to the fore over the last two weeks,” said Sam Khater, Freddie Mac’s Chief Economist. “However, on the homebuyer front, the news is more positive with improved purchase demand and stabilizing home prices. If mortgage rates continue to slide over the next few weeks, look for a continued rebound during the first weeks of the spring homebuying season.”

The inventory of homes for sale in Salt Lake County increased to 1,721 listings in February, up 113% compared to 808 listings a year ago. The months supply of inventory now stands at 1.7 months, up from 0.6 months a year earlier.

Higher mortgage rates increased the days on market until sale to 59 days in February, up from 18 days in February 2022.

The median sales price of homes (all housing types) sold in February fell to $494,650, down 4% compared to $515,000 in February 2022. The median single-family home price settled at $560,000, down 4% from $585,000 last year. Nationally, total existing-home sales year-over-year fell 23%, down from 5.92 million in February 2022, according to the National Association of Realtors®.

“Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines,” said NAR Chief Economist Lawrence Yun. “Moreover, we’re seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs.”

First-time buyers were responsible for 27% of sales in February, down from 31% in January and 29% in February 2022.