Friday, October 30, 2009

Ogden Frightmare: Date With Dr. Frankenstein

In the spirit of Halloween, I thought I would share something REALLY scary.  Are you ready?  You may want to put your hands on your eyes and peek through the cracks.....

Here is a really creepy map of Ogden's zoning in 1990.  Sometime in the 50's and up until 1990, the city hired Dr. Frankenstein to do the zoning plan for this pleasant neighborhood of mostly single family houses.  He ghoulishly zoned it like this:

R-2 Allows for Duplexes OOH!
R-3 Allows for Triplexes  EEEK!
R-5 Allows for up to 30 Units!  AAAAAAAAAH!!!!

This zoning plan worked as well as a bunch of dead-mismatched-body-parts sown together and then jump-started with lightning...just like we would expect from such a devious plan. Yikes!

A great example is the house next door to mine.  It is a Victorian home cut up into a 5-plex.  Definitely the work of Dr. Frankenstein.  It is still haunted by the R-5 zoning from yester-decade.

Fortunately, the zoning nightmare began to change in 1991 and, just last week, the Trolley District Neighborhood Plan was approved by the city council.  More and more these kind of zoning nightmares are becoming a thing of the past. 

Wednesday, October 28, 2009

SCRAPE: The Demise of 549 22nd Street

Ogden Crime Way Down!

This morning's Standard Examiner reports on recently released FBI statistics:

According to the report, Ogden had a crime index of 90 in 1997, meaning there were 90 crimes per 1,000 residents during that year. Last year, Ogden’s crime index was 55, the FBI statistics show.    Officials say Ogden’s 2008 rate was lower than such cities as South Salt Lake, Salt Lake City, Murray, Riverdale, Mid-     vale, West Valley City and even Park City. Ogden had a slightly higher rate than Taylorsville.

Congratulations to Cheif Greiner and all the officers on the police force for a job well done!

Tuesday, October 27, 2009

The 10-Year Bet

Many of the transactions I have written this year involve seller financing.  Many have involved downpayments ranging from 5%-10% of the purchase price.  However, none of them have involved a balloon payment of less than 10 years.  Why?

With credit shrinking at breakneck speed and unemployment preparing to stay at structurally high levels, price pressure on real estate should stay soft for sometime into the future.  In fact, we may not see prices increase again for another 5-6 years or so in Utah in any meaningful way.

There is a debate being waged today between inflationists and deflationists.  Marc Faber gave an interview to Bloomberg regarding this which I found very interesting.  He sees things as a mixed bag...which I think is the prudent view given that we are in uncharted economic territory. However, when asked about inflation down the road Marc said this:

"In ten years time, in my opinion, about 50% of tax revenue will be used just to cover interest on government debt...and that is unsustainable.  Then you are really forced to print money"
Printing money at the levels Marc is speaking about ultimately creates inflation.  Gold, stocks, consumer goods, and real estate all react to the printing of money.  Hence, our fortuitous 10-year bet on balloon payments.  In ten year, banks will likely be shoving loans out the door (yet at higher interest rates) just to keep up with inflation.  Also, by that time, equity positions will be strong enough in the properties that the owners can justify selling them or refinancing.

What interesting times we live in.  Click here for another interesting yet apocolyptic article with Marc's insights.  My advise after reading it?  Buy real estate as a hedge against economic and political insanity.  American property owners have a tendency to weather economic and political convolutions better than most. (Just ask the survivors of the French and Bolshevik Revolutions.)

Monday, October 26, 2009

Uncle Sam's Mortgage Monopoly

In a recent conversation with an investor, we discussed the implications of the governments "bailout" of the housing market and the implications it has for the future.

Instead of private banks competing for borrowers to lend money too, credit for home mortgages has dried up as private banks retreat into the trenches and lick their wounds.  To fill the void, our own government has stepped in to save the day and provide funding for home loans.  I found this stunning chart while online today that truly illustrates what has happened to the market place:

Fannie Mae, Freddie Mac, and Ginnie Mae are all government sponsored mortgage originators.  They provide "liquidity" to the market by guaranteeing or insuring losses on loans that they originate.  Taxpayer money is now used for this purpose.   They handle FHA, VA and certain agricultural loans.  As you can see from the chart, all three agencies total 95% of our marketplace!  For the mortgage market to get back to normal, we need private sector lending to step up to the plate.  Unfortunately, I believe it may be several years before we start to see that again.

In the meantime, we can all put this bumper sticker on our cars:

Saturday, October 24, 2009

Capmark Bank: Utah's $10 Billion Dollar Bust

Reports are out today today that Capmark Financial Group, the owner of Utah's Capmark Bank in Midvale, may file for bankruptcy before Monday.

Capmark is a giant commercial real estate lending bank.  Total assets are over $10 Billion in its Utah subsidiary alone.  You can read more about the banks problems here.

This bank failure is the sound of the "other" shoe dropping.  Except, there are many more "other" shoes to drop in the future.  You can review the list of problem Utah banks for yourself (from CR table):

Barnes Banking Company
Written Agreement
CIT Bank
Salt Lake City
Cease & Desist
Capital Community Bank
Cease & Desist
Capmark Bank
Cease & Desist (Media Report)
Centennial Bank
Cease & Desist
First Utah Bank
Salt Lake City
Written Agreement
Liberty Bank, Inc.
Salt Lake City
Cease & Desist
Prime Alliance Bank
Woods Cross
Cease & Desist
Transportation Alliance Bank, Inc.
Cease & Desist
Utah Community Bank
Cease & Desist
Western Community Bank
Cease & Desist

Wednesday, October 21, 2009

Historic Renovations: Before and After Video

I listed this home on Wednesday last week and placed it under contract on Saturday morning.  72 hours on the market isn't bad!  Need to sell your home?   Give me a call.

Tuesday, October 20, 2009

Architectural Apropos

My wife and I finally installed our light fixture in the entryway of our home.  Until this week, we have been starring at a hole in the ceiling created by me for a couple of years now.  Its refreshing to have it done.

Words of Wisdom: NEVER USE A SAWS-ALL FOR FINISH WORK ON LATHE AND PLASTER.  That is, unless you want the lathe and plaster to disappear completely from your wall, or in this case ceiling studs.  It took a lot of mud work to fix my insane "handy" work with the saws-all.   

Kim and I purchased three minuature chandeliers like this off Ebay two years ago.  Priced then ranged from $25-$95.  Kind of wacky on the price variation.  Kichler no longer makes these so it was great that we found them to stay consistent in our home.  As you can tell, we are particular to the tiffany glass mission style for our home.  It fits the clean lines and stately woodwork in our house.  Here are the two other matching chandeliers. 

One of my greatest pet peeves is the installation of light fixtures in a home that do not fit the period in which the home is built. With a little advanced planning and some patience, affordable fixtures can be found to accent any historic home.

Monday, October 19, 2009

Ogden Hoarder vs. The EPA

The Standard Examiner reported yesterday on a hoarder in Ogden who found himself in trouble with the EPA: 

Firefighters and U.S. Environmental Protection Agency officials combed the home of an elderly couple Saturday in search of potentially dangerous materials that had apparently been stored in the dwelling for years.    Various chemical compounds such as resins and epoxy-like materials, some kept in original containers manufactured in the mid-1990   s, were found at the home at 1620 9th St., said Ogden Fire Chief Mike Mathieu.

NOTE: As a real estate agent, I would advise against using your carport as a storage facility for caustic chemicals.  Especially when you are trying to sell your home.  It tends to "spook" buyers.  I know it sounds totally unreasonable, but what can I say?  Buyers are picky these days.

The last part of the story is the best:
Firefighters, EPA officials and representatives from the city’s Risk Management Department and Weber-Morgan Health Department began planning for the operation Thursday after being contacted by the woman who lives at the house, Mathieu said....The woman who lives at the house where Saturday’s operation took place said her husband kept chemicals in the storage units in anticipation of selling them to the government.
In other words, if you are hoarding toxic chemicals, make sure you keep your wife happy!

Photos courtesy Standard-Examiner

Friday, October 16, 2009

Weber County's Next Highway: Legacy North

The Wasatch Front Regional Council had deliberated for quite sometime on a corridor for the much anticipated Legacy North Highway. After debating the merits of several corridor proposals, it appears a final contender has been selected for consideration.

Legacy Highway Colored Purple

This corridor basically starts around 5000 West in Hooper in southern Weber County and then meanders further west in a long arch until it heads east and connects to I-15 in the north.  The idea with this corridor is to avoid disturbing existing homes and subdivisions while also avoiding the disruption of agricultural activities in western Weber County.  This corridor seems to strike a balance between the two.

When finished, this highway will provide an alternative to I-15 and will support the population growth anticipated.  Weber County, with the exception of southern Utah County,  is one of the few places left along the Wasatch Front with open space for further housing development.

Wednesday, October 14, 2009

FOR SALE: Historic 1912 Craftsman Bungalow $104,900

Blood In the Streets: FHA Slaughters Condos

FHA has made significant changes to rules guiding financing for condos.

Under new Federal Housing Administration rules that took effect Oct. 1, condo loans must meet these conditions:

• Project must be primarily residential.

• No more than 10 percent of the units may be owned by one investor. (This provision is bad for developers.)

• No more than 25 percent of the project's floor space can be commercial use. (This is bad for mixed use projects found in urban centers.)

• No more than 15 percent of the units can be 30 days or more past due on condominium-association fee payments. (This provision eliminates potentially foreclosure ridden complexes.)

• At least 50 percent of the units must be owner-occupied or sold to intended owner-occupants.  (This is bad for resort markets.)

This is going to hurt a lot of condo sales.  I believe, it will create paralysis similar to the multi-unit market.  While bad for sellers, it bay be a boon to saavy investors willing to scoop up unwanted units.  Look for more seller financing for these types of property in the very near future.

From the Memory Banks: Gender Bender Investor

My first week as a Realtor was certainly an interesting one.  My motivation for getting my license and working in real estate was spurred by a friend at church who had become interested in investment real estate.  I was also interested in the prospect and figured that getting my license would be the fastest way to success.

I had been working on identifying properties for my friend. We were very interested in the short sale process and the profits that were possible at the time.  My friend didn't have all the money he needed to get started so he partnered with some other investors.  One day he and I were talking about a specific property and he talked about how he and one of his other investor associates was looking at the property with him.  The conversation went something like this:

Me: "Oh, so you have have some more folks interested in the property, that's great.  Who went with you to look at the place?"

Friend:  "It was an investor named Alecia."

Me: "Oh, thats interesting.  Where did you and Alecia meet?"

Friend: "Well, you will think I am kind of crazy but Alecia is my dad"

Me:  "What?  So your dad's name is Alicia?  I have heard of androgynous names before but I never thought of Alicia as qualifying for that.  That's interesting."

Friend: "Well, my dad isn't so much a he as a she."

Me: -silent-  "Uh, now what?"

Friend: "Well, my dad is a transsexual."

Me:  "Whoa?! (Pause) You've got to be kidding me.  Your joking right?"

Friend: " No I am not."

Me: "Oh well uh, ok.  That's really interesting."

We then talked about how his wife and kids felt about the whole situation.   We talked about how his dad had graduated from BYU, married his mom, had 6 kids or so, and then divorced and decided he was a woman.

That Saturday I got a call from my friend:

Friend:  "Hey Jeremy, Alecia and I would like to meet to go over a game plan for a property."

Me:  "Ok, where did you want to meet."

Friend: "Can we come to your house."

Me:  " is your dad...or I mean Alecia, is she like a guy who just thinks he's a woman or is he dolled up to look like this going to be weird for my family to have Alecia here?"

Friend: "Well I am used to it, I think she's ok".

Me:  "Lets meet at Alecia's house."

This "meeting Alecia thing" was a real head-scratcher.  I didn't know what to expect.  I certainly didn't want some dolled-up dude in red pumps, lipstick, and a falcetto voice sitting in my kitchen for two hours.  The time came for our appointment and I went to Alecia's house.  I knocked on the door.  After a nervous few seconds the door opens.  Standing before me is a giant 6 foot 10 inch man. Yet, instead of a wacky "dolled-up" version of Alecia that I imagined in my head, I was presented with a confused giant man with a long ponytail, a baby blue moo-moo and fuzzy slippers.  Alicia shakes my hand.  His/her hands are huge and wrap entirely around mine as you would expect of a person of that size.     

We spent the next two hours in Alicia's house chatting about investment property.  I have to say it was one of the strangest two hours I have spent in my life.  I had to address him as Alecia and we all talked for the whole meeting as if nothing was out of place and everything was just perfectly normal.  What a pleasant fiction! 

The moral of the story is that you never know what kind of new experience you are going to have.  If you are patient, you might be lucky enough to have an experience like this too.

Friday, October 9, 2009

Renovated Cottage For Sale: $79,900

FHA: Bailout or Belt Tighten?

I was reading a presentation to congress yesterday.  The gist of the meeting was that FHA, which is 75% of the housing market right now, is in big trouble due to fraud, poor underwriting standards, and waste.  The compensating taxpayer bailout would cost us $54 Billion.  I won't bore you with too many details.  However, rather than endorse a bailout, the expert testifying made some serious recommendations to right FHA's ship.  Here they are:

The first point would probably take care of the problem FHA is having.  If downpayments increased to 10%, I would expect the housing market sales volume to be cut by another half.  Painful? Yes. Necessary? You bet.  Getting underwriting back to realistic risk-reward ratios will cure most of the problems ailing our marketplace.

And then as a counterpoint there is the mindset of those in charge who are running the ship:

“I don’t think it’s a bad thing that the bad loans occurred. It was an effort to keep prices from falling too fast. That’s a policy.”
Barney Frank, chairman of the House Financial Services Committee on recent FHA lending.


Wednesday, October 7, 2009

Photo of the Day: Demolition Delight

The improvements in the Trolley District neighborhood continue. I drove by our rehab project on Quincy Avenue today and found that the city had purchased and demolished a bedsore in the neighborhood.



At first glance it would seem sad to demolish such a cute home. The house was certainly very cute on the exterior. In fact, about a year and a half ago, I had placed it under contract for a client hoping to rehab the property. Unfortunately, once we viewed the interior, it became obvious that the home was going to require at least $50,000 in repairs. Sagging floors, bad scabbed-over wall surfaces, chopped up duplexed floorplan, no woodwork, ect. plagued the interior. Also, the home was a way station for drugs and nefarious types and the interior definitely showed signs of being "improved" by folks of that ilk.

This demolition compliments the improvements being made in the Trolley District. The 25th block of Quincy is really coming along. Follow the link to see the re-development work being done.

Monday, October 5, 2009

The Trolley District Neighborhood Plan Meeting

David Eccles at his home on Jefferson Ave.

Over the last year neighbors have been involved in creating a plan for the East Central Bench Historic District or Trolley District. After an initial meeting with over 100 people present, the participants were divided into separate steering committees. Finally, the Planning Commission has reviewed the communities input and crafted it into a cohesive and well thought out plan for our neighborhood.

Please read the report here.

I am excited to see this plan put into action.

If you live in the Trolley District and would like to voice your support for the plan to the City Council, the meeting will be held October 20th at 6pm at the James Madison Elementary School at 25th and Madison Ave.

See you there!

Friday, October 2, 2009

Things to Do In Ogden: The Indian Trail

The wife wanted to go hiking with the kids again so we decided to take a trip up Ogden Canyon and hike The Indian Trail. The trail was initially used by Ute indians to travel up Ogden Canyon during spring water run-off season. Due to Ogden Canyon's very narrow and impassable features (prior to modern blasting to make room for roads) the Indians found it necessary to use this trail.

The trail starts on the south side of Ogden Canyon Rd about a mile up into the canyon. The first thing that caught our attention was the giant restored kiln that dominates the trailhead. A very cool feature thanks to the folks at the Weber Heritage Foundation and a bunch of other local contributors who made the restoration of this old kiln possible.

The first part of the trail is on some fairly steep parts of the mountain. Fortunately, improvements in the trail make for easy walking at first. We took our four daughters with us so our progress was slow going most of the way.

If you are wanting to see fall colors, I strongly recommend this hike right now. The trees are changing all over the trail. I was amazed at some of the brilliant colors we saw. Its been a while since I have seen colors this intense.

Unfortunately, we made a wrong turn at the very beginning of our hike. Instead of hiking on the Indian Trail, we ended up in some weird section of a trail that high school kids use on weekends for recreation. We found a big open space that made for good camping. Just to the east of this spot is a giant sinkhole in the side of the mountain. Its a wacky 20ft depression with very steep walls. I am sure its full of water most of the year.

As we continued up this wrong spur of the trail we found some interesting firepits that almost resembled altars. They were higher up on the trail and away from good camping. Very wierd to find in this location. Whats makes them even more interesting is that the stones were mortared together. Somebody really wanted these here.

Ultimately the trail came to a dead end at a rockslide. We poked around trying to find a continuation of the trail but could not find one. By that time the kids were tired so we turned back, ate lunch at the camp site and returned home.

Next time we will follow the map and do the REAL Indian Trail.

Thursday, October 1, 2009

The Trolley Disctrict Movement

One of my good neighbors, Shalea Larsen, has initiated a campaign to re-brand Ogden's premier historic neighborhoods while also supporting a mass transit option under consideration.

I encourage you to visit the new site:


Particularly during the East Central Bench neighborhood planning meetings, we had spirited discussion about the role of mass transit in the nieghborhoods and the role that it should play.

I personally support the idea of bringing trolley transit back to the neighborhoods here. It has been proven to work before, it works in other cities, and it will work here again.

I also like the new name associated with the historic neighborhoods. The "East Central" label it currently has is such a sterile and lifeless one. Its connotations conjure up images of urban squalor. The Trolley District sounds much more alive. I believe Ogden's renaissance will require a few name changes to reflect the good things happening here.