Ogden Insights

Climbing Out Of The Abyss: Weber County Sales Data

2012-02-13T09:59:00.000-08:00

I reviewed sales data from Weber County for the past several months. There is some good news.

Queue chart please:

This chart records home sales since the inception of the online MLS system for Weber County back in 1995. From 1995 to 2003 sales volume grows slowly but steadily, likely mimicking population growth. Then, in 2003, sales start to climb significantly. That surge in sales never stops until 2007... just as the mortgage meltdown starts. Then we see a precipitous and painful correction. The downward trend is choppy as government intervention gooses sales in 2009 only to have the market recoil further in 2010.

But alas, there is hope. Just looking at the patterns, it appears that 2011 was the first "normal" seasonal cycle we have experienced since prior to the market collapse.

Our trendline is also showing signs of improvement. After 2010's dismal performance, we appear to have bottomed out and are now climbing out from a sales volume trough.

Another thing to consider is what the long term trend should be based on population growth. If we draw a line following the average growth that occurred ending in 2002, we should be selling just under 300 homes a month on average. Right now we are floating around 200. If we have truly troughed, then look for sales growth to trend toward the 300 mark over the next couple of years.

Brighter days may be upon us.

Uncle Sam's New Mortgage Tax

2012-02-06T09:05:00.000-08:00

Headlines today report of a discouraging new tax being levied on new purchase loans and refinances.

Here is a video from CBS:

This is what happens when government spends more than it generates in revenue. If they will tax mortgages, what else will they tax? Your auto loan? Your student loan?

The dark cloud that looms is that the Feds have now created a dependency on Federally backed financing to help generate tax revenue. That can create all kinds of mischief, including an incentive to increase government's involvement in its already near-monopoly in residential lending. However, there is a silver lining. If the taxes increase to a substantial level, it may be an incentive for private lenders to step in and provide a more affordable option to borrowers.

The best policy decision would be to get the government out of the mortgage and housing business.

HARPooned: Fed Mortgage Mods Let Owners Spear Self In Foot

2012-02-03T16:59:00.000-08:00

Headlines showed up recently praising a revamped Mortgage Modification program proposal coming out of Washington. The official acronym is HARP. Here are some highlights courtesy of Housingwire:

The plan...allows borrowers in privately funded loans to refinance into a lower rate Federal Housing Administration mortgage. The program would be expected to cost between $5 billion and $10 billion through a tax charged on the banks.

A separate option under the program would apply to borrowers in Fannie Mae and Freddie Mac loans as well. Anyone who refinances could reduce the term of their mortgage to less than 20 years. If the borrower commits to keeping the monthly payment where it is, the GSEs or the FHA would cover the closing costs estimated at roughly $3,000 per refinance.

This is government intervention in the market at its worst. To understand how bad this policy is, you have to follow the money chain. Currently, many banks own loans issues to homeowners during the housing bubble. Many of those loans went bad over the past few years and those banks are now licking their wounds trying to rebuild capital and stay afloat. For the good loans that are left, the bank receives a monthly payment that includes interest and a portion of principal. This is income to the bank.

What the HARP program proposes is to refinance the bank's good loans (i.e. eliminate its income source) and lend the homeowner money from FHA (a loan insured by my tax dollars and yours). At prevailing rates which are far lower than rates on loan issues several years ago.

So what kind of crazy consequences could come from this kind of policy? There are several.

First, the program has the potential to handicap the banks even further. By holding good loans that have interest rates above prevailing interest rates today, the banks can make use that money to repair their balance sheets and return to health. If those loans are refinanced, it means that the bank looses that income and must reissue those funds in new loans at todoay's lower rates. This reduces their income stream and postpones their return to health.

Even more sinister however is the effect that future inflation could have on these banks. If the bank reissues its entire portfolio at today's record low rates, when rates increase, it means that the banks will be loosing money again hand over fist as borrowers have no incentive to refinance at punitively higher rates. Inflation could drag banks back into insolvency at interest payments on savings and deposits exceed interest income on loans.

Think about FHA and all these government owned loans. What does it mean to the taxpayers if their money is sitting in super low interest loans as inflation pushes interest rates up? These loans become a loss on the public balance sheet.

Add interest rate risk to the fact that the Feds want to tax banks to pay for a forced divestiture of their assets and you have a recipe for gross unintended consequences. It's the equivalent of thugs ransacking your house, taking your valuables, and then sending you a bill for their efforts.

It might be tempting to say, "Hey, those slimy banks deserve it!". Well, not all banks are slimy. Unfortunately, this policy proposal will affect the good as well as the bad. How much better off will the public be when their good banks whither? The public should not be surprised when their local bank gasps for air after having been HARPooned by the Feds.

Developer Deliverance: Changes to Development Rules

2012-01-26T05:30:00.000-08:00

I am currently on the Hill working on Legislative issues. One of the committees I sit on is called the Political Subdivisions committee. It sounds like a bland name but it deals with all kinds of fun issues that address our democratic system and the function of "subdivisions" (i.e. cities and counties) of the State.

Today we heard a bill in committee by a Representative from Kaysville. Under current law, cities and counties have the right to change the specifications required on asphalt depth, street width, curb width, and other infrastructure specifications as they see fit. Unfortunately, this poses a problem when a developer purchases land, begins development and then has the city change the specifications mid-stream.e

The bill we heard today eliminates this as a possibility and fixes the specifications that are required for a development when the development starts. You would think that this was the law already. It is not. Due to the length of time it takes to complete developments, some contractors were running into issues with this.

Fortunately, it passed out of our committee unanimously and will go to the House floor for a vote. This should create a more predictable environment for developers and cities to work together.

JUST SOLD! Beautiful Bargain Bungalow

2012-01-23T05:00:00.000-08:00

I just closed with a buyer on this fantastic bargain. Located in Ogden, this home was a Freddie Mac foreclosure. It was originally listed in February of 2011 for $77,900. Over the last year, the price has slowly come down and in November the price dropped to $50,000. We entered a competitive bid situation and adjusted our offer to $56,000 financed with $2,000 earnest money. Several of the offers we were competing against were cash and very close to our price. Fortunately, our offer was selected as the winning bid.

The home is in excellent condition and will require some carpet in the basement and a good cleaning upstairs.

Once we placed the home under contract we experienced our December Wind Storm. Unfortunately, the roof on the garage suffered some unsightly damage.

We used this to renegotiate the purchase price down to $53,800. The seller also agreed to pay about $1,000 in my buyer's closing costs.

Congrats to my clients on a super bargain purchase. Repairs are estimated around $2,000 to make it rent ready. Rents are anticipated to be $750-800/mo.

Rental Repair: When Does It Make Sense?

2012-01-19T08:18:00.000-08:00

One of the big questions facing landlords is when to make repairs and what kind to make. Let me share a recent example.

I accepted a new client in November who wanted to rent his home while he moved out of area. Like many folks, his home was worth less than what he owed but it wasn't so upside-down to warrant just walking away from the property. He estimated that he could liquidate the home in about 5 years if he rented it and he could still maintain his good credit in the meantime. Rents would be slightly less than the mortgage payment but that would beat paying for two homes or sacrifice his good credit.

One of the issues I thought might be an issue was that my client had pets previously. As they were moving out of the home the carpets were freshly cleaned. However, I could still tell that pets had been there. After not receiving any applications for a while we reduced the rent price by $100. Ultimately, several tenants applied and I was able to approve an application. The tenants also noticed the pet odor and asked if the carpets could be cleaned again. We agreed to clean them and have it treated for the odor. The tenants moved in.

Depending on the kind of pets someone has, carpet odor can be a simple fix or require a complete do-over. In this case, the carpet cleaning didn't work. The odor actually got worse and now the tenants were very unhappy. They had signed a year lease but now were contemplating leaving the premises.

A bid to replace the carpet came in at $1,500. We received a similar bid for the laminate flooring. Rents are $1095 a month. There were a couple scenarios that could have played out:

A. One option would be to tell the tenants: "You signed the lease. You knew what this was before you moved in. We aren't fixing anything." This option would definitely have created some stress for all parties involved. If the tenants balked and broke their lease, the owner would keep the deposit. But, we would have more vacancy and still have a house that would not meet the market's needs because of the odor issue.

B. Another option would be: "We want you to enjoy your stay here. Let's see what we can do to fix the problem." This option would involve figuring out a way to fix the problem and do it affordably.

Option A is the slumlord business model. Option B is the professional business model. We went for Option B and negotiated a year extension of the lease with the tenants if we would agree to pay for the installation of new flooring. The tenants agreed to tear out the old carpet and treat the floors with Clorox and Kilz. I estimated that the floor repair would be paid for by a reduction in vacancy when the tenants signed on for another year. The scenario is win-win.

Don't ever be afraid to make sensible improvements to your property. Vacancy, tenant quality, and rents all improve when you put a little money back in to your investment.

Winter Water Woes

2012-01-13T07:57:00.000-08:00

I colleague of mine emailed some photos to me recently of homes that were not prepared for the winter weather.

Swamp coolers are a notorious water problem for homes, no matter which season of the year. They can also be very ugly. When not coating your roof in ice, they can be found ruining the appearance of your shingles with unsightly hard water deposits.

Drippy spicket? Or cool work of art?

I am not sure what is making the water form brown icy goo. But, whatever it is, it isn't good.

The moral of the story is take care of your exterior plumbing features BEFORE winter comes. It looks like the plumbers and handymen will be busy come spring.

Uncle Sam To Play Landlord?

2012-01-11T04:00:00.000-08:00

The vicious cycle of federal encroachment into the housing market is coming full circle in the near future. Housingwire reports that the Federal Reserve is endorsing a program to allow Federally owned homes to be made into rental properties:

"Preliminary estimates suggest that about two-fifths of Fannie Mae’s REO inventory would have a cap rate above 8% — sufficiently high to indicate renting the property might deliver a better loss recovery than selling the property," Bernanke's staff writes in a supporting white paper.

"..support for such a program will cost mortgage servicers, bond investors and even taxpayers. But it may be a sacrifice for the greater good.

"Some actions that cause greater losses to be sustained by the GSE in the near term might be in the interest of taxpayers to pursue if those actions result in a quicker and more vigorous economic recovery," the white paper states.

This would complete the pernicious circle of government intrusion into the free housing market. Right now Uncle Sam issues about 95% of all home loans. Presently, many of those loans are being issued on REO homes that are owned by Uncle Sam as well. Finally, we find out that Uncle Sam will now be wanting to rent all the homes that it owns due to making bad loans in the first place.

This proposition of an REO-to-Rental program is inappropriate. The article sites tight underwriting guidelines as the reason for the program. The Federal government created this scenario by keeping unhealthy banks alive and not letting them fail. Banks have no incentive to lend while they get cheap money to buy Treasuries that yield them a guaranteed (but low) return on investment. Why would they lend to the man on the street when they can get a risk free ride from Uncle Sam? Pure folly.

Let's get government out of the housing market.

FOR SALE: South Ogden Short Sale Condo

2012-01-10T05:30:00.000-08:00

I just listed this condo located at 1091 Country Hills Drive in South Ogden. This one is unit #207. List price is $49,900.

The unit is 2 bedrooms and 1 bath and located conveniently close to Weber State University.

The property was updated in 2007 and has granite surface countertops, updated cabinets and stainless steel appliances.

The unit has 1140 SQFT and one covered parking space.

This property would make a great investment or first time home. Monthly payments are incredibly low. If you are interested in learning more about this great opportunity, please email me or give me a call.

Ogden History: The Henry H. Hudman Home

2012-01-07T18:42:00.000-08:00

One of the things that attracted Kim and I to Ogden was its rich history. The older neighborhoods are teeming with stories and a rich heritage. One of the things I find interesting is to tie the people together with the homes that they owned. Often, the history of the home is intriguing in its own right.

This weird fascination of mine took me back to the Weber Title Abstract Vault for some more research on my own home. Here is the story:

In 1907, the lot at 2227 Jefferson Ave. was owned by Leslie S. Hodgeson. This name might sound familiar to Ogden historical buffs. He was the same gentleman that designed the Perry Egyptian Theater, Peery Apartments, Ogden High School, Ogden City Building, Forest Service Regional Building, Shupe Williams Candy Factory, Old Dee Elementary School, Ogden Masonic Temple, John S. Houtz Home, LDS Branch for the Deaf, The Hotel Bigelow, Polk School, and many other structures. Mr. Hodgeson has probably left more of a mark on the city than any other person.

On October 4, 1907, Henry H. Hudman, the Vice President of Pingree National Bank and the Treasurer for the Blackman Griffin Company, acquired the lot from Mr. Hodgeson for the princely sum of $1,200. Converted to 2010 dollars, that equates with a $28,000 purchase price...all for a .15 acre lot. Mr Hudman proceeded to construct the home with cash. A building permit was pulled in 1908 and the home was completed likely in 1910. We know this because the steam pipes in our basement are stamped with the year 1910 on them.

(This structure existed at the current site of El Matador's at 26th and Ogden Ave.)

The home was constructed for a family of four. Henry and Anne Hudman had a son and a daughter. Their son served in The Great War (World War I) and their daughter worked as a stenographer. The home has a master bedroom with two closets on the main level. I am sure Mrs. Hudman had the larger walk-in closet with window and Henry was relegated to a much less impressive closet that I use today.

(Located on the 24th block of Washington where the plaza north of Markestar is today.)

On April 29, 1920, Mabel Hudman, the daughter, received a life estate from her parents and it was finally recorded at the county office upon Henry's death in 1937.

Mabel owned the home until October 9, 1952 when Leonard Bauman purchased the home for $9,750 (just $79,000 today). Mabel seller financed $5,250 of the purchase which the Baumans finally paid off on July, 2, 1969.

The Baumans owned the home for 50 years until 2003 when it was sold to some investors in Salt Lake City for an undisclosed amount. The investors procured private hard money financing and then proceeded to default. By early 2005, we had purchased the home from the lender who repossessed it. We paid $72,500. A lot of damage was incurred during that short two year period in which the investors owned the property. It wasn't helped by the fact that the Baumans made their last significant improvement to the property in the early 1970's.

Here are some photos from when we purchased the home:

Cool woodwork. But the cool wallpaper had been ruined.

Here you can see the shards of glass and the rock (left of the fireplace) that had been thrown through the window.

The home was coated in wallpaper and it required a lot of scraping to get rid of it all. You can see the latch on the top of the door. The investors tried to turn the property into a boarding home. I am sure that worked for then until the boiler stopped working.

Of course, no old home would be complete without a creepy basement.

The restoration process has been extremely rewarding. We have grown to appreciate the amount of workmanship that went into home building so long ago. We look forward to preserving our home for another generation to own in the decades to come.

High Density Smart Growth: The Utah Pioneer Solution

2011-12-26T05:00:00.000-08:00

A colleague of mine forwarded a brilliant and insightful .pdf from the APA Conference last year. I thought I would share it with you.

APA Oct 2010 Strong Roots Sustainable Communities
It makes for a quick read, but it emphasizes the importance of smart planning and harkens back to the "Plat of Zion" of the early days of the Church of Jesus Christ of Latter Day Saints. A fun read for sure.

The Ghost of Christmas Present: Death at My Doorstep

2011-12-24T15:14:00.000-08:00

One of the properties that I manage is a freaky five-plex next door to me. One of the units is a little hut that sits in the backyard of an old Victorian era subdivided house. When I took over management from the owners, I made sure to introduce myself to all the tenants. In the hut, I met Allen, a 60-something veteran. Our meeting was congenial and polite but could I tell Allen appreciated his privacy.

Joel, one of the other tenants in the neighboring building, was a friend of Allen's and would check in on him from time to time. Earlier this week, Joel called me saying that he hadn't seen Allen in a few days. His mail was starting to pile up in the box and he didn't answer his door when he knocked to check in on him. Given the time of year I told Joel to watch the place for a couple more days in case Allen had gone to visit family. I typically try to avoid barging in on tenants unless there is an obvious emergency.

We opened Christmas presents this morning as a family. After enjoying our family time together I got a call around noon from Joel. He was very concerned and felt like something was wrong since Allen hadn't shown himself. Something in my gut told me that this situation wasn't going to end well. I dressed in my grubbies and headed over.

Joel and I walked to the back hut and knocked on the door. No answer. Allen's dog mildly barked...a lot less enthusiastically than the few days prior. Joel was concerned something had happened to Allen. I reached for my keys to unlock the door and, as I put the key in the lockset, I caught the smell of death. My heart sank and I stepped back. I didn't open the door but told Joel that I believed that Allen was no longer with us. I called 911.

The police arrived, and as it turns out, Allen had changed the locks so the only way to access the property was via kicking in the front door. The officer's legwork got us in the unit. Sure enough, Allen had expired, probably about seven or eight days prior based on the condition of his body. He was laying on a futon casually with his legs crossed. Unfortunately, putrification and the decomposition process had already begun in earnest. It was quite overwhelming to the senses. Interestingly, Allen's dog stayed close to protect his body.

The police and CSI began to process the scene and Allen's body was finally removed. Now we have the exciting chore of cleaning the unit. Any volunteers?

There is a great take away lesson from this experience for everyone: Remember how your mother and church leaders told you not to look at naughty magazines or watch naughty movies? There is a good reason. You never know when you are going to die. Your last act on this earth could be watching a naughty movie when your heart fails, and your landlord has to call the police a week later to kick in the door so they can take care of your body, and your naughty movie is still playing on the television that never got turned off because you died. There are better ways to be found dead.

Treasure Hunt: Obtaining Non-Conforming Use Certificates in Ogden

2011-12-21T05:00:00.000-08:00

I was speaking to a client the other day and he was relating a problem. He owns a triplex in Ogden and has been renting it for a number of years. Then, suddenly, Ogden City zoning enforcement notifies him that his property is not zoned for a triplex. The city has no record of a non-conforming use certificate.

So, how do we fix this problem? Ogden City typically will grandfather a multi-unit property if it can be shown that there was use going back prior to 1952. But where do you find this information? The answer lies in the archives of the Weber County Library.

On the main floor in the south end of the building is a reference desk. Hand the lady your cell phone and tell her that you want to see the "Polk Directories" for any year you can think of off the top of your head that is before 1952. Might I suggest 1951 as a good start.

The Polk Directories is like an old phone book but without phone numbers. It lists addresses and the names of people living at the property.

They are also full of cool old advertisement for local businesses.

If you are needing a non-conforming use certificate, you will be looking for multiple names at the same address. Unfortunately for my client, it appears his property was subdivided after the cut off date for grandfathering. It looks like we will be seeking some alternative solutions for his property woes.

Turf War: The Battle of Jefferson Ave.

2011-12-19T05:00:00.000-08:00

Someone suggested recently that I share some stories of our experience transforming Ogden's neighborhoods. Some of our best stories come from our move to our current home on the 22nd block of Jefferson Ave.

In May of 2005, Kim and I purchased 2227 Jefferson Ave. We had fallen in love with the Arts and Crafts architecture of the home and it was just the right size for our growing family.

The home had been abandoned and was inhabited by transients. So, prior to purchase it required that we secure the property (see plywood on the windows) and patrol the home to keep unwelcome folks out. After we purchased the home I placed a sign on the door and windows that read:

WARNING!

DO NOT ENTER

TRESPASSERS WILL BE SHOT!

I thought I would speak in a language that people could understand. It seemed to work. I only had one problem with someone stealing the old water heater from our basement once we cut out the old plumbing. The joke was on them.

In September 2005, after fixing up the home we moved in. At that time, about 50% of the neighborhood was abandoned or in some state of foreclosure. The folks inhabiting the homes surrounding us were nefarious at best. Our "suburban family" appearance clearly shocked some of our neighbors who were not accustomed to the presence of upstanding law abiding folks. I could almost hear one of them exclaim: "Oh man! The Peterson's moved in. There goes the neighborhood!"

In a way, that exclamation would be prophetic. Kim and I were determined to overturn the lawlessness of the block.

The spring after we moved in, I was planting flowers along our front sidewalk. That afternoon a man driving a truck pulled in across the street with two ladies in the cab and a pair of mattresses in the back. He unloaded the mattresses into the apartment and the ladies took up roost on the front porch. About 30 minutes later, very nice cars with single gentlemen began to troll slowly up and down our block. The girls would whistle, the car would pull over and a "transaction" would be negotiated through the window. When a deal was made, the lady would hop in the car, they would leave, and she would be returned about 30 minutes later. I was shocked at how open this "business" operated.

I decided I wasn't going to tolerate that going on across the street from us. I dressed up in my white shirt and tie, grabbed my clipboard and digital camera and took up a position on my front porch. Then came the next unsuspecting "John". The girl whistled and a negotiation commenced. That is when I waltzed out into the street and walked up behind the car. I took a picture of the license plate and wrote it on my clipboard. Then I waltzed back to my front porch with a big grin on my face.

The guy and the girl both were shocked. He slowly drove away while she backed up onto her porch and went in the house. No more "Johns" showed up that day. The next day we repeated the choreograph, and again later that week. Clearly, this routine was bad for their business.

Finally, one Saturday, the ladies were sitting on their front porch ready for work as I sat on my front porch dressed in my Sunday best with my handy clipboard and camera. The girls whispered to each other and finally one of them started to walk across the street toward my home. I met her half way in the middle of the street. Our conversation went like this:

Hoochie Mama: "Hey, why you bein' so nosey!" Fingers pointing at me.

Me: "Hi, I'm Jeremy. I am the neighborhood watch captain. It's so nice to meet you! What is your name?" I was smiling and extended a handshake. (I boiled my hand later.)

Hoochie Mama: "Uh....Melinda...." At this point she became really disengaged from our conversation.

Me: "Well, I have been noticing lots of folks coming into the neighborhood I don't recognize and I am writing down the plates just to make sure everything is on the up and up...."

At that point, "Melinda" just nodded her head, went back to her friends and that was the end. The girls moved out about a week later.

Our next play was to purchase the home next to us.

This home had been in the foreclosure cycle for over 7 years. It was abandoned and bank owned when we purchased it. We proceeded to fix it up and rent it out. The change in curb appeal put further pressure on the neighborhood to clean up.

Our next challenge was probably our scariest. In 2007, the fourplex two doors down was a den of iniquity. It was poorly managed. I begged the owners to sell it to me and finally they capitulated after being stiffed on rent too many times.

The property was a mammoth 4700 SQFT project. I had multiple restoration projects going on at the time and I had a problem: My insurance company would not insure the property unless it was occupied. At the same time, my contractor's painter said he needed a place to stay. I struck a deal, I told him I would exchange paint for two month's rent. If he painted two units, I would let him live there for free. I would pay him to paint the other two.

Unfortunately, as soon as my painter moved in, strange traffic started to frequent his place. It appears that he was part of the same crowd that I had just eliminated from the building. I complained to him to no avail. Of course, the two units that needed painting were not done well either. I ended up doing a lot of the painting myself.

About two weeks before our two month agreement ended, my painter moved in a roomate. "Steve" as he called himself was a 40-something hispanic guy with a shaved head and who had spent half of his life in prison. The only shirts he owned were red and the only socks he owned were of the knee high variety. Steve was friendly enough and liked to talk. He would chat with me while I was doing the work that my painter was supposed to have done. Our conversations were captivating because Steve explained the entire street racket to me. He talked about how a dealer could make $3,000 a week pimping and selling drugs. He explained how to cut drugs for higher profit, hook the ladies on crack, turn them into slaves, put them to work on the street, and make a great living doing it all. He had quite the entrepreneurial mind.

In fact, he was so ambitious, he set up the same operation he described to me with it's home base in my painters apartment. D'oh! I approached Steve and we had this conversation:

Me: "Hey Steve, I noticed your lady friends seem to be doing a lot of business right here. Can I ask you to ask them to move their business down the block? We are really trying hard to clean up this part of the street if you haven't noticed."

Steve: "Oh, you know I can't do that. You gotta pay me some protection money to tell these ladies to move."

Me: "Steve, I am not going to pay you to ask the ladies to move. I will just go and talk to them myself and see what we can work out."

At that point, I went about my business with the intent to negotiate some kind of "change of venue" for the folks within next couple of days. Steve beat me to the punch though right after our conversation. Basically he went to his minions and said: "See that guy over there? (Pointing at me.) He lives in that house. (Pointing at my house.) He drives that car. (Pointing at my car.) He says this is HIS neighborhood, not yours. He says you can't be here. That is what HE thinks."

What a wonderful way lighten up the day. This exchange led to a "turf war" so to speak. The pimping and dealing continued. At the same time some truly scary dudes started loitering around the properties. These were the type of guys that would have no problem knifing you, dumping you in a trash bin, and grabbing a beer afterwards.

Things came to a head when my painter overstayed his lease and I had to threaten to evict him. During that exchange he says: "Hey you better watch your back! Me and my buddies (Steve and the scary dudes) have been figuring out a way to shut you up PERMANENTLY." At this point, not having dealt with the underworld before in such a confrontational manner, I was honestly terrified. I went to the store to get some milk. That didn't help calm my nerves. Ultimately, I ended up at my Bishop's home asking for a blessing. That was a wonderful personal experience which I won't share here. I went home and talked to the wife and we felt it was best to move her and the kids to her sister's house for a few nights. I stayed home waiting for a Molotov cocktail to fly through my front window.

The next day the neighborhood was completely different. The street was eerily quiet. No hookers. No pimps. No junkies looking for a fix. My painter had a "midnight move out" and took his jolley entourage of ne'er-do-wells with him. No retribution ever occurred. We finished the renovations and have rented the building out to excellent tenants ever since.

I learned some priceless life lessons during this experience. Here is a recap:

1. Evil will prevail if good men (and women) do nothing.

2. Street thugs are impulsive and only act out violently on impulse as opposed to thoughtfully and carefully planned violence (i.e. the mofia). Hence, the lack of retribution.

3. Street thugs honor their own code of justice which is different from the law you and I live by. Upstanding citizens trump street code thuggery by creating the threat of law enforcement.

4. Street thugs need to maintain street credibility. Posturing, insults, and threats help maintain that credibility even if they are not acted upon. Violence occurs during an escalation of insults and threats between thugs to maintain street credibility. (See item 2) Upstanding citizens don't need street credibility and thus have dominance over those that do.

Since the time years ago when these lessons were learned, many more homes in our neighborhood have been purchased and rehabilitated. We have excellent neighbors and tenants that are thoughtful and community oriented. The push for restoration continues and we have just a few remaining homes to complete the work. You can check out some of the cool before and after videos representing the work that has been accomplished in Ogden.

Tenacity and perseverance are rewarded.

Oops! I Stepped in HUD: Top 6 Reasons to Avoid HUD Homes

2011-12-16T04:00:00.000-08:00

Once in a great while, I experience something so ridiculous that I find myself bereft of words to express myself. I had two experiences like this recently working with buyers to purchase two HUD homes. One client was an owner-occupant. The other was an investor. The grievances are many and poignant. Hopefully, by sharing our ulcer-inducing experiences, you will come to the same conclusion I have regarding HUD homes. Here are six reasons you should think twice before placing an offer on a HUD home:

1. Appraisal Aggravations - When entering a purchase contract, HUD boasts that it will provide an appraisal it has conducted on the property in advance. This sounds sweet and endearing doesn't it? Well, there is a catch. If the appraisal expires sometime during the contract period, the buyer has to pay for a new appraisal at their own expense. In marketing we call this the bait-and-switch. What would otherwise be a selling point of HUD homes turns instead into a slap to the face of buyers. This happened to my clients during a recent purchase. The new appraisal cost an outrageous $690. HUD refuses to order a new appraisal at their expense unless the buyers cancel their contract, lose their earnest money, and start over by winning the competitive bid process again. Nice!

2. Field Service Insanity - HUD contracts with independent companies such as Sigma out of San Diego and AMS to make sure the properties are secured and winterized. A buyer cannot turn on the utilities for an inspection or an appraisal, unless they work through one of these companies. You would think this would be easily done through a phone call to an 800-number or via the internet. No! Instead, buyers are required to fill out a form, include a cashiers check for $150 (non-refundable), snail mail it to their office, then wait three more business days for a response. The only contact number is a long distance area code. Then they send the buyer an email granting permission to turn the utilities on at the buyers expense and then only for a 3 day window of time. Of course, buyers can only hope that both their home inspector AND appraiser (if HUD's appraisal has expired) have an open calendar to fit into this brief 72 hour window of opportunity. Typically, this coordination has not gone well and utilities have to be turned on multiple times...at the buyer's expense of course.

I am aware of an experience where the field service provider would not give permission to turn on the water. Yet, HUD also required that ALL systems be checked including plumbing in order for an appraisal to be completed. So, one person says don't turn the water on and the other person says that it has to be turned on to complete the transaction. The buyer's were caught in a wasteful bureaucratic crossfire and charged late fees for it by HUD...for more on this read on...

3. Extortion Fees - HUD charges $25 per day that a buyer extends past the original contract deadline. They charge buyers $375 at a time. They refund the difference at closing or waive the fee if the delay is their fault...unless you are an investor. If you are an investor, you are charged the fee even if the delay is HUD's fault. HUD could drag its feet indefinitely and run the meter up while investor-buyers wait to close on a home.

Also, the field service providers charge $150 to re-winterize a home when the water has been turned on during winter months. But, local plumbers only charge $90 for the same service. The field service providers are making $60 to make a phone call to local plumbers. How do I become a field service provider? This parasitic fee fleeces all buyers.

4. Non-Refundable Earnest Money - Investors are charged a much larger earnest money deposit than end-user buyers. To add injury to insult, HUD deems the investor's earnest money NON-refundable upon contract acceptance! Investors are also granted NO due diligence period. HUD unreasonably expects investors to spend money inspecting the property before they even know if they can buy it or not. This totally contradicts market practices.

5. Commission Forfeiture - If a contract extension request is not completed on time, HUD forfeits the buying agent's commissions! Now, doesn't that give you a warm fuzzy feeling all over?

6. Deadline Nonsense - HUD requires to be notified 5 business days in advance to set up closing. That means that once docs are ordered and received by a lender, HUD takes up to 5 more business days to close the file. This adds another layer of aggravation to buyers who have cleared today's difficult underwriting standards to wait around an extra 5 days to close. Keep in mind that many buyer's contracts have to be extended (and thus pay the $25 per day "extortion" rate) to fulfill this requirement.

There are more complaints but this should be enough. The HUD home system is convoluted and completely contradicts market tradition...let alone being a buyer friendly enterprise. Rather than creating incentives for homeowners, the system badgers them with fees, deadlines, and bureaucratic nonsense. Who wants to put up with that?

My buyers had terrible experiences during this process. I refuse put my clients through this needless hassle any more. You and I deserve much better than what HUD has to offer.

JUST SOLD! Super Bargain Breadbox Cottage

2011-12-15T05:00:00.000-08:00

I just closed with a buyer on this super bargain home. This was another exasperating HUD home experience. Look for a post soon with all the mind blowing details of the journey to close this house.

To show you the intrinsic value of this property here is some background history. The home sold in 2006 for $98,000. Then it went into foreclosure and it was listed for sale in August 2011 for $65,000. We viewed the property in October and the next day the sellers reduced the price to $58,500. We immediately placed an offer for $56,000 and our offer was accepted.

With 4 Beds 2 Bath and a 2 Car garage, the home retails for about $120,000 in the market place. Rents are estimated around $850-$900/mo. My clients plan to repair and rent the home for positive cash flow. Repairs are estimated at less than $10,000.

Congratulations to my buyers on an excellent purchase!

If you are in the market for a bargain investment property like this one, contact me today.

Coming Off the Mountain: Chart of Ogden Valley House Prices

2011-12-14T05:00:00.000-08:00

A reader emailed me the other day and asked the following question:

I know it is just aguess... but when do you think the bottom would be for prices in Eden,Huntsville and Liberty?

Excellent question! To answer that I dived into the sales records and produced this chart:

This is monthly data with a 12 month moving average (black line) superimposed over the top. As you can see, the resort area experienced a wild ride as home prices doubled in the space three years! Commensurately, they have been cut in half again in nearly the same time time.

Based on this chart, I believe that "rock bottom" will be found in 2012. So, if you like skiing, mountain biking, and fresh mountain air, and you are in the market for a resort property, contact me and lets find an affordable bargain in Utah's hidden gem of Ogden Valley.

Hungry Hungry Repos: Banks Take Preemptive Possession

2011-12-13T04:43:00.000-08:00

One of the things I do as a Realtor is help folks sell their homes on short sale. To find these clients, I use one of the oldest prospecting methods in the book...the door knock. Usually, I show up and let the owner know their home is headed for foreclosure and then discuss some options with them. As you can guess, it's a sensitive conversation. However, it has been a source of business for years.

While I was scouting homes today I noticed a curious thing. Of the homes on my list, 60% of them had keyboxes on the front door with notices from bank-contracted asset management companies saying that the home was vacant. This is very interesting because the banks do not own the homes. Yet, somehow the property has been deemed vacant by the lender and the property has been rekeyed...all before the property is even returned to the bank via trustee sale.

How would you feel if I rekeyed your home on a whim while you are on vacation?

I wonder if these folks participated in a deed-in-lieu of foreclosure with their lenders. Either way, to find 60% of my prospective short sale list "pre-possessed" by banks is a pretty alarming development.

I inquired with Bill at CalculatedRisk to see if he had any insight. From his response, it appears that most trust deeds allow a bank to protect the collateral on their loan in the event that a home is in danger of being damaged. Winter weather can pose a real threat via plumbing which might explain the preponderance of pre-possessed homes.

Let's see what happens when I contact the owners and let them know their homes have been re-keyed.

Video: Interview with a Perspective Tenant

2011-12-12T08:24:00.000-08:00

Ever wondered what it is like to be a property manager? Being a property manager is both a science and an art. Here is a humorous video I made looking inside the all-too-important perspective-tenant interview.

Being able to ask probing questions and assess risk while being courteous and professional at the same time are important skills for any landlord.

Making Ogden Water Realtor Friendly

2011-12-12T07:00:00.000-08:00

In a recent Realtor political luncheon held during the Ogden City mayor's race, one of the questions that was posed to the Mayoral candidates was this: What are you going to do to make Ogden City a friendly place for Realtors to do business?

One of the particular complaints Realtors have had against Ogden City over the years is its unhelpful demeanor when it comes to turning on water to vacant homes.

Why make such a fuss about a seemingly small issue? Well, current loan underwriting standards and traditional market practice have been to conduct inspections and appraisals on property. These inspections require that utilities be turned on. If they aren't on, you can't inspect the systems. If you can't inspect the systems, then the buyer assumes a lot more risk and will either not buy the home or demand a significant price reduction.

So, what? Well, from a city perspective, either one of these outcomes is undesirable. The city looses water revenue from homes that sit vacant. Plus, the longer homes sit vacant, the lower their property value goes and thus the assessed property taxes as well. Putting up road blocks to homes being sold is a lose-lose proposition for the municipal coffers.

I had a conversation today with city staff sharing some of my thoughts. They assured me that they have been working diligently to change the culture at the Ogden City Utility Department and make it easier for Realtors and buyers to turn the water on to vacant homes.

They asked that Realtors take notes about their experience with the City Utility Department and report in a few weeks to give feedback. Let's be vigilant and hopefully we can make Ogden one of the most Realtor friendly cities in the county.

If you have any recent experiences you would like to share, please email them to me and I can share those when I report.

JUST SOLD! South Ogden HUD Home

2011-12-09T07:59:00.000-08:00

I recently closed on a house with a buyer shopping for an affordable home. During our shopping experience we stumbled upon this property on 39th Street in South Ogden.

The home was a HUD property and listed at $87,200. It had previously sold for $128,000 in September of 2008. We placed an offer at $85,000 with $2,550 in seller concessions. Our offer was accepted.

Then began the long winding bureaucratic road to close the transaction. I will elaborate on my client's bewildering experience in a later post. Let it suffice for now that HUD homes are not the wonderful thing they are touted to be.

Anyway, congratulations to my client's for bearing through the tediousness of it all and coming out in the end with a bargain property that meets their needs.

Buyer Loyalty: Blowing In the Wind and Driven by Waves

2011-12-05T10:03:00.001-08:00

My client loyalty rate is extremely high. I have never had a listing client leave for another Realtor after an expiration (that was not mutually agreed upon first). I make it a practice to leave my protection period at "0" on all my listing agreements. I am that confident in my ability to service and provide for my clients.

With buyers, I typically spend some time getting to know them and sign the buyer-broker agreement when we write an offer. Typically, I will invest about 8 to 10 hours of my time showing houses and answering questions before we reach that point. In seven years in the business, I have only had one person bail and work with another real estate agent before we signed the buyer-broker agreement.

Well, today we get to increase that number to two clients in seven years. It is certainly a bitter cup to drink from, especially in today's marketplace. It also may be a sign that Realtors must be more diligent about getting agency agreements authorized up front before investing the time, energy, and gas money.

We all need professional sharpening from time to time and I will consider this the lesson learned from this experience: Loyalty appears to be a scarce virtue.

Wind Storm December 1, 2011

2011-12-02T17:02:00.001-08:00

Well, we all felt the effects of the windstorm on Thursday December 1st. Our home lost power at 4:10am and we were without power until 10:30pm that evening. I have no idea how our pioneer forefathers entertained themselves in the cold dark winter months. Here is a video I scrapped together from some scenes around my neighborhood. Special thanks to Dave Willis for forwarding the smashed car photos.

For another great video on the Davis County area click HERE.

Real Estate Bloodlines: Scenes from the Secret Recorder's Vault

2011-11-30T13:51:00.001-08:00

I went to do some historical research today at the Weber County building. I wanted to find out who has owned my home since it was built in 1908.

My quest led me to the Weber County Recorder's Vault. Located in an inconspicuous hallway on the 2nd floor of the Weber Center, the first thing I noticed was the security coded doorknob and a handwritten note "knock to enter".

Upon knocking, a pleasant elderly woman answers and wisks me into the room. The room smells of old books. As I cast my eye around the room, I see rows and rows of disproportionately large books carefully organized. Their scale is awkward and almost cartoonish.

The clerk asks what I am looking for. When I respond, I am handed a note with a handful of letters in the alphabet. She pulls out a book stamped with a letter on the cover and shows me how to read the cryptic cursive handwriting from the 1800's. Then I am on my own.

My abstract search reveals some interesting facts about the creation of our home (look for that in a later post). When I am done, I look at the clock. What I thought was just a few minutes was actually an hour and a half. I am late for my next appointment...

Nanny State Real Estate: The Rise of the Ridiculous

2011-11-29T04:19:00.000-08:00

It seems that with the increase in bank owned inventory there has been a proportionate increase in ridiculous Federally mandated safety fixes to properties. Here is today's example:

My, doesn't that look pretty. I am so grateful that Uncle Sam, in his well-intended way, has mandated these to protect us from ourselves. Had these shabby railings not been there, I would have flung myself off the terrace and onto the driveway below.

Upon reflection, it's remarkable that mankind has survived the ages without handrails....

Notice that there is only one person in all of these pictures. I am sure the rest of them died of neck and back injuries sustained when their governments failed to mandate handrails.

Housing Roulette: Short Sale Odds Against the Buyer

2011-11-28T04:35:00.000-08:00

I have some clients I am shopping with who have recently shown an interest in short sale properties due to their apparent attractive price points. The thought of shopping for short sales with owner-occupants instinctively made me cringe. It has a reputation as being a notoriously bad experience. However, I wanted to double check the market to make sure the expectations I established with my clients were correct.

So, let's say you are a buyer and want to play the short sale roulette. Here are some things you need to know:

1. Short sales constitute 18% of all active listings but only make up 10% of the sales.
2. 832 short sales were listed for sale in the past 12 months. Only 270 (or a measly 32%) sold.

So what does this mean to you?

For starters, it means that if you find the perfect home that meets your every need and it's a short sale and you place an offer on it, you have a roughly 1-in-3 chance of closing on the sale (assuming you are the only person putting an offer on the property). Why only 1-in-3? Well there are many variables at play in short sales that do not affect traditional listings. Here are a few:

1. Bank Stubbornness - By definition, a short sale is the "shorting" of the debt owed on the property that allows it to be sold at a more agreeable market price. Since the bank has to approve what kind of haircut they will take, many times they will keep that point too high to make a transaction work. There are many behind the scenes reasons for this counter-intuitive behavior but the fact is that it still happens. If the bank won't play ball, the home goes to foreclosure and comes back as an REO listing.

2. Bank Bureaucracy - Many times, particularly if the seller is participating in HAFA, the process can take a very long time to complete. I had this happen on a listing and the it took so long to get the sale approved that the market had changed significantly to the downside. Thus, it rendered our sale price unattractive relative to contemporary market pricing. In this case, a buyer will usually excuse themselves from the transaction and the home will go to foreclosure. It will come back later as an REO listing.

3. Seller Absconding - Because of the large length of time involved, many times sellers will lose patience and move on with their life out of frustration. One time, I had a short sale I negotiated for six months only to have the seller disappear and change his phone numbers. This happens more often than you think. Because short sales become extremely time sensitive once approval is gained, absent sellers can ruin a short sale pretty quick. When sellers abscond, the home will go to foreclosure and come back later as an REO listing.

These are just a few of the pitfalls associated with closing short sales. From a buyers perspective you have a 1-in-3 chance of getting the home if you are the only one making the offer. What happens if you are one of multiple offers? Well your odds get worse with each additional offer you are competing against. If you were competing against 5 offers, your chances would be about 1-in-15.

Of course, on a case-by-case perspective the market isn't as perfectly predictable as these numbers. Knowing the listing agent, their negotiation style, and trustworthiness goes a long way to helping you understand your odds. However, in the broad picture, there is still a lot of uncertainty in the business of buying short sales.

Most of the owner-occupant buyers (as opposed to investor-buyers) I have worked with prefer to avoid short sales altogether and stick with the more reliable and less frustrating realm of REO and bank owned properties. They can be just as much of a bargain as short sales but without the hassle.

Photo of the Day: Mt. Ogden Views

2011-11-26T15:17:00.000-08:00

I was driving about today and was fortunate enough to have my camera handy:

This was take from about 23rd Street and Taylor Ave. in Ogden. Enjoy!

REO Worst Home Improvement Gallery

2011-11-19T14:22:00.001-08:00

I had the opportunity to preview a few REO homes with a client recently. We stumbled upon a home that had some "improvements" that were too funny to pass up. I came back with my camera to document the do-it-yourself comedy.

On first impression, this home seems like a cute brick bungalow from the 1920's. However, upon closer inspection some interesting surprises await...

First up is the swamp cooler support structure. It's made out of landscaping border lumber and scraps. It appears that the level and square were unavailable the day it was made.

On the interior we find that the swamp cooler was ill fitted for the window woodwork. However, that is an easy fix with a hammer and brute force.

Something is amiss with the fireplace. It turns out the fireplace is electric. Notice the wire and plug sticking out of the bookshelf...then notice the outlet on the floor.

Yellow foam is a cure-all for any home improvement problem. It's also handy for making your bathroom look like something from a horror movie.

Sometimes basements can be scary. What better to make you feel safe and keep you company while you shower than this friendly vent register....

...of course, assuming you can get to the shower without electrocuting yourself first.

Make sure while you are on the loo taking care of business, that the business from upstairs doesn't drip on your head.

Plumbing is expensive. Best to just avoid installing it when possible.

And to close the sale, this home comes with a 2-year home warranty!

There you have it folks. Some of the "best" improvements I have seen in quite a while. I hope you grinned like I did.

The Rent Price Penalty

2011-11-18T11:09:00.001-08:00

As with all things in life, risk is tied to compensation. Consumers see this relationship particularly in borrowing money. The payday loan office charges over 300% interest because so many of their loans go to collections. The risk of lending is very high. Banks will increase the interest rates on car loans made to individuals with bad credit. Since most people operate on a fixed budget, the higher interest rate translates into a higher payment for a smaller amount of money. That smaller amount of money translates into a dumpy car.

This same dynamic typically plays out in the housing market. Folks with great credit present a low risk. They can borrow inexpensively. Since their interest rate is low, their budgeted payment allows them to borrow more for the same payment than someone with bad credit and a high interest rate. Thus, those with good credit can afford to live more lavishly than their bad credit friends.

So why do I bring this up? Well, risk runs in many directions. Tenants typically pay more for a rental space than they would if they owned something. However, sometimes the spread is not that great. In fact, during the housing boom, rents were LESS than mortgage payments. That is normally a good indicator of an overheated market.

Today though we have just the opposite situation. Good credit buyers are shunning ownership right now and running to rentals instead. This pushes up demand and rents on the best rental units. How much does it push up the rents? Lets look at a recent example:

459 20th Street (which you may recognize) has been for sale at $89,900. Let's assume that a purchase is based on a 4% interest rate with a $3,150 down payment. The monthly payment for a buyer comes out to $527 (principal, interest, taxes and insurance).

Yet, despite this very low payment, buyers have not been forthcoming. However, we just leased the property to the second tenants to look at the place for $695 a month net.

As you can see in this case, the tenants are willing to pay 32% MORE to rent the property than to own it. That is a remarkable thing.

Even more remarkable is that this is not a rare situation. Demand for rentals is high while demand for ownership is low. That leaves an abundance of bargain homes in the marketplace that need investors to own and rent to tenants for much more than the mortgage payment.

It makes sense to be one of those owners.

FOR SALE: Historic Arts and Crafts Apartment Building

2011-11-17T11:25:00.001-08:00

I recently visited with a client who asked that I present his property to my sphere of influence. The Peery Apartments are 15 units nestled next to the heart of Downtown Ogden. They are just 1 block's walking distance to Historic 25th Street's entertainment, restaurants, and amenities.

Here is just a sampling of the property:

I have current rent information, expense data, and other analysis on the property. The owner has asked $850,000 for the property. With rents currently at $10,800 per month, the property is a great cash flow investment. Here is a video of just one unit.

To see video of inside the building, click here.

The building is made to be turn-key. On-site manager and housekeeping are excellent. Contact me for more details. Please do not disturb tenants.

Video: Market Seer Explains How World Works

2011-11-17T09:00:00.001-08:00

A colleague of mine passed this video along in an email today. I thought I would share this most insightful exchange between an antagonistic British hostess and a hedge fund manager who understands economics. He explains how the housing market works at the very first. (Note: The reasons he cites for the market bust are the exact same reasons real estate is such a great investment right now.):

I hope you found this video as enlightening as much as I did.

Enforcement: Ogden City Boots Dishonest Landlords From Discount Program

2011-11-15T17:25:00.001-08:00

As a member of the Utah Apartment Association, I get a regular trade publication called the Landlord Times. In today's edition was an article entitled Ogden City Disqualifies Dozens from Good Landlord Program. Here is a excerpt:

Ogden City recently revoked the Good Landlord status of dozens of Ogden Property Owners who violated their agreements with the city, forcing them to pay thousands of dollars in extra fees to the city.

Participants in the Good Landlord program in Ogden agree to run background checks on all applicants, deny applicants with certain high risk factors, evict tenants who commit crimes, and comply with city ordinances and codes. In return, the city reduces the per unit license fee as much as $143 per unit.

Although I hear a lot of old timer landlords complain about this program, I have had nothing but good experiences following the guidelines in my business practice. In fact, the class that the UAA puts on to train participants in the program has been a valuable business education tool. It teaches landlords how to run their business like a business instead of a hobby. It empowers owners to make their rental respectable instead of flophouses.

If you own rentals in Ogden, take heed to honor your agreement with the City if you are participating in this program. Everyone benefits when you do what you say you will do.

Affordable: House Payments 40% Below 2006 Levels

2011-11-10T21:37:00.001-08:00

An interesting headline courtesy of Housingwire this week in Monthly mortgage payment almost 40% cheaper than 2006. Here is an excerpt:

Housing affordability improved dramatically because of declines in both prices and mortgage interest rates, according to David Stiff, chief economist at Fiserv.

"The monthly mortgage payment for a median-priced single-family home is now $700, compared to $1,140 in 2006 — a decline of nearly 40%," he said in comments on the latest release from Fiserv.

Even more interesting is this snippet:

Stiff said national purchase mortgage payments now account for only 13% of monthly median family income, down from 23% in the first quarter of 2006, and the lowest percentage since 1971.

That should give us some historical perspective. How low can house payments go? Not much more in my opinion. The only scenarios that I foresee pushing house prices meaningfully lower would be a pandemic or a Zombie Apocalypse.

We're On The Cusp: Charts Show Prices to Rise or Massive Overcorrection

2011-11-07T09:18:00.000-08:00

I had a conversation on Friday with a client about house prices and how the market "feels" like such a good value. My client remarked: "Houses are a better value than they were in 1999 when I got in the business!"

This comment caused me to reflect on market dynamics for a moment. The housing market in Utah peaked in 1999 but the peak we experienced in 2007 was leaps and bounds better. Time has a way of distorting perceptions because of economic changes and inflation. So, to verify if my client's gut feeling was correct, I decided to do some heavy analysis and compare sticker prices with Consumer Price Index "Inflation-Adjusted" prices.

The findings are shocking in my opinion:

First, lets review the above market history since 1979. Let's follow the brown line for a moment. If you purchased a home in 1979 worth $100,000, that home today would be worth approximately $340,000. Between then and now, your home would have declined in value five separate times from five separate market peaks. However, each successive market peak exceeds the previous one which brings you to today's price point.

Now lets look at the blue line. In real "inflation-adjusted" terms, your home would have declined in value for 12 years even though its sticker price was increasing during that same time. Your home's value lagged abnormally behind inflation quite a bit from 1979 to 1992. Then, in the early nineties, this distortion corrected and there was a tectonic increase (both real and nominal) in the value of your home. After peaking in 1999, the real price plateaued and stabilized again until our most recent housing bubble .

The lesson to take away from this is that, when adjusted for inflation, housing is a fairly stable and predictable store of value. Is it any wonder then that it has been such an excellent tool for creating and maintaining wealth?

Now lets look at the latest housing bubble to measure the local market's progress in finding equilibrium.

This chart is the same as the first except we zoom in on the years 1997-2011. Again, here we are looking at inflation adjusted prices. A quick glance at the chart confirms my client's assertion that homes today are indeed a better bargain than they were in 1999. In fact, we are very close to the market trough of 2004. Keep in mind that this data is six months old. Today we may already be at parity with the previous inflation adjusted market trough. We won't know until a few months when today's data is finally released.

Regardless, what we are seeing is that we are at or very near the natural equilibrium point for housing. There are a couple questions now that need answering:

1. Will the market over-correct?

If it does, that will set up the market for another scenario like the early 1990's when real and sticker price values vaulted after lagging behind inflation. I don't know anyone who bought real estate in the early nineties who is doing poorly. It may be wise to watch this metric. An over-correction is a boon for investors and new home owners.

2. If the market does not over-correct, what's next?

Once the market hits its natural equilibrium point, which on this inflation adjusted chart is around the $100,000 mark, will it hit bottom and plod sideways again? If it does, with inflation increasing, that means that house prices will have to increase with it to maintain that equilibrium. This very well might be the case.

Either way, we are at an important junction. We will either enter a super-bargain phase of the market. Prices hold. And it becomes nearly impossible to go wrong purchasing investment real estate because of its relative value to the dollar. Or, the market will start to see rising sticker prices as nominal values try to keep up with inflation.

Whatever happens, it appears that brighter days are just around the corner.

Financing Mortgages In the Days of Old

2011-11-03T16:51:00.000-07:00

653 21st St. Ogden, UT c.1900

I had the opportunity to review some very old title work at the Weber County building last month. One of the curious things I discovered while I was there was an absence of trust deeds and mortgage company names in the register.

The books I reviewed dated back to the mid and late1800's during Ogden's growth and maturing into a major population and economic center. I watched the registers witnessed as land was subdivided, sold, improved and sold again.

The most captivating part came as I saw what happened when new homes were constructed. Here is an example:

In 1907, 459 20th Street was a vacant lot owned by Albert Richter of Ogden. It appears that Mr. Richter constructed a home on the lot and then, on September 10, 1908, sold it to James and Charles Moore, brothers, for the princely sum of $3,300. However, rather than going to the bank and getting a loan, inscribed in the book was this note: "$3,000 payable at 8% in 10 years" with Mr. Richter being the Grantor. What we find out is that the Moore Brothers purchased the property with $300 down payment and seller financing the rest after Mr. Richter built the home with his own cash.

Some fast work with our mortgage calculator reveals that the house payment was $36.40 a month. But wait...adjust that for inflation over the past 103 years and that would be paying about $850 today. The home's sale price of $3,300 would be about $79,000 today...about what you would expect to pay for the home as it was originally when it did not have a bathroom, laundry, or electrical like it does now.

Anyway, the early 20th century was an interesting time to be in the land and housing market. Most of the transactions were done with cash or through seller financing. Bank mortgages like we know today didn't come onto the scene until the Great Depression and FDR's New Deal.

So, what does this all mean? If the mortgage market lacks Federal support through Fannie and Freddie Mac and other government contrivances, the private mortgage market will tend to gravitate back to a shorter termed mortgages and they will be less available. Is this a bad thing? Well, it depends on your perspective. But, it is the natural course of action in the absence of a fluid and confident marketplace for mortgage bonds.

Fannie and Freddie Mac are on their way out. If new market mechanisms can take their place, we may still see 30-year mortgages continue; however, the proof is in the pudding. Let's watch and see how things play out. These changes to the way we do financing are so significant that they may take place over the course of a decade or more.

Home Price Hysteria: Triple Dip Drama A Delusion

2011-10-31T08:58:00.000-07:00

Headlines today are warning of another forthcoming dip in home prices as a financial analysis firm declares that home prices are headed down again. How far down? Here an except:

The besieged housing market has even further to fall before home prices really hit rock bottom.

According to Fiserv, a financial analytics company, home values are expected to fall another 3.6% by next June, pushing them to a new low of 35% below the peak reached in early 2006 and marking a triple dip in prices.

So home prices could possibly decline 3.6% between now and June? Pardon me folks if I am simply unimpressed by the alarms being sounded. It is not that I don't believe what they are saying. Rather, I believe that this is a contrived headline and these numbers are inconsequential to us based on the big picture.

The truth of the matter is that house prices have bottomed, bottomed again a few months ago, and will likely bump a bottom again "by next June." To see why this is a non news event, lets take a look at the house price index charts from CalculatedRisk:

As you can see the double dip was really us bouncing along the bottom of house prices. A triple dip will be an even less newsworthy event. House prices have blown off all their excesses and now are operating in the historical price range ratios that are more closely tied to household income instead of household income leveraged to the Nth degree through interest-only and option-arm loans.

This correction in house prices and their return to equilibrium prices becomes even more apparent when you look at prices adjusted for inflation:

Due to Uncle Sam's incessant printing of money, house prices have never really stopped dropping in real terms. Which means that today's house prices are right about in the sweet spot of equilibrium. Even if home prices didn't drop a dime in the next year, the printing presses are still running which means that each year the homes become a better and better value at current sticker price.

Meanwhile, price-to-rent ratios are also showing we are very near to equilibrium:

So, the next time you hear headlines telling you that the sky is falling, be sure to look up. You will likely live to tell the story the next morning...if it's a story even worth repeating.

Real Estate Investment: Getting the Good Deal

2011-10-27T05:20:00.000-07:00

I am working with some clients right now who have been mentored by another investor to cast a broad net over the market to find bargains. Their methodology is to follow a specific formula to derive an offer price and then submit that offer regardless of list price.

My experience has taught me that even though a property may be worth of a specific value, the list price for that same property may or may not reflect its value. In many cases, the list price may be too high. Does this mean that a low ball offer should be submitted to such a property?

A couple of years ago I wrote Blacklisted at 10%: Betting Against The Seller. The article has a very interesting chart showing you the List Price-to-Sale Price rations for single family home transactions in Davis County. What we discovered was that back then most transactions happened at 90% of list price of above. Therefore, the chances of success offering a price below that threshold were very small...something we discovered to be on the order of a 1-out-of-33 chance. My advise then: Don't low ball because it's a waste of time.

In light my new client's methodology, I wanted to revisit the data and see if there were any new trends. I also narrowed the focus to the multi-unit market in Weber County. I present you with today's chart:

What we see here is interesting. Surprisingly, given market conditions, we discover that 13% of all transactions are occurring ABOVE list price. How can this be? Well, remember that list price and sale price are not necessarily the same thing. If a property is listed lower than its current value, which happens 13% of the time according to this chart, then the price will be bid up. Nearly half of all transactions are occurring between 90% and 99% of list price. 16% of transactions are happening between 80% and 89% of list price. And finally, only 8% of transactions are happening below 80% of list price. That means you have to submit over 10 offers at 80% or less of ask price to get one to stick. That is a lot of offers.

So, is it worth the time and effort? That is up to the agent and the client to decide. My preference is to be more analytical and hone in on the deals based on experience and subjective research. However, some folks do things differently.

So, whatever it is you choose to do...happy bidding!

Fudgery: Uncle Sam's Mortgage Manipulation Madness

2011-10-26T16:11:00.000-07:00

I found this interesting video online today:

New guidelines for refinancing (aka HARP) have come out to "help" homeowners again who are underwater on their homes. After the failure of the first push to modify mortgages, I doubt this push will be any more successful.

My favorite quote from the video:

"Will it be enough? Maybe. Maybe not. But its definitely a step in the right direction."

Really? What direction might that be? Entrenching people in their homes as debt slaves? Creating dis-incentives for bond investors to enter the market so they can lend to folks who actually qualify?

The answer is to let the market find its equilibrium by allowing homeowners who are underwater and lack the income to service their debt to foreclose. Foreclosure eliminates excessive and bad debt. It resets home prices at lower and truly affordable levels that are related to household income and not manipulated according to gimmicky government programs.

Foreclosure is uncomfortable and often traumatizing to the homeowner. However, with so many homes already reset to lower prices, the chances are high that a homeowner will be able to rent a home in the same neighborhood for less than they were paying on their mortgage prior to foreclosure.

Foreclosure is the natural solution to excessive debt. The sooner that nature can take its course, the sooner our economy will be on the mend, and this tough period in history will be behind us.

Things to Do In Utah: Capitol Reef National Park

2011-10-24T12:09:00.000-07:00

The family and I took a much needed vacation this last week. Part of our adventure included a trip to Capitol Reef National Park. The park is off the beaten path and getting there is a little tricky, especially when we couldn't find our map and our planned route was closed. However, store clerks were a very helpful guide.

Our adventure started from St. George and took us to Cedar City. State Road 14 was closed due to a massive rock slide which meant we had to travel via Parowan through Cedar Breaks. That was a spectacular scenic detour.

Cedar Breaks is located just a few miles from Brian Head ski resort.

After visiting St. George, we were unprepared for the cool 40 degree temperatures found at the lookout. The elevation was approximately 10,000 feet.

And, just in case you didn't know, cliffs and lightning can be harmful.

Our jouney then took us though some fascinating country to the quiet secluded town of Panguitch. The clerk at the gas station was kind enough to direct us where to go from there. We stayed at the Best Western which is just three miles from the Capitol Reef. Here is the view from our hotel room.

We then traveled into the park and checked out The Goosenecks which is a winding canyon created by Sulpher Creek.

We then headed to the Visitor Center to get oriented and traveled down Scenic Drive toward the Grand Wash. At the entrance to the Grand Wash are some interesting features. The abandoned uranium mine was a nice diversion. It was dug into the thin white band near the base of the cliff.

Of course, our family already had our radiation dosage allowance for the year so we decided not to break in and explore.

Further into the wash the geologic features continued to fascinate us...

Notice Kim and the kids at the very bottom of the above photo. It gives you a sense of scale.

The next morning we awoke to a beautiful sunrise...

We then drove to Capitol Gorge...

Near the end of the gorge there is a side trail taking you up to "The Tanks" which are these large pools of water held in deep depressions in the rock. The pool you see below is about 15 feet across.

After Capitol Gorge we headed along SR 24 and stopped to photograph the Fremont Indian petroglyphs.

Then, we headed up the Hickman Bridge trail...

Since I had the camera, I had to take a self portrait to prove I was actually there.

The trail also had some interesting surprises. There was a cave feature off the trail that we found and played in for a few minutes.

The "bridge" is a massive arch feature high above the valley floor.

The trail ends with a fantastic view of the Fruita Historic District and park Visitor's Center area below...

After the hike we traveled north out of the park...to Goblin Valley about an hour and a half away.

Our trip was so short and yet packed so full of interesting events and scenery that I am still stuggling to digest it all. The geologic features still haunt my mind and I find myself yearning to go back so I can explore this part of Utah again. It has certainly found a special place in my heart.

Real Estate Investment: Creating Win-Win Deals

2011-10-14T04:17:00.000-07:00

I recently sold an investment property that I had acquired a couple months ago. The sale was unanticipated, but when the opportunity presented itself, I thought that it would be best to move forward.

You might recall my post from earlier Super Bargain: The $10 Real Estate Transaction. I had received a call from a gentleman in Kansas who had obtained a parcel at the County Tax Sale back in 2008. The parcel happened to have a four car garage sitting on it. However, the lot was tucked way back behind some other properties and adjacent to a bombed out fourplex. The county did not know that the parcel had a garage on it until this year and his tax burden increased 5-fold because of the new higher valuation. The garage had been taken over by squatters and looked like a tent city.

There were several factors that contributed to purchasing this property at such a low price:

1. The market value of the garage was tough to determine because of non-existent comparables. The county assessed it at $16,000 but it needed some repair.
2. At such a low price point, marketing it with a realtor would be a non-starter. Most agents would not want to put up with the hassle of marketing this property for the paltry commissions involved.
3. Property managers would be equally disinterested because the total rental income from the garage would be around $180/mo. Most property managers charge 10% of gross rents. Being paid $18/mo. for dealing with four separate tenants wasn't a winning option either.
4. The seller was absentee and the property was a liability rather than an asset to him. It cost him money each month rather than generating revenue.

So, with this in mind I agreed to eliminate his problem and pay his property taxes. That is when I got to work. I dressed up in my church clothes, typed up a serious sounding vacate notice, and marched over to the garage to post it on the premises. For good measure, I also notified all the tenants in the fourplex just in case they happened to know who might be using the space. Of course, many of them denied knowing anything about the stuff in the garage. I also offered to rent the space to them for $45/mo. if they didn't want to move their stuff.

To my surprise, as the deadline approached for vacating, I got a call from a tenant and she agreed to pay the rent. We signed a lease and I collected rents for two months. That is when a good friend of mine called and out of the blue asked if I had a garage for sale.

My original plan was to sell the garage in a few months when the fourplex came up for sale in an effort to piggy back on the interest and hopefully have the buyer of the fourplex purchase my garage also. However, my friend needed some storage space today and didn't want to pay out the nose for rent on a storage shed he didn't own.

We put a deal together. I agreed to sell the garage for $10,000 with seller financing for 5 years on a 6.25% note. He put $1,000 down which covered property taxes, title insurance, and closing fees. The monthly payment is about $175/mo.

This is a classic win-win deal for both transactions. I didn't want the headache of fixing up the garage and my friend didn't want to pay for something he wasn't going to own in the end. Based on rent-to-value ratios, I sold the garage for about half of its retail market value on a generous seller finance contract. The payments I receive will be nearly equal to what I could rent the garage out for each month. Everyone is happy. When I acquired the garage, I cured someone's headache who did not have the time or money to cure the problem himself.

These are the types of transactions you want to put together.

Ogden to Gain 700 Jobs from Massive Home Depot Service Center

2011-10-13T15:48:00.000-07:00

It was reported by ABC 4 today that Home Depot has announced plans to open a customer support and service call center in Ogden.

Construction will begin soon on the building and will be completed by Spring 2012. A location has not been announced but my guess is that it will be in the Business Depot Ogden facility on 12th Street. This is where CSN Stores recently opened their new center as well.

Ogden's rise continues...

FOR SALE: Restored Victorian Cottage

2011-10-10T20:08:00.000-07:00

We finally completed our historic Victorian Cottage restoration and it is ready for market. This home was built in 1908 by James and Charles Moore who owned the home until 1919. It has lots of interesting history that I will share in a later post.

The home has new everything: roof, kitchen, bath, lights, electrical, and more...

Here is the video of the exquisite finished product.

This property its just a block away from the Ogden River and a kayak launch point. For anyone looking for outdoor recreation, this is a prime locale. It is also just a block from museums, restaurants, entertainment and everything cool about downtown Ogden. Plus, if you move into this home, you have some awesome neighbors that include myself nearby. Come take a look at this Victorian era gem! Priced at $89,900, you won't find a better value.

Ogden Rising: Ogden River Restored!

2011-10-07T18:51:00.000-07:00

I attended the ribbon cutting on the Ogden River restoration project today as a dignitary. After years of hard work, the river has been converted from a dumping ground to an outdoor sports and recreation sanctuary. Fox 13 has this video of the event:

The river now boasts a board walk, kayak ramps for easy access, and restored vegetation and wetland areas. A new playground was also installed in the park adjacent to the river.

Come to Ogden to live, work and play!

Weber County Housing Inventory Snapshot: October 2011

2011-10-07T04:51:00.000-07:00

A client asked me which markets in Weber County were the "hottest" as far as sales go. It's an interesting question. I liken it to asking which body in the cemetery is the warmest. I was curious myself and ran the numbers. Here are the findings:

This chart measures the "Months of Inventory" available. In other words, at sales rates over the last 12 months or at the 30-day pace, how long would it take to sell all of the homes that are on the market today.

Anything under 6 months is considered a healthy market. Anything over 12 months is considered extremely overstocked. It appears that the rurul communities of Plain City, Farr West, and Slaterville are doing relatively well along with Hooper. The upper income communities of North Ogden, Pleasant View, and the resort communites of Eden, Liberty, and Huntsville are still glutted with listings.

But before you start a pity party, lets take a look at how far we have come from 2009. Here is a chart I posted a couple years ago:

There was a time when inventory levels were north of 10 months for most of the county. Check out Eden and Liberty! Those markets have come a long way to better health today. Nobody likes an 80 month market time.

The contrast between these two charts shows that the market today is finding an equilibrium point after the shock of the market collapse in 2008.

Safer Neighborhoods: Ogden's Proposed Gated Community

2011-10-06T04:31:00.000-07:00

Recently I have been made aware of efforts to make Ogden's neighborhoods feel safer. One of these efforts includes a proposal to create a unique gated community in Downtown. Here is a map of that neighborhood:

Basically, the proposal includes gating Eccles, Van Buren, and Brinker Avenues at 20th Street and also at 19th Street and Jackson Ave. The four gates would enclose a community of approximately 150 homes, most of which were built in the 1940's.

The idea is to create an environment that would allow home owners to feel safer but also create an environment that makes it more difficult and less opportunistic for criminals.

Interestingly, crime is not necessarily higher in this neighborhood than the surrounding area but rather the geography and street layout provide a unique opportunity to create a gated community with the least amount of infrastructure expenditures. It will also be interesting to see how this kind of project will affect crime statistics once it is completed.

The project is still in the research stage so it will be interested to report on this again as community buy-in gets underway and plans are presented for approval.

Watch for a report on this again in the future.

Creating Wealth: Timing the Real Estate Market

2011-10-03T04:41:00.000-07:00

It's no secret that one way to build wealth is to buy assets at a low price and sell them at a higher price. Day traders do this with stocks all the time. The same is true for real estate investment. There are bargains in any market but there are more opportunities in a buyer's market. So how much more time do we have before house prices start increasing again? (In other words: How long will this awesome buying opportunity we are in now last?) Housingwire gives us some insight:

The U.S. housing market hit bottom this year and will remain flat until 2014, when it will start to slowly recover, said Rick Sharga, an executive vice president with Carrington Mortgage Holdings.

~snip~

Banks hold about 800,000 REOs, and three-quarters of those are not listed for sale, said Sharga. Another 800,000 homes are in foreclosure and 1.5 million loans are delinquent.

This "shadow inventory" will slow down a housing market recovery, he said, as monthly foreclosure numbers will remain elevated through 2012 and REO inventories will stay high through 2013.

So, according to the crystal ball, it appears the window of opportunity will be open for another 2 years. Let's make use of it. Those who have acquired real estate during this period should be well rewarded in the years to come.

Old Provo Tabernacle to Be New Provo Temple

2011-10-01T14:04:00.000-07:00

Last year we mourned what we thought would be the loss of a historical icon: the Provo Tabernacle. Today during General Conference of the Church of Jesus Christ of Latter Day Saints, it was announced that the tabernacle will be restored and dedicated as a new temple. This will be the 2nd temple in Provo, Utah.

As was the case with the new Ogden Temple, the church has provided elevations of the new restored victorian structure. Here is the rendering of what the finished product will be:

This will be an improvement over what the tabernacle structure was before it burned last year. The large steeple in the center was taken down back in the 1940's due to structural weakness. Here is a picture of the tabernacle shortly after it was built:

The church deserves credit for committing the resources to resurrect this fine edifice.

Appraiser Atrocity: Bureaucracy in Real Estate Hell

2011-09-30T13:41:00.000-07:00

I just closed with some buyers after spending 75 days working on a small file that would normally take just 35 days. You can read details about the negotiation and price points in JUST SOLD! Bargain Cottage Starter Home.

Once we locked the home up at the $59,000 price point the first thing we did was order an inspection. We found some ticky tacky problems but nothing serious. We then ordered the appraisal. The appraiser came to the home and several days later we received her findings. To our surprise, the appraisal came in low with the appraiser indicating the home's worth at $57,000...the original list price. This was disconcerting because the home was in very good condition for its age and we estimated that the home was actually listed several thousand dollars below its comparable market value.

An examination of the appraisal was shocking (click to enlarge):

A couple things popped out at me on this page. First, the comparables the appraiser used were cash transactions rather than financed transactions as you would normally expect to see with retail owner-occupied homes (homes that are actually comparable to the home my buyers were trying to purchase). A review of the MLS confirmed my suspicions. These comparables are scratch-and-dent BANK OWNED homes! Our appraiser was comparing apples to oranges in her work. Tisk. Tisk.

Five minutes on the MLS revealed traditional non-distressed homes that sold just a block away. After I put our evidence together, my lender and I threw a Hail Mary pass and disputed the appraisal. We were pleasantly surprised when the appraisal management company called us a week later to say that our dispute was successful and the value was adjusted to $60,000. Whew!

Little did we know what kind of waves we had made by succeeding in our dispute. As you can see on the appraisal form, the home called for "Exterior cracked and peeling paint needs to be scraped and painted." When we notified the sellers they immediately scraped and painted the appropriate places. We ordered our Own In Ogden inspection and the inspector passed us off except for a couple interior repairs. Own In Ogden is picky about paint and they could find nothing wrong in their inspection.

Shortly after that, the original appraiser returned to review the paint work. She was unsatisfied and identified several places that were not noted in the original appraisal that needed to be "fixed" according to her. Flustered, the sellers scraped and painted those areas. We called the appraiser back to the property and she refused to sign off on the repairs yet again, this time indicating she could see transition lines where the old paint had been scraped off even though it was all covered in new paint. The appraiser said "I am the eyes and ears of FHA and this needs to be sanded, scrapped and painted to our satisfaction." Wonderful. It cost $150 each time the appraiser had to revisit the property. Someone's ego had been bruised so they were running up the meter.

Finally, the appraiser signed off on the repairs. When the Appraisal Management Companies are done away with and we go back to a free market again, this appraiser will be on my short list.

However, our problems did not stop there. Just a few days before closing, our loan officer received a full page of conditions he needed to fulfill from the underwriter, one of which was a 2nd appraisal! Our closing was delayed a month while we jumped though numerous other hoops. When the underwriter discovered that I was the landlord of the buyers, they tossed out my Verification of Rents as unreliable and instead demanded proof of deposits. It took my bank a full week to pull deposit images of my buyer's rent payments. Finally, the underwriter was satisfied, miraculously waived our 2nd appraisal, and we were able to wrap up our transaction.

In my opinion, the HVCC has been a disaster in the market and has created an appraisal industry rife with bureaucracy and paranoia. I know some very competent appraisers. Unfortunately, our freedom to employ them has been restricted and regulated by Federal law. The sooner this regulation is done away with, the healthier our market will be.

JUST SOLD! Bargain Cottage Starter Home

2011-09-29T14:40:00.000-07:00

I just closed today with some buyers on this quaint starter home in Ogden. My clients are also my existing tenants who over the past two years have been preparing themselves for home ownership.

This home was listed in May for $57,000. Given the price point, we thought that it might be a real fixer upper. To our surprise, the home was in quite good condition. Given such, I estimated that the home had been listed below fair market value. Nevertheless, we pressed our luck and offered $54,800 while asking the seller to pay for $3,500 in closing costs.

The listing agent called me and we determined there was not enough equity room for the seller to pay closing costs even at the list price. Knowing that we had some headroom on value, we agreed to the idea of increasing the sales price to $59,000. The seller agreed to pay up to $3,500 in closing costs and also participate in the Own In Ogden program. However, the seller would not agree to make any FHA or OIO required repairs. This was a bit of a risk for my buyers because of the age of the home but we felt it was the only way to make the transaction work.

After 75 days, and a long, precarious, and crazy journey, we finally closed. Congrats to the buyers on their first home!

Tenacity certainly pays off!

If you are looking to buy a home, contact me. Bargains abound.

Consumer Unconfidence: Making Hay In A Buyer's Market

2011-09-28T12:09:00.000-07:00

One of the sites that I follow is Gallup. I find their polls quite interesting and a good way to take the temperature of public sentiment on a variety of topics. One of the topics related to my real estate business is the consumer confidence index. I have reproduced one of Gallup's charts and adjusted it with a 6 day moving average trend line:

My gut feel lately was that the market has changed since June. Buyer behavior has changed and seller's are increasing in their motivation in general. Gallup's data here illustrates what my gut had been telling me. We have had a significant move down in consumer confidence.

The last time confidence was this low was in 2008 and 2009. Interestingly, I closed several seller finance transactions during that period. Similarly, I just closed a seller finance real estate transaction within the last couple of weeks. Clearly, this shift in consumer confidence changes the way we conduct business.

Ogden Redevelopment: September 2011 Update

2011-09-26T16:29:00.000-07:00

I thought I would do a follow up on development projects I spotlighted in April and in several other posts. Construction continues:

Weber Morgan Health Department

The last time we saw this site it was just a couple concrete walls being held up with beams. Its coming along nicely. This building is located on 23rd Street between Adams Ave. and Washington Blvd.

The Lincoln Center

If you have traveled to Ogden and come into the city on the 24th Street viaduct, you can't miss this enormous project. For the longest time work was being conducted on the interior concrete stairwells. Finally, and quickly, they have assembled the walls and floors of this attractive edifice.

The Ogden Hilton

Construction just began on this building and they are making serious headway. The first floor is nearly framed.

Its great to see this project moving forward despite the tough economic challenges we are facing. It will provide a boost to surrounding businesses. Here is what the finished project will look like:

As the economy rebounds, I anticipate a surge of new redevelopment projects in the city. I know of several plans by developers who are just waiting for the macro economic climate to thaw a bit before they move forward with their designs.

Photo of the Day: Porch Ornament

2011-09-22T07:53:00.000-07:00

I was cruising to work today and saw this unusual scene:

Front porches can be such useful storage places.

Depreciation Delusions: Why Falling House Prices Don't Matter

2011-09-20T05:40:00.000-07:00

There are a few folks out there writing headlines about another down leg in housing prices. Here is one from HousingWire:

Home prices could dip another 6% to 7%, before hitting rock bottom in early 2012, according to analysts at JPMorgan Chase.

If that is the case, prices will fall about 37% from peak levels reached before the 2008 housing meltdown.

For obvious reasons, this kind of headline puts a lot of prospective buyers on the sidelines while they wait for some good batch of housing news to come about.

The questions I ask is: If the market is going to fall another 7%, can it be to anyone's advantage to buy today? Or can anyone make money buying real estate today if it will be worth less tomorrow?

The answer is an emphatic YES! How? The key is buying the right property. There are two kinds of properties in the real estate market 1) RETAIL which is your sparkly shiny homes that are at full market value and 2)WHOLESALE which are the scratch-and-dent bargain bin properties that are typically bank owned, short sales, or estate sales.

Fortunately, wholesale properties can be purchased for anywhere from 90% to 50% of Retail market value depending on condition. What does this mean? Well, it means that you can still pick up a lot of equity in a home in today's market and still keep a majority of that equity even if the market slides 7% or even 15%.

Let's say that you purchase a wholesale property today for $65K. The retail value of the home is $95K. You have $30K equity. Now lets say the market slid 10% over the coming year. Your equity position is reduced to $20.5K. Yet, your net worth is still $20.5K better than it was before you purchased the property. If you waited to buy the property after the market slid you could have purchased it for $58K and its retail value would be about $85K. You would have about $27K equity. The questions one has to ask themselves is: What is the opportunity cost of waiting a year to net a possible $7K in additional equity? Would that time have been better spent by acquiring additional bargains rather that waiting for the "perfect" property at the perfect moment?

Obviously, if you were going to just purchase one property in your entire life and you had the luxury of purchasing whenever you wanted, timing the market exactly right would be to your favor. However, if you are interested in creating wealth through real estate acquisition, this is an unreasonable proposition. Instead, wealth builders look for opportunities as they arise in any market.

Wealth builders and smart home buyers look to the wholesale real estate market for such opportunities.

Another fallacy out there is that owning real estate is not good if there is an overall trend toward lower home prices. House prices are a product of supply and demand with an overlaid component of household income. If population levels are declining like they are in Russia, Iran, Japan and Detroit, you can expect house prices to decline as demand declines and existing structures maintain supply. If economic malaise arrives and wages decline, house prices will decline too. That is what we have experienced as a nation over the last several years.

Keep in mind though, that over the long term that if house prices decline, typically so will the price of milk, clothes, and every other thing that has a price attached to it. We call this deflation. If you own rentals and the rents have declined because of deflation, typically it won't matter much because the cost of living will have declined as well. Your standard of living will be unaffected...that is, unless you have mortgages on your property.

To beat the deflation effect you have to be out of debt on your properties and have little debt elsewhere. This is why I advocate aggressive amortization or sizable down payments on property when possible.

A couple years ago I wrote We're Turning Japanese! and explored this scenario. Here are the charts I put together:

Click to enlarge. The point of this chart was to show where equity was in a financed retail property if long term deflation were to occur.

The other chart I put together shows what happens with a 10% downpayment:

As you can see, it would take a catastrophic hit to house prices over a sustained period to affect equity in retail homes with 10% down payments. Otherwise, equity is sustained and grown over the long haul regardless of long term declines in value.

The way to make this situation even more favorable in the long term is to shorten the mortgage time to 15 years. However, Utah has never and likely never will experience protracted price declines like you see illustrated here. Population growth and limited supply of land will moderate our prices on the downside. Even the worst housing collapse since the Great Depression has only knocked about 15% off Utah's house prices while the U.S. has suffered a 37% decline on average.

The bottom line is that house prices can't go down much more. Even if they do, the wise investors and wealth builders will be pocketing the bargains while they are available now in today's market. Why make money tomorrow when it can be made today?

Bargains abound. Call me and I will show you where they are.

JUST SOLD! Arts and Crafts Era Home - Seller Finance Bargain

2011-09-19T07:38:00.000-07:00

You may recall that I just listed this home less than a month ago. One of the special features of this listing was that the seller was savvy enough to offer seller financing terms for the home. The day I listed the property, I presented it to several experienced investors I work with. We wrote an offer the following day.

The seller was savvy but also very cautious in their approach and it took us about a week of fine tuning things to come to terms on the contract.

The transaction was closed at a price of $73,800 (just $1,100 off of list price) after inspections revealed a few maintenance items that were unanticipated. The buyer paid $7,490 as a down payment. The first mortgage payment was due 15 days after closing. The buyer opted for a 15 year note with a payment of $577 and a note rate of 6.5%. The seller asked for and the buyer agreed to a 3 year prepayment penalty in the amount of 6 months interest in the event the buyer refinanced or paid the note off early. Finally, the seller wanted a larger down payment than we ultimately agreed to. However, to appease the seller and reduce risk for all parties involved, the buyer agreed to make capital improvements to the home within 60 days after closing that included installing new kitchen cabinets and finishing some space in the basement.

This home was listed and sold in under 30 days. If you want your home to sell fast and near full price, give me a call and I can show you how it is done.

Mortgage Lending: Signs of Life In The Wasteland

2011-09-14T21:16:00.000-07:00

The mortgage lending market has gone through some trauma since 2007. For illustrative purposes let's liken the damage done to the mortgage lending business to the effects of a volcanic eruption...in this case Mt. St. Helens specifically.

Here is a picture of the as a lush forest pre-eruption. Look at all those pretty trees living happily basking in the sun. Think of each tree as a mortgage lender and the abundance and health of the trees in this photo as a representation of the Mortgage Industry in 2007.

Then, trouble brews and a cataclysm befalls the forest as Mt. St. Helens blasts the life out existence.

Uh oh! Think of this as a visual representation of what happened to the mortgage industry after the housing crash of 2008.

Yet, with every disaster, there is renewal. Here is a photo shortly after Mt. St. Helens erupted:

This looks like a lifeless moonscape. How could anything live in this environment?

Well, lo and behold, there is life!

Please forgive the labored analogy. The point I wanted to make today was that, as in all natural disasters, life goes on and nature has a tenacious way of springing up and clawing its way back from obliteration. The same goes for the mortgage lending market for housing. Just this week we get two very interesting headlines from Housingwire:

Redwood Lines Up Another Jumbo RMBS
Redwood Trust,the only company to launch private-label residential mortgagesecuritizations since the financial crisis began in 2008, is issuingthe RMBS. Redwood will bond 473 loans with a total balance of approximately $375 million.

This is good news! Morgtage backed securities have been dead for nearly three years with Redwood being the recent innovator and initiating the creation of more of these products. They anticipate doing another $1 Billions in RMBS this year. Good for them. Good for us.

Also we read today:

Banks May Skirt GSE Uncertainty With Covered Bonds
More banks based in the United States will establish covered bondprograms to fund future mortgages on the perception of less risk andstill lingering uncertainty over private and agency securitizationmarkets, according to Moody's Investors Service.

New covered bond frameworks could take the place of mortgage-backedsecurities issued by either the government-sponsored enterprises or theprivate market.

-snip-

"New covered bonds in the U.S. will also not havethe low quality assets that were common in pre-crisis residentialmortgage-backed securities." Moody's said in a research note releasedTuesday. "We expect future U.S. covered-bond deals will have much lessmarket risk following a bank default than pre-crisis U.S. covered bondsbecause we assume future covered bond legislation will establishmechanisms permitting liquidation of a portion of the pool over aperiod of time."

What this is saying is that banks are seeing the writing on the wall that Fannie Mae and Freddie Mac's days of market dominance are numbered. If the demand for home loans is going to be satisfied, banks will need to find other ways of meeting that demand than originating loans and sending them to Fannie or Freddie. Thus, traditional banks have started to use tools called covered bonds to provide incentives for the creation of new home loans.

Both of these reports show that the market is innovating and adapting to survive in the inevitable post-government-dominated mortgage market.

FOR SALE: FRANK LLOYD WRIGHT OGDEN, UTAH ARCHITECTURAL TREASURE!

2011-09-13T20:32:00.000-07:00

I just listed this amazing architectural gem located at 2508 Jackson Ave. in Ogden, Utah. It was designed by Eber Piers who was a protege and student of Frank Lloyd Wright at the Chicago School of Design. The home was built by Royal Eccles in 1919. The floorplan is very progressive for the year in which it was built with broad open spaces and sweeping views. A true architectural masterpiece. The home has over 4800 SQFT, a two car garage, three kitchens, five beds, a pool, and nearly .70 acres in the highly coveted Eccles Historic District neighborhood. This home is a must see. Please contact me for current pricing.

Call me to view this historic treasure: 801-390-1480.

(Note: Some improvements and repairs are currently underway. Contact for an update.)

Mortgage Interest Rates Lowest In 60 Years

2011-09-10T18:48:00.000-07:00

If you listen to the radio you hear mortgage lenders announcing "Rate are at historic lows! Refinance today!"

Is this claim even true? Que today's chart from CalculatedRisk please....

This chart only goes to 1971 but other records show that rates were in the 4% range dating back to the 1950's. Interestingly, it wasn't until the 50's that American's decided that we were not going to return back to a depression economy. America's psyche had been scarred by a stymieing depression and then austerity and sacrifice during WWII. Once the Great Depression began, it took 20 years for the economy to become vibrant again...long enough to have a lasting impact on the behavior and attitudes of an entire generation. Lest I digress...

If you can qualify for it, money is incredibly cheap right now. If you combine today's low rates with the near rock-bottom prices of bank owned and short sale properties, monthly payments on home loans are ridiculously low. If you are an investor looking to purchase property, this translates into more positive cash flow.

Can rates go any lower? They can and likely will for a short while as Europe's debt crisis creates a mass money exodus and everyone piles into U.S. Treasuries as a safe haven (relative to risk elsewhere in the world). Much of the interest rate declines we have seen since 2008 have been the result of this activity.

So, when things start stabilizing in the rest of the world, look for rates to start climbing again. Or, if we hit a bout of inflation here at home, look for the same. In the meantime, lock in your rate, buy some real estate, and laugh your way to the bank.

Historic Home Restoration: Stripping Paint From Brick

2011-09-03T15:30:00.000-07:00

The wife tasked me with getting our back porch ready for paint. When we purchased our home with a hard money loan back in 2005, our short-term renovation plan did not included painting the exterior of the property. However, our appraiser changed his mind at the last second and demanded that we paint the exterior just 48 hours before our refinance deadline for the hard money loan. Of course, the appraiser was then several days slow in getting back to inspect our home and we had to pay additional interest and fees for busting our hard money deadline. But this is a whole separate story...

The bottom line is we painted very fast and with little prep work. You would think that with us in such a hurry we would just avoid taping the brick and paint like complete slobs. Not so. But what we discovered when we did our painting six years ago was that the previous painters were. I always thought that it was the property owners just previous to us that did such a lousy job. The fun thing about old houses is that there are often clues that let you know who did what and when. Here is such a clue:

A previous owner had the bad taste of writing directly on the brick; but, since they wrote over top a paint drip, we now know that the sloppy painters did their damage prior to October 15, 1969 when someone named Mike was about 4 feet tall. Interesting clue. Here is the travesty that we have been fixing:

Just ignore the peeling green paint. That's a relic from the quick fix paint job to satisfy the appraiser. Check out the total neglect in cutting in the paint to the brick. Pure laziness.

Fortunately, paint stripper and goof off are just the right chemicals to fix this.

And of course, don't forget a putty knife and some elbow grease...

Here is what I was up against:

Here is the finished product:

There are several more areas that need attention but this is a good start. It took me about six hours to undo poor craftsmanship from 50 years ago. There were 2,600 Saturday mornings between now and the time that this paint was first put on the brick. The question I want answered is why didn't somebody do this before now? Certainly they have had an abundance of opportunity.

Posted by Jeremy Peterson
Ogden, Utah Real Estate Broker
Mountain Real Estate Companies
801-390-1480

FOR SALE: Ogden Arts and Crafts Era Home

2011-08-25T09:30:00.000-07:00

I recently listed this home for sale.

This home has been in the same family since its construction in 1909. In fact, the original owner of this home built nearly every home on the block. The home has many amazing original features that have been preserved through time. Such things included the clawfoot tub, dual sink basin, push button switches, brass hardware, butler pantry and more. Check out the video:

The home is 1820 SQFT with a 2 Bed configuration. It is possible to convert the upstairs parlor to a bedroom by installing an armoire. There is also plenty of room to convert the basement to livable space and install another bed and bath. The lot boasts an apple and cherry tree.

The sellers will entertain seller financing on this home under the right conditions and terms. If you are interested in taking a look at this property, let me know. Call for current pricing.

Posted by Jeremy Peterson
Ogden Utah Real Estate Broker
Mountain Real Estate Companies
801-390-1480

Wall Street Journal Praises Ogden, Utah

2011-08-23T05:52:00.000-07:00

The Wall Street Journal recently spotlighted Ogden as an important business hub and as a success in transforming itself from a railroad town to a recreation industry magnet. Here is an excerpt from the article on what they had to say:

Ogden, a small city some 40 miles north of the capital, packs a concentrated punch in the outdoor and recreation industry. Ogden made headlines in 2002, when it hosted events for the Salt Lake City Olympic Games. Those Olympic facilities, along with acres of pristine mountains, canyons and rivers, are the main reason outdoor-apparel and equipment companies have been moving to town: The site offers a perfect spot for testing new products, and it's easily accessible from a nearby airport that supports direct flights to Europe. What's more, business owners say, the growing base of competing companies in the area push each other to design the best equipment.

Utah has a relatively modest share of the industry; the state estimates it's home to about 5% of the outdoor-products firms in the U.S. Still, companies that expanded in or relocated to Utah have created at least 2,550 jobs in the past six years, according to the Economic Development Corporation of Utah.

Industry goliaths get partial credit for the surge in Ogden. Amer Sports Corp., the company behind Wilson, Atomic and other brands, consolidated its U.S. operations in 2007 and moved them to the town. Quality Bicycle Products Inc., a distributor based in Bloomington, Minn., set up its second location in Ogden in 2010.

The creation of jobs has helped support our real estate market and economy during this tough period. Let us continue to recruit businesses to our city and keep the momentum that has been created. Go Ogden!

Posted by Jeremy Peterson
Ogden, Utah Real Estate Broker
Mountain Real Estate Companies
801-390-1480

Restoring Old Homes: The Venerable Clawfoot Tub and Douglas Fir Floor

2011-08-20T05:00:00.000-07:00

We are nearly finished with the home we are restoring in Ogden, Utah. Today's effort was a mind-over-matter exercise. We had to retrieve the clawfoot tub from storage, paint it, and transport it to the home. A special thanks to my father-in-law for rounding up the trailer and proving some elbow grease.

Many folks are weary of clawfoot tubs. I am asked by folks: "Why don't you just put a new tub in?" My response: "Have you ever taken a bath in a new tub?" New tubs are like those plastic kiddie pools you buy at Walmart. No serious person would consider today's dinky tub basins as a place they would want to soak. Also, old tubs have a certain dignity to them that trumps today's throw-away consumable construction. Here is a teaser photo of the tub ready for hardware and installation:

Ahhhh....

Hardware kits for old clawfoot tubs (like spigot, shower head, and halo shower curtain) can be purchased at Jerry's Plumbing in Ogden. Don't buy them on Ebay like I have done. Get them from Jerry's. You can pick up a whole kit for about $175.

The other item that was worked on at the home today was sanding and staining the douglas fir floors in the dining room. As with all lumber, the older it is, the better quality it is. Today's douglas fir 2x4s are 1/5th the density of the same lumber 100 years ago. Today's fir lumber is almost balsa wood by comparison to yesteryear. Thus, we felt confident that we could sand and refinish the fir floors in the dining room. Here is a sneak peak before we put polyurethane on:

Look for this home to be on the market in about 10 days...

Posted by Jeremy Peterson
Ogden, Utah Real Estate Broker
Mountain Real Estate Companies
801-390-1480

Super Bargain! The $10 Real Estate Transaction

2011-08-18T05:29:00.000-07:00

Last week I got a call from a gentleman in Kansas. He indicated he had a piece of property in Ogden that he no longer wanted. Apparently, he purchased the property at a county tax sale several years ago without seeing the property. It turned out to be a small parcel with a four car garage on it tucked away behind a dumpy fourplex. Since he purchased it, the tenants in the fourplex have taken it over and used it without permission.

Coincidentally, it appears though that the county did not assess the value of the garage until this year which increased his tax obligation by four-fold. Thus, his desire to unload the property. With no income from the property and an increasing tax burden, suddenly he became a motivated "seller". I indicated I would be glad to relieve him of this responsibility and he quit claimed the property to me for the princely sum of $10.

Here is what I will be dealing with.

Behind those tarps are lots of "things". Plus, there is definitely some room for some TLC. I notified the tenants of the fourplex today that they have 15 days to remove their items. As you can probably imagine, that wasn't received very warmly by everyone who has been used to using the space for free for the past several years.

The plan is to clean the building up and then lease it for parking and storage to the tenants in the building. Without this space, there is really no parking available for the fourplex so there is some incentive to pay to use the space. We shall see. Stay tuned for an update when we return at the deadline to see what is left to tow or throw away.

Posted by Jeremy Peterson
Ogden, Utah Real Estate Broker
Mountain Real Estate Companies
801-390-1480

Ogden Rising: Restoration of Historic Ogden High School

2011-08-17T21:39:00.000-07:00

I was privileged to attend the First Look event held today for donors and dignitaries at Ogden High School to celebrate completion of the restoration of the auditorium. The high school is a historic architectural masterpiece that is rife with Art Deco motifs and themes.

The last time I was in the auditorium was several years ago prior to the start of renovations. What I found inside was remarkable. Here are some photos.

This is a picture of the proscenium above the stage. That glimmer is not glossy gold paint. That is real gold leaf! The auditorium was restored to it's original specifications. $9 Million has been raised from local alumni, foundations, and enthusiasts to complete this work.

The attention to detail is remarkable.

The inside is coming together nicely. I am so impressed. Yet, there is still more work to be done. The north wing of the school is still being worked on.

The school has over 10,000 panes of glass that will all be replaced by the end of construction. Here is an example of an area where the work is already done.

One of the challenges of construction was trying to retrofit the building to be seismically safe. The challenge was being able to reinforce the structure without encroaching on the interior space. To solve this problem the contractor drilled vertical holes in the walls from the roof down into the foundation. Then, rebar and concrete were injected into the holes. Amazing idea. The result reinforces the structure without altering the interior space.

When the community approved the bond in 2006 for the renovation of the school, one of the issues at hand was modernizing the use so it could function as a modern high school. That meant that some new construction was needed to augment the current structure.

A commons area and gymnasium were constructed.

It was wonderful to see so many people who contributed their time and resources to make this restoration possible. The school is an icon and a metaphor for the great resurgence Ogden is experiencing. As we continue to reinvest in ourselves as a community, we can expect the future to ever be brighter.

Posted by Jeremy Peterson
Ogden, Utah Real Estate Broker
Mountain Real Estate Companies
801-390-1480

Sales Anemia: Market Update in Charts

2011-08-15T09:34:00.000-07:00

I was updating some of my market charts this morning and thought I would share some findings:

The first chart here shows sales volume and the 12 month moving trend since the inception of the MLS. It appears that we are at a new post-bubble low on the trend line with sales volume trending at the same level as in 1998. Can you hear the crickets?

Just to show you how government interference distorts the marketplace, I have updated our year-over-year monthly sales volume chart showing the differences in sales over the same month the previous year. The tax credit spiked sales volume which was followed by a dramatic collapse in volume for the rest of the year. We have had mildly improved numbers this summer which in turn has translated into us springing back above zero in the last couple of months. I expect this graph to smooth out over time as we move past the volatility created by the tax credit.

The next chart shows membership of the Northern Wasatch Association of Realtors.

As you can see, despite sales volume tracking to 1998 levels, board membership, while slowly declining, still remains hearty.

This translates into our Weber County "Starv-O-Meter" which shows the number of transactions being sold per year per agent on average. Think of this chart as a "pain" index reflecting the ease or suffering the Realtor community experiences as a whole. Clearly, now is the toughest time in MLS history to be in the business. If we had stats going back to the early 1980's I bet we would find the meter in a similar place. Interestingly, I am also told that Board membership in 1983 was just 200 agents.

For those Realtors who are surviving this hostile market environment, I salute you!

Posted by Jeremy Peterson
Ogden, Utah Real Estate Broker
Mountain Real Estate Companies
801-390-1480

Things To Do In Utah: Sailing (and Capsizing) on Deer Creek Reservoir

2011-08-13T08:22:00.000-07:00

My father flew into town and invited us to go sailing as a family on Deer Creek Reservoir. Our family owns a Hobicat catamaran which has proven to be a very fun diversion on light breezy weekends.

However, it has been quite a while since since I have manned the Hobicat...4 years to to be exact. As it turns out, it's been quite a while since my father has been out on the boat too. The first chore was for us to put the mast up and set up the rigging.

It took us about an hour or so to set the mast and hoist the sails into place.

After getting everything set we took the Hobicat out for a trial run to make sure we remembered our sailing skills.

It took us a few minutes to remember how to operate the craft. After a run across the reservoir and back we figured it was time to load some of the family on board.

Wynnie and Sophie were eager to go for a ride. They hopped on board and were having a good time. We ran across the reservoir and were headed back. We were moving a quite a clip since the breeze had picked up and we had figured out how to optimize or sails for speed. As we came to shore we realized we moving to quickly and coming in at the wrong angle to the beach. I was steering and aborted our landing attempt and I turned our boat away from shore. We already had centrifugal momentum with our weight on the outside of the turn. Unfortunately, the quick turn meant that all our body weight was also suddenly on the downwind side of the boat. The breeze picked up and the boom swung around and knocked the tiller (the thing that controls the rudders) out of my hands and locked the rudders into a hard turn. I grabbed the tiller but the force of the boom was to great to overcome. All these forces combined, capsized the boat, and dumped us all into the water.

The kids were my biggest concern. We probably had 3 seconds between the boom locking the rudders and the boat being sideways with us in the water. Life jackets saved the day for us. Also, the kindness of other folks helping us get the kids to shore was priceless.

The kids panicked at first but we were able to calm them down once they realized they weren't sinking. Thank you to Duane for helping us get the kids to shore.

Once the kids were safe on dry land the next chore was to get the boat righted. Hobicats are actually designed to be "rightable" by the passengers. There is a giant elastic band on the bottom of the boat that is supposed to allow the pilot to tip the boat upright using his body weight as leverage. Unfortunately, the weight of the water on the sails and perhaps my lack of girth kept us from accomplishing that. We even had help from some strangers and couldn't get the boat righted with our combined weight. Fortunately, a jet ski provides just the right amount of pull to upright a Hobicat.

Here is a picture of the rigging that controls the boat. As you can see, the boom rope runs along a track on the back of the boat. Its path intersects with the tiller and that is where we got into trouble. The change in wind direction caused the boom to swing on that track which put is in the drink. Had we anticipated the change in wind direction we would have been fine. Lesson learned.

Once we got the boat up we practiced landing and then headed back out with Hannah.

By about 4pm it was time to pack up and head home for dinner.

Posted by Jeremy Peterson
Ogden, Utah Real Estate Broker
Mountain Real Estate Companies
801-390-1480

Short Sale Flatline: Wells Fargo Foregoes Defribulator

2011-08-10T21:17:00.000-07:00

I have been working on a short sale recently that experienced an untimely death. In the beginning of July I listed a home in Layton that had a week left before the first scheduled foreclosure auction. Upon submitting the file to Wells Fargo (the 1st mortgage) for review, they postponed the auction.

I listed the property at $169,900 after a CMA showed the AS-IS value at around $160K-$170K. By my estimates, the home needed approximately $15K in repairs and was valued at $195K on post-fixup. We quickly received two cash offers. One at $155K and one at $158K.

Upon submission of the offer we were assigned a negotiator and she ordered a BPO (broker price opinion) on the property. It was handled in about three days. About a week and a half later a I get an email from the negotiator saying:

Counter offering to $195000 or best and final offer ************************** * Counter offer acceptance is subject to senior management approval, mortgage insurance and /or investor approval * No sale transaction is accepted until lender signs written contracts *

She then attaches paperwork with the counteroffer price of $155,000...the original offer price! Whoa? I emailed her to clarify the discrepancy for me. After several days, I received no response. So, we kindly filled out the paperwork accepting their $155,000 and sent it back to see if anyone in their office was manning the store.

It took about ten days but the negotiator that sent me that email was suddenly no longer working on our file. Instead I got an email from a new negotiator. After several paperwork tasks, I get an email saying that they are countoffering again at $195K but this time they had the right paperwork to back it up.

The buyers didn't want to budge on their price so the negotiator sent me this note:

The BPO completed on the property suggests $20,000.00 in repairs needed to the property even with the value at $195,000.00. Unless the buyer is willing to provide a higher offer, we will not be able to move forward and the offer will have to be declined. On a different note, I want to inform you that I will be out of the office beginning this afternoon through Friday 8/12. I will be back in the office on Monday 8/15 and will continue with any tasks upon my return. If the file is not moving forward, this would be the reason why. Thank you.

I was shocked to get this note. It seems to me that the BPO agent checked a box wrong on their form. Here the bank believes the home is worth $195K AS IS. That is simply not what the market says. I ran follow up CMAs to confirm and sent them to this negotiator. Unfortunately, I sent them about an hour after this guy had left for vacation.

The following Monday I recieved this email from a new 3rd negotiator:

Please be advised that the Short Sale for the property above has been declined by Wells Fargo. If you have any additional questions or would like additional details concerning the Short Sale process, please contact Wells Fargo...

Any my immediate response:

What?! We are in the midst of a BPO dispute. [The other negotiator] left for vacation Friday afternoon. He has the BPO dispute findings sitting in his email box which were sent to him about an hour after he left town. So are you saying that the investor would rather take his chances at a trustee sale and/or marketing the place as an REO? I seriously doubt the investor would fare better. Please advise.

No response was ever received. The home was put on the docket for foreclosure auction again.

The lesson learned here is that garbage in equals garbage out. When a wild BPO gets done that is 25% over market value, your short sale will almost certainly be in trouble.

Posted by Jeremy Peterson
Ogden, Utah Real Estate Broker
Mountain Real Estate Companies
801-390-1480

Ogden's Urban Infill: Historic Style New Construction

2011-08-04T05:00:00.000-07:00

Ogden has come a long way in building urban infill homes that compliment the historic character of its old neighborhoods. I have compiled a video of the historic style new construction along with some "bad" examples of new construction. Be sure to read the quote at the end.

If you are interested in building or purchasing a home like one of these, be sure to contact me.

Posted by Jeremy Peterson
Ogden, Utah Real Estate Broker
Mountain Real Estate Companies
801-390-1480

Restoring Old Homes: Picking Historic Paint Colors

2011-08-03T05:00:00.000-07:00

One of the great challenges in restoring old homes is trying to pick the right colors. When choosing exterior colors, consideration needs to be given to the age and style of the home, surrounding neighborhood, ect. On the interior, the style of the home will typically demand a certain palette.

The home that I am restoring with my business partner finally has the paint finished both interior and exterior. Here is a sneak peak.

This is an awkward view of the back of the home. Nevertheless, it looks dignified and refreshed. We removed the old industrial looking shingles, scraped, primed and painted this with a "Cayenne" color from the Eddie Bauer Bungalow color palette at Lowe's. The trim is "Vanilla Bean".

For the interior, I have found that my tried and trued colors are real winners in the market place. These colors will look familiar to you if you have been watching our restoration videos.

The trim is painted "Canoe" from the same collection at Lowe's. We use a glossy or semi-gloss finish. It gives the paint the look and feel of wood without all the tedious and expensive stripping. The base is "Pecan" from the palette.

I joke that the objective is to make the home look edible. If you start salivating when you walk in the room than you have done a good job.

You can check out more paint colors online here.

Happy rehabbing!

Posted by Jeremy Peterson
Ogden, Utah Real Estate Broker
Mountain Real Estate Companies
801-390-1480

Ogden Temple Renovation: July 2011 Update

2011-08-02T04:41:00.000-07:00

The Ogden Temple renovation is in high gear and crews continue to dissemble the facade of the temple structure. The picture below was taken July 25, 2011.

The exterior paneling is being removed and exposing the inner steel frame. The windows in the tabernacle have also been removed.

In this photo you can see that the two story parking structure that existed to the west of the tabernacle has been completely removed. All that remains are piles of dirt.

The LDS Church is typically very discreet and protective about its temples and their construction, hence the green privacy fence. Based on what has been announced through the press, the construction process will continue another two and a half years. Click here to see what the finished product will look like.

Posted by Jeremy Peterson
Ogden, Utah Real Estate Broker
Mountain Real Estate Companies
801-390-1480

JUST SOLD! Estate Sale Rambler

2011-08-01T05:54:00.000-07:00

I just closed recently with a buyer who purchased this well kept rambler. This particular home was an estate sale where the original owner-builder recently passed away and left the home to her family to liquidate.

Our negotiations were tough to make this transaction work. The home is 3,000 SQFT and had been listed at $155,000. However it had not been updated (except for carpet) since the home was built. Following our 90% of list price rule, we offered $145,000 and asked for the seller to pay $5,000 in closing costs. The listing agent felt that our offer would be well received due to his client's eagerness to sell the home.

Unfortunately, things didn't pan out that way when our offer was presented. We received a counteroffer at significantly higher terms. Due too the large number of decision makers involved, it was tough to get a consensus among the children of the deceased owner. Essentially, they were making decisions by committee which makes things really tough in a real estate transaction.

They countered us at $150,000 and paying no closing costs. We responded back with $150,000 but asking for $4,500 in closing costs. The sellers were still unhappy. That is when we negotiated a verbal agreement to $150,000 with the seller paying just $2,500 in closing costs. However, when writing up the addendum, one of the sellers vetoed the agreement and they sent us an addendum where the price was $152,500. Obviously, this was not our verbal agreement and was provocation enough for my buyer to reject the terms and scuttle the transaction.

I felt that the change in terms was an act of bad faith on the sellers part and advised my client to withdraw. However, I told the listing agent to call me if his sellers changed their minds and could honor our verbal agreement. A couple days later I got a call with the agent respectfully asking us to reinstate the contract under our verbal terms. We agreed.

After inspections, we adjusted our price to $149,650. So what does this price point buy you?

It gets you a well kept and nearly original 1968 rambler with new carpet. For a home of this size, type, and condition, this turned into one of the best values of its class in Weber County.

Congrats to my buyer on his new purchase!

Posted by Jeremy Peterson
Ogden, Utah Real Estate Broker
Mountain Real Estate Companies
801-390-1480

Demolition Day: Deferred Maintenance Disaster

2011-07-30T11:02:00.000-07:00

I was cruising through Ogden the other day and was shocked to see a home being torn down at 2015 Monroe Blvd. Here are the before and after photos:

The home had been vacant for several years and needed some TLC. However, I didn't think the condition was as bad as it really turned out to be. Here is the city order to abate the problem (click to enlarge):

I did some research to find out the story behind the home. I discovered that the property was controlled by a local real estate "guru" who is very widely known in the Weber County real estate investment community. It appears that someone may have just experienced a serious (i.e. total) loss on their investment. Whoops!

Moral of the Story: Fix up your homes before they become garden plots.

Posted by Jeremy Peterson
Ogden, Utah Real Estate Broker
Mountain Real Estate Companies
801-390-1480

Ogden Rising: New Hilton Hotel Ground Breaking

2011-07-26T06:14:00.000-07:00

Ground was recently broken for a new Hilton Hotel which is being built at 23rd Street and Washington Blvd in The Junction. Here is a picture of the lot where the structure is being constructed.

The Standard Examiner gives us a brief summary of the project:

Dan Vanzeben, the architect of the hotel, said the structure's design is influenced by art deco and prairie-style architecture that's prevalent in Ogden. In addition to brick, it will be constructed with a variety of high-quality building materials including granite and limestone plaster, he said.

The second and third floors of the hotel will have three king-size suites and three one-bedroom suites. The exterior walls of the suites will be glass, providing panoramic views of the mountains to east and the valley to the west.

There will also be an indoor pool, spa and exercise room along with a kitchen to provide breakfast, room service and catering in three large meeting rooms.

A two-level parking garage with retail space surrounding the structure will be built north of the hotel, Vanzeben said.

This is just one more project that is rejuvinating downtown Ogden. Onward and upward!

Posted by Jeremy Peterson
Ogden, Utah Real Estate Broker
Mountain Real Estate Companies
801-390-1480

Deferred Maintenance Timebomb: Slumlord Stairways

2011-07-25T05:34:00.000-07:00

One of the properties I purchased in 2007 suffers from "repairs" made by a notorious slumlord in Ogden who flipped the property to the person I purchased it from. You might remember this post from last year: Photo of the Day: Math for Dummies.

That ill-resolved math problem was enscribed on the stairs I had the priveledge or rebuilding this week. There are two sets that need to be rebuilt. Here are photos of the stairs I have not demolished yet. They are representative of the condition of the stairs I removed with my bare hands:

Look at the top landing area and how they placed the 2X4's horizontally when framing it. Then notice how they screwed it into the 1/2 inch OSB board. They didn't screw into studs...just the OSB. Nice!

My kids could do better work than this. These stairs were in "good" condition when we purchased the property several years ago. The passage of time, poor craftsmanship, and lousy materials bring us this travesty just a few short years later. Clearly, the slumlord who did this work intended to do it cheaply with an eye toward bamboozling the person he sold it too.

To begin to remedy this problem, I took a couple days off during the last two weeks to construct new stairs. Here are the results:

I will be siding the OSB with cedar shakes to give it a cool old time look. I will post photos when I am finished.

I used treated pine and framing nails as my buidling materials. The hardest part of this whole project was drilling holes in the concrete for the anchor screws. My hammer drill and carbide bit took about an hour per hole just to drill 2 inches into the 102 year old concrete. I might as well have been drilling granite. Anway, I am encouraged that these stairs should last at least another 40 years. .

Wild West: Farr West City Tamed By The Law

2011-07-23T21:39:00.000-07:00

Last month I reported about a project that an associate of mine was working on in Farr West to build an assisted living center for the elderly. You can read the story in Wild West: Farr West City Denies Developer and Dooms Taxpayers.

Well, it appears that the reality of the situation has finally caught up to the city council. The Standard Examiner reports the following:

After a scolding from its own attorney, the city council this week granted Anthony Marler permission to build an assisted living facility.

The action reversed the council's ruling earlier this year that the center could not be built because it was on land the council designated as wetlands.

Had the city not reversed course, the penalty the city would pay would likely not me a small sum. The city attorney cites other examples:

And such a ruling would have severe consequences for the city, he said. He pointed out a case in Boise, Idaho, in which a county lost a similar suit and is now filing for bankruptcy because of the $4 million awarded.

The taxpayers of Farr West can breath a little easier tonight.

Historic Restoration: Chimney Brick and Mortar Rework

2011-07-23T19:25:00.000-07:00

We continue to do the nip-and-tuck necessary before we reroof our home. One of those chores was to fix the brick on our chimneys. We had a longtime pro named Brent Weston come and do the work for us.

The first thing he did was start work on the center chinmey. To do so, he built a platform that was held in place with a rope.

For the fireplace chimney a cherry picker was required. Although the center chimney is lacking the top decorative band, I am satisfied with the work. According to Brent, the last time the chimneys were worked on was about 40 years ago when the owners improvised and used silicone to hold the bricks in place. (These must have been the same folks that didn't tape off the brick when painting the front porch of our home and thus leaving it to us to strip off.) Fortunately, all the silicone bugars were scraped off and everything put back in its proper place.

Here are the before and after pictures:

BEFORE

AFTER

If you need a hard working and experienced brick mason, give me a call and I will put you in touch with him.

Happy Restoring!

Rules from MARS: NAR Blasts FTC With Ray Gun

2011-07-21T09:13:00.000-07:00

It was announced today that the Federal Trade Commission will exclude Realtors from the MARS disclosure rules that it adopted earlier this year.

Basically the MARS disclosure documents were a series of four papers that were cumbersome, confusing, and in my opinion totally unnecessary.

Today's ruling is a common sensed step back.

FOR SALE: 5 Bed 1 Bath 1580 SQFT Home

2011-07-11T16:47:00.000-07:00

Lots of rooms in this pleasant post World War II home. Located in a quite cul-de-sac which overlooks the Ogden River from the bench. Secondary water will feed your garden. It has a large .17 acre lot. Located just moments from trails and other recreation. Seller will pay buyer's closing costs. MUST SEE!

Contact me to see this charming and affordable home!

Illusion vs. Reality: NWAOR 80/20 Rule Proven in Charts

2011-07-11T11:57:00.000-07:00

The Northern Wasatch Association of Realtors released their 2011 survey. They had a total of 476 respondents. Here are some interesting findings:

It appears that 28% of Realtors in Northern Utah work two jobs. The question I wanted answered is how many people truly make a living doing real estate vs. supplementing their income in real estate. I also would be interested to hear how many Realtors live with a spouse or significant other that work and contribute to the household income. An appropriate question would have been "Does Real Estate sales provide the majority of income in your household?" Unfortunately, this survey does not completely answer that question. However, it does give us a clue:

The Real Estate industry is highly pretentious and ego-centric to a large degree. What you are told is not always how things actually are. That is why I love the MLS and these kinds of surveys. They get to the crux of what is really going on out there.

This pie chart here shows that a whopping 61% of agents sell less than 10 homes a year! I would say that 10 transactions is the threshold necessary to stay proficient in the industry. Certainly, selling less that 4 homes a year does not meet this standard and with well over a third of the folks in our ranks falling into this category, it is no wonder that the industry is often given a bad name. It's my opinion that many of these folks know just enough to be dangerous.

Meanwhile, only 20% of the agents are selling more than 20 transactions per year. I would qualify this number of transactions (unless you are selling super expensive houses) as the number needed to be truly full-time and a serious wage earner in the business. Perhaps I feel this way because I fall in the category of the 20-30 range each year. I am also the sole breadwinner in my home which I know is an anomaly in the industry as well. This chart basically proves the Pareto Principle or 80/20 rule of life.

Regardless, the next time you interview a Realtor, ask them: "Are you a full-time professional Realtor?" See what they say. As the top chart shows, way more than 20% will likely answer you in the affirmative.

Suburban Development Doomed - Where To Now?

2011-07-09T06:59:00.000-07:00

I was on Youtube and found this video from 2008:

It's been three years. Do you think things have gotten any better since then? Here is the chart on new construction nationally (courtesy of CalculatedRisk):

Well, I will euphemistically say that new construction sales are "under performing". Locally, Utah has better demographics and there is new construction occurring due to population growth. But, local builders have not altogether avoided the trend you see in the above chart. If you ask them how things are going they take a deep breath and say "ok". The deep breath says more than their words.

The market right now is rewarding the resale and reuse of existing homes over the creation of new ones. Here is another chart that shows that dynamic:

The money in real estate right now is in rehabbing existing homes. The new construction supply hangover we experienced in 2008 is mostly mopped up but new construction is anemic and will be for the foreseeable future. Investors can capitalize on this market dynamic by fixing existing homes and reselling them for a profit. The speculative game of betting on new construction won't be back for a decade.

My Mortgage Mod: CitiMortgage Bets On Low Interest Rates?

2011-06-29T11:18:00.000-07:00

Last week I received a curious package via UPS at my doorstep. I hadn't ordered anything so I was surprised that somebody would overnight something to me.

I opened the package to find a giant over-sized envelope that read "Don't Delay. Return your modification agreement today!" Hmmm...I don't remember ever requesting a modification of any of my mortgages. Here is the cover letter I found inside (click to enlarge):

This particular loan is on an investment property we own. It appears they have sent us this package just as our ARM is due to start adjusting. The question I have is why would CitiMortgage offer this? One of my favorite real estate industry blogs is CalculatedRisk. I emailed Bill (CR) and posed this question:

What incentive does Citi have to do this? If inflation is really in the cards, fixing a 5.5% rate is going to kill them when rates increase to 9%. However, if a rate reset increases my payment, they would take a haircut on the property in the off chance that I foreclose due to cash flow constraints.

Is CitiMortgage betting that low interest rates are foreseeable for the next decade? (betting on a Japanese style real estate market?)

Bill responded:

Hi Jeremy, I've heard similar stories (but with different details). This sounds like one of those blanket mod programs with the bank offering to modify all loans that meet certain characteristics (like ARM, non-owner occupied).

Citi has probably decided that the losses will be less for the loans as a group if they offer this program.

Also - Citi might be able to sell the loan easier after this mod (seems weird, but it could be).

When I called CitiMortgage, the gal on the line confirmed this approach. They are more concerned with loans staying current and performing than they are with interest rate risk. I accepted their terms and we should be well on our way to a recasting of amortization and a rate reduction.

Here is a copy of their agreement they sent me (click to enlarge):

I find it interesting that they make a fuss about the property needing to be in my name and not sold to another party as would be the case if I had sold it in a seller-financed transaction. Most mortgages have an acceleration clause regardless of this modification agreement. I find it interesting that they recognize the possibility that I may have seller-financed the property to a buyer and therefore cannot qualify for the modification but they don't threaten to call my existing loan either. Perhaps this is recognition on their part of a credit deprived housing market?

Another interesting side note here is that because our loan was interest only, I have been paying about $100 a month more on the loan to pay down the principal. If I continue to do this with the new rate and term in place, the mortgage payoff on the home goes from 30 years down to about 20 years from the present day. This modification will save me 5 years! Wohoo!

Ogden Rising: Innovative Partnerships Restore Historic Gems

2011-06-28T05:09:00.000-07:00

Here is a home we have been watching in our neighborhood over the last year:

Video Courtesy of KSL.com

This house is listed with my friend David Willis from Terra Venture Real Estate. Of course, if you are interested in taking a tour of this victorian gem, you know who to contact. ~ Grin! ~

"Distressing" Follow Up On Two Ogden Cities' Charts

2011-06-27T14:26:00.000-07:00

Last week I posted Tale of Two Ogden Cities: In Charts showing market metrics and trends for the East Bench of Ogden compared to the Trolley District area just east of Downtown. One of the most remarkable charts showed the trend on prices. Here is that chart again:

So what could be driving this decrease in average sale price? To figure that out, I took a sample of all the homes that sold in these neighborhoods over the last year. Here is a breakdown:

It looks like there are a significant amount of distressed sales (bank owned and short sale) occurring in both markets. Here are the percentages illustrated:

So what does this mean? Well, the red and blue categories are where you want to be buying investment grade "scratch and dent" properties. The green category is where you want to be selling.

The non-distressed sales compete with the distressed sales in the market. However, distressed sales typically are not in good physical condition in comparison to non-distressed sales. Therefore, the distressed sellers will discount these beat up properties to move them off their books.

What has happened, especially in the Trolley District, is that with half of all sales being distressed, and the price discounted accordingly, the average price is pushed down as we see in the chart at the top. The average price for non-distressed homes has come down over time but is not nearly as much as the distressed sales. This math all gets mashed up together to produce our trendline in the top chart.

We can see that the East Bench has this dynamic going on as well but to a lesser magnitude. With the mix of distressed sales being diluted, that explains why the average price has not come down nearly as much as the Trolley District.

Nevertheless, homes can and will be sold at top dollar in this market. The catch is that the home needs to be free from deferred maintenance and in pristine condition. Here is an example. Patience is also necessary because market times are 4 to 5 months for these kinds of properties right now.

The Tale of Two Ogden Cities: In Charts

2011-06-24T21:53:00.000-07:00

In Ogden there is a strong bifurcating force called Harrison Blvd. I was toying around with the MLS statistics the other day and I thought I would explore exactly what the differences are between the "East Bench" which is located east of Harrison Blvd. and bounded by 20th Street to 36th Street as compared to "The Trolly District" which encompasses 20th to 30th Streets west of Harrison Blvd to Washington Blvd.

Queue the charts please....

In this first chart, you can see that the Trolley District has had more sales per month on average than the East Bench. Part of that may have to do with density being lower on the East Bench. Its interesting to see that sales peaked on the bench in the summer of 2006 while the Trolley District had a cathartic surge in the summer of 2007 (which then quickly collapsed as the subprime fiasco tanked the mortgage markets). The moving average for sales volumes for both areas of Ogden are back to 2001-2002 levels.

This next chart shows the median days on market for each month. You can see that during the bubble that market times were extremely short for the East Bench and moderate in the Trolley District. Since sales volume has been so low for the last several years there is a ton of noise in the chart. The moving average helps us get a better idea where things are trending. Market times are now longer for the East Bench than they are for the Trolley District on average.

Finally, here is the chart that everyone wants to see. Where are values headed? Well, on average, they have been headed down. Again, notice the "noise" that exists in recent years due to the low sales volume. The data shows the range of values. Fortunately, the movement down has been so slow that it is still profitable to fix and resell homes...as long as you don't take years to complete your project. Another interesting thing to see is that homes on the East Bench are typically priced 50% more than homes in the Trolley District. East Bench values also tend to lead in price movement. Additionally, while the Trolley District has returned to pre-bubble price levels, the East Bench has not yet given up all of its gains. This may have to do with the fact that more homeowners live in their homes on the East Bench than those in the Trolley District. Owner occupants are less likely to sacrifice on price when they sell their homes thus making prices "sticky".

FOR SALE: Updated 3 Bed Craftsman Bungalow

2011-06-21T15:03:00.000-07:00

Here is a fine example of the craftsman bungalow style home with tasteful updates. The home has 3 beds, 1 bath, and a garage and carport. Nice woodwork and hardware inside with an updated kitchen and bath.

Here is the video tour:

To view or schedule an appointment, please contact me.

FOR SALE: 2 Bed 1 Bath Updated Victorian Cottage

2011-06-17T18:18:00.000-07:00

For those of you looking for a cute 2 bedroom home with lots of updates, check this out. New windows, roof, kitchen, plumbing, bath, electrical, and more. It's a must see. Located at 2962 Ogden Ave.

Here is a video tour:

Be sure to contact me for details and current pricing.

JUST SOLD! Masterpiece Restored Craftsman Bungalow

2011-06-17T16:07:00.000-07:00

In April of 2010, I scoured the market and found this home for my clients who were looking for a house to restore. At the time the home was just 1 Bedroom, 1 Bath, and choked of cigarettes and dog urine. Our final acquisition price was $55,000.

My clients got to work and added 3 bedrooms and another bathroom as well updating all the systems and amenities in the home. We closed on the home with a new buyer at $123,900. As you can see from this video, the transformation is absolutely remarkable:

I am currently seeking capital partners to do more work like this in Ogden. Here is a project I am working on, If you are interested, contact me and we can discuss. You can see past projects HERE.

Turning Point? Charts Indicate Possible Market Thaw Coming

2011-06-14T20:20:00.000-07:00

It has been a while since I have updated my charts on the multi-unit market in Weber County. Back in 2009, I wrote a half dozen or more seller-financed transactions for investment properties and it seemed the market was trending that direction. The charts I put together at the time certainly seemed to show that.

Today it appears that the market is entering a new phase. Here is our update chart showing the share of the multi-unit income property market according to the type of financing:

Keep in mind that 2011 figures are Year-to-Date. It appears that cash continues to dominate the market as the acquisition method of choice. Interestingly, seller finance and FHA purchase have declined significantly while conventional purchases have seen an upswing after a long plunge.

What is also interesting to see is our transaction count:

We appear to have bottomed out in sales volume in 2009. We are only half way through 2011 and at our current count we may top out near 90 sales or so. That will be a significant increase from 2009 and 2010. This is an important market signal. To understand more about this signal, lets take a look inside some intriguing market dynamics:

This chart shows the $/SQFT of sales based on the terms of sale whether that be FHA, Conventional, Seller-Financing or Cash. What we see are some pretty stunning trends:

1. Is it any wonder that sales volume is dominated by cash when the $/SQFT is in free fall for this type of purchase? Cash buyers can anticipate a giant 36% pricing advantage compared to conventional and seller-financed buyers!

2. The black box shows the recent data points that are bringing the average price on cash purchases down. They range from $15/SQFT to $32/SQFT. When replacement costs are $85/SQFT, why would anyone build anything right now? Investors can put an additional $10-$20/SQFT in capital improvements into these properties and have brand new-like structures that cost much less than new construction.

3. Notice that seller financing and conventional financing price points seem to lag the direction of cash price points by a 9 to 12 month period. However, notice that they are also much less volatile than cash prices. That makes sense because they are using other people's money. The price points are "sticky".

3. Now lets talk about that important market signal. The sales volume signal is related to the overall decrease in price we have seen in all three financing categories. We saw this same signal in 2003 when prices troughed in Weber County and sales volume accelerated.

In an exciting note, we may be witnessing the first signs of the multi-unit market turning the corner. As sales volume increases, a floor will be established on pricing and we will build on value from there. Sales volume increased for a full year in 2003 before prices began to increase in 2004. We may still be 9 to 12 months out before we establish a bottom on pricing. Nevertheless, this is interesting to watch and hopefully a sign that a market winter will give way to spring.

If I were a cash investor, I would be purchasing as much property as I could right now.