Salt Lake
REALTOR Magazine September 2019
RECESSION OR NO RECESSION? p. 20
Mortgage Advice p. 14 Realtors® Help Wasatch Front Schools p. 10
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Residential real estate professionals may be leaving money on the table by neglecting to send referrals to commercial practitioners. p. 12
Table of Contents Features 10
Realtors® Give Time, Raise Thousands of Dollars for Tools for Schools
12
Residential Agents Can Hit Jackpot with Commercial Referrals Buck Wargo
14
Three Things to Consider When it Comes to Mortgages Marita Viselli, Jeff Loveland, John Gonzales
20
As Recession Fears Rise, Here’s the Lowdown for Real Estate Clare Trapasso
30
Article 16 Affirmative Duty Holly Rawson
Columns 7
Showing a Home without Permission is Trespassing and an Ethics Violation Scott Robbins – President’s Message
Departments 8
Happenings
8
In the News
26
Housing Watch
28
Realtor® Connections
28
On the Move
On the Cover: Cover: ©Pellinni / Adobe Stock Photo left: ©EyeMark / Adobe Stock
This Magazine is Self-Supporting Salt Lake Realtor® Magazine is self-supporting. The advertisers in this magazine pay for all production and distribution costs. Help support this magazine by advertising. For advertising rates, please contact Mills Publishing at 801.467.9419. The paper used in Salt Lake Realtor® Magazine comes from trees in managed timberlands. These trees are planted and grown specifically to make paper and do not come from parks or wilderness areas. In addition, a portion of this magazine is printed from recycled paper.
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September 2019 volume 79 number 9
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The Salt Lake REALTOR® (ISSN 2153 2141) is published monthly by Mills Publishing, located at 772 E. 3300 South, Suite 200 Salt Lake City, Utah 84106. Periodicals Postage Paid at Salt Lake City, UT. POSTMASTER: Send address changes to: The Salt Lake REALTOR,® 772 E. 3300 South, Suite 200 Salt Lake City, Utah 84106-4618.
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1-National Association of Realtors® • 2-According to Jessica Lautz, vice president of demographics and behavioral insights and research at the National Association of Realtors® • 3- Based on rankings from Scotsman Guide® Top Originators List, 2018. • Guaranteed Rate is an Equal Opportunity Employer that welcomes and encourages all applicants to apply regardless of age, race, sex, religion, color, national origin, disability, veteran status, sexual orientation, gender identity and/or expression, marital or parental status, ancestry, citizenship status, pregnancy or other reason prohibited by law. Julia G. Borst NMLS ID: 275440; CA - CA-DBO275440, IL - 031.0038963, TX - 275440, UT - 5495305 • 9350 South 150 E., Suite 140 Sandy, UT 84070 • NMLS ID #2611 (Nationwide Mortgage Licensing System www.nmlsconsumeraccess.org) • CA - Licensed by the Department of Business Oversight, Division of Corporations under the California Residential Mortgage Lending Act Lic #4130699 • IL - Residential Mortgage Licensee - IDFPR, 122 South Michigan Avenue, Suite 1900, Chicago, Illinois, 60603, 312-793-3000, 3940 N. Ravenswood Ave., Chicago, IL 60613 #MB.0005932 • TX - Licensed in TX: Licensed Mortgage Banker & Licensed Residential Mortgage Loan Servicer- TX Department of Savings & Mortgage Lending • UT - Licensed in UT: Utah-DRE Mortgage Entity License #7495184 & Utah-DFI Residential First Mortgage Notification – Utah Department of Financial Institutions
Salt Lake
REALTOR
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President Scott Robbins Summit Sotheby’s
Michael Morgan Realtypath LLC Scott Colemere Colemere Realty Associates
First Vice President Alicia Holdaway Summit Sotheby’s
Jodie Osofsky Signature Real Estate Utah Mary Olsen Utah Key Real Estate
Second Vice President Matt Ulrich Ulrich Realtors®, Inc.
Sophie Reece Berkshire Hathaway
Treasurer Steve Perry Wise Choice Real Estate
Rob Ockey Century 21 Everest Dawn Stevens RealtyOne Group Signature
Past President Adam Kirkham Summit Sotheby’s
Brian Gottfredson Coldwell Banker
CEO Curtis Bullock
Tony Ketterling Equity Real Estate
Directors
Ryan Henderson Realtypath LLC
Advertising information may be obtained by calling (801) 467-9419 or by visiting www.millspub.com
Entering a home without permission is trespassing and a violation of the Code of Ethics. There are too many ethics violation hearings related to this issue. Listing agents often tell sellers that no one will access the house without prior permission. It makes Realtors® look bad when someone shows up unannounced and lessens our professionalism.
Managing Editor Dave Anderton Publisher Mills Publishing, Inc. www.millspub.com
If you are scheduling the showing directly with the listing agent, be sure to confirm it before showing up with your client. If you are using ShowingTime on the MLS, you can request the showing appointment, but that doesn’t mean the listing agent has confirmed it with their client. So until that happens, don’t show up at the property.
President Dan Miller Art Director Jackie Medina Sales Staff Paula Bell Paul Nicholas Chad Saunders
Office Administrator Cynthia Bell Snow
Administrative Assistant Caleb Deane
Besides, most homes today are equipped with security cameras and sellers know and can see when someone enters their home. One sure way a buyer’s agent can leave a bad impression and lessen the chances of his/her client’s offer getting noticed is entering a home without permission.
Salt Lake Board: (801) 542-8840 e-mail: dave@saltlakeboard.com Web Site: www.slrealtors.com The Salt Lake Board of REALTORS® is pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the nation. We encourage and support the affirmative advertising and marketing program in which there are no barriers to obtaining housing because of race, color, religion, sex, handicap, familial status, or national origin. The Salt Lake REALTOR is the monthly magazine of the Salt Lake Board of REALTORS . Opinions expressed by writers and persons quoted in articles are their own and do not necessarily reflect positions of the Salt Lake Board of REALTORS®. ®
Remember the movie “Christmas Vacation” where cousin Eddie shows up with his family at the Griswold home unannounced during the holidays? The scene gets a lot of laughs. But it’s no laughing matter when an agent shows up announced at a seller’s home without permission. Realtors® should not show a home until they have permission to show it even if the home is vacant. This is an ongoing issue and shows a lack of professionalism. Home sellers are sometimes startled, caught off guard, or put in embarrassing situations.
Michael Rowe Berkshire Hathaway
Graphic Design Ken Magleby Katie Steckler Patrick Witmer
Showing a Home without Permission is Trespassing and an Ethics Violation
®
Listing agents can add an extra measure of security to a seller’s home by enabling a CBS (call before showing) code. When this feature is enabled on the Supra Keybox, agents who are seeking access to the key will be asked to provide a CBS code after entering their PIN. Any agent who wants to show the property will need to contact the listing agent to obtain the CBS Code. This allows a seller’s agent control access to a client’s home. Don’t be the cousin Eddie of the Realtor® family!
Scott Robbins President
Permission will be granted in most cases, upon written request, to reprint or reproduce articles and photographs in this issue, provided proper credit is given to The Salt Lake REALTOR®, as well as to any writers and photographers whose names appear with the articles and photographs. While unsolicited original manuscripts and photographs related to the real estate profession are welcome, no payment is made for their use in the publication. Views and opinions expressed in the editorial and advertising content of the The Salt Lake REALTOR® are not necessarily endorsed by the Salt Lake Board of REALTORS®. However, advertisers do make publication of this magazine possible, so consideration of products and services listed is greatly appreciated.
OFFICIAL PUBLICATION OF THE SALT LAKE BOARD OF REALTORS ® REALTOR® is a registered mark which identifies a professional in real estate who subscribes to a strict Code of Ethics as a member of the NATIONAL ASSOCIATION OF REALTORS®. October 2005
September 2019 | Salt Lake Realtor ® | 7
Happenings
In the News Are you entitled to know what your neighbor paid for his house? A recent story in the Deseret News outlined the pros and cons of non-disclosure states. “In a nation increasingly worried about privacy, Utah guarantees its citizens a courtesy that most other states don’t: the right to keep the selling price of a home a secret,” the article said.
Trip to Anywhere in the World Congratulations to Lisa Caccavella, a Realtor® with KW Utah Realtors®. Lisa was the grand prize winner of the RPAC Trip to Anywhere in the World, a $7,500 value. This past summer, members who invested $15 to RPAC when paying dues received an entry into the contest. Lisa invested $100 to RPAC and paid her dues early, tripling her entries. Lisa said she wants to travel to Italy or French Polynesia. Her broker is Eric Santistevan.
Utah is just one of a handful of states considered non-disclosure, meaning “when a home changes hands, only real-estate agents and lenders know the final price, along with the seller and buyer. That means local governments, national real-estate websites and gossipy neighbors don’t.” Realtor® Susan Poulin was quoted in the article and said most people she’s talked with don’t care as much about price privacy when it comes to buying a home, but they care more when they’re selling one. “They are thrilled if they get a good deal on the buy side, but don’t want anyone to know how much money they made on a sale.” The article also pointed out that non-disclosure states were less likely to implement transfer taxes on the sale of real property. When Steve Theobald, a real-estate broker in Salt Lake City moved to Utah from Maryland, he had to pay a $20,000 transfer tax on the sale of his Maryland home, the article noted. “I was happy to find out there wasn’t going to be any transfer tax in Utah,” Theobald said.
New Directors Elected Four new directors have been elected to the 2020 Board of Directors. They are (above left to right): Jennifer Gilchrist (Utah Key Real Estate); John Lucky (Coldwell Banker Residential); Janice Smith (Coldwell Banker Residential); and Carlye Webb (RealtyOneGroup Signature). Each of the new directors will serve a four-year term beginning Jan. 1. The Board of Directors consists of 16 Realtors® who establish policy for the association.
8 | Salt Lake Realtor ® | September 2019
The Utah Association of Realtors® said in a statement that it supports the current system. “Not only does this protect Utahns’ privacy, but it also safeguards them from paying a real estate transfer tax,” said Deanna Devey, director of communications and operations.
David Weekley Homes Sales Consultant Alicia Madsen with Real Estate Agent Mindy Fung and Vickie & Charles Taylor
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Realtors® Give Time, Raise Thousands of Dollars for Tools for Schools
M
embers of the Salt Lake Board of Realtors® teamed up with radio station Z104 to give their time and money to help Wasatch Front school students with needed supplies at the annual Tools for Schools event. Radio hosts Dave and Deb aired live broadcasts from The Shops at South Town promoting the fundraiser. More than 100 volunteers helped organize and purchase supplies to help 10 school districts. This year, Summit Sotheby’s International Realty donated $2,000 to the cause. Coldwell Banker Residential gave $1,700. Realtors® who gave $500 or more included: Miriam McFadden (Miriam K. McFadden Real Estate), Donna Pozzuoli (Berkshire Hathaway Home Services), Sharon Spratley (Berkshire Hathaway Home Services), Jim Bringhurst (Windermere Real Estate); Troy Peterson (Equity Solid); and Scott Robbins (Summit Sotheby’s International Realty). In addition, Snackdash donated $3,500 in food supplies to the cause. Dante Esquibel, a loan officer with Intercap Lending and owner of Fueled Fresh Kitchen in Draper, provided lunch to 100 volunteers on the last day. The Rock Church in Draper dropped off 80 backpacks filled with school supplies. Alliance Lending gave $500. More than $10,000 was raised from members and the Board’s GoFundMe page. “We definitely filled four school buses with supplies,” said Laura Fidler, chairwoman of the Board’s Charities Committee. “This year every school district got six large boxes filled with hygiene supplies. We collected or purchased more than 1,300 backpacks. In addition to the backpacks, many people donated new socks, underwear and other clothing. The generosity of the Realtor® community family was overwhelming.” A special thank you to Charities Committee Vice Chairwoman Jolene Lehman and the entire committee for their help.
Photos: Dave Anderton
10 | Salt Lake Realtor ® | September 2019
September 2019 | Salt Lake Realtor ® | 11
©Dollar Photo Club
Residential Agents Can Hit Jackpot with Commercial Referrals Synergy between the two sides is sorely lacking in the real estate industry, experts say. By Buck Wargo
R
esidential real estate professionals may be leaving money on the table by neglecting to send referrals to commercial practitioners. But agents on both sides of the business should partner with each other to expand their clientele and improve their bottom lines, a panel of brokers told attendees at the Coldwell Banker Gen Blue conference in Las Vegas. Robert Pressley, president of Coldwell Banker Commercial MECA in Charlotte, N.C., demonstrated how lucrative these partnerships can be. He recalled working with a New York– based residential agent in August who had a client looking to place $100 million in cash in a 1031 exchange. “I was able to close on more than $70 million and sent the referring agent a $345,000 referral fee,” Pressley said. “That’s one way to make money.” Synergy between the residential and commercial sides, though, goes largely untapped in the
12 | Salt Lake Realtor ® | September 2019
industry, which flummoxes Bob Fredrickson, CCIM, president of Coldwell Banker Commercial Danforth in Federal Way, Wash. Having worked on both sides of the business himself, Fredrickson said he’s always had commercial and residential teams working together. “We’ve seen the results,” he said. “In 2017, we had $86,000 in referral fees, and in 2018, we had $525,000 in referral fees on the residential side. That is powerful. We got [residential agents’] attention because they can add 10 to 20 percent a year to their incomes.” Pressley cautioned residential agents against pursuing their clients’ commercial interests if they don’t have experience handling such transactions. It’s bad for the client and themselves if they do it wrong, and it’s better to hand it off to a commercial pro, he said. “It’s never the big-performing residential agents trying to do [a commercial] deal. It’s the newer agents that don’t have a lot going on, and the
last thing they should be doing is a commercial transaction. I don’t want to hurt anybody’s feelings, but I have never sold a house in my life and never will. I will mess it up so fast.” But his advice is conditional: In rural areas where commercial transactions are more infrequent, agents may be wise to learn both sides of the business so they don’t have to send a client to another market to find a commercial pro, Pressley said. But in larger cities with a wealth of both types of transactions, residential and commercial deals should be handled separately by knowledgeable agents. Commercial pros, too, should understand when to seek the expertise of a residential agent, Pressley noted. Oftentimes, they must cooperate with one another in a leasing or multifamily transaction, and it’s wise not to assume either party misunderstands the other and can be taken advantage of. Residential pros can be helpful to commercial brokers because they’re good at developing client relationships and can offer advice on making deeper business connections, Pressley said.
Duff Rubin, president of Coldwell Banker Residential Brokerage Mid-Atlantic, said that many home buyers may also be entrepreneurs interested in leasing space nearby. “Everyone who has a home has a job,” Rubin said. “Every single person [residential agents] are speaking to and selling a home to is a buyer in a potential commercial lease. They need to pull the leads out of them.” Pressley said that while commercial agents can get a lot of referrals from the residential side, it doesn’t necessarily work the same in reverse. He said that most times when he sends referrals to residential agents, it involves a commercial client who needs to find homes for relocating employees. But with so many more residential agents than commercial ones, there’s a lot of competition, he said. Buck Wargo is a real estate reporter and writer based in Las Vegas. Reprinted from Realtor® Magazine Online, March 2019, with permission of the National Association of Realtors®. Copyright 2019. All rights reserved.
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Three Things to Consider When it Comes to Mortgages
T
he most commonly searched for financial topic in Utah is “mortgage,” according to a recent study by TermLife2Go. With that in mind, members of the Affiliates Advisory Board offer advice when securing a mortgage.
1. What Types of Credit Problems Can Derail the Home Buying Process? By Marita Viselli Inspiro Financial Often, home buyers are focused on their credit scores, and aren’t aware of how scores are derived, or how use of credit impacts their ability to qualify for a home. There’s nothing worse than getting to the week before closing and having to tell an excited homebuyer that they no longer
14 | Salt Lake Realtor ® | September 2019
qualify because an action they took interfered with their credit score, or their ability to obtain more credit (other than telling their agent that they can’t finish the deal—it’s a close second!) Loan officers, as well as Realtors®, should be reminding their clients throughout the process that they should not do the following: · Don’t change jobs or become self employed (and don’t quit and tell us you’re on vacation – we will find out) · Don’t buy a car, truck or van (unless you plan to live in it) · Don’t spend the money you’ve saved for down payment (you’d think this is obvious) · Don’t buy furniture before you get the keys to your house (it’s not going to fit in your car) · Don’t make large deposits into your bank account (yes, you have to explain these) (Continued on page 18)
An in-house advertising agency is much more than a graphic design department. It is a creative force where artists are handselected based on their experience, their vision and their ability to innovate. Their talents and skills range from photography to branding, web development to copy writing, public relations to product design, documentary filmmaking to art direction. We look at each moment and each property as an opportunity to bring irreplaceable value to our clients, and in the process, redefine what it means to be in the business of real estate. Telling the stories of our clients’ properties through the talents of our in-house creative team is a crucial part of how we approach real estate differently from our competitors. Luxury isn’t tangible. It isn’t a price tag. Luxury is an experience and a commitment of going beyond the status quo. Being Utah’s only real estate brokerage with a globally recognized, award-winning advertising agency wasn’t a choice – it was a mission – a mission that has become a part of who we are and how we’re different. Being different isn’t for everyone, but to us, it is everything.
THE TEAM THAT MARKETS PROPERTIES L I K E N O O T H E R LUXURY REAL ESTATE AWARD WINNERS P I AG AWA R D W I N N E R S T E L LY AWA R D W I N N E R S
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©MMXIX Sotheby’s International Realty Affiliates, Inc. All Rights Reserved. Sotheby’s International Realty® is a licensed trademark to Sotheby’s International Realty Affiliates, Inc. An Equal Opportunity Company. Each Office Is Independently Owned And Operated. Copyright© Summit Sotheby’s International Realty 2019. All rights reserved.
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· Don’t cosign for anyone on a loan of any type (they can wait till you have the house) · Don’t apply for any new credit cards or open new accounts (we pull credit just before you sign and we will see that inquiry) Seems like these are common sense, right? It’s amazing how many times these actions cause big problems in the loan process. Most loan officers are going to tell a client this in the beginning of the process, but keep reminding them. And agents, we could use some reinforcement here!
2. Second Homes as Nightly Rentals By Jeff Loveland OneTrust Home Loans An interesting mortgage option that has begun to gain popularity is using a second home or vacation home mortgage as a nightly rental. The benefits of this program over using a standard investment property mortgage are twofold. First, this options only requires a 10 percent down payment versus the typical 20 percent to 25 percent put down on an investment loan. This allows the out-of-pocket investment to remain minimal and the difference in monthly payment between to differing down payment amounts is usually less than a couple of hundred dollars, easily made recouped by a night or two of rentals. The other benefit is the interest rate placed on the loan. Interest rates placed on second homes are typically the same or near that of a principal residence compared to and investment property that is anywhere from 0.25 percent to 0.75 percent higher. This great option comes with a couple stipulations. First, the borrower must occupy the residence for some part of the year. Essentially
18 | Salt Lake Realtor ® | September 2019
they need to plan on staying in the house for what would be considered a vacation, a weekend, a week, a month. The second item to consider is if the home has a home owners association and if that association has a ban on nightly rentals. This has started to become an issue in some resort towns.
3. Do Your Clients Really Need an Appraisal? By John Gonzales South Towne Mortgage If buyers have more than the minimum required down payment, along with high credit scores, securing a mortgage could be faster and easier than ever. This is due to an increase in mortgage applications receiving appraisal waivers through the automated underwriting systems of Fannie Mae and Freddie Mac. Both organizations offer an option for a waiver of the appraisal on many conventional mortgage transactions based on the application information compared with borrower analytics and property data collected over decades. One of the most time-consuming parts of obtaining a mortgage is often the appraisal. Appraisal waivers can provide a quick and more efficient closing. It is worth noting, however, that many lenders have additional underwriting guidelines and overlays preventing them from taking advantage of these waivers. Ask your loan originator for details. Freddie Mac’s ACE (Automated Collateral Evaluation) and Fannie Mae’s PIW (Property Inspection Waiver) differ slightly so it is also important to know your loan originator has access to both agencies. Working with an experienced mortgage team will help your client navigate the differences and take advantage of the appraisal waiver(s) offered by Fannie Mae and Freddie Mac.
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As Recession Fears Rise, Here’s the Lowdown for Real Estate But although the R-word may be a trigger for those who remember the last downtown, folks shouldn’t panic just yet. And they shouldn’t expect another real estate fire sale. By Clare Trapasso
I
t seems that whenever you pick up a newspaper or turn on the news these days, a scary word hits you in the face: “recession.” Germany is already teetering on the brink of recession; an unruly exit from the European Union this fall could cause one in Britain; and in the U.S., a rapidly escalating trade war with China is increasing fears. But although the R-word may be a trigger for those who remember—or even experienced— the mass layoffs, scores of foreclosures, and plummeting home prices of the last downtown,
20 | Salt Lake Realtor ® | September 2019
folks shouldn’t panic just yet. And they shouldn’t expect another real estate fire sale. “This is going to be a much shorter recession than the last one,” predicted George Ratiu, senior economist with realtor.com®. “I don’t think the next recession will be a repeat of 2008. ... The housing market is in a better position.” Federal Reserve Chairman Jerome Powell indicated that July’s interest rate cut would be followed by another in September, but cautioned that that might not be enough to counter the trade tensions, which ratcheted up as China
responded to an earlier round of U.S. tariffs with its own, and President Donald Trump responded by making U.S. restrictions even tougher. About 2 percent of economists, strategists, academics, and policymakers believe a recession will start this year, according to a recent survey of more than 200 members of the National Association for Business Economics. Thirty-eight percent believe one will begin in 2020, while 25 percent anticipate one starting in 2021. Fourteen percent expect it won’t materialize until after 2021. However, Trump seems confident that there’s no risk of a recession at all. He’s been putting out a series of positive tweets about the economy for the past week or so. He responded to China’s tariff announcement on Friday by tweeting, “Our Economy, because of our gains in the last 2 1/2 years, is MUCH larger than that of China. We will keep it that way!” For sure, unemployment is hovering around the lowest it’s been in the past 50 years. However, it turns out there weren’t as many jobs in 2018 and early 2019 as previously reported. Wages are
growing, and we’ve entered the longest economic expansion in U.S. history. But a downturn within the next two years still looks likely—particularly if a trade war heats up, making it more expensive to import goods. Those increased costs are likely to be passed along to everyday consumers. The housing market’s risky mortgages and rampant speculation were blamed for plunging the world into a financial crisis the last time around. But these days real estate isn’t likely to be the cause of a recession. Will home prices and sales plummet in a recession? Aspiring buyers hoping that home prices will crash, like they did during the Great Recession, are likely in for a rude awakening. There simply aren’t enough homes being built to satisfy the hordes of buyers. And with more members of the giant millennial generation wanting single-family homes in which to raise their growing families, there isn’t likely to be a drop-off in demand anytime soon.
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LENDER
September 2019 | Salt Lake Realtor ® | 21
“With people having PTSD from the last time, they’re still afraid of buying at the wrong time,” Wolf said. “But prices aren’t likely to fall 50 percent like they did last time. “We do expect prices will fall marginally,” she continued. The priciest parts of the country, which saw the biggest price hikes, could see the biggest price corrections. Sales could decline anywhere from 10 percent to 20 percent, she predicted. The luxury market is already seeing price decreases. These high-end homes, usually in the range of $1 million and up, are usually considered a bellwether for the greater housing market. A big wild card in all of this is mortgage interest rates, which were at an ultralow 3.55 percent for a 30-year, fixed-rate loan, according to Freddie Mac data. If they continue to fall, it could give the housing market a boost. That’s because low rates translate into lower monthly mortgage payments. Could rentals become cheaper? Those hoping for rental prices to be slashed will probably be disappointed as well.
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But the anticipation of a recession in itself could make the housing shortage even worse. Worried would-be sellers may decide to postpone listing until they can get top dollar for their properties. Yet although a lack of homes for sale typically drives up prices, that effect could be mitigated if there are fewer folks who can afford to buy. In a recession, it could become harder to find a goodpaying job or steady freelance work. Even those who remain gainfully employed may worry about their job stability. “If we do go into a recession, there will be layoffs,” said Ali Wolf, director of economic research at Meyers Research, a national real estate consultancy. “If you move from a twoincome household to a one-income household, it doesn’t change the desire to own. But it does impact the ability.” Realtor.com’s Ratiu believes prices will flatten, but likely not fall. Meanwhile, the number of home sales will also remain flat or potentially even dip, he believes. Other economists expect the recession to take a bigger toll on housing.
22 | Salt Lake Realtor ® | September 2019
“We expect a little bit of an impact,” said Greg Willett, chief economist at RealPage, a property management technology and analytics company for apartment buildings. “But it’s not doom and gloom.” He expects apartment price hikes to slow from 3 percent annually to more minor 1.5 percent or 2 percent price increases over the next few years. The rental market is likely to be buffered by those nervous about making what could be the largest purchase of their lives, a home, in uncertain economic times. Those folks may decide to live in a rental until the economy is booming again. The exception, again, is the luxury rental market. Developers may have to offer concessions (e.g., a free month’s rent) or lower prices a little to attract wealthier tenants. But that isn’t likely to trickle down to the middle or even lower end of the rental market. Will builders stop putting up badly needed new homes? A recession could make builders even more reluctant to break ground on new residences, particularly in the priciest markets on the coasts. A year ago, about 10 percent of single-family home builders offered buyers incentives such as discounts to go under contract, said National Association of Home Builders Chief Economist
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Robert Dietz. Today, about 40 percent are turning to incentives to spur home sales. That’s not a good sign. Tariffs on building materials such as steel are already making construction more expensive. And the construction worker shortage is severely limiting the number of homes that can be built. A downturn could make this worse.
homeowners who lose their job and are unable to make their monthly mortgage payments are much more likely to put their property on the market instead of going into foreclosure. And with home prices expected to remain high, fewer folks will find themselves underwater on their mortgage. That should make it easier to unload the residences if need be.
“You’ll [have] some local markets where home construction declines,” said Dietz. “Some prospective home buyers could be concerned about making that purchase.”
And more people own their homes outright today than they did just over a decade ago. About 4 in 10 homeowners don’t have a mortgage on their abode compared with 3 in 10 when the last recession occurred, according to Ratiu.
Will a recession spur another foreclosure crisis?
“Foreclosures will definitely increase, but only because [the number of] foreclosures are [already] at rock bottom,” said Andres CarbachoBurgos, a senior economist at Moody’s Analytics focused on housing. He expects a recession will happen at the end of this year or early next year, and last only two or three quarters.
One of the hallmarks of the Great Recession were the blocks littered with foreclosed properties. Some sold quickly to intrepid young families or investors. However, those with boarded-up windows and overgrown yards blighted many a neighborhood. And losing a home was a devastating blow to many owners. But foreclosures aren’t expected to be such a problem if a downturn occurs. Lending laws were tightened in the wake of the housing bubble bursting. So now only the most qualified borrowers can secure a mortgage. “This time we won’t have bad mortgages, just people who are losing jobs,” said Lawrence Yun, chief economist of the National Association of Realtors®. Plus, homeowners these days have a record amount of equity in their homes. That means
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In addition, Carbacho-Burgos expects home improvement spending to remain flat during the recession. And home flipping, one of the factors contributing to the previous housing market bust, is expected to slow, he said. That’s because slower home price growth makes flipping less lucrative for investors. Clare Trapasso is the senior news editor of realtor. com and an adjunct journalism professor at St. John’s University. Reprinted from Realtor® Magazine Online, August 2019, with permission of the National Association of Realtors®. Copyright 2019.
JULY HOUSING WATCH July Home Sales Rebound after Drop in June Home sales (all housing types) in Salt Lake and Davis counties rebounded in July following a drop in June sales. The median price of a home in Salt Lake County sold in July was $350,000, up 7 percent compared to the July 2018 median price. In Davis County, the median price increased 8 percent to $334,764. A federal report in August indicated Utah had the second highest house price appreciation in percent change of all states. In the second quarter, Utah house prices increased nearly 8 percent over the past year, the report stated. Only Idaho showed higher appreciation. Over the past five years Utah house prices increased 49 percent. The median days a listing remained on the market in July increased in Salt Lake County to 19 days compared to 12 days a year earlier. In Davis County, the median days a listing was on the market was 14 days, up from 10 days in July 2018. Based on current sales trends over the past 12 months there is currently 3.5 months of housing inventory in Salt Lake County – meaning if no additional listings were put on the market, the current inventory would all sell within 3.5 months. Inventory levels of less than 6 months indicate a seller’s market. Nationally, overall home sales were up 0.6 percent in July from a year ago, according to the National Association of Realtors®. “Falling mortgage rates are improving housing affordability and nudging buyers into the market,” said Lawrence Yun, NAR’s chief economist. However, he added that the supply of affordable housing is severely low. “The shortage of lower-priced homes have markedly pushed up home prices.” First-time buyers were responsible for 32 percent of U.S. sales in July, down from 35 percent the month prior and about equal to the 32 percent recorded in July 2018.
“A federal report in August indicated Utah had the second highest house price appreciation in percent change of all states.”
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Individual investors or second-home buyers, who account for many cash sales purchased 11 percent of homes in July, up from 10 percent recorded in June 2019 and down from 12 percent recorded in July a year ago. All-cash sales accounted for 19 percent of transactions in July, up from June and down from July of 2018 (16 percent and 20 percent, respectively). Distressed sales – foreclosures and short sales – represented 2 percent of sales in July, unchanged from June but down from 3 percent in July 2018. Less than 1 percent of July 2019 sales were short sales.
Salt Lake & Davis County HOME SALES
Salt Lake County UP 4%
Davis County UP 7%
1,766
1,690
JULY 2018
JULY 2019
JULY 2018
MEDIAN PRICE
$327,000
JULY 2018
$350,000
JULY 2019
$311,000
JULY 2018
UP 58%
$334,764
JULY 2019
UP 40% 19
12
JULY 2018
JULY 2019
UP 8%
UP 7%
MEDIAN CDOM
540
507
14 10
JULY 2019
JULY 2018
JULY 2019 September 2019 | Salt Lake Realtor ® | 27
REALTOR® Connections
On the Move
Elaine Zambos
American Dream Grant Awarded to Single Mom Danielle Puckett was the winner of a $5,000 American Dream Grant by the Salt Lake Board of Realtors®. Puckett was randomly selected from a list of candidates who applied for the grant. She is a single mom of two girls and purchased a home in West Valley City. Her Realtor® is Shaunna Shurtliff with Royce Realty. The Board is awarding four American Dream Grants this year. The grants are being given to single-parents, school teachers, first responders and veterans.
Utah is No. 2 in House-Price Increases Utah had the second highest house-price appreciation of all states in the second quarter year-over-year, according to a new report by the Federal Housing Finance Agency. In the 12 months ended June 30, house prices in the Beehive State increased 7.73 percent. Only Idaho showed greater house appreciation over the same period. Rounding out the top five states were Tennessee, Georgia and Arizona. At 1.21 percent, Delaware had the lowest appreciation.
Elaine Zambos, associate broker at Utah Key Real Estate, recently traveled to Mexico with 25 other people and built a home for a homeless family. Fifteen members of the group were from Utah and parishioners at St. Anna Greek Orthodox Church. The group raised funds and personally contributed their own money to travel to Mexico and purchase materials to build the 300 squarefoot structure. Volunteers stayed in tents while building the home, which was completed in less than a week. Project Mexico, a 501(c)3 non-profit group selected a single mother with two children as owners of the home. Exit Realty Legacy welcomes the following agents: Jeff Morris, Jessie Hillebrand, Murielle Bird, Rick Crossley, Leah Blackburn, Brandon Freeman Brandon “Mook” Freeman, Jeaneane Kanehara, Amy Lander, Madison Lanford, Ann Martinez, and Brody Jensen. Wise Choice Utah recently held an agent appreciation day and food drive, collecting 300 pounds of food which was given to the Utah Food Bank. The brokerage announced the following new agents have joined Wise Choice: Rachel Tobey, Chad Hendrichsen, Andy Warr, Tammy Basinger, LaShawn Wright, Holly Angelastro, Jacky Castro, Tamra Simons and Tamera Delaney.
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Article 16 Affirmative Duty Realtor’s®, when contacted by prospective clients, have an affirmative duty to insure there is not a current Buyer Broker Agreement in place with another agent. By Holly Rawson Salt Lake Board of Realtors®
A
rticle 16-9 states “Realtor’s® shall not engage in any practice or take any action inconsistent with exclusive representation or exclusive brokerage relationship agreements that other Realtor’s® have with clients.” Realtor’s®, when contacted by prospective clients, have an affirmative duty to insure there is not a current Buyer Broker Agreement in place with another agent. This year, this issue has been a common complaint. Take the case scenario below for example to avoid a violation of this article. Client Rick had signed an Exclusive Buyer Broker Agreement valid for a period of six months with Realtor® A. While looking at some homes online, he came upon an advertisement for Realtor® B. Client Rick contacted Realtor® B and in that conversation stated that he had been working with another agent but wasn’t anymore. Realtor® B did not ask who it was that Client Rick had been working with and whether he had an agreement with Realtor® A in place.
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Realtor® B moved forward in helping Client Rick find a home. Realtor® A soon reached out to Client Rick about looking at more properties in which Client Rick told Realtor® A he had already put an offer on a home with Realtor® B. Realtor® A reminded Client Rick that they had an agreement in place and whether Realtor® B knew this since Realtor® A had not been contacted. Realtor® A filed a complaint with the Board alleging Realtor® B violated Article 16 of the Code of Ethics. The hearing panel concluded that Realtor® B was in violation of Article 16 as interpreted by Standard of Practice 16-9. The panel’s decision indicated that Client Rick had told Realtor® B that he had been working with another agent and that Realtor® B had an affirmative duty to insure that his prospective client was not currently bound by another Exclusive Buyer Broker Agreement. Realtor® B made no effort to verify that there was not a current agreement in place with a different agent.
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Congratulations to Shirley Jacobson, the recipient of the 2019 Darlene Dipo Meraki Award. This award is given to those who demonstrate mastery, love, and passion for our profession.
meraki THE DARLENE DIPO
AWARD 2019
A $5,000 endowment will be awarded in Shirley’s name to be used as a resource for Windermere agents. Watch Shirley’s highlight video at winutah.com/meraki