Daybreak Housing Market

The Salt Lake Tribune reported today that homes in the Salt Lake Valley have returned to 2006 levels. According to the median home prices in our zip code (84095), they are correct. If you look at a graph of median home values it is easy to see that we have peaked and that values have decreased since the second quarter of this year. With home values now on the decline, Daybreak, like all other areas, is experiencing a record number of foreclosures. These foreclosures are for every type of property from condos/town homes to 5,000 square ft. single family homes. So now we ride the downhill slippery slope. But how fast and for how long will the market decline? If you can answer that question, then you will probably become a millionaire soon. The market is always unpredictable. However, looking at common sense factors can help establish a good prediction.

One of the largest factors that needs to be considered is Daybreak's success. Daybreak has been steadily increasing its already large share of the new home market. Last year Kennecott Land boasted that for every 10 houses sold in the salt lake valley, one of them was located in Daybreak. This has now increased to one out of every seven new homes. Why? In a market where buyers can be picky, they are choosing a differentiated product. You cannot find a community like Daybreak anywhere else. Another factor to think about is the 7,500 tax credit for new home purchases. The deadline for this credit ends next summer. Buyers will want to take advantage of this for all of the reasons I stated in my previous post on the subject and will not want to miss it.

A third reason is the Village Center. I know, it is definitely late in becoming a reality, but now I can see the skeleton of a retail building being constructed every time I pass Oquirrh Lake. Once this part of Daybreak is finished I expect demand will increase even more. For those of you not familiar with the predominant religion/culture here in Utah, you should not factor out the new temple being built in Eastlake. This like everything else in Daybreak is arriving later than expected, but when complete it will definitely be a major attraction for LDS buyers.

While there are many expensive homes in Daybreak, you can find plenty of affordable options. Most buyers have found themselves priced out of the market, but with options in the 180 to 220 range, some of those buyers will consider Daybreak their best option. Another attraction is that unlike many developments, these townhomes and condos are interspersed with more expensive homes creating a community of variety instead of a mass of town home/condo clones.

Utah as a whole has always been behind the national trend. This would suggest that we have further to go before we see prices increase in a steady fashion. However, Utah's economy is better than most and has not had to wait while congress takes action. Instead, measures were already in the works to boost the housing market long before Utah arrived in a foreclosure "danger zone."

Given these conditions I am betting that Utah and Daybreak especially will have a slower decline that will not last as long as other areas of the country. Especially those homes that are in the low to mid 200s. A local realtor who calls himself Utah Dave brings up an interesting point for those buyers who are looking to upgrade their home. He reasons that while the market for starter homes is still fairly stable, the market for larger, more expensive homes has gone down quite a bit. The old adage "buy low sell high" could apply here. Sell your starter home at a decent price and buy your upgrade at a considerable discount. Not a bad idea.

For those of you who follow this blog regularly you will have noticed that I took a rather long break from writing any posts. I did this for two main reasons: my work has recently taken up much more of my time. I have also been working on integrating a new feature into this blog that will be very informative once complete. Stay tuned...

Foreclosures in Daybreak

According to RealtyTrac, a company that tracks foreclosures around the United States, foreclosures increased by 75% in 2007. Utah, for the most part, has bucked this national trend with foreclosures actually going down compared to last year. However, Utah had 7,438 properties in foreclosure this last year. This statistic sparked my interest and so I used the map feature on RealtyTrac to get an overview of foreclosures in Daybreak. I was fairly surprised. According to the map there are 5 houses that are in pre-foreclosure status, 10 houses that are at auction status, and 3 houses that have transferred ownership to the bank. Looking at the definition of pre-foreclosure on RealtyTrac I found that properties in pre-foreclosure are those whose owners may have received a notice of default or are significantly behind on their mortgage payments. Apparently if a loan is not reinstated by the end of the pre-foreclosure period then a house may be put up for auction.

Does this make Daybreak a foreclosure hotspot? No, not really. Considering the actual foreclosure rate in Utah is about 1 house in 400, there is bound to be a couple of foreclosures in a 1000 home community such as Daybreak. Life happens. Maybe somebody lost their job or have a mass of medical bills for some unforeseen health problem. Most of those houses that are in pre-foreclosure status or auction status will be sold before they are actually auctioned or the bank takes possession. I seriously doubt that this will have a big impact on property values in Daybreak. However, there were some interesting patterns in the data posted on RealtyTrac. Most of the pre-foreclosures, auctions, and bank-owned properties were concentrated in the Southwestern portion and the outskirts of Founder's Village. Eastlake did not have any listings on the map. The heart of Founder's Village is virtually free of mortgage problems. I think this also corresponds with actual property values, but will need to do more research to be sure. Hopefully Utah's economy along with actions by our federal government will ensure that Utah and Daybreak do not suffer the same fate as areas in Florida and California.