Wednesday November 5, 2014:
Canyon Property: About two weeks ago, Joy and I drove up to Park City via Big Cottonwood Canyon and went over Guardsman’s Pass and through the Deer Valley area. I don’t know the last time you were at Deer Valley, but it’s amazing how many homes, condo, townhouses and hotels have been built in that area. It’s a small city that sits vacant most of the year until the ski season arrives.
Our Utah ski resorts have been changing hands this year. Vail bought Park City Mountain Resort (PCMR) in September. Ian Cummings, former owner of PCMR, bought a majority stake in Snowbird from Dick Bass in May. Then last month, Deer Valley Resort announced that it would buy Solitude Mountain Resort and take over operations in May 2015.
That drive by Solitude and over Guardsman’s to Deer Valley got me thinking about the property up Big Cottonwood Canyon and specifically about the condos at the base of Solitude Mountain Resort in the Solitude Village. The condo complexes in the Solitude Village include Powderhorn, Eagle Springs East, Eagle Springs West, Creekside Lodge and The Crossings. These were built between 1999 and 2001 prior to the 2002 Winter Olympics.
During the Great Recession, these units were very hard to sell, but that might be changing right now. I looked up the history of sales for those condos back to 2007 and this is what I found:
2007: 19 units sold from $349 up to $589 per square foot
2008: 13 units sold from $364 to $493 per square foot
2009: 4 units sold from $344 to $362 per square foot
2010: 7 units sold from $275 to $453 per square foot
2011: 5 units sold from $309 to $414 per square foot
2012: 10 units sold from $250 to $511 per square foot
2013: 7 units sold from $295 to $390 per square foot
2014: 11 units sold so far this year from $225 to $406 per square foot
2014: 4 units are currently under contract from $248 to $328 per square foot
2014: 23 units are currently for sale from $310 to $577 per square foot
So eleven units sold so far in 2014 and four more are under contract. If the four that are under contract close, that will be 15 sales this year and counting which will be the most units sold since 2007. With increasing demand for the Solitude condos, Deer Valley taking over operations for Solitude in May 2015 and the ski season starting in just a few weeks, I’m guessing the prices will be going up in the Solitude Village condos.
Are you paying for Private Mortgage Insurance?: Private Mortgage Insurance (PMI) is insurance that lenders require a borrower to pay for if they are putting less than 20% down on a home purchase. It protects the lender against a loss if the borrower defaults on their loan. The smaller the down payment, the higher the PMI. If you have PMI, it’s paid for in your monthly payment and it can be greater than a hundred dollars a month. Over the years, this adds up.
PMI can be removed from most loans once the borrower has greater than 20% equity in their home. One of the main steps of the process of removing PMI is an appraisal paid for by the borrower. If you have PMI and you think you may have 20% equity in your home, contact me and I’ll run a free valuation of your home before you start the process of petitioning your lender to remove your PMI and paying for an appraisal.
You can also remove PMI when you refinance if you have the equity to do so, but refinances cost thousands and appraisals cost hundreds, so if your current mortgage interest rate is close to what you could get now, it might be cheaper to just remove the PMI on your existing loan.
The End of Quantitative Easing 3 (QE3): Last Wednesday October 29, 2014, the U.S. Federal Reserve ended QE3, the third phase of it’s bond buying program that was created to stabilize the economy and keep interest rates low during the great recession by buying mortgage backed securities and treasury notes. Throughout this year I have read many forecasts from major economists and financial writers and have said myself that these low interest rates won’t last forever, and they won’t, but will they rise quickly?
The Federal Reserve started QE1, six years ago in November 2008. At that time the Fed held about $750 billion in bonds. By June 2010 the Fed had tripled it’s holdings to $2.1 trillion in bonds. When the purchases were halted last week the Fed held $4.5 trillion in bonds, six times what they held in November 2008.
Now that the Federal Reserve is holding such a large share of mortgage backed securities and treasury notes, rates may stay low and stable into 2015, as long as they keep holding these assets and not selling them on the open market. This is simple supply and demand and the government is holding the supply. As big as this is, it is only one factor of the equation and it’s also hard to know when the Fed policy will change. For now, interest rates are still historically low and I’m not making predictions. I’m just hoping they stay low through 2015.
If you found this article interesting and would like to keep up to date with the Salt Lake County real estate market, I post a couple times a week on my SLC Homes Facebook page which is at:
https://www.facebook.com/SLCHomesNews
Thank you!
Kev
