2015 marked the best overall year for homeowners since 2007 thanks to steady demand, attractive interest rates, and a healthy Utah job market. Looking ahead to 2016, here is a quick outlook on 3 things I anticipate to occur.
Interest rates will rise.
From news outlets, leading economists, to real estate blogs, rates are forecasted to be closer to 5% by years end.
Rental rates will continue to increase.
Low rental vacancies, lack of new construction rentals, and difficulty to save sufficient down payment to purchase a home will continue to drive rents upwards.
Millennials, millennials, millennials.
These ’35 and unders’ just surpassed baby boomers as the largest demographic. You’ll hear more and more about ’em as they move out and move into homeownership.
My phone was buzzing with questions from clients wondering if mortgage rates would be impacted from the Federal Reserve’s decision to raise the key fund rate. “If only I had a crystal ball,” was what I found myself saying.
It’s important to note that home mortgage rates are not directly tied to the Federal Fund Rate. Revolving lines of credit, on the other hand (think: home equity loans or credit cards) are more closely related. Mortgage rates follow bond yields, specifically the 10-year treasury.
While I don’t have that crystal ball, analysts and economists from organizations like the Mortgage Bankers Association or government-sponsored funders like Fannie or Freddie are predicting that mortgage rates may increase gradually over the next year. Take a peek at the chart below for what they’re predicting.
FHA Loan Limits Increase
Also this month, the Federal Housing Administration (FHA) increased FHA loan limits to both counties Utah and Salt Lake County. The FHA loan limit for Salt Lake County is now $312,800 (up from $304,750) while Utah County is $303,600 (up from $293,250).
My take: There’s no need to hit the panic button; in the big historical picture, mortgage rates are still very low. However, if you believe the predictions, then now is the time to buy and you’ll only pay more interest the longer you wait. We had also hoped the FHA limit changes would be more substantial, but there are still many homes available that fall in those guidelines, and can be had for minimal down payment.
There’s more development in motion in SunCrest! Recently, Draper City Council approved a master development agreement regarding the properties known as Hidden Canyon Estates, Mercer Mountain Estates and Lakeview Heights.
Hidden Canyon Estates
Located adjacent to the Stoneleigh Heights Townhomes and the future Edelweiss development, the agreement allows up to 300 single-family homes with a minimum lot requirement of 7,500 sq. ft. The developer will contribute $500,0000 towards the construction of trails/trailhead in either the first or second phase.
Mercer Mountain Estates
This 20-acre parcel, acquired in the Zion’s Bank acquisition, will be limited to 50 single-family homes with a minimum lot requirement of 12,000 sq. ft. The agreement will allow for a gated community if desired and all roads within MME will be private streets.
This 20-acre parcel, commonly referred to as the “concrete jungle,” was also acquired in the Zion’s Bank acquisition. This parcel will allow townhomes or condos and be limited to 160 units and all roads within LH will be private streets.
…To the highest bidder. Which unfortunately, was not the HOA. In case you missed the most recent HOA meeting, Tod Bean and our Board of Trustees updated the residents on the status of the (former) DR Horton Sales Office.
At HOA meeting, it was communicated that the HOA was in conversations to acquire the building but talks failed to materialize. The HOA stated they made several attempts to negotiate with DR Horton and raised their offer (undisclosed) multiple times. The HOA stated they felt they had an agreement with DR Horton only to hear back from DR Horton that they received a higher (presumptively) bid.
The sale of the building includes the access road(s) to the clubhouse, the parking stalls located on the East side of Village Green Drive, and East side of the parking lot in front of the community clubhouse. According to the Wasatch Front Regional MLS, the property sold for $490,000.
Draper City APPROVES 20-acre surplus property in SunCrest. Councilmen Bill Colbert, a SunCrest resident, was the only council member voting against it.
After the comments from the few in attendance who spoke during the public comment portion, City council spoke providing a brief history and their comments.
Among the main points:
-This 20-acre parcel is part of a proposed settlement agreement from a lawsuit between David K Mast/DJ Investment Group LLC and Draper City.
-City council explained many proposals went back and forth including different parcels and this parcel is what both parties have agreed in principal to. The other parcels or other alternatives that may have been part of the negotiations were not disclosed. Declaring this parcel as surplus is formality so they can convey this property if they settlement agreement continues to move forward.
– Council explained that this lawsuit has taken massive amounts of time and money. Council explained they could negotiate a settlement agreement or at this point go to a grand jury. Council explained in assessing the potential risk of losing the lawsuit and incurring further costs for the city, this parcel and other terms of the settlement is a better route.
– Councilmen Stenquist made the comment that he feels the City has been 'extorted.'
– City Council explained that in relation to 'what could have been' with the original master agreement, this area would have been houses anyway.
– Improvements to the water system are already underway and will be able to handle this and other privately owned developments.
– Council does not feel like this is setting a future precedence for potential lawsuits or developments by giving away SunCrest land.
– This parcel would belong to the TRSSD.
– Councilmen Colbert has previously noted the 20-acre parcel that was also declared as surplus by the City in 2014 known as the 'Concrete Jungle', would also be included.
– Over 2 years after the purchase from Zions Bank, Draper City recently hired a consultant to develop a master plan for open space.