Dust off the ARM’s
In 2013 the median mortgage payment for Salt Lake County was $1,299. In 2018 the median mortgage payment is $2,014 which represents a 36% increase in the base cost to own a single family home or condominium. Between 2013 and 2018 Utah’s population grew by 263,178 people. I largely attribute this migration into Utah to the tech industry moving into Utah County like a herd of gazelles running from a hungry lion, aka California Government. When a few sectors flourish, other sectors like professional business services and hospitality follow—this is the longest expansion Utah has enjoyed. Our builders and developers could not keep pace with the migration to Utah and this caused home prices to explode. One home builders comment in a survey is, “we’ve reached an emotional threshold to pricing.” When prices grow this rapidly and borrowing decreases because of affordability the mortgage industry responds by dusting off old products like the 2-1 Buy-down Adjustable Rate Mortgage (ARM). The idea behind the 2-1 ARM is to jump start the mortgage industry while household income catches up with the median mortgage payment. The desire to own a home is still there but too many folks can’t afford it, so the mortgage industry creates ways to make homes more affordable. If your income is likely to increase in the coming years and you want to get out of that town home or apartment and into a single family home this product might work for you. If you’re curious about selling real estate that you own but are not committed yet, you might enjoy learning how I think this news influences my housing forecast in the coming years. My housing forecast may help shape your choice to sell or keep the real estate you own.
Destiny Real Estate