Housing starts post biggest gain since September 1997
MSNBC News Services

WASHINGTON - Home construction rose strongly last month, marking a recovery from a weather-induced November slowdown. U.S. housing starts climbed 10.9 percent in December, the biggest jump in more than seven years, as groundbreaking activity increased across the nation.

The Commerce Department reported housing starts rose to a seasonally adjusted annual rate of 2.004 million units in December from an upwardly revised 1.807 million pace a month earlier. That was the largest one-month gain since an 11.2 percent increase in September 1997.

For the full year, housing starts rose 5.7 percent to 1.953 million. That is the slowest rate of increase since 2.2 percent in 2001.

Low mortgage lending rates, which averaged 5.8 percent in 2004 according to Freddie Mac economists, have been supporting the housing sector despite short-term interest rate increases by the U.S. Federal Reserve.

Permits for future groundbreaking, an indicator of builder confidence, fell 0.3 percent to a 2.021 million unit pace. For 2004 as a whole, permits were up 6.8 percent to 2.018 million units.

The Commerce Department said housing starts increased 18.8 percent in the Midwest, 10.6 percent in the South, 7.9 percent in the West and 5.7 percent in the Northeast in December.

Q: I am about to shop the mortgage market. Can you give me a handy list of the mistakes I need to avoid?

A: Here are some of the worst.
Select The Loan Provider Offering The Best Price Over The Telephone Or In The Newspaper

If you cast a wide net, you are bound to find a rogue who will beat all the other prices, but has neither the capacity nor the intention of delivering such prices. His objective is to rope you in and move the process along until it is too late for you to back out. At that point, he raises the price using any of a dozen tricks available for that purpose.

Remember: Because the market is constantly changing, you can't hold a broker or lender to a price quote until you lock the prices. A lock is the lender's agreement guaranteeing the prices.

Assume That You Can Shop Lender A Today And Lender B Tomorrow

Because of market volatility, prices obtained on different days are not comparable. Unless you shop all sources on the same day, you are wasting your time.

Solicit Price Information Without Providing All The Information About Your Loan That May Affect The Price

Prices vary with numerous borrower, property and transaction characteristics that lenders believe affect their risk and cost. These include loan size, credit rating, type of house, your ability to document income and assets, etc.

Unless informed to the contrary, lenders quoting prices assume a set of standard specifications that generates the lowest price. If the specs on your loan differ at all, the price will be higher.

For example, lenders assume you are purchasing a single-family house as your permanent residence. If in fact you are buying a condo, or the house is intended as a second home, expect to pay more.

Accept a Mortgage Broker's Verbal Assurance That You Have Been Locked With The Lender

Some brokers tell the borrower the price has been locked, but don't lock with the lender. If interests rates don't rise between the supposed lock date and the closing date, the broker makes an extra profit. If interest rates spike during that period, which is unlikely but always possible, you're left holding the bag.

Don't be afraid to ask for written confirmation of the rate lock.

Allow The Price To Float Without An Agreement With The Loan Provider Regarding How The Price Will Be Determined At Closing

Some borrowers elect to allow the price to "float" -- change with the market -- until shortly before closing. Such borrowers are told they will receive the "market price" at the time they lock. Few loan providers, however, explain how the market price is determined.

The market price at closing should be the price available if the loan were delivered immediately. This is also the price quoted to new customers electing to float on the day you lock. Because the lock price is always higher than the float price, floating should save you money if interest rates don't rise.

The reality, however, is that in the absence of an agreement to the contrary, the market price at closing is what the loan provider says it is. And many say that it is the 30 or 45-day lock price, rather than the float price.

Assume That The Loan Provider Who Offers The Best Price On One Type Of Loan Will Also Have The Best Price On Another

It is common for borrowers to shop the loan they think they want, then change their mind later in the process. For example:

*They begin thinking they want a fixed-rate loan, then switch to an adjustable.
*They begin thinking they want a 30-year term, then switch to 15-years.
*They begin thinking they want a zero-point loan, then switch to 3 points.

Such switches may invalidate their shopping because the loan provider with the best price in one loan category may not have the best price in another.

One way to avoid this mistake is to retain an Upfront Mortgage Broker (UMB) to shop for you.

Jack Guttentag is Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania.

Economist: Easing oil prices were a factor, and "all of this spells a good start to the new year"
By Bob Mims
The Salt Lake Tribune
Salt Lake Tribune

Utah's unemployment rate fell to 4.6 percent last month, a 1.1 percentage point decline from January 2004.

Mark Knold, Utah Department of Workforce Services senior economist, reported Tuesday that 54,500 Utahns were without jobs in January, a sharp decline from 68,100 a year earlier. Even better: Utah employers added 35,500 jobs last month compared with January 2004 for a job-growth rate of 3.3 percent.

The increase of new jobs will only help our local real estate market. As more and more business come from out of state, more people will want to move hear which in turn helps our market grow.'Scott Robbins…Greatscottutah.com'

Knold speculated that easing oil prices were a factor in improved hiring levels in every sector of the economy.

"After a bit of an energy-price-run-up pause at the end of 2004, current lower energy prices have released that negative psychology, and businesses seem to have responded quickly," he said. "Construction is really doing well right now [and] even the manufacturing sector is getting into the act. It has added over 4,000 new jobs over the past year."

Indeed, all industrial sectors have added new jobs over the past year. Six of 11 sectors added more than 4,000 new jobs each.

Knold's conclusion: "All of this spells a good start to the new year."

Nationally, more than 2.2 million new jobs were added since January 2004, a 1.7 percent growth rate.

"We are seeing the strongest job growth in Utah in six years, if you look at the last 12 months [for comparison]," said Jeff Thredgold, an economic consultant to Zions Bank. "If you want to talk about a diversified, well-balanced economy, that appears to be where we are going now."

In Utah, the most new jobs - 6,200 - have developed in the trade, transportation, and utilities sector, with more than half in the retail trade sector. The trucking industry also is expanding, adding over 700 new jobs. A recent job vacancy survey released by the Department of Workforce Services shows that truck drivers are in demand across the state.

The professional and business services sector added 5,100 year-over jobs, construction 5,000.

Construction rode high into the new year thanks to low mortgage interest rates that allowed thousands of Utahns to buy their first homes.

Other home buyers found the favorable financing a means to move up to better digs, Thredgold said.

"The housing market continues to do well, tied to extraordinarily attractive mortgage rates," he said.

Abundant and early snowfall also boosted the ski industry to a strong start this year. Knold said the leisure and hospitality industry is seeing year-over employment gains of around 4,700 jobs.

Education and health services have added 4,500 year-over positions, though the health care sector faces a shortage of nurses statewide.

Manufacturing has added 4,400 new jobs over the past year, while government - primarily the education sector - has added 2,300 slots.
bmims@sltrib.com

Utah communication sector stalls, but construction sees rise
By Glen Warchol
The Salt Lake Tribune

Utah added 30,700 new jobs to its economy in December, compared with a year earlier, for a job growth rate of 2.8 percent.

The numbers suggest job growth is moderating, the Utah Department of Workforce Services said.

State economist Michael Hanni said job growth previously had been holding steady at about 3 percent a month.

He attributed the slight slowing to a hiring stall in the sector that includes telecommunications, cable, Internet and broadcasting.

The state's December unemployment rate was 4.4 percent, a number that means 53,700 Utahns were unemployed last month. The rate compares with 4.6 percent in November and 5.3 percent in December 2003.

Still several economic sectors, notably construction, saw a healthy burst of hiring in December that should continue through 2005.

Job growth in the construction industry reached 7 percent, according to the report. The state recorded 73,700 jobs in construction, a gain of nearly 5,000 compared with December 2003. The seasonal peak of construction hiring came in August when hiring hit 78,000 workers.

Contractors president Rich Thorn. "And that trend looks like it will continue."

Several factors, including highway spending bills at the Legislature, will generate construction jobs beginning this spring, he said. And flood damage this month in the St. George area will have to be repaired. "The tragedy in southern Utah will mean a significant influx of construction work."

Appreciation: The Utah real estate market has inched up to No. 37
By Lesley Mitchell
The Salt Lake Tribune
Salt Lake Tribune

After years of having one of the nation's weakest real estate markets, Utah no longer trails most other states in home price appreciation.

The selling price of Utah homes rose nearly 5.3 percent in the last quarter of 2004 compared with the same quarter a year earlier, ranking the state No. 37 among all states in appreciation, according to a report released Tuesday by the Office of Federal Housing Enterprise Oversight.

The highest increase was in Nevada, where home prices rose 32.4 percent during the same time period. Indiana was last with appreciation of 3.7 percent.

Utah's ranking is well below the national average of 11.2 percent, but it is a marked improvement from its position at or near the bottom of the list, where Utah has lingered for years even as the nation's housing markets have heated up.

"The real estate market along the Wasatch Front right now is hot," said Midvale Realtor Jaren Davis, president of the Utah Association of Realtors. "I tell people it's a good time to buy because you'll see some good appreciation over the next five to 10 years."

Davis said home prices in all the most populated areas of the state - Park City, St. George and the Wasatch Front - are rising after years of little or no change.

Salt Lake City economist Jeff Thredgold predicts appreciation along the Wasatch Front will average 7 percent to 10 percent this year. He believes owners of homes valued above $250,000 - who especially have seen little if any appreciation over the past several years - will see significant gains in the coming years.

Stronger job growth is one factor that will lead to gains, said Thredgold, a consultant to Zions Bank. Another factor is the affordability of Utah real estate compared with surrounding states.

"There is growing recognition that Utah's real estate is dirt cheap compared with Las Vegas and much of California and Colorado," Thredgold said.

Bountiful Realtor Sharon Spratley said another factor driving appreciation in Utah has been low interest rates, which give buyers more purchasing power. Although mortgage rates are expected to increase in the coming years, many economists say mortgages are expected to remain affordable.

The Office of Federal Housing Enterprise Oversight, created to oversee the safety and soundness of mortgage funds providers Fannie Mae and Freddie Mac, tracks appreciation by measuring price changes of individual properties as they are sold and refinanced over the years. Many economists consider this method of determining appreciation to be more accurate than other methods.

While Utah's appreciation trailed most other states in recent years, in the early to mid-1990s, the state led the country in home-price increases as Utah's economy thrived and substantial numbers of people moved to the state.

But in the late 1990s, Utah's economy slowed, thousands of people lost jobs in corporate layoffs and fewer people moved to Utah. As a result, appreciation also slowed and in some neighborhoods stopped altogether.

While Utah's real estate market is improving, it still is surrounded by states with much higher appreciation. Nevada is No. 1 with 32.4 percent appreciation, followed by Arizona (No. 10, 14.5 percent); Wyoming (No. 17, 11 percent) and Idaho (No. 22, 10.3 percent). Colorado trails Utah. Ranked No. 47, Colorado had appreciation of only 4.18 percent over the past year.

Among metropolitan areas, Salt Lake City and Ogden also are no longer at the bottom of the list of 265 communities ranked by the federal agency. The Ogden-Clearfield area is ranked No. 238 among 265 metropolitan areas nationwide, with appreciation of 3.2 percent from the fourth quarter of 2003 to the same period in 2004. Salt Lake City scored better, at No. 156, with appreciation of 5.6 percent. Provo-Orem, however, was ranked No. 241 with appreciation of 3.1 percent.
lesley@sltrib.com