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Show Sunday. March Bu siness 8, 1987 THE HERALD. Provo, Utah. - Page 21 mi What is happening in the stock markets and the business world. ES TA TE to sell n Ml 1 M fL 1 ff 1CP f MT i SB As the real estate market reels from the dual blows of severe overbuilding and the effects of tax reform legislation, buyers will turn to retail and industrial space investments rather than office buildings in 1987. Owners will also rely on intelligent, creative management of their properties to ensure a good return on their investments. These are the opinions of real estate and asset management specialists writing in the January February issue of the Journal of Property Management. The biggest problem facing the real estate market today is the tremendous surplus of office space, which has led to skyrocketing varents and cancies, below-markdeclining property values in many of the nation's major markets. "All of this should result in a very loud signal to the capital markets saying. "Stop the money flow: we have enough office buildings,"" said Blake Eagle, senior vice president of Frank Russell Company, Tacoma, Wash. He said retail space, which is driven by supply and demand, and industrial devleopments, which are still doing well overall, will perform well for investors in the future. The recently-passeTax Reform Act will have an immediate impact on real estate, according to the authors. The legislation will initially reduce property values and cause a dramatic drop in particularly in the e area of housing, which relied almost entirely on benefits to make construction feasible. "Tax reform and supplydemand imbalance will result in somewhat lower short-terprices for all real W Scattered through(API out Houston, some clumped together in nearly desolate subdivisions built in boom years, stand thousands of foreclosed homes, signs of the times. Hardly any section of the country's fourth-largecity remains immune to foreclosures, but especially hard hit are some outlying subdivisions built in the early 1980s. "There are so many vacant houses here." said Bennie Wyatt, who lives in VVesthollow Village, a development west of downtown Houston. "They start lookHOUSTON st chairman of the Center tor Real Estate and Urban Economics and a professor at UC Berkeley. However, the overt' U etfect of the tax bill will be positive, he said. "Real estate devleopment should always have been based on sound economic demand," he said. "Tax benefits are nice, but where they trashed out." "For Sale" signs stand in front of home after home in his area and others. ing Weeds have taken over some lawns. Combined totals from the two Harris County auctions held this year showed 5.406 foreclosures, compared to 3.551 for the first two monthly auctions last year. In 1986. 26.919 properties were" tore- - were excessive, they caused abuse." V V. - if"''-- Mil l 1 P m y Nationally, sales of previously owned single-famil- y homes dropped 14.5 percent from December to January, according to National Association of Realtors statistics. However, the December rate was the highest since November 1978. The drop reflected more of a rush by buyers and sellers to close deals before the year's end to qualify for the advantageous tax savings that applied to property transactions in 17 closed,, according to statistics released by Baca Publications, a Houston firm that charts monthly foreclosures in the county. That's nearly triple the 1984 figure, of 9,075 properties, according to Baca. Of last year's foreclosures, only about 1.700 properties were commerical. said J. Reid McTaggart, market analyst for Baca Publications. "There are some areas that could become slums," McTaggart said. "It may not be slums as we think of it. but it is." Lower-incom- e families are moving into some areas initially designed and inhabited by people with more money to spend on their homes and the surrounding community, he said. Vandalism is another problem in neighborhoods where homes are vacant. Thieves have stolen appliances trom some unoccupied houses. ome buyers want a The number of home buyers opting for conventional fixed-rat- e mortgate loans to finance their purchases moved higher in 1986, reports Chicago Title Insurance Co. in its 11th annual survey of recent home buyers. The company's annual survey, which tracks home buying trends in major metropolitan housing markets nationwide, reveals that 73.3 percent of all home buyers fiused conventional fixed-rat- e nancing last year compared with 64.2 percent IP&rf par 1986. .1 . "The drop in January is not surprising, considering that a significant portion of December's pace was made up of sellers seeking to get favorable capital gains treatment under the old tax laws," said NAR chief economist John Tuccillo. He noted tha January's decreased activity is not indicative of a permanent market slowdown. "We regard the January figure of about 3.5 million with optimism. We're looking at it as a signal of a healthy level of sales," Tuccillo said. "Sales are up from January 1986, so we are getting off to a better start this year, which I think is a good indication of where sales are headed," said 1987 NAR president William Moore. "With mortgage interest rates staying low, 1987 ought to be a great year for the residential near-recor- d market." A familiar sign of the times. fixed-rat- e in 1985. When mortgage er, as they did rates trend lowlast year, the normal expectation is that home buyers will seek to "lock in" the lower rates with fixed-rat- e loans, said John Ptister, vice president of The national average effective interest rate, including discount points paid at closing, for loans on existing homes was 9.62 percent in January. Rates have not been lower in about nine years. mortgage market research for the national title insurer. Pfister says lower rates in 1986 reduced the average monthly mortgage payment to $852 irom'$896 in 1985. The average monthly mortgage payment as a percentage of family income moved below 30 percent for the first time in several years, he adds. The Chicago Title study further length of mortgage loans increased in 1986. from 28.3 years to 28.7 years. reveals that the average Choosing a Realtor can he as difficult as choosing a house - J .v Everj'body knows if you're in the market, now is the time to buy a home. However, for the first-tim- e buyer, that assignment is about as easy as filling out the new W-- 4 tax form. "Some prospective buyers tend to start shopping with no Inkling of what they want, need or can afford," said Mary Wheeler, president of the Utah County Board of Realtors. "House hunting should not be a whimsical or Impulsive way to fill an idle weekend. Before you even start to look, think carefully and decide exactly what you want." Wheeler has several suggestions for those plunging into the home-buyer- s tl market. "Narrowing down your preferences will enable a real estate agent to serve you more proficiently. You will be shown properties in which you are seriously interested. Viewing places you have no Intention of buying only wastes time. "Price Iknnli fttlmoa I'knia execatlve vice president of the 'Hah County Board of Realtor!, la explain the importance of uilng qualified help A. J. Micbaeli, Hilt Tough times in Houston estate,'' said Kenneth Rosen, s- m jWr A d Several other important social issues will affect real estate development in the near future, including an increasing immigrant population (especially in the West and Southwest), the availability of fresh water, and the rapidly growing elderly population. According to Rosen, the current surplus of office space should be absorbed within the next live to seven years, allowing developers to begin new projects. m w bouse-buntin- g. is equally important. Familiar ize yourself with price ranges for types ot units apcaling to you. Discuss you financial situation honestly with a real estate agent before you start your search. "You may be able to afford more than you imagined; the current low inters! rates have placed homeownership at its most affordable point in almost nine years. However, if you find your preferences are beyond your budget, don't be discouraged. Be willing to consider alternatives you can afford," Wheeler said. The selection of a real estate agent is g another Important clement of the process. It's difficult to know just who you can trust, though. A. J. Michaels, executive vice president of the Utah County Board of Realtors, says choosing a realtor is akin to choosing a doctor or a lawyer. . "Look for someone with integrity. Ask this what can he do for you.' Michaels said. The Realtor should maintain a good rapport with his clients, understand their needs and show them houses they like. Michaels said. The majority of real estate agents In Utah County subscribe to the Board of Realtors. Realtors s'gn a statement adcode of ethics, hering to a above the requirement of the law, theo home-shoppin- retically guaranteeing the customer a fair shake. In Utah a normal real estate licensee completes 90 hours of classroom schooling, passes a slate examination and places his license with a broker. To become a member of the Board of Realtors, the licensee has to go before a membership committee and receive their approval, plus agree to uphold the code of ethics. Michaels enumerates the advantages realtor: of working with a d "There's the professional distinction. education Plus Realtors have an process. Realtors must give equal opportunity to all their clients. And they provide the multiple listing service which gives the client exposure to more homes." ibcr does not Meanwhile, the have to pay fees to the board nor subscribe to the code of ethics. Michaels nun-subs- said neither of these advantages turns out to be a plus for the client. "Choose an agent that you like and someone who you want to work with," Michaels said. |