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Salt Lake City update

August 9th, 2006 by Kenric

I talked to my realtor in Salt Lake City a few days ago. I’ve been hearing that the market there is real hot. I asked him to run some comps to give me an idea of the value of my townhomes out there. My realtor said that there are no houses for sale in my subdivision and that I could list for $195k! That’s a potential $50k increase in 12 months (not including realtor fees, closing costs, etc..)

So now my dilemma is, “should I sell?” I am thinking about selling and 1031 exchanging into 2 single family homes in Raleigh, North Carolina. In Raleigh, I’m looking at new construction around $165k-$195k which rents for $1,100. If I 1031 into 2 homes at the low end, I would transfer about $30k down on each one. I would be break even or negative $100-$200 a month. I’m having the same butterflies that I had last year at this time when I bought these two SLC townhomes. But look at how well they worked out for me. Sometimes, I think I should trust my judgement and go for it. My instinct is saying that Raleigh will do well in the next few years.

My gut is telling me that SLC will not continue this massive appreciation. Can people in that city afford a $250k starter townhome? How likely is it that I will see $20-$50k more appreciation in them? Remember, these townhomes were $110k 18 months ago!

Of course on the flip side I know someone from Chicago who bought a townhome in Scottsdale, AZ for $180k and sold for $250k in 6 months in 2004. He said to me, “I’ve gotten 40% appreciation in 6 months, it’s very unlikely that I will get 40% again this year.” I told him not to sell as the market was just heating up. Today that townhome is worth over $600k.

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