Friday, February 29, 2008

Utah Real Estate Market

Utah Real Estate

I used to report that Utah Home sales were the last frontier where huge home appreciation rates were not experienced yet, such that lots of investors and home buyers could come and make a go of it. Well, along with that I think that the 'Wasatch mountain range' really did have a 'shield affect' for lots of Utah from a lot of this yo-yo like market the rest of the nation has been experienceing. Even now, they hold off as 'conservative' with housing prices being held down along with the rest of the nation. When I heard that Utah boasted one of the better appreciation rates I decided to try and do some research. But the following information taken from the Desert Morning News, Feb. 15, 2008, left me really a wondering about that.



Sales of existing homes in Utah dropped 33.8 percent in the fourth quarter of 2007, compared to the fourth-quarter of 2006, mirroring decreases in much of the rest of the nation, according to a report released Thursday by the National Association of Realtors.

The median sale price of existing homes in the Salt Lake City area also showed a drop at the end of 2007. While sale prices for the year were up 2.5 percent overall, they decreased 7.13 percent from the third quarter to the fourth quarter of 2007.

The median sale price of a home in the Salt Lake area in the fourth quarter was $229,100, down from a median sale price of $246,700 in the third quarter.

Utah Association of Realtors president Dave Mansell said even though sales are down, there is still cautious demand in the marketplace in Utah. "People are holding back because they're afraid the market is going to fall on its face," he said. "They're hearing Florida, California and Las Vegas are seeing these huge drops in prices, and they think it's coming here."

But Utah will likely avoid major problems, he said, because the state's economy is strong and the housing market has not been vulnerable in the ways other areas have been.

"Historically, we haven't had the same market swings," he said. "We don't go up as fast, and we don't fall as fast or as far, so it's much more stable." Sales of existing homes fell in 45 states during the October-December quarter, with metropolitan areas showing growing weakness, the national report said. The fourth-quarter data from the National Association of Realtors underscore the breadth of the housing market's slump.

Prices have fallen more than 10 percent since their July 2006 peak, in the worst U.S. housing slump in 26 years, as the number of unsold homes has grown and prospective homeowners have had a tougher time getting home loans.


Global Factors - U.S. Housing Demand

There are a few looming factors that in paraphrasing Chief Economists of NAR, will make it just a matter of time before the housing market becomes an engine for the economy, rather than a drag for the economy. First off interest rates were dramatically cut in January by the Federal Reserve. Also, home prices are projected to stay lower. Secondly, the job growth has far outperformed housing. Typically we will see one new buyer for every 2 new jobs created, but that has not been the case for some time. So, with home prices being down and job growth having been high, new buyers have the wherewithal to buy. The guess is that they are waiting for rates and housing prices to fall even more. Another third major factor mounting demand, would be the increase in population numbers that will help fuel more new construction and even resale demand.

St George Real Estate

The local Southern Utah real estate scene has some complex factors weighing in on the scene. One, we used to have a lot of Californians and Las Vegas buyers and that segment has all but wained. When you take such a major segment away and when you still have some persistence in home values, with not too much drop being experienced along with all the Short Sales, one begins to wonder if the illustrious appeal from the immigration doesn't just generalize to a broader spectrum from the entire U.S. and to the more northern region of Utah as well as into the state of Idaho. Retirees, both from the northern regions (too cold up there) and south, are contributing as well.

The areas homogeny contains a large mix of Mormon or LDS population in those more localized Utah and southern Idaho regions and this contributes at least in a moderate flow of immigration to this area. But the attraction to the area is much more diverse now with the the intrinsic appeal of being geographically centrally located, in the mild climate area and more accessible to both the north and south mid-west. Also appealing is the geologic red rock formations and general sandstone color mystique of the area, boasting Zion National Park and Snow Canyon State Park, a stones throw away- this doesn't hurt the matter any.

This is to mention that the area is becoming much more homogenized with influx from all various parts of the country. We at SoUtah.com believe that these factors all add up for a quick one to one-and-a-half year turn around of the market to normal appreciation rates from 6 to 9% again. In the mean time, many smart buyers will have found a niche property or two for investment or retirement ends. We also project that values, although maybe dropping marginally, will maintain mostly at flat levels or will not extend to be a huge drop, and in the main price range under 300K may turn sooner vs. later to actual appreciation of home values once again.

St George real estate is always going to fall victim, as in 'the new decade holder for being the fastest growing micro-macropolitan area in the nation', to the mere fact of location, location, location. We haven't even began to talk retiree dialect. Some have asked, when stumbling onto St George, Utah, 'Why in the heck would I retire in the desert when I can have the best of that weather and of the more scenic country side, along with more things to do, not to mention the solid family and community values one gets a sense of, when living here. Also, combine that with the quaint artsy-ness of the place and the culture that is here? Along the main I-15, blink and you miss it, just like life! Soon and all the kids will be out of the nest for me (5 kids, oldest is 12)- check out your St George Realtor. Pretty much this is also the only place you can go for a quick search of St George Utah Retirement Communities.

1 comment:

YUMMYTORK said...

Hey Brian,
I agree, St. George seems to be drying up, so to speak, and no pun intended. Hope you don't mind me making a little plug for my utah real estate listings since we are more in northern utah. I actually read your blog frequently and point some of my contacts to read it as well. Thanks. Adam