2012 SLC housing forecast
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With many signs of life at the end of last year in both Utah employment and home sales, many are wondering whether 2012 will continue to build upon those positive trends.
In a recent presentation to the Salt Lake Board of Realtors, James Wood, director of the University of Utah’s Bureau of Economic and Business Research, provided a forecast for his view of Salt Lake housing in the next year.
In 2011, home sales in Salt Lake County rose for the first time in four years, up about 9 percent over 2010 levels. In 2012, Wood sees a sales gain of 15 percent. He says the higher levels of real estate sales will be supported by the favorable interest rates and housing prices.
The support from the recovery in Utah’s economy will also be helpful. In his report, Wood points out that all major indicators, with the exception of housing, improved in 2011 over 2010 levels. Exports, nonresidential construction, vehicle sales and state tax revenues all had double-digit gains.
The acceleration in job growth will be a major player in the housing market recovery. During the second half of 2011, job growth jumped from around 1.5 percent to the 2.5 percent range. Wood points out that the forecast for 2012 calls for 2.7 percent job growth, which translates into the creation of 33,000 additional jobs. Compared to other states, Utah has the fourth-highest job growth rate in the country.
Eric Belsky, who manages the Joint Center for Housing Studies of Harvard University and who spoke at the event, pointed out that it will be Utah’s job growth that will put the state on track to a stronger recovery than what the U.S. will see during the coming year. Although there are many headwinds that will hold back recovery, there may be a surprise upside, which would be supported by Utah’s job creation.
Wood says the new jobs will help all sectors of the economy expand, and “these conditions will lead to an improvement in home-buyer confidence, which should stimulate housing demand.”
The improved labor market should also release some pent-up demand, according to Wood. People who had been doubling up and postponing marriages and moves may begin to form households and release some of the pent-up demand. Wood says total residential sales in Salt Lake County in 2012 will be about 12,500.
The price side will take a little longer to recover, according to Wood’s report. Prices will face downward pressure during the first half of the year due to foreclosures and short sales. However, Wood says prices should stabilize by the second half of the year. For the year as a whole, Wood is forecasting that the median sales price for a single-family home in Salt Lake County will decline another 3 to 5 percent.
While distressed properties are expected to remain elevated, Utah appears to have already seen the worst of the foreclosure crisis. According to figures from the Mortgage Bankers Association quoted in the report, Utah foreclosures have fallen steadily over the past 18 months. The peak in foreclosures appears to have been during the first quarter of 2010.
“We are on the mend,” Wood said in his presentation to Realtors. “I expect improvement this year. I expect [there will be] no better time to buy.”
While there is still some softness in home prices, Wood points out that homeownership has historically been a good investment for Utahns, despite the performance of recent years. According to data from the Federal Housing Finance Agency, Utah ranked fourth among states in appreciation over a 20-year period from 1991 to 2011.
“As an asset, a home provides a hedge against inflation, tax advantages and forced savings,” Wood said in the report. “Furthermore, once a mortgage is paid off, housing costs are reduced to maintenance and property tax costs.”
Consumers who are interested in learning more about housing conditions in their own areas can contact a local Realtor.
February 3, 2012 | Share: