What's good about Utah real estate
Categories: None | Tags: None
About a year ago, an economist was talking to a group of industry insiders about the annual forecast for real estate. While he cautioned there was still a bumpy road ahead, he said we’d feel much better about the housing situation in a year’s time.
Well, a year has passed, and his statement appears to be true. The real estate market has made many strides over the past year as demand for homes has picked up, inventory has come down from highly elevated levels and foreclosures have dropped.
As we head into 2012, here's a recap of last year’s highlights and explain why they are meaningful for the coming months.
Utah housing market indicators are strengthening
Even though the Utah Association of Realtors has yet to release its December statistics, I think it’s safe to say 2011 will have been a stronger year for home sales than 2010. For the 12 months ending in November, home sales were up about 7 percent compared to the previous 12 months. Since January, Utah Realtors’ sales increased about 8 percent.
Inventory has also fallen over the past year and is at its lowest point since April 2007. It would now take just under 8 months to absorb all of the homes on the market.
While prices fell about 8 percent for the 12 months ending in November, this boost in sales, combined with our significant inventory declines, is a prerequisite to price improvements.
And those improvements may happen relatively quickly. Fiserv Case-Shiller says by summer Utah home prices will have increased 2 percent.
Foreclosures have declined
Of course, new foreclosures could continue to put pressure on home prices. Fortunately, the foreclosures situation has eased over the past year.
In November, Utah had the 13th lowest percentage of non-current loans compared to other states, according to data from Lender Processing Services. Utah’s percentage of non-current mortgages (including foreclosures and delinquencies) fell 12.4 percent from last year. Utah had 8.8 percent of loans that were non-current versus 12.3 percent for the U.S.
Affordability remains high
The combination of lower home prices and 4 percent interest rates has boosted housing affordability while the costs of renting have increased.
In the third quarter in Salt Lake, 79 percent of all homes sold were affordable to a family making the median income, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index. That’s up from last year when 74 percent of homes sold were affordable.
The only time local affordability has been higher was in 1993, when the index exceeded 80.
Mortgage rates also had a historic year. At an annual average of 4.45 percent, interest rates on 30-year fixed-rate mortgages were at their lowest point in history, according to Freddie Mac, which has tracked them since 1971. The company is forecasting that rates will remain near records lows at least through the first half of this year.
Utah is creating jobs
Utah’s improved employment situation is also helping housing. In November, Utah job growth was up 2.5 percent, compared to a 1.2 percent gain nationally, according to the Utah Department of Workforce Services. For the 12 months ending in November, Utah’s economy created 30,300 jobs.
Utah’s unemployment rate also fell, according to DWS. In November, it was 6.4 percent compared to unemployment of 7 percent last month and 7.6 percent a year ago. Nationally, the unemployment rate is 8.6 percent.
According to DWS, “the employment rebound appears on firm footing as the economy moves into 2012.”
In fact, Forbes magazine ranked Utah No. 6 on its list of “The Best States for Jobs,” which was published in December. Forbes also said Utah was the “Best State for Business and Careers” in November.
This combination of improving indicators is generating much optimism for the year ahead. However, the market remains complex so buyers and sellers will want to work with a professional Realtor as they evaluate potential opportunities.
February 3, 2012 | Share: