Real Estate Still Looks Rosy In Utah, Local Experts Say
With pundits around the country playing Chicken Little when it comes to the national housing market, local economists and real estate experts continue to have a more optimistic outlook for Utah’s market.
“The housing market here locally has been strong and still is strong,” said John Norman, executive director of the Utah Mortgage Lenders Association. “We have the underlying economic foundation for it to be.”
Record low unemployment rates and continued job growth, at a rate of about 4,500 new jobs each month, contribute to a continued need for housing along the Wasatch Front. However, a decrease in sales of existing homes and new building permits show signs that the market is beginning to slow down.
Utah’s housing market remains one of the strongest in the nation, said Gary Wright, a consultant for Ivory Homes, one of Utah’s largest homebuilders. But it has shown “definite signs of weakness” in the past six months. Single family building permits, for example, have decreased 20 percent since January 2006.
The biggest threat to Utah’s market, analysts agree, is affordability. Despite Utah’s strong performing economy, house prices in the state are increasing at least twice as fast as incomes and have, so far, shown no signs of dropping amid decreased sales.
The average price of a house in Salt Lake County is nearing $300,000 — a $110,000 increase over the past four years, according to a recent Wells Fargo analysis. At the same time, Wright said, land prices have gone up 250 percent.
Another blemish on the national housing picture, which has plenty of implications in Utah, is the meltdown in the subprime mortgage market. In the wake of that crisis, lenders have tightened standards, making it more difficult for even those potential homebuyers with good credit to qualify for a home loan.
The subprime market meltdown is “having a large effect on the housing market both nationally and in Utah,” Wright said.