The new construction home market has been in decline for some time now, but it is starting to pickup in a few areas. One of those areas is the Salt Lake Metro area which was named the 6th most active metro area for new construction home permits (source Trulia).

In the third quarter there were 2.64 new home permits per 1,000 existing homes in the Salt Lake Metro area. The two best areas were both in Texas, Houston 3.68 permits and Dallas 3.41 permits.

Those areas are that are now recovering are ones that experienced a combination of a milder recession, and a growing population (both things found in Salt Lake).

Even with this recent recovery, home building levels are still only a fraction of those seen in the mid 2000’s.

Following on from other encouraging Utah business and real estate news, a recent Forbes study says that for the second year running ‘Utah is the No. 1 State for Business and Careers ’.

Fueled by companies like Home Depot, Goldman Sachs and Boeing expanding their presence within the state, Utah is producing strong business growth and a declining unemployment rate. Companies are attracted by Utah’s low energy costs, attractive corporate tax rate and high number of young well educated people.

Technology companies seem to be particularly attracted to the area, with Oracle, Adobe, eBay and Electronic Arts all expanding into Utah over the last few years.

A recent article in the Builder Magazine predicts a bright 2012 for the Salt Lake City Housing Market. They teamed up with Hanley Wood Market Intelligence to produce their list of healthiest housing markets in the United States. The list was compiled using various criteria including the local employment market, population growth, and income growth. The resulting list saw Salt Lake coming in at the 3rd healthiest housing market in the country, with a projected 4.7 percent price increase in 2012.

This data backs up what we have recently been seeing in the housing market, with this years home prices stabilizing, the rental market tightening and the number of home sales greatly increasing. We are certainly busier than we have been for a while, only time will tell if this translates into home price appreciation in 2012.

There were some good pointers in the latest Salt Lake County housing sales data for August 2011. First of all the number of homes sold topped the 1000 mark for the forth month in a row. There were 1,086 homes sold, that’s an increase of 38.52% from Aug 2010, and an increase of 7.12% from last month. The other positive data was the Average Days on Market (amount of time it takes to sell a home), which dropped to 81, the lowest level seen since Mar 2010.

Helping to boost home sales this summer was a rebound in Utah’s job market, which over the past 12 months has added 30,000 new jobs, a nearly 3 percent increase, according to the Utah Department of Workforce Services.

More jobs means more people able / wanting to buy a home.

Total Sales 1,086
Average List Price $226,218
Average Sale Price $219,684
Sale Vs List 97%
Average Sq. Ft. 2,479
Price Per Sq. Feet $89
Days on Market 81

You can read this post about Salt Lake County August 2011 Housing Sales and other posts on my real estate blog.

Good news for Daybreak residents, Kennecott today announced the first Businesses set to occupy Daybreak Utah’s SoDa Row Village Center. They will be:

Black Diamond Gymnastics and Sport Centers – Will provide gymnastics, dance, cheer and martial arts. It also offers the Kids Klub after school enrichment program, off-track camps for kids, birthday parties, special events and an academic preschool and tutoring program.

Tio’s Mexican Restaurant – A local Mexican restaurant with one other location currently open in Murray.

Classic Cleaners – Dry cleaners priding itself on being an environmentally sensitive cleaner. This will be Classic Cleaners third location in the Valley.

Zion’s Bank – No explanation needed for this one.

Guy’s Barbershop – Guy’s Barbershop will open its first location offering haircuts and straight razor shaves in a traditional one-chair shop.

Oopsie Daisy –A children’s boutique offering distinctive children’s clothes, shoes, gifts and furniture.

San Gelato Café – Italian café offering gelato, panini and many other Italian treats.

Looking at the list one of the things I really like, is the lack of chains (with the exception of Zion’s), all the businesses are locally run and operated.

There are a couple of noticeable businesses missing from the list. Rumors were that a brew pub and sports bar was due to be part of the village center. I am not sure how true these rumors were, but I hope that these businesses have not had to be scraped due to Utah’s lack of available liquor licenses. The press release did say that there will be more announcements over the coming weeks, so maybe they will be announced then.

A new report produced by the American Legislative Exchange Council (ALEC) said Utah has the best economic outlook of any U.S. State. The report shows that those states which were eager to increase spending during the good times and have a high tax burden, are now suffering the most and those that controlled their budget are now in the best position to come out of the downturn first.

While Utah came at the top of the list, New York earned the dubious distinction of having the worst economic outlook. Maybe this has something to do with the 137 proposed tax increases currently being considered.

TOP FIVE STATES
1. Utah
2. Colorado
3. Arizona
4. Virginia
5. South Dakota

BOTTOM FIVE STATES
46. New Jersey
47. Maine
48. Rhode Island
49. Vermont
50. New York

The west side of the South Jordan located Daybreak development has always been earmarked for commercial development, and hi-tech companies seem to be sitting up and taking note. Attracted by Daybreak’s fiber optic infrastructure eBay have already announced plans to open a building in Daybreak’s commerce park.

The project to build a ‘next generation’ data center is expected to create around 50 jobs and will be designed with a focus on reducing its environmental impact. These efficiencies will be generated from a number of technologies incorporated into the mechanical and electrical systems of the facility including a water side economizer that uses outside air to cool water versus motorized chillers and variable speed drives
to run fans and chillers on an on-demand basis. Additionally, rainwater will be used to supply the cooling tower and for landscape irrigation.

Also in the news is that eBay plan to close its Vancouver Canada Service Center and increase the number of employees at its Draper Utah facility.

There is now a new Utah State incentive of $6000 dollars for home buyers, but it comes with limitations and in my opinion a major drawback. Unlike other incentives introduced at the federal level, the State incentive is limited to new construction homes. Now this is great if you are looking to buy a new home, but does nothing if you are currently trying to sell your own home. In fact I believe this will have a detrimental effect on the current housing market and here is why.

The reason the Utah housing market is currently suffering is because there are more sellers than buyers. This is a basic rule of economics, whenever there are more buyers than sellers then prices go up, and whenever there are more sellers than buyers, prices go down.

So what will the impact of the new incentive be? I believe it will make matters worse, instead of decreasing the inventory of homes for sale, it may well increase it. That is because when an existing home is sold it usually triggers a chain, person buys home A, whose owner buys home B, whose owner buys home C etc. So one sale, actually results in multiple sales. However, when someone buys a new home there is no chain. In fact it is worse than that, in the current climate builders are reluctant to build spec homes, so when someone buys a new home they have to build a home, which means a new home sale reduces the inventory by zero.

For those that are interested here are some details on the intentive:

The one thing I would say is that if you are interested, unless you close in the next couple of months you will miss out. There are only a limit number of grants available and they are running out fast.

OK so I had a bit of a surprise the other day, I received my stimulus tax rebate check, but it was not for the amount I expected.

The check I received was for $600 and not the expected $1200. Given this, I started to do some digging to try to find out why I was shortchanged. Here are the qualification criteria for the rebate.

- More than $3000 in qualified income.

- Less than $150,000 joint income.

- Net Income Tax Liability more than $600

Now the first two criteria were no problem, so it must be the ‘Net Income Tax Liability’ criterion. After a bit more digging, it turns out that because both my wife and I are self-employed we pay ‘Self-Employment Tax’ and not ‘Income Tax’. While self-employment tax counts towards the Qualified Income criterion, it does not count towards the Net Income Tax Liability. So while we paid several thousand dollars of tax on our income, it was the wrong type of tax.

Can anyone explain why self-employment tax should not qualify, because I am totally baffled. I would image that there an awful lot of upset self-employed people out there at the moment.

These are not my words, they are from a recent article in Forbes Magazine. According to the magazine article, Salt Lake is the sixth most recession proof city in the U.S. This is based on the fact that the city’s unemployment rate is low, that we are still creating jobs and that the housing market remains strong (well at least compared to other cities).

This economic strength may well explain why the Salt Lake housing market is not seeing the large declines like other major cities and that the foreclosure rate, while increasing is relatively small. Even with the number of homes sold decreasing by 40% and days on market increasing by a similar margin, the median sales price still went up in the last quarter. The reason prices have not declined, is that most people don’t have to sell. They have a good job, and are reluctant to lower their price, so their home just sits on the market. This results in a stalmate, with buyers wanting a bargain, and unwilling to pay full price for a home.

A good example of this was an offer recently made for one of our listings. The buyer offered 20% below asking price. The reason for the low-ball offer was that they had relocated here, and had to take a 20% hit on the sale of their home. Because of this, they assume that the Salt Lake Market is going to go down by 20%.