Salt Lake City Real Estate Blog

The number of single family homes sold in Salt Lake County increased for the fourth-straight month. There were 835 homes sold in May, which was an increase of 4.11% over April’s numbers. While the numbers are still way down on last years numbers (in fact year to date they are 37% lower), at least the number of homes sold seems to have stabilized. Even with the increase in the number of homes sold, home prices for properties over $300,000 remain under pressure.

May 2008 - 835
Apr 2008 - 802
Mar 2008 - 765
Feb 2008 - 585
Jan 2008 – 507

Looking forward, as of today there are currently 1415 single-family homes under contract in Salt Lake County. While a good number of these will fall out of contract, the high number suggests that we will build upon May’s numbers and return an increase in homes sold for June 2008.

Home prices for the first quarter 2008 are out, Salt Lake Home Prices. For the first time in a long time, more zip codes went down in value than increased in value. The average home price for Salt Lake County is now $287,119, which is a 0.33% increase from last years average home price of $286,170. That’s not too bad given the rest of the U.S. market. What’s worrying are the days on market and number of homes sold figures. In the first quarter 2008 DOM was 58, that’s an increase of 45% and there were 1820 homes sold, which is a decrease of 42.82%.

If you compare current home prices against the third quarter 2007 (this was the high point in prices), you see a larger decline. The average home price in the third quarter 2007 was $309,876, which means prices have declined 7.34%.

While places like California and Florida saw their home prices decline over the last year, Utah was a different story. Home prices for the fourth quarter 2007 went up 9.27% compared to the same quarter in 2006, which was the largest increase in all 50 states. What’s more, that was the fifth consecutive quarter Utah led the nation in house price appreciation.

At a city level, four out of the top 10 cities were in Utah, Salt Lake City no. 7, Ogden-Clearfield no. 4, Provo-Orem no. 6 and Logan was no. 8.

However, all good things come to an end. The Utah housing market has slowed considerably over the last couple of quarters and the home sales data for the first quarter 2008 is due to show a considerable tightening of the market. The number of homes sold is way down on last year’s numbers, (for example, 687 in Feb 2008 compared to 1,148 in Feb 2007) and the days on market are climbing accordingly.

I have updated our Salt Lake new homes map to incorporate the latest developments and pricing information. This interactive map uses Google Maps functionality to show the location and prices for the major new home builders and developments in Salt Lake County, Davis County, and Utah County. New home prices across the Salt Lake Valley are coming under pressure from the slowdown in the local housing market. Very few builders/developments have increased their prices, with most builders keeping their prices the same or lowering them slightly. Ivory Homes seems to have cut their prices the most, with the majority of developments showing substantial price declines.

The median annual home price information for 2007 is now available at Salt Lake County Home Prices , Utah County Home Prices , and Davis County Home Prices. Home prices went up in the vast majority of zip codes in all 3 counties, but not at the same pace as 2006.

Here is an interesting article in the Utah Business Magazine on why Utah real estate may not suffer the same as Florida, California and most of the rest of the country. It explains that we are now in more of a balanced market with home prices still increasing, and that the strong economic growth is helping limit any downturn in the local real estate market.

It also touches on one of my pet peeves, where local media report on the national real estate market like it is the local market. When people see that home prices are falling in Florida and California of course they are going to get worried, particularly when the report does not explain that the market is not like this in Utah.

The 2nd quarter 2007 home prices are now available for Salt Lake County, Utah County and Davis County. On the surface everything looks OK with the vast majority of zip codes seeing their home prices showing double digit increases compared to prices in the 2nd quarter 2006.

That is until the look at the underlying data. Take the number of homes sold, in June 2007 1,366 homes were sold in Salt Lake County while June 2006 saw 1,931 sales. That’s a drop of nearly 30%.  In Utah County things are the same with 532 home sales in 2007 and 726 in 2006 (a fall of nearly 27%).

OK so maybe fewer people are listing their home and that’s why we have fewer sales? Not so there are actually more homes being listed, in Utah County for June 2007 523 homes were listed for sale and in June 2006 403. For Salt Lake County there were 1041 new listings in June 2007 and in June 2006 881.

So what does this mean? It means we are in a transitional market, going from a very strong sellers market to more of a buyers market. Homes are sitting on the market longer, inventory is increasing and sellers are having to drop their asking price.

Home foreclosures were up 4 basis points from the same time last year. While this is obviously not good news it does need to be put in perspective. Foreclosure rates actually fell in 24 states, and the overall foreclosure rate is still below the 10 year average.

All in all the increase in foreclosures is being driven by just a few states. Florida, Nevada, California and Arizona have seen large increases in foreclosures largely driven by speculators who are seeing home prices stagnate and their ARM rates increase and so they are walking away from the loan.

The other problem states are Ohio, Indiana and Michigan who combined account for nearly 20% of all loans in foreclosure. The problems in these states are due to job losses in the manufacturing sector.

Experts are predicting that the slow housing market will continue through the end of the year and well into next year. Fueled by the subprime problem the number of foreclosures are not expected to peak until next year which will put further pressure on the U.S. real estate market. 

The market in Salt Lake is still very healthy at the low end (under $200) but is slower than last year when you get above that level.

Everyone knows about the subprime issue with the market but I believe another problem will start and rear its ugly head. People living beyond their means. This is where people have been living on the equity within their home, every time they need more money they just cash out more of the equity. But what happens when prices don’t go up? All of a sudden that ready made cash is no longer available, but they still have the same level of expenditure.  They could sell their home and downsize in order to cut their bills, but wait their home is already mortgaged to the max and prices have now gone down so they owe more than it is worth. If they cannot cut their bills then the only option is to foreclose!