Utah home prices are on fire

From this morning's Salt Lake Tribune:

Utah's home price appreciation, the worst in the country just three years ago, is now the best nationwide.

Home prices statewide rose 17.6 percent from the fourth quarter of 2005 to the same quarter of 2006, according to a report released Tuesday by the Office of Federal Housing Enterprise Oversight, a government agency that tracks housing values.

Nationally, home prices rose only 5.9 percent during that time period, reflecting the downturn seen in cities that have experienced a rapid run-up in prices in recent years. Meanwhile, housing prices in all of Utah's major metropolitan areas posted major gains in the past year.

The Provo-Orem metropolitan area had the third-highest
appreciation among 282 cities in the survey, with a 19.9 percent increase in home values. Salt Lake City was No. 4, with a 19.8 percent increase. Ogden-Clearfield was No. 14, with a 15.3 percent increase. St. George was No. 28, with appreciation of 12.3 percent, with Logan a distant No. 94, with an increase of 7.3 percent.

The increases over the past year alone have made it increasingly difficult to find homes - or condominiums - in the Salt Lake Valley that sell for less than $200,000.

In Salt Lake County, median selling prices are $225,000, according to 2006 data from the Salt Lake Board of Realtors. Utah County's median is $212,900, followed by Davis County ($197,500.)

The most affordable areas are Weber County, where the median selling price is $144,975, and Tooele County ($161,000.)

Strong home value gains in Utah undoubtedly have made it more difficult for some families, especially those with low and moderate incomes, to buy their first home now. But many other families have benefited from the home-price increases - especially those who purchased their properties several years ago.

Carine Henderson, of Salt Lake City, is one who plans to profit from her good timing. She and her husband purchased a three-bedroom, two-bath condominium in downtown Salt Lake City for $117,000 three years ago. "A neighbor of mine just sold a unit like ours for $220,000," said Henderson.

The condo is just blocks away from Howa Capital's planned mixed-use development along 300 West between 500 North and 600 North that will include an 80-unit condo and town-home development with prices in the $300,000s to high $600,000s. And Henderson expects the relatively high prices in that development to boost hers.

The Wasatch Front housing market last peaked in the early to mid-1990s, when home sales, buoyed by the state's strong economy and job growth, rose dramatically and values increased by a larger margin than any other state. By the late-1990s, though, the market had slowed considerably, and in the years that followed, housing values in many areas of the state barely budged or increased only slightly.

By 2005, home prices began to climb once again as Utah's economy began to boom. Much of Utah's current real estate boom has to do with the state's strong job market, said Andrew Leventis, economist with Office of Federal Housing Enterprise Oversight. Job growth in the state, among the highest nationally, is expected to continue strong through this year and next.

"Employment and house prices are closely linked," Leventis said.

Another factor in Utah's favor is affordability.

Utahns struggling to afford a home may think otherwise, but Utah still has "fairly affordable housing," Leventis said.


OneHungMan said...

Where did Indiana rank, a couple of years ago, it was last only to Texas (50th out of 51 states, plus DC). Impressive.

Reach Upward said...

So, you are saying that Utah's recent rapid rise is somewhat due to the market playing catch up to the rest of the nation? That sounds reasonable.

Sometimes I wonder how my kids are ever going to be able to afford a home. But then I remember that my parents were wondering the same thing back in the 70s.

That One Guy said...

As I've noted elsewhere from time to time, the run-up in Utah's home prices is PRIMARILY fueled by our local economy: Lowest unemployment rates in the country, signals a rise in wages, and consumer confidence.

This has always been the missing link in other real estate appreciation areas, like California.

Their problems arose when real estate started to appreciate at an astonishing rate, without any support whatsoever in job growth or wage growth. It was total speculation. Which always ends badly. The first speculators are always smart; the last ones are always losers. And the ratio is 10:90.

Not so here - at least not yet.