Is the Utah Real Estate Market destined to crash?

By
Real Estate Agent with Boomerang Leads

Utah was one of the bright spots for a weak national real estate economy in '07. While many local areas had price declines, Utah had double digit price appreciation. Three Utah Metro's were in Business Week's top five for highest appreciation for the third quarter. When foreclosures went up throughout the nation, they went down in Utah.

While examining the 2007 Home Sales stats, I  noticed some numbers that seem a bit out of whack. The trend is consistent, but it is especially obvious in Utah County.  While home sales are way down, average prices are still up.  However, the alarming thing is the average price of homes on the market now. Are we headed for the same real estate destiny as California, Nevada, and Arizona? Did real estate investors artifiitially inflate our housing economy? Were builders a little too optimistic in their housing projections? Will new construction homes sit on the market unsold until foreclosure? Or is the Utah economy really healthy enough to handle the large inventory of homes on the market.

Here are the 2007 home sales statistics. I guess we won't really know what will happen until we're at this point next year.

    Number of Houses Sold       
                    # Sold 2006    # Sold 2007    % Change
Utah County        6013              4503    0.25112256777
Salt Lake County    15181         11568    0.237994862
Davis County        4655             3802    0.18324382385
Weber County        4329            3692    0.14714714715
Cache County        1209            1136    0.06038047974

    Average Sold Price               
                        '06 Sold Price    '07 Sold Price    %Change    Ave Price Actives    Difference
Utah County           261396              289144    0.09596602385    414145         0.30182906953
Salt Lake County    269691              295941    0.08870011252    445283          0.33538670913
Davis County         227960              254510    0.10431810145    358584          0.29023603953
Weber County        166663              184612    0.09722553247    288348          0.35975973476
Cache County         182052              197668    0.07900115345    273907         0.27833899827

    Time to Exhaust Existing Inventory       
                       07 Homes Sold    #Actives    # of Months to Exhaust Supply
Utah County            4503               3539    9.4310459694
Salt Lake County    11568               5863    6.0819502075
Davis County         3802                 1930    6.0915307733
Weber County        3692                 1844    5.9934994583
Cache County         1136                 476    5.0281690141
    # of Days on Market       
                      '06 DOM    07 DOM    Active DOM
Utah County          50            51            89
Salt Lake County    32            37            77
Davis County        43             44            82
Weber County        57            51            92
Cache County        71            61            98

 

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Rainmaker
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Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Property Manager
Hi Alan,  What's YOUR gut feeling about the near future of your market.  We, in Wenatchee Washington, are also one of the bright spots and I'm still very bullish with a strong local economy.
Jan 07, 2008 05:31 PM #1
Rainer
250,048
Venturi Realty Group
Albuquerque, NM
Albuquerque's Trusted Real Estate Team

The people there in Utah must ignore the national news...  I wish people in Albuquerque did.

Jan 07, 2008 07:22 PM #2
Ambassador
1,510,452
Renée Donohue~Home Photography
Savvy Home Pix - Allegan, MI
Western Michigan Real Estate Photographer
Alan:  a couple of spots seem to be untouchable and UT and WA (as Carol mentioned) are a couple that I think will be OK.  Mostly because of a more stable economy and less transient population.  What are your thoughts?
Jan 08, 2008 12:07 AM #3
Rainmaker
87,348
Alan Barker
Boomerang Leads - Smithfield, UT

I think my particular area of Cache County will be alright. Our appreciation has been less, and our number of homes on the market is at a normal level. With interest rates as low as they are, housing is still very affordable here.

I do think there will be a big problem selling the high end spec homes statewide.  More than 9 months of inventory in Provo? That's pretty alarming, especially in light of all the mortgage fraud has gone on down there. It was the statistics I saw that inspired me to write the article.

I honestly don't believe that the Utah Market is going to crash, the economy is very healthy. However there are some things out of whack, and part of the huge economic boom was the robust housing market. With that slowing, so is the big money from those jobs. 

 

 

Jan 08, 2008 02:19 AM #4
Anonymous
Brian Armstrong

Alan, great post. I built a spec home that I'm now trying to sell down in UT county and currently have two mortgages. Not that this is saying much, but a year ago or 18 months ago, we probably would have sold it without too many problems. Now, it is a serious chore just to get foot traffic there. Any recommendations?  The location isn't all too convenient, but the home is amazing and the views are hard to beat.

Thanks,

Brian

 

Jan 08, 2008 04:52 PM #5
Rainmaker
87,348
Alan Barker
Boomerang Leads - Smithfield, UT
There was an article today that Utah is among the lowest in the nation in Unemployment.  That's gotta bode well for the housing market. 
Jan 30, 2008 02:02 PM #6
Anonymous
Donna
Brian, where is the home located in Utah? Thinking of moving there and looking for a high end home.  You can contact me at sweetb28@yahoo.com.
Feb 03, 2008 10:26 AM #7
Anonymous
Adam

Donna,

Do your homework, Utah is just starting to its decent.  At least Alan is honest about the possibility of the Utah market crashing.  All the other Realtors are lying through their teeth, telling people that Utah's economy is too strong(these Realtors also built a spec home in Utah county and can't sell it).  ALL the numbers point in the same direction, UTAH REAL ESTATE WILL CRASH.  We are no different than California, Vegas, and Arizona(their economy's were stong too, until all the Construction, Real Estate, and Mortgage jobs hit the wall, and that is exactly what it starting to happer here).

Alan, very good post, but I recommend everyone DO YOUR OWN HOMEWORK, Don't Trust Realtor's.  Buy now and be upside down 15% by Christmas. 

 

May 06, 2008 04:23 PM #8
Anonymous
Wayne

Adam, I just moved here and tend to agree with your perspective so I'm going to rent for a bit to see if the housing market drops.  Perhaps other buyers are deciding to wait also which will only exacerbate the problem.  My company is putting me up in corporate housing while I find a home but I've noticed also that rental homes are fairly expensive.  I'd rather wait and see then buy a home and have it drop 15% over the next few years.  On a $300K house that's nearly $50K, so not a trivial amount for me.

May 23, 2008 11:09 PM #9
Anonymous
van

Very few people posted in this page are doing UTAH real estate business. I don't trust them at all. What kind of skill they have other than selling housing with lying. Lie after lie. Those people made American economic down. Really, what else they can do? In big % of UTAH business are real estate. Really what else they can do more than selling house.

Sep 08, 2008 03:14 AM #10
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