Salt Lake's Tribune released an article titled "Utah home sales plunge" on February 14th, 2008.
It starts out by saying that Salt Lake is now caught "in the middle" of the national downturn.
Is this true, or just an attention grabbing headline?
If you read the entire article and not just the headline, you will find the truth buried in there somewhere.
Let's analyze the statistics from the article itself:
The report compared the home sales volume nationwide in the last quarter of 2007 with the same period in 2006.
Remember: This has nothing to do with home prices, just the total number of homes that sold in 4th quarter 2007 compared with 4th quarter 2006. 2006 was one of the most productive years in Salt Lake's real estate history. I don't think there was anyone out there who expected 4th quarter 2007 to beat 4th quarter 2006 in number of homes sold.
There are many reasons that the total number of homes that are actually being SOLD is down. The article goes on to explain.
Lawrence Yun, National Association of Realtors chief economist, blames the nation's lending crisis in great part for the decline in sales.
"The continuing crunch in the jumbo loan market that began in August has disproportionately reduced the number of transactions in higher price ranges," he said in the report. "For buyers who need loans of more than $417,000, mortgage interest rates have been running more than a percentage point higher, and that has been having an obvious impact."
In spite of the fact that the number of higher priced homes has been "disproportionately reduced"
In the Salt Lake area... prices in the fourth quarter were up 2.5 percent to $229,000 compared with the same period in 2006, according to the report.
So, what does this all mean?
The headline is correct, but it isn't all doom and gloom.
Reason presumes that homes needing loans of less than $417,000 are still doing well, in fact, probably better than the 2.5% positive appreciation rate quoted (because the lack of sales in the higher price range skews that number downward).
The article then goes on to mention last week's Forbes.com article naming Salt Lake as the best place to find a good deal on a home.
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