Admin

Millcreek, Ut - 2021 Real Estate Trends

By
Managing Real Estate Broker with Rindlesbach Homes 5479984-PB00

 

The last two years have been the strangest on record for the housing industry here in Utah. An unprecedented housing boom increased throughout the 1990s and continued into the new millennium, thanks to relaxed credit standards, sinking interest rates, low unemployment and an insufficient housing supply. But signs now point to the impending end of the boom.

 According to The Wall Street Journal with information from the economic consulting firm Economy.com. Home prices have risen nationally three times faster than incomes since the turn of the century, which has made home ownership an impossibility for more Americans than ever before. This is a significant shift from the congruent price and income figures throughout the 1990s boom.

 

These factors have contributed to the difficulty for first-time homebuyers. The demand for homes in turn has slowed, which would point to an eventual slowing or reversal of the rampant price appreciation of the last decade until the market becomes affordable again.

 

The Wall Street Journal quotes Allen Sinai, chief global economist of Decision Economics Inc., a forecasting firm: "I have never seen an asset market -- whether it's stocks or real estate -- that has boomed to excessive prices ... without a serious downturn. I really doubt we will escape" without price corrections in some cities, he says. "Asset prices don't go straight up forever."

 

 Home sales are still headed for another record year, and low interest rates alone could prop up the market as long as they last.

 

The current boom was thanks to major changes in the mortgage business over the last ten years, including the growth of Fannie Mae. Along the way, lenders began using computerized loan-approval systems that make it cheaper to process mortgages and easier to identify at-risk borrowers that deserve credit. Also with the lower interest rates purchasers have been able to qualify for a larger home and higher prices.

 

Low interest rates are the only continuing positive trend of the housing market. Low rates average now less than 4 percent for 30-year fixed-rate loans, the lowest since the 1960s. Prices could take a major turn if rates begin to go up again.

 

Real-estate analysts believe that if the housing market stalls, some areas will continue to grow modestly while other markets gradually go soft, rather than pop. That's because unlike stockholders, homeowners don't normally panic when trouble strikes, and a house is a tangible asset that provides a place to live.

 

. Home-price gains remain fairly constant with incomes in many cities, including Salt Lak City