Utah Real Estate - Being Late to the Party is Good?
It’s been my experience over the years to observe that Utah is behind the times of national trends by about two years. Whether the trend is music, fashion, or whatever else, the time frame is always about two years. The same is true with real estate. 2005 marked the year housing prices really took off in Utah…about two years behind the rest of the country.
Could our coming late to the party actually prevent a major downturn? Just as Utah’s home builders are beginning to feel some pain and time to sale has increased, Government steps in deus ex machina style lowering rates and easing loan standards in a tightening credit landscape. These actions were intended to help the deeply troubled areas of the country avoid disaster. In Utah, it could help us avoid even a pinch of pain.
The Salt Lake Tribune reported yesterday Utah’s job growth has been phenomenal. While the rest of the country saw only a 1.1 percent growth rate for August, Utah’s was 4.5%. Since last year, Utah has created 54,000 jobs.
Is Utah about to face the music for the downturn in housing? After all, 12,000 of those 54k created in the last year were in construction. Department of Workforce Services economists don’t think so -
“Lately, I get asked how the subprime mortgage situation will affect Utah, and the answer seems to be, not much.
“Utah didn’t experience a high usage of this mortgage voodoo, so our exposure to its negativity is limited,” Workforce Services economist Mark Knold said.
About 12,000 construction jobs were created in the 12 months ending in August. That number has been slowly abating but is being offset by gains in other areas, including sectors that are producing high-paying positions.
Good job prospects and comparatively affordable housing put Utah on top of the list for migration from other States.
The robust growth in jobs, coupled with record low unemployment, suggests strongly that large numbers of people are moving to the state to find work. Thredgold said 100,000 people have probably migrated to Utah since 2005. He expects that number to grow by another 30,000 this year.
“They are providing more homes. They are helping to support the strong retail spending that we see going on and the construction of more retail space. We are kind of hitting on all cylinders.”
Utah’s healthy economy should continue to drive demand for housing, despite problems in other parts of the country.
There is a bad side to all this good news. Increased population has its own costs in terms of a lower quality of life, higher traffic and infrastructure burdens. The worst case scenario is so many people move to Utah, unemployment goes up and the State becomes less desirable to live, which pushes down housing and drives away residents. A vicious cycle indeed.
Should that worse case scenario play out, do you know when it will begin? You’ve got it. Two years after the rest of the country sees their own downturn.