Utah Real Estate - Third Quarter Reveals Some Pain
Third quarter numbers are out for Utah’s real estate market and they aren’t pretty. I previously reported that volume was down, but the average sales price held up pretty well.
The new numbers reflect median sales prices which turned out to be 50% lower than the average.
Selling prices in Salt Lake County were up 5.4 percent in the third quarter, to $253,000, compared with the same period in 2006. Prices in Davis County were up 9.7 percent, to $230,500, with Utah County increasing 8.1 percent, to $241,000.
Having gains is still better than many other areas of the country, but it’s clear the market psychology in Utah has changed. How long this will last is yet to be determined.
News reports, lower access to loans and highly publicized cases of mortgage
fraud have buyers holding back while record numbers of homeowners are putting their homes up for sale. Now that we’re headed into the slowest real estate season of the year, I don’t see things picking up, though last year’s fourth quarter outpaced the previous one in appreciation gains.
Is Utah destined to become like California and Nevada in terms of a downturn? I don’t think so. Like many others, I simply see the market slowing down before building up steam again. I don’t see a market crash.
“Our housing market is slowing down but it’s still solid,” said economist Jeff Thredgold, a consultant for Zions Bank in Salt Lake City. “I don’t see big-time declines in prices. I just see appreciation slowing down to single-digits [annually].”
That’s not to say certain segments of the market won’t see declines. In 2002 many new construction homes priced in the $600,000 range lost half their value after the Olympics. For those that held out, they were richly rewarded in the past two years as those losses turned into gains. Currently, the softest segment in the Utah market are those homes above $350,000.
How long will this last? That’s the million dollar question. Until we have successive quarters showing diminished gains, it’s too early to draw any conclusions. Third quarter could be the start of something worse, or merely a blip caused by national concerns. Passage of FHA reform could make the market here and elsewhere turn on a dime.
We are definitely at a “wait and see” point now.