The real estate blog.

I’ve seen comments on this blog time and time again suggesting Salt Lake is merely behind the times when it comes to following the national downward trend housing is currently facing.

In the back of my mind, and I’ve said this over and over again, I can’t see a major downturn without major job losses. It would seem that an economy built on housing, as ours has been over the past five to seven years has been, would suffer a downturn when housing declined. So far that hasn’t been the case.

Residential construction jobs have been replaced with commercial construction jobs. Many of the jobs lost within mortgage lenders have been moved from wholesale to retail with poor employees left to consider a new career. Unemployment has only risen slightly in the country and in Utah. New numbers come out next Friday that will influence the Fed’s rate decision when it next meets December 11th.

With that said, Salt Lake real estate still leads the nation in appreciation and our healthy economy is a driving force. Third quarter numbers from the Office of Federal Housing Enterprise Oversight (OFHEO) show -

Home prices in the state rose 12.9 percent in the third quarter, compared with the July-August-September period a year earlier, according to a report released by the Office of Federal Housing Enterprise Oversight (OFHEO). Utah has held the top spot for four consecutive quarters.

Among all metro areas, Provo-Orem had the second-highest appreciation nationally in the year that ended in September (14.4 percent), below only Wenatchee, Wash. (15.7 percent). Ogden-Clearfield is No. 4 (14 percent) followed by Salt Lake City (13.4 percent).

Nationally, prices were up only 1.8 percent for the year that ended Sept. 30, the lowest one-year increase since 1995.

What about the tighter lending restrictions and fraud and investors? Yes, those are issues that will need to be dealt with. In comparison to the top foreclosure areas, Michigan, Florida, Nevada and California, Utah’s housing market hardly compares. We don’t have the economic problems Michigan and Ohio have, we didn’t have the speculators Florida, Nevada and California had and we’ve got a strong in migration from other states.

Incoming Regional V.P. of the Jaren Davis said,

that Utah’s strong economy, job and population growth and continued corporate expansion will help the Wasatch Front real estate market avoid a sharp downturn. He believes the market locally is simply switching to a lower gear - one with yearly appreciation in the low single digits.

“I just don’t see any of what is happening in other states happening with us,” he said.

There is a contingent of readers who believe real estate agents and mortgage brokers have too much of a vested interest in their businesses to be honest about what’s going on. How about housing bear economist Robert Shiller? He’s saying the same thing in a national article published today.

“Along with previous price gains, job growth is by far the most significant variable in forecasting growth,” says Robert Shiller, co-founder of a home-price research company and professor of economics at Yale.

Job growth is a top factor Utah currently has going for it.

Other areas of the country are avoiding a downturn as well, despite trouble in the mortgage market. I still think it’s too early to tell how lenders will hold up, but third quarter presents hope America’s real estate markets will be resilient -

Wenatchee is not the only hot spot bucking the national trend. Markets in the Pacific Northwest, Utah and Colorado still boast annual appreciation rates of 10%-plus, along with a scattering of bright spots in the South and even in the East and the Midwest.

Is the Utah real estate market simply at the end of the housing train collapse? I don’t think so. I believe the fundamentals of our economy will prevent major pain. I wrote yesterday that it will cost more for conventional borrowers with mid-grade credit, but other options, especially FHA still exist. The Fed appears ready to drop rates another 1/2 percent at its next meeting and homes are still selling across the Wasatch Front, admittedly a little slower than the past few years.

If the economy’s okay, your market will be too… You needn’t worry about house prices collapsing if local industries are doing well. By merely reading the business section of the local paper, you get a sense of the economic climate.