The real estate blog.

Fourth quarter statistics are out for the Wasatch Front and while the number of homes sold is down, the prices are still seeing gains. However it is very clear that no area of the country will be immune from the credit crisis.

The Deseret News reports -

Despite the steep drop in sales, the prices of houses along the Wasatch Front held their value, with the median price rising 1.7 percent over the same 12-month period.

Specifically, house prices in Northern Utah went up in the fourth quarter -

The median single-family home price in each county, however, went up. Weber had the highest median-price appreciation, at 11.4 percent, followed by Tooele County at 8.6 percent, Davis at 3.3 percent, Salt Lake at 1.7 percent, and Utah County at 1.3 percent.


Every zip code in Salt Lake City saw appreciation for the year, save one - 84103 (-7.5). The zip codes that saw the greatest year over year appreciation were also the ones with traditionally lower prices. West Valley City (84128) and Magna (84044) led Salt Lake County for the year with 23.9% and 20% appreciation respectively.

Affordability is clearly in question. Wells Fargo economist Kelly Mathews said in a Tribune article -

“Housing prices are out of whack with incomes and there needs to be price adjustments,” Matthews said. “There’s no way we are going to be able to work our way out of this situation without having some price adjustments. We’re just too far out of line.”

House prices are just one part of the equation. Interest rates and accessibility to credit are other major factors. Consumer sentiment is another point to consider.

This week has been quite volatile. I’ve turned very bearish on housing because of the credit crisis. If it’s too expensive to own in comparison to rent, demand will dry up. However, Government and the markets have shifted interest rates and lending guidelines to the point housing is starting to look good again. Coupled with low consumer demand, I think some deals can be had. Super low interest rates and expanded qualifying criteria will stave off many of the foreclosures queued up to hit the country. So my inner bull returned.

Then we found out the Fed rate cut seemed due to a rogue trader at a big French investment bank. Will the Fed continue to cut rates? It’s so volatile, there is little that can be done to make accurate projections.

What I do believe is low interest rates are a boon. Using FHA financing is a boon. When the stimulus package is enacted, a lot of families will be empowered to buy homes they can’t currently buy. The stimulus package will stave off foreclosures, therefore keeping house values at their current level or more. Unemployment has improved with four consecutive weeks of lower claims.

With improvements in lending, increasing monthly payment affordability and expanded approval criteria, I wouldn’t be surprised to see a mini-boom return by the end of the year.