Utah’s Mid-Priced Housing Market Softens, Lower Priced Market Stays Strong

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The housing market for homes priced between $400,000-$800,000 in northern Utah is showing signs of softening due to high inventory levels. We are not going through a correction or a decline, simply a slowing. The Salt Lake Tribune today reports that homes priced over $500,000 are being hit the hardest, which I can confirm. I listed a home for $509,900 two days ago and when I pulled comps there were hundreds of active homes in the area, in the price range that we need to compete against.

The media likes to play up anything they can, including a shifting housing market, but things aren’t usually nearly as dramatic as the media makes them out to be. The media is chicken little, running around screaming about anything they can, while I’m out in the field everyday seeing what’s actually happening.

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(Searching between $500-$700k on BlueRoof.com in the south end of valley returns almost 500 homes for sale)

In the lower price ranges homes are still flying off the market in days, many still getting multiple offers. Three of the homes I have listed under $250,000 in the last couple weeks sold within the first couple days at full price or more.

Some areas of town are seeing this more than others. The south end of the Salt lake Valley and the northern part of Utah county are seeing the most inventory in the $500,000 price range, making it difficult to sell in those areas. Even in Sugarhouse, where homes usually sell very quaickly, are sitting longer. I have two listing around $400,000 in Sugarhouse that have been on the market for more than a month. Our team just put one under contract for over $500K in Sugarhouse, but it was priced very well.

Looking at data from the MLS the number of active listings in Salt lake County has risen each week for the past two months and has increased from 5212 active listings on June 1st to 6984 on August 17th, representing an increase of 1772 homes, or a 35% increase in the last two months. That’s a lot of inventory coming on the market, and a lot of that is in the south end of the valley.

The average days on market has risen, but not by much (from 27 days in August 2006 to 33 days this year), showing that homes that are priced well are still selling fairly quickly.

Another sign of the softening market is that less people are trying to sell For Sale By Owner (FSBO), seeing their homes sit on the market longer and getting less activity. We’ve been having quite a few FSBO sellers contact us recently to ask about listing their properties, many have been trying to sell for months and are now realizing they may need a good Realtor now that the market isn’t a seller’s market like it was last year.

One listing I have at $1,250,000 in the south end of the valley has seen more activity than some of our homes listed in that mid-price level around $500k, even though there are more homes over $1Million on the market this year than last.

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The market continues to stay strong overall because of the nation-leading job growth and people moving into the area. And the area is still experiencing appreciation (probably 6-8% this year), with some area prices rising by more than 15% for the year, especially in the under $250k price ranges. The Deseret news has an article from yesterday saying the local market is still rosy.

Overall, it’s a good time to buy in the Salt Lake area because there is such a great inventory, prices are steady and sellers that need to sell are pricing their homes accordingly, and with the job growth and influx of people moving into the area we should see a good, healthy growth and appreciation over the next few years. It is still very easy to qualify for a loan and first time home buyers would be wise to buy now and have their money work for them instead of throwing it away on rent.

For the latest area stats see chart.

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21 thoughts on “Utah’s Mid-Priced Housing Market Softens, Lower Priced Market Stays Strong

  1. Totally agree. It’s a good time to buy. The fact that we have record foreclosures doesn’t really matter if the unemployment rate is low. I hear people complain about affordability but real estate has never gone down so if they have to stretch a bit with a neg-am loan its no big deal. Better to get in now before houses are more expensive in five years.

    As my broker says, just refinance or sell the thing for a profit is the worst that can happen. I could probably sell all of my condos at a huge profit that I bought last year despite all of the doom and gloomers predictions.

  2. You’ve got to be kidding.. your thinking is about 15 months old. Are you not paying attention to what’s happening with the subprime market.. brokers like yours are the cause of much of the housing meltdown that will continue into 2009.

  3. GetReal,

    Click on the stats I posted. They are the second quarter of this year and the Salt Lake market shows a year-over-year appreciation rate of over 15%.

    This is for THIS YEAR…

    Where exactly is the meltdown?

    Real estate is local. While California was booming with 50% price growth in 2000-2005, Utah was slow. National factors play a part in local market trends, but a minority part.

    Your rationalization for declaring a market meltdown is that the subprime market is tanking? The sub-prime market represents an entire 2% of the total buying market.

    So you are saying that if you take away two percent the market will meltdown?!? Even with thousands of jobs being creating in the area (leading the nation), the nation’s lowest unemployment rate (the counties lowest ever) and a net of over 50,000 people per year moving into the area?

    Thank you for your opinion, but frankly, you are the reason people need good agents.

    The sky has not yet begun to fall…

  4. I was shocked to read your post about SLC’s mid-priced homes cost $400K – $800K. According to my Dad, you need an income of 20%-25% of the selling price of a home to really be able to afford it. Are annual salaries in the SLC really that high? I mean $75K – $200K salary for the mid-priced buyer seems high but I know nothing of the pay scale in Utah.

  5. Hi Tim,

    According to the Census Bureau, Utah’s median income was just under $54,000 in 2005 (which is the latest year released). I imagine with so much demand and low unemployment rate, the average wage has increased some over the past couple years. The average in 2005 represented an increase of $1261 over the previous year, meaning if that growth maintained over the next two years, Utah’s average annual income would now be around $57,000.

    See:

    https://blueroof.wordpress.com/2007/03/01/average-median-income-by-state-utah-9th-highest/

  6. This is to Ted R. You need a reality check. Real estate can go down and it does. Having an attitude like yours is why people go into forclosure. Although real estate, if you hold on to it long enough, is usually a good investment this is not always the case. The market is what it is and people can keep telling themselves it is better than it is to get more business, but you can’t deny a slowdown in Utah, get real!

  7. My house sold very quickly last month in West Jordan for $230,000 and I bought in Riverton and now may need to sell (job transfer). I’ve noticed what you are saying though. When we bought it was nice to have all the options but now that we may need to sell it’s not so good. I may just try to hold onto it as a rental for a couple years until the inventory goes down.

    A few homes in my neighborhood have sold since we moved in, but there are quite a few for sale. Do you think it would be better to hold on as a rental or sell now?

  8. Greg,
    Thanks for responding. It shows you care.

    I still believe your blog lacks objectivity. In you articles you don’t talk about affordability (all time low), the “credit crunch”, the rent to own ratios, or the disparity between inflation and house prices(for over 100 years both have increased at the same pace, and one always catches the other usually by a crash or cost stagnation)

    I don’t enjoy a pesimistic view on the real estate market, but I do think the coming semi-crash will be well deserved by all who borrowed well above what they could afford by lying in their applications, unscrupulous lenders, and “flippers” which inflated the market.

    The view that Californians are what make this market hot is just ridiculous, Las Vegas, had the same excuse and their prices have fallen considerably. If the market increases were due to Californians then why is most of the country and the world experiencing this real estate inflation? The reason prices are high is because the new lending process, in which entities like countrywide get mortgages and sell them to investors… what a ripoff

    Update your blog with recent numbers and you will realize how off you are.

  9. Inflation has not been a factor in our market at all, in fact just the opposite- one reason real estate has stayed hot is the lack of inflation. I have discussed in several posts the role the “flippers” take in creating an inflated market. See;

    https://blueroof.wordpress.com/2007/06/09/the-natural-cycle-of-a-real-estate-market/

    This post was originally posted last year and then I re-posted it this summer (which is reflected in the posting date).

    Our market is not the same as every other market. Each market has it’s own character and situation. Our market was flat for too long, which resulted in it being under-valued by a long shot. That caused attention and eventually we began seeing the market rise, but the first year of our market’s rise (2005) was not appreciation, but correcting from being under-valued to correctly valued, see:

    https://blueroof.wordpress.com/2006/09/27/the-battle-between-appraisers-and-everyone-else/

    So we have really only seen one year of appreciation (2006) which was a hot 20% rate, but not nearly the 50% that Vegas, San Diego and Phoenix saw for two or three consecutive years. Our market has been driven by a number of factors- investors being one of them. But when you take into account the influx of people moving into the area and the job growth of the area- it paints a different picture.

    The reason the market is slowing down now is a result of a few things- inventory levels being way too high (a result of people throwing homes on the market to take advantage of the “hot” market and builders and investors trying to unload their properties now that the market is not as “hot” as it was) and the lenders response to the enormous amount of foreclosures they are seeing on a NATIONAL level. By taking away the subprime loans, reducing the debt-to-income ratios for all loans, mandating that condo’s are in a complex of at least 50% completion, taking away stated income loans, and tightening up appraisal guidlines (again) much fewer buyers are qualifying for loans. So you have too much inventory and then take away the ability of people to get financing and it creates the current market.

    But this is not simply a bubble or the market crashing. We still have a lot of job growth in our area and we still have an influx of people moving into the market- two of the most important factors determining the direction a market takes. As a result, our market will stay flat for a while- I predict it will take at least 12-18 months to shake through this period, which will be followed by a subsequent return to healthy increases in values.

    Looking at “average sales price” does not paint a real picture (which is why we look at several factors in determine market trends). Currently we have so many homes in the mid-priced range ($400-$800k) that the ratio of homes being sold versus homes active on the market looks crazy. But looking at the lower priced range (under $250) you see many homes being sold. So you take a total picutre and the average sales price looks way down, but it’s not because homes ahve lost their value- rather it is because more lower-priced homes are selling as a ratio to the total amount of sales, thus lowering the total “average” sales price. See

    https://blueroof.wordpress.com/2007/08/17/utahs-mid-priced-housing-market-softens-lower-priced-market-stays-strong/

    Thank you for your opinion- just remember there is usually much more to the story than you see in the media….

    Respectfully,

    Greg Tracy

  10. Oscar,

    More bad news for your point of view- according to the Salt Lake Tribune (August 30th), we’re still #1 in the entire nation for appreciation.

    Geesh, if this is a “semi-crash”, with 15% appreciation over last year, I’d hate to see what has to happen for you to consider the market to be good?

    Our market is actually more of a buyer’s market now above the $300,000 price range, but is that a bad thing (especially if you are a buyer?)

  11. I was thinking of selling my house in South Jordan and upgrading a bit. Is the selling market really that bad in Utah right now? Thanks!

    Jesse

  12. Jesse,

    Selling in South Jordan right now you’ll have a lot of competition so you’ll need to price aggressively to get your home sold. There are a lot of homes on the market right now, especially in the south end of the valley and in the $400-$800,000 price range.

    Plenty of good homes are still selling and prices are still strong- but the best homes sell first, so you just want to be the best home for the price.

    Call us and we’ll give you our opinion of the highest price your home will sell for… Greg

  13. Just came into town a couple of months ago to start a new job. I’m looking for a house in the sweet spot – the 400K to 500K range. Luckily, I didn’t rush in and buy right away because now I’m seeing price cuts of 25K on a regular basis. Nearly every house on the market has dropped its price, and I’ve seen some drop by more than 100K. The price drops started before subprime, but now it’s definitely falling faster. Nothing is moving, and the number of houses in my search criteria just keeps going up (currently 217 and was 200 just a week ago — there are only 15 of these houses currently under contract). Just yesterday, the number of active listings on the wasatch front mls broke 20,000 — probably the highest ever. The increases mentioned on this board happened at the end of last year, and the 15% is probably measured at the end of the 2nd quarter. It is in no way indicative of the current market. The market really is bad, and I think it is because speculative investment has increased prices here artificially. It’s amazing the number of remodels I see where people thought they were going to do a quick flip. Too bad everyone thought the same thing at the same time, because now that people can’t qualify for loans there is no hope of clearing the inventory without a big price drop. It’s not just the media, the bad market for 500K is fact.

  14. I agree that the market is definatly not what it needs to be. The house prices are too high for the average wage earner to afford. And I can’t see waiting around till 2009 for it to get better. I need to make money too. The problem is that their just are not enough buyers that can afford the over 300,000 house. I know because I’m mortgage loan officer. I is actually better (from my point of view) that the house prices fall back to their lower price, someware in the 250,000 range. That way people that want houses can afford them, and there will not be as much of a compition for realtors or loan officers, because their will be plenty to go around. It just helps everyone if the houses are affordable. Anyway in my opinion the house prices need to go down a ways.

  15. WhatAbout…

    Bountiful’s east bench is beautiful and has some really great properties, and it’s about the same as Salt Lake County in general. Areas os Salt Lake County, especially the southwest valley are moving very slowly, but other areas, such as the east bench are still selling fine.

    In the last 90 days there have been 9 homes sell above 1000 east in Bountiful between $600,000- $1,000,000. There are currently 6 homes with that criteria for sale.

    Not as many homes selling as last (record-breaking) year, but not too bad.

  16. I have a home about 200,000. in value, last summer. Now it is for much less. (Feg. 2008). I am wondering when the housing prices will go up again so that I can sell. I am single, and I need to move in with my mother to take care of her needs. Luckly, in this scenario, I have her place to live in so I can sell my home. I just dont know when to do it.

  17. The market will not get back up to the prices it was last July until 2018. The average price right now is around 290,000. Based on the numbers and historical real appreciation the average should be
    close to 220,000 right now. The market won’t fall back to 230,000 because the real appreciate will continue to increase. The average price will drop to about 240,000 and then grow at a rate of 2-3 percent a year for some time.

  18. Some people posted in this page are doing UTAH real estate business. I don’t trust them at all. Please don’t lie to yourself! What kind of skill they have other than selling housing with lying. Lie after lie. Those people made American economic down. Really, what else they can do? In big % of UTAH business are real estate. Really what else they can do more than selling house.

  19. I really don’t know how bad those real state people try to do now. Those people try to destroy United State Economy. I really don’t know how to trust real state people any more.

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