Economic Slowdown Slow to Reach Utah

The slowdown of home sales has been slow to reach Utah and has not been as severe. With home prices beging to decline in the third quarter of 2007 and home prices falling to  4.9% in comparison to the national decline of 11.5%,  Utah has been spared what the rest of the nation has been struggling through. Utah will fare better in the long term as well, with the median priced home appreciating by $66,800 since 2002.

Affordability in Utah has also remained strong. Consequently, the demand for the risky ARM and interest-only loans that drove the subprime crisis has not been as big an issue. In addition, stable market prices in Utah have made it easier for at risk home owners to refinance and fewer households ended up in foreclosure.

Historically, the Salt Lake area has had a higher than average foreclosure figure. However, the recent prime foreclosure rate for the nation was 2.3% in comparison to Utah’s 1.5% rate.  It has been noted that job losses and foreclosure are closely linked in Utah and the recent decline in jobs may result in an increase of prime and subprime foreclosures in the Salt Lake area in the near future.

Another positive is that since the rest of the country has already experienced many of the problems that are now developing in Salt Lake, the government has already begun programs to help home owners in jeopardy. Things may get worse here, but the systems are already in place to help.

Sales are defiantly on an upswing in Utah. Statewide sales were down by a whopping 22% a year ago in comparison to only 1.3% in the third quarter of 2009.  Clearly the decline in sales has slowed. As sales volume improves, prices will stabilize, which will help with re-financing troubled mortgages and boost confidence in the local housing market. The result of this upward cycle is a return to a more stable, long-term market at a lower level.

Employment is the biggest issue facing the Salt Lake housing market. This market is not as exposed as others to risky lending and its late emergence into the housing recession will help it to take advantage of government work-out programs, limiting the upward pressure on inventories and price declines.