Utah Still Leads the Nation for Rising Home Prices
By Lesley Mitchell
The Salt Lake Tribune
March 03, 2008: For the scores of homeowners who are having to cut asking prices to get their properties sold, it might not feel like Utah's real estate market could be considered the best in the country.
But in a report released Tuesday by the Office of Federal Housing Enterprise Oversight, Utah is No. 1 among all states in home-price appreciation, from the fourth quarter of 2006 to the same period in 2007, with a 9.27 percent gain. It is the state's fifth consecutive quarter in the top spot.
Utah's appreciation rate is down considerably from the double-digit gains of recent years. When it first topped the nation in appreciation in the fourth quarter of 2006, its one-year appreciation topped 17 percent. By the third quarter of last year, appreciation had slowed to 12.9 percent before dipping even farther in the fourth quarter.
But compared with many other states, coping with a much sharper downturn, Utah's residential real estate market is faring much better.
"We do have a lot of inventory, which has caused prices to have flattened," said Realtor Bill Heiner, second vice president of the Salt Lake Board of Realtors. "But we're still doing well."
That's due in large part to Utah's economy, which continues to see solid job and population growth and low unemployment. It also had less exposure to sub prime lending in recent years, in which scores of people with poor credit got loans they could ill afford, ultimately ending in foreclosures.
"Our fundamentals aren't as good as they were six months ago, but they are still better than most every other state," said Jim Wood, director of the University of Utah's Bureau of Business and Economic Research.
Falling home prices for Utah in the coming years are "not likely," Wood said. "I just don't think we're on the brink of price declines in a broad Wasatch Front or statewide market.
Nationally, Wyoming was No. 2 on the appreciation list, with a 8.27 percent gain. The U.S. average was up only 0.84 percent in the year that ended December 31. The index created by the federal agency is based on data from Fannie Mae and Freddie Mac on more than 34 million sales transactions and appraisals ordered for refinancing of conventional "conforming" mortgages for less than $417,000.
All of Utah's major metropolitan areas - with the exception of St. George - were in the top 10 metro areas nationally. St. George actually showed a 1.91 percent decline, placing it No. 220 on the list.
The southern Utah city's real estate market began a home-price run-up more than a year earlier than much of the Wasatch Front and began its downturn in 2006. The Wasatch Front's real estate market began to slow last summer.
Earlier this decade, Utah's home-price appreciation was the worst in the country, while many of Utah's neighbors and such states as Arizona and Florida were racking up impressive home-price gains. Then, a few years ago, the state's real estate market took off.
But even as that was occurring, Utah's Western neighbors were hitting a downturn that continues today. Nevada's home prices fell by 5.86 percent in the year that ended in December and prices were down 2.40 percent in Arizona. The lowest-ranked state in terms of appreciation in the report was California, with a decline of 6.65 percent.
