Utah Real Estate Market According to An Expert Jeff Thredgold and Others
January 17th, 2008 Categories: Real Estate News
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Utah Housing Forecast
We hear all kinds of hullabaloo about the Utah Housing market, from reporters committing loan fraud to someone that has never bought or sold a piece of property BUT listens to NPR.
Let’s hear from some experts
National Economist
“Utah is one bright spot compared to other parts of the country that are in severe pain,” said Lawrence Yun, chief economist for the National Association of REALTORS®. “It’s the shining star so far if one wants to say which market is hot.
” But that’s not to say Utah real estate will be completely free of cloudy conditions in 2008. Despite Utah’s strong economy, housing sales are still expected to slow in 2008 and some markets may face affordability challenges.
“In Utah, you’re going to see home sales at a lower, more sustainable rate, but they aren’t going to falter,” said Jeannine Cataldi, senior economist for economic forecasting firm Global Insight.
She expects activity to pick up once people know the full extent of the mortgage crisis, which is expected to peak in 2008. “Once we know how that plays out, people can make decisions and move forward,” Cataldi said.
The more debatable subject is what will happen with home prices. Some economists expect to see single-digit price growth in 2008 while others expect slight price declines.
Local Economist
Some local economists, however, see a slightly different picture.
Mark Knold, chief economist for the Department of Workforce Services, says he predicts prices will probably come down a little because he thinks, “prices are flirting above what this market can afford even in the face of good wage gains.”
Kelly K. Matthews, Wells Fargo’s executive vice president and senior economist, also says Utah has an affordability problem, which is why he expects prices to be down 6 to7 percent in mid-2008.
“I believe we are so far out of equilibrium, I do not believe we can avoid some reduction in prices.”
At the same time, Jeff Thredgold, economic consultant to Zions Bank and president of Thredgold Economic Associates, sees price activity varying depending on the market segment.
According to Thredgold, lower-end properties in the $175,000 to $300,000 range should increase approximately 7 to 10 percent. Some homes in the $300,000 to $500,000 range should see price gains of about 5 percent while others may see a slight decline. The real concern is the market for $500,000 and above properties; people may have to cut prices, and there may be areas that have to come down 5 to10 percent, he says.
“All real estate is local,” Thredgold said. “In certain communities, it will do well, but in some areas, prices may have to come down.”
I am more in line with Thregold, he clearly understands there is no across the board blanket diagnosis for Real Estate. It is local in nature, you can have zip codes with two different markets with tow different conditions at the same time.
If you would like info on your particular maket contact me.
Above quotes are from the Utah Realtor Magazine
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Your right Rob, you can’t just through a blanket over it and say it’s all going to be the same. As you pointed out, real estate is local, all the way down to price ranges and neighborhoods in a zip code. Unfortunately, you don’t hear that in the media.
I do think all markets are struggling in the high end properties, which for us is over $300,000. Ours is especially troubling in new homes in that price range.
Real estate is very local. The comment by Charles above definitely brings the point home. In our market, the high end has remained pretty hot. It is definitely neighborhood and price point specific to each area. In general, it sounds like the Utah market is still pretty stable. That is good news.
SL County 2007 Single Family Average Sales Price - 3rd Quarter $310,567
SL County 2007 Single Family Average Sales Price - 4th Quarter $286,250 -8.50%
Source: WFRMLS XL Quarterly Comp Reports
That doesn’t look that stable to me.
Bill,
The problem with using an average price like that is. To take all the numbers and throw them in a hat and call an average is like saying the weather forecast for the United States is going to be 72 and sunny. It is more localized than that even inside a county and in zip codes you can have multiple directions.
All the overbuilding in the high end that are not selling now. So when you take out those sales it appears that prices are going down, which in the higher end they are.
Properties in the $300,000 and under are selling well, $200,000 and under that are clean and priced fair will actually get multiple offers.
As Realtors we need to keep the public totally informed and not be like the media. Real Estate is more intricate than most reporting.
“there is no across the board blanket diagnosis for Real Estate”
We still have 2.8% unemployment, in-migration and 25,000 people entering the market annually from natural growth. Combine that with interest rates 6% +/- I think we are pretty good.
Granted it is not the same as it was the last couple of years.
what do you expect the market in Magna to do?
Hi Brittany,
I think Magna has a lot room for growth. Because of the easier commute than some of the South West Suburbs of Salt Lake City along with the affordability factor Magna is starting to be the hot spot.
I wrote an article back in October http://www.3poundsofrealestate.com/2007/10/30/run-dont-walk-to-magna-the-last-affordable-frontier-in-salt-lake-county/
Some of the problems the developers are having is dealing with the old infrastructure like the storm drain issue…
Rob,
Your analysis is flawed. Even if you say the lower end homes are selling well, it would mean, and the numbers would suggest, that the higher ones are not. Sooner or later those higher ones will have to lower their price and then they will compete with the midium priced ones. Since the higher ones will sell instead of the medium priced ones, they will also have to lower their price to sell. Then they are competing against the lower priced ones. I DO NOT LISTEN TO THE MEDIA! YOU SHOULD STOP LISTENING TO REAL ESTATE SALEMEN WITH A HUGE CONFLICT OF INTEREST!
Employment falls when housing falls. Realtors out of work, construction out of work, fewer sales at Home Depot, etc, etc. The unemployment is not in a vacumm
I agree on the construction employment concerns. However currently the commercial construction is booming and that is keeping things going for now.
My analysis is in agreement with Jeff Thregold. He is an economist and a consultant with Zions Bank and not a sales person.
Also a lot of construction jobs when they go away the labor force usually leaves. I know there is fuel from the construction, I am still confident in the lower end.
So if I understand you correctly you are saying that the million $ plus homes in Draper that are not selling is going to cause the $500,000 plus houses to slide back then they will cause the $250,000 to go backwards.
I am not so sure about that. I think the pressure of the demand in the lower end will keep it from going backwards. The demand for the entry level will keep pressure and then the second time buyer will get a good dela, but I think the two will meet, the entry pressure and the down slope of the upper end.
My husband and I rent right now and are growing out of our place. We feel like we’d like to buy, but are concerned that we should wait. We’re looking in the Salt Lake Valley for something around $250K or lower. Do you think there is any reason we should wait?
There are two reasons why it is a good time to buy in the Under $300,000 Price Range.
1. This segment of the market is very stable (Some people confuse when someone over pricing a home and then they have to come down some to sell as prices falling). When a property is priced correctly and is clean there are actually multiple offers.
2. Interest rates are great.
There is a set of slides that compare rates to falling home prices. Remember Salt Lake’s $150,000-300,000 price has no evidence that it will come down.
Check out A Case Against Waiting To Buy
Don’t forget you can go to www.MoreUtahListings.com and search the active listings in Salt Lake County.
Here is real data from Salt Lake.
Local Accurate Data
As reported in previous articles. There are three pricing points.
$0-300,000 Very Stable
$300-500,000 Some parts of the valley stable
$500,000 major issues
If you look at the bracket I highlighted one in three homes has a sale pending.
Real Estate is so local in nature. The chart I am posting will show you activities based on price ranges (different prices are different areas).
Real Estate markets are a little more complex than to take a bunch of numbers and throw out an average.
People posted in this page, most are doing UTAH real estate business. I don’t trust them at all. What kind of skill they have other than selling housing with lying. I have few friends very mad and unhappy the deal they got. Lie after lie. Those people make American economic go 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.
Van I challenge you to show me lies on this site.
You show up and give rants about my lack of skill and lying.
Can you substantiate either one?
So please don’t show up at my house and accuse me of anything without any facts about me it just shows your lack of maturity.
Now I agree there are many agents that have entered the industry in the last 5 years and their only experience is (or should I say was as they are leaving the industry) a booming seller’s market.
If you have some friends that mistimed the market based on speculation I am sorry. They thought they were investors and actually they were gamblers. The reason most gamblers had inexperienced agents is because the professionals don’t work with the gamblers.
You see real investors are starting to buy now, because real investors don’t gamble.
I was advising my investors to buy multiple units because the vacancies were going up because of the easy access to home loans. A lot of people that should not have bought could and multiple unit prices were a little soft. Now that banks have reverted back to sensible underwriting again rental vacancies are low and multiple unit properties are enjoying a really good rate of return. My investor clientele are very happy.
If you care to discuss anything here great let’s discuss it. But please your generalized ranting is boring.
Well, it looks like this is your web. I am so sorry! But few things need to let you know, most of my friends are engineers/ or just normal families with buying family home for family member. They are not the gamblers or investor. I feel that American Economy go badly, because people are like you or your investor, not like the real “HOME BUYER” because family need!
Again, I am sorry to accuse you in your house.
it’s all good,
I am man with a family too.
I help people buy and sell homes, whether they are an investor or a family. I operate with high integrity, I have had people in the past show up and rant about how I am a cheat, no good… I am not sure if they got bad advice and lost money, but I wasn’t a part of that. I have had clients in the last two years that bought a home that would be tough for them sell right now. That is a market condition, not something I have done. I have also always taught that real estate is a long term item and not a short term.
I have helped a lot of people discover lately that maybe selling right now is not good. Buying depends on what and where. I always say real estate is local in nature and there are people they say realtors keep saying that. I cannot see how it can be anything else.