Utah home prices are climbing at their fastest pace in 10 years, with St. George ranking among the top five U.S. cities for price appreciation, according to a new report.
For the 12 months ended Sept. 30, Utah's home prices increased an average 11.37 percent, the biggest gain since the year ended March 31, 1995, when home prices appreciated 13.46 percent, according to a quarterly report by the U.S. Office of Federal Housing Enterprise Oversight.
The double-digit gains have propelled Utah to a No. 22 ranking among all states and the District of Columbia in house-price appreciation. That is a sizable comeback from the second quarter of 2004, when Utah ranked dead last.
Andrew Leventis, economist with OFHEO, called Utah's jump in house-price appreciation "very significant."
"Utah was certainly in the cellar for quite some time in the early 2000s," Leventis said. "Between '94 to '97, Utah had the highest appreciation rate in the country."
In fact, in 1995 Utah ranked first in the nation in house-price appreciation, climbing back from a 45th place ranking in 1988.
And it appears Utah is again on the rise, with some areas posting remarkable gains.
With an appreciation rate of 31.57 percent, St. George earned a No. 4 spot among 265 U.S. cities and was the only Utah city to break the top 20.
St. George beat out areas such as Merced, Calif., at 30.27 percent; Prescott, Ariz., at 28.31 percent; and Orlando, Fla., at 28.04 percent.
Keith El-Bakri, owner of St. George-based RE/MAX First Realty, said out-of-state investors appear to be driving St. George's residential market.
"I've been selling real estate since 1993, and I've never seen as many investors show up into communities such as we see here in St. George," El-Bakri said. "This past year I've dealt more with investors than I've ever dealt with before. They are buying everything."
The city's climate also is a major draw, he said.
"You've got 38 million baby boomers that are getting ready to retire," El-Bakri said. "Today, I'm driving down the street and my car says it's 61 degrees, and it's December. I actually played golf yesterday. This is the lifestyle that people want."
The report noted that Salt Lake City ranked No. 97 of the 265 cities, with 10.87 percent appreciation. Logan placed No. 115 at 9.10 percent. Ogden-Clearfield was at No. 136 at 8.05 percent, and Provo-Orem ranked No. 142 at 7.58 percent.
While many Utah homeowners cheer new-found equity in their homes, first-time homebuyers find the rising prices difficult to swallow.
In October, Paul Flack and his family moved from Bicknell, in southern Utah, to Heber City, where they purchased an entry-level home for $162,000.
Flack said he was shocked by the area's high housing prices.
"Despite increasing our income by several thousand dollars, we ended up actually having less take-home pay because of the housing," Flack said. "We had to cut way back on all of our spending. It probably set us back about five years."
Nationally, U.S. home prices increased 12.02 percent in the year ended Sept. 30, representing a two percentage point decline from the previous four-quarter rate of roughly 14 percent.
And while housing prices remain hot in areas like Arizona and Florida, for the first time since 2003 the list of the top 20 cities showing the highest appreciation rates do not include any Nevada cities, indicating those markets may be cooling.
Las Vegas has fallen to a No. 77 ranking, down from No. 21.
"Appreciation rates in excess of 25 to 30 percent," Leventis said, "definitely can't be sustained over the long term."The OFHEO house price index measures average price changes in repeat sales or refinancings on the same properties.