Undervalued homes? Not Salt Lake City

You could call it home-price sticker shock.

The median price of a new house in the greater Salt Lake area climbed to $311,000 in this year's third quarter, a 26 percent increase from $247,000 in the same quarter last year, according to a new report.

Since late 2004, new house prices along the Wasatch Front have skyrocketed, according to Eric Allen, director of Metrostudy Utah, a Houston-based real estate research company with offices in West Jordan.

Just two years ago, Salt Lake City was considered one of the most undervalued real estate markets in the nation. Not anymore.

About 19 percent of total new-house inventory in the third quarter was priced at more than $500,000, the Metrostudy report said. That compares to 11 percent of all new houses priced above the half-million-dollar mark in the third quarter of 2005.

Adriana Woldberg, who recently moved to Utah from Dallas, was shocked at Salt Lake's pricey new houses.

"How in the world are people affording these homes when the income here is less than Texas?" Woldberg said. "It's outrageous."

Woldberg is purchasing a new house in Centerville for $370,000. But her new house is smaller, has fewer amenities — no swimming pool — and is $70,000 more expensive than what she left behind in Texas.

Even in more affordable areas, like The Ranches, located in Eagle Mountain, new house prices are soaring.

Kaj Larsen of Eagle Mountain purchased his new house in February for $230,000. Today, Larsen said, he would have to pay $300,000 or more for the same house on the same street.

"I haven't seen another home in the same neighborhood go for less than $298,000," Larsen said. "That's great news if you own the home. But to go out and purchase another one, I definitely wouldn't be moving back into the same neighborhood."

The Metrostudy report noted that the unsold, finished, vacant-house inventory rose to 1,402 units in the third quarter, a 38 percent increase over 1,019 units in the third quarter of 2005.

Still, unsold new-house inventory represents just a 1 1/2-month supply.

"The Salt Lake market itself is still very strong, especially compared to the national market," Allen said. "A lot of the national markets have been hit pretty hard with high inventory levels, but Salt Lake actually has done very well.