SALT LAKE CITY — The Salt Lake County housing market is finally looking up.
The 2012 Salt Lake Housing Market report released this week predicted that existing home sales in Salt Lake County will rise roughly 15 percent to more than 12,500 units sold compared to residential sales in 2011.
The report, commissioned by the Salt Lake Board of Realtors, also stated that seven in 10 homes sold in Salt Lake County were considered “affordable” to the state’s median household income of $57,000.
That is good news for Salt Lake homebuyers and sellers, according to James Wood, study author and executive director of the Bureau of Business and Economic Research. The two main drivers of home sales are affordability and jobs, he said.
"Utah's economy is chugging right along," Wood told an audience of about 500 real estate professionals at the Grand America Hotel on Wednesday. "At year-end, the Utah economy showed clear signs of recovery, which should give a boost to the real estate market in 2012.”
He said that all major indicators improved over 2010 last year and the forecast for 2012 shows further improvement. Most impressive, however, was the strength of Utah’s job market in the second half of the year.
"Employment growth jumped from an annual rate of around 1.5 percent, where it had been stuck for several months, to the 2.5 to 2.9 percent range,” he noted.
However, poor credit scores and falling home prices continued to create uncertainty among some homebuyers, the report stated.
Salt Lake-area home prices declined in 2011 for the fourth consecutive year because of continuing foreclosures and short sales. The report said that home prices this year will continue to face downward pressure, but should stabilize in the second half of the year.
“Until recently, the average sales price of a home in Salt Lake County rarely declined," Wood said. "In only 10 of the past 56 years have prices declined, including the four most recent years.”
The peak in foreclosures was during the first quarter of 2010 when 3.4 percent of all mortgages were in the foreclosure process. Consistent with the decline in foreclosure filings was the recent drop in notices of default in Salt Lake County, the report said. The estimated number of notices in 2011 was down 28 percent.
This is a positive sign since default notices are a leading indicator of foreclosures, Wood said.
However, one analyst cited distressed properties as one of the main reasons for the slower than normal growth in the housing market.
"What is holding things back is an overhang of foreclosed inventory in homes that are being sold under distress, which weighs down prices," said Eric Belsky, managing director of the Joint Center for Housing Studies at Harvard University — keynote speaker at the event. "As prices struggle to find a bottom, some buyers stay on the sidelines more than they would otherwise."
He commented that historically low interest rates could eventually help move the market forward as long as employment growth continues to trend upward.
"With jobs and some confidence, the (Utah) housing market will come back," Belsky said.