SALT LAKE CITY — Jessica Rancie, 29, came to the United States about six years ago from her native Australia to serve an LDS mission. She would eventually relocate to Utah, taking a position as a lawyer for a downtown Salt Lake City law firm.
After sharing an apartment with friends, she recently began looking for her own home because “it was time to move out … and grow up,” she said. She is hoping to find a place with at least three bedrooms, a couple of bathrooms and a basement in the $200,000 to $300,000 price range.
“Houses are fairly inexpensive right now, and I can’t see them going any lower,” Rancie said. “Houses in Australia are double or triple what they cost here.”
Rancie is part of the continuing recovery of the housing market. Strong job growth in Utah combined with low interest rates will give a boost to both buyer confidence and housing affordability, according to Jim Wood, director of the Bureau of Business and Economic Research at the University of Utah. He said home sales and prices will also benefit from the release of pent-up demand.
“During the recession, job loss or foreclosure forced many families to move-in with friends or family and “double-up,” which in turn reduced housing demand,” Wood said. “Some of this demand will be restored to the market in 2013.
"In addition, rising rental rates will prod some renters into home ownership further expanding the demand for housing. Consequently, home sales will increase by 15 percent to 20 percent pushing sales to around 13,000 units,” he said.
The rebound in condominium, twin home and town home sales will also continue as sales increase from 2,225 units in 2012 to 2,600 units in 2013, he predicted.
“The affordability of multifamily units will be particularly attractive to many renters and doubled-up families,” he said.
“Demand will continue to outpace supply in 2013 putting upward pressure on prices.”
Some of this pressure could be offset by an increase in listings, but presently there is no indication of any listings surge, he said. In fact, the Salt Lake Board of Relators reports that the current supply of listings is the lowest level since 1997.
And if the market avoids the oft-predicted next wave of foreclosures and dodges federal actions that could dampen demand — the resolution of the fiscal cliff was a win for housing on several counts — price increases will exceed the 6 percent gain of 2012 and likely increase at a double-digit rate of 10 percent to 12 percent, Wood said.
The Board of Realtors reported that local home prices have continued to rise. The median price of homes has increased every month since April 2012, the agency reported.
“There are more buyers than sellers,” said Dave Frederickson, president of the Salt Lake Board of Realtors. “This is resulting in multiple offers, and in some cases offers coming in above asking prices.”
The hottest price range is $250,000 and below, he said. “Nearly two out of three homes that are sold in Salt Lake County fall within this price category,” he said.
The best selling areas in Salt Lake County have been Magna, with an 85 percent increase in sales over last year at this time; Cottonwood Heights, up 48 percent over last year; and Millcreek, up 45 percent during the past 12 months.
“We expect an increase in sales of condominiums and townhouses because of the limited supply of single-family homes,” Fredrickson said. “We also expect price increases for multifamily homes this year."
With the number of existing single-family homes for sale in limited supply, the market for new houses is expected to climb, Wood said. That was good news to homebuilders, who have experienced a significant decrease in the number of new construction housing in the wake of the housing bubble and mortgage crisis.
Fortunately, after an extended “down” period, the demand for new housing is beginning to rise, according to Chris Gamvroulas, president of development at Ivory Homes.
“We see more activity in the market,” he said. “We’ve had the best first quarter in sales that we’ve had in six years.”
He noted, however, that there were still “headwinds” that have builders concerned, such as the rising costs of labor and materials required to operate effectively, labor shortages and the national economic uncertainty that could potentially increase historically low mortgage interest rates.
Uncertainty continued Friday with the release of national unemployment statistics showing that businesses dramatically curtailed hiring in March. Economists are also predicting weakness in the economy as the nation deals with deep federal spending cuts through the summer.
Despite the potential concerns, Gamvroulas said that the homebuilder community was “cautiously optimistic” about the upcoming warm weather sales season in Utah.
“We’re under-producing right now after absorbing was an oversupply a few years ago,” he said. “Now we need to start producing more housing to keep up with new household formations.”
He said that his company is projecting to build about 700 homes in 2013, after falling to a low of 550 homes during the recession. At the height of the housing market, the company — the largest locally-based developer — built as many as 1,200 homes in a single year, he said. Now, the goal is to reestablish strength in the Utah housing market.Comment on this story
“The market can’t comeback (to peak levels) that fast,” he said. “We’re going to build more homes this year."
Rancie of Australia is already out there looking.
“My parents (who were visiting from Australia) came out looking with me last week and were amazed by what you could buy for $200,000,” Rancie said.