Housing market bolstering Utah economy

Published: Wednesday, Aug. 28 2013 7:08 a.m. MDT

Strong growth in the housing sector is prompting increased consumer confidence in the Beehive State.

Al Behrman, Associated Press

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SALT LAKE CITY — Strong growth in the housing sector is prompting increased consumer confidence in the Beehive State.

The Zions Bank Consumer Attitude Index rose a modest 2.8 points to 88.4 in August — to climb to its highest level since its creation in January 2011. This month’s national Consumer Confidence Index increased 0.5 points to 81.5.

Strong economic data from the labor, housing and stock markets buoyed attitudes in Utah over the past several months, explained Randy Shumway, chief economic adviser for Zions Bank. Major stock indexes continue to move upward, and the CoreLogic Home Price Index showed home values in Utah have increased 13.5 percent year-over-year, he explained.

Speaking at a monthly economic news conference, he said Utahns expect these trends to continue.

“Only 30 percent see their 401(k)s declining in value over the next 12 months and just 9 percent see their home values declining over the same period,” Shumway said. “In the labor market, only 7 percent of Utahns think they are likely to lose a job they wanted to keep during the next two years — a reflection of Utah’s already low unemployment rate (of 4.6 percent).”

The Zions Bank Consumer Attitude Index is based on a representative sample of 500 Utah households. The monthly survey was conducted by the Cicero Group/Dan Jones & Associates with a confidence interval of plus or minus 4.38 percent.

“Since the summer of 2012, positive movement in the state’s housing market has promoted Utah’s overall economic growth,” Shumway added. “High demand, low supply and fewer distressed properties have led to significant home price increases, a primary factor in the state’s overall economic recovery.”

One of the key signs the Utah housing market is recovering is that home prices have risen 9.4 percent since the low point of the Great Recession, according to the White House. Construction of new homes in Utah is also on the rise. The number of building permits rose nearly 73 percent, according to Census Bureau, since the housing crisis low.

The number of foreclosures has steadily declined, according to the Mortgage Bankers Association. Since the national peak, the number of homes with seriously delinquent mortgages has dropped by 52.6 percent in Utah. Over the last year, the number of homes with delinquent mortgages has dropped by 28.3 percent.

The number of homes that are under water has also dropped. Data from research firm CoreLogic indicated that the homes in Utah with negative equity has decreased almost 41 percent since the national peak.

“This is what we’ve been seeing in our research,” Shumway said. “Since the summer of 2012, positive movement in the state’s housing market has promoted Utah’s overall economic growth. As homeowners see their most valuable asset increasing in value, they will have more confidence in the economy, leading to increased levels of consumer spending and fueling growth in all state industries.”

Earlier this month, President Barack Obama laid out ideas to help more responsible homeowners refinance, to cut red tape and to increase home values.

Regarding the president’s plan, Shumway added that it appears to be a step in the right direction, “although more details are needed on the specifics of the plan and it could take substantial time before we see an impact.”

He attributed the decline in mortgage delinquencies in Utah to the state’s overall economic recovery, allowing more Utahns to stay current on their loan payments. Additionally, post-housing crisis loans are generally less at risk for delinquency since creditors now have tougher requirements to take out a loan in the first place, he added.

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