SALT LAKE CITY — The Salt Lake Valley housing market has finally recovered from the bust brought on by the Great Recession, a local analyst said.
Speaking Friday at the 2014 Housing Forecast Breakfast to an audience of more than 700 local real estate professionals at Little America Hotel, Jim Wood, director of the University of Utah’s Bureau of Business and Economic Research, said home sales are on the rise.
The sale of single-family homes in Salt Lake County increased by 5 percent in 2013 to 11,686 homes, Wood said, with 30 percent of all sales in the county in Salt Lake City.
According to the 2014 Salt Lake Housing Forecast authored by Wood, Sandy and West Jordan were the next largest markets, each with roughly an 11 percent market share.
Sales in Sandy and West Jordan were up nearly 7 percent and 11 percent, respectively, the report stated, with Bluffdale achieving the largest percentage gain in sales — up almost 52 percent for the year. Only Midvale and West Valley City had declines in sales activity last year.
Single-family home sales in Salt Lake County established an all-time high of 14,878 sales in 2006, Wood explained. By last year, sales had recovered to 80 percent of that peak.
The combined single-family home sales of the Wasatch Front counties also topped out in 2006 at 29,303 units. Last year, total home sales for the four-county metro area registered 23,555 units, 80 percent of the 2006 peak, the report said.
Utah County is within 10 percent of its all-time high, Wood said.
“In the last couple of years, Utah County has had remarkable employment growth which has helped to boost home sales, particularly in the north end of the county,” he said. “In contrast, the recovery in Weber County is lagging well behind the other counties.”
On the city level, the report showed that existing home prices in every city within Salt Lake County registered solid increases in the median sales price.
South Salt Lake had the largest gain of 26 percent, but it was the only city in the county that didn’t have a price increase in 2012, Wood cautioned. Salt Lake City was the only other city to have a price increase of greater than 20 percent, while Cottonwood Heights and Draper were the only cities to register price hikes below 10 percent.
Housing prices for the past seven quarters have recorded exceptionally strong increases, Wood said, after turning positive during the second quarter of 2012.
“It appears that the year-over percentage gain in prices reached a high in the first quarter of 2013 with a 21 percent increase over the first quarter of 2012,” he said. “Since then, price increases have remained very strong — in double digits — but the gains have been decelerating. By the fourth quarter of 2013, prices were up 11.4 percent, well below the first quarter gain.”
Another positive trend that helped bolster the housing market was the decline in the volume of foreclosures and troubled mortgages with negative equity — where homeowners owed more than the property was worth, he said.
“The number of mortgages 'underwater' in Utah has improved markedly with the increase in housing prices,” Wood said. “Two years ago, Utah ranked 13th among all states in the share of mortgages that were underwater, as 1 in 5 mortgages had negative equity.”
A negative equity position locks homeowners into their current mortgage and home, he explained. By the second quarter of 2013, the state’s ranking had dropped to No. 34, with just 8 percent of mortgages in the state underwater.
“Fewer negative equity mortgages pave the way for increased housing demand,” he said. “These homeowners with mortgages previously underwater can now consider moving up. Rising prices have given relief to an important component of housing demand — the move-up market.”
As for what to expect for the coming year, Wood noted that over the past six years, the Salt Lake County housing market has experienced historic levels of volatility. From 2007 to 2010, prices plunged 20 percent and sales fell more than 40 percent, he said. But in the ensuing three years, prices and sales have recovered, Wood added.
“Low interest rates helped sustain the surprising price recovery, and accelerating job growth supported increases in sales,” he said. “Now that the recovery has been secured, this year will be marked by a return to normalcy.”
Wood predicted that housing price increases this year would be in the 5 percent to 7 percent range, just a bit higher than the historic average of 4 percent. Additionally, sales of single-family homes are projected to increase by 7 percent as improving economic conditions free up pent-up demand for housing, he said.
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