Good news, real estate investors and hopeful homesellers, the Salt Lake residential real estate market climbed out of the pit of despair in the last quarter of 1988, and, says the Salt Lake Board of Realtors, seems poised to continue the recovery in 1989.
No, the board isn't talking about a return to the boom times of the 1970s - those caused a lot of the problems,anyway. Rather, the board foresees a resumption of controlled, sustainable market activity."We feel we will see the improving trend of the last few months continuing with a small increase of maybe 2 to 3 percent in 1989 residential sales," Salt Lake Board President Scott Webber told industry professionals gathered at the Little America Hotel Wednesday for its annual Real Estate Forecast Breakfast.
Webber, regional manager for Coldwell Banker Residential Real Estate, said the past year got off to a very slow start - sales well below 1987 for the first three quarters - but had a "radical reversal" in the fourth quarter with a 21.5 percent increase. The reversal included a 46 percent increase in sales during December alone that saw the year close out with 5,695 single-family home sales, only 22 fewer than '87.
Webber credits the increase in fourth-quarter home sales to overall improvement in the local economy and to the dip in interest rates at year's end that turned "lookers" into buyers. Also, he believes, fears of rising interest rates prodded buyers into locking in rates that "were obviously not going any lower."
The average price of homes sold in the Salt Lake area last year was $79,602, a 1.2 percent decrease from 1987's $89,554. Since 1980, the average selling price has increased 15.3 percent over the 1980 price of $67,430. The area east of 13th East and west of Wasatch Blvd. between 33rd and 77th South had the biggest jump in average sales price at $112,817, up 8.4 percent from 1987.
Despite the fourth-quarter flurry, Webber said new housing starts remained low in '88, off 23 percent from the previous year. But it's no great mystery why this segment remains soft, he said: declining values of existing homes coupled with fierce competition from foreclosures.
U.S. Housing & Urban Development (HUD) foreclosures alone totaled 1,200 in Salt Lake County last year, a 37 percent increase, and similar figures are expected in 1989.
Webber said that while house prices have increased 15 percent since 1980, values are up only 4 percent since 1982, compared with a 40 percent increase nationally. While the average price of a Salt Lake single-family home sold through the board's Multiple Listing Service (MLS) declined 1.2 percent last year, Webber said most local experts feel the drop in values was really more like 4 to 5 percent.
The board forecasts an improving (for sellers) trend during 1989 with a small increase of 2-3 percent. And buyers can expect slightly higher interest rates to prevail until spring.
Webber believes many neighboring states have "priced themselves out of the market" with higher living costs than Utah, and that should make the state and city much more attractive to companies looking to expand, thus boosting housing values.
During 1988, he said, interest rates rose as the year went along with the average price of a house remaining nearly even with 1987. However, the number of new single-family homes listed on the MLS decreased 11.8 percent in 1988, meaning fewer homes competed for about the same number of buyers.
Overall residential property sales - single-family, condominiums, apartments, duplexes and vacant lots - totaled 6,865, a 1.0 percent increase over 1987. Residential dollar volume was down 2.2 percent for the year.
Condo sales of 604 units totaled $35.0 million for the year, a 23.0 percent increase over '87; 92 duplex sales totaled $5.8 million, a 12.4 percent drop; 67 apartment sales totaled $7.0 million, a 26.4 percent increase; and 407 vacant lot sales totaled $13.2 million, a 6.0 percent drop from the previous year.