Utah's economic outlook is grim, and relief may not be on its way any time soon, economists at a conference hosted by the Utah Association of Appraisers said Wednesday.
Jim Wood, director of the University of Utah's Bureau of Business and Economic Research, told the audience at the summer symposium held at the Little America Hotel in downtown Salt Lake City that the current economy is "a recessionary environment."
The rapid loss of jobs in the state's construction industry has contributed to much of the decline, he said.
"I've been following the housing market for 35 years, and I'm as pessimistic today as I've ever been," Wood said. The current downturn rivals the economic woes Utah experienced during the 1980s, he added.
"Construction employment is just killing the job numbers," he said, noting that the state has lost about 15,000 jobs in that industry alone.
The lost construction jobs account for approximately 40 percent of all jobs lost from the state's economy this year, he said. The construction industry has contributed 8 to 9 percent of all jobs in Utah's economy.
Wells Fargo economist Kelly Matthews echoed Wood's sentiments. He added that as long as the housing market struggles, it will continue to be a drag on the state economy, although Utah continues to be stronger economically than most other states nationwide.
In examining the housing crisis, some analysts have pointed to unethical conduct by lenders, real-estate agents and even appraisers as contributing to the current downturn.
According to an Associated Press investigation, experts and industry insiders, including appraisers who feel betrayed by colleagues who don't follow the rules, believe the failure to effectively monitor the real-estate appraisal industry has contributed to the housing market's decline.
Rick Lifferth, president of the Utah Association of Appraisers, said that many people in his industry are feeling pressured to inflate values in order to please lenders and sellers.
"In the residential business, it's become more of the norm than the exception," he said. "You come up with any number the customer wants, to keep the business."
He said the practice of padding property values is so pervasive that it is almost commonplace, and it is hurting the credibility of his profession. He praised the Utah Division of Real Estate for its efforts to step up enforcement to weed out unscrupulous appraisers.
Some of that unscrupulous behavior may have been responsible for a number of subprime loans being approved resulting in an increasing number of loan defaults in Utah and across the nation.
Wood said that the number of foreclosures in the state would likely rise significantly in the coming months.
"Right now, we're at about 4,000 foreclosure filings in Utah" in 2008, Wood said. "I don't think there is any way we're going to keep that below 12,000 or 13,000" in the next year, he added.
Not all of those households will end up losing their homes, he said, but "those 13,000 households are going to go through serious pains."Residential real-estate agents also will have to cope with a slow market this year and into next year, he said. "We might be able to see by 2010 some life and some expansion again."
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