SALT LAKE CITY — Finally, some good news on the Salt Lake area housing front. The worst of the housing and economic crisis is likely over, economists predicted Tuesday, which should mean stable prices and increasing sales in 2011.
In a report commissioned by the Salt Lake Board of Realtors, economist James Wood, director of the University of Utah's Bureau of Economic and Business Research, said an improving job market should be an important key to normalizing the local housing market.
"Employment growth is essential for us to have any kind of a recovery," Wood said, following the annual Salt Lake Housing Forecast Breakfast at the Little America Hotel. "What we've seen over the last few months is the beginnings of a recovery (albeit) pretty slow."
He said economic growth has climbed 1 percent to 2 percent, which is considered quite low, but "pent-up" demand for housing is growing and the decline in home prices has narrowed.
In addition, homebuilders' unsold inventory is at very low levels, improving prospects for an upturn in residential construction for this year, he said.
"After three years, house price declines are not as steep," he wrote in the report. "Prices will … be stable through the first two quarters of 2011 with very slight gains in the third and fourth quarters."
He added that continued price pressure from foreclosures and short sales still in the market will prevent any meaningful upward movement, leaving prices pretty much unchanged from last year.
While Wood forecast slow growth for the year, a fellow economist was a bit more optimistic regarding the potential for growth.
Lawrence Yun, chief economist and senior vice president of research for the National Association of Realtors, said demand for homes along the Wasatch Front could climb 5 percent to 10 percent in 2011.
"As long as there is demand revival with an improving economy, that is the key to (growth)," he said. Yun was the keynote speaker the Tuesday morning event.
He said that while the state's economy did suffer through the recession like other regional and national counterparts, Utah fared much better than most.
"In terms of the cycle of recent recessions, it was much milder … here compared to most other states across the country," Yun said. "When things become more normal, Utah's economic growth is usually twice as fast as U.S. growth."
He said given that circumstance, once the normalcy comes, Utah will be a "better beneficiary" of the economic recovery.
Wood said after three very tumultuous years, the housing market and state economy seem poised to begin bouncing back this year.
"For the most part, declines have run their course, markets have stabilized and conditions for a recovery are in place," Wood said.