According to Lawrence Yun, the chief economist for the National Association of Realtors, the housing market will improve in the Rocky Mountain region soon. He states that the housing market will improve in Utah and surrounding areas because there will be more growth here than most of the country. He said, “People are moving into the region: far more coming in than moving out. That’s always positive. That creates additional demand for housing, and anytime there’s demand for housing, that makes the market much more healthy.”
“Utah’s home prices have taken a breather in the past year, but when the fence-sitters get moving, that will change significantly…..five years from now, the market will be very healthy locally and home prices could be 30 to 50% higher than where they are now.”
June 11, 2008 at 7:14 pm
Yun should be put in a mental institution. He obviously has not visited Utah over the last six months, demand is gone, prices are too high, inventory is skyrocketing, and the market is crashing. Yun’s idiotic comments are even making local Realtors laugh.
June 11, 2008 at 8:55 pm
Adam,
Perhaps you should learn basic fundamental principles of economics before being so pesimistic.
If Utah does continue to grow, which it will, demand for real estate will increase. As demand for real estate increases it will becomes scarcer and prices will go up. Yes the local real estate economy is down, but that downfall won’t last forever. Do you seriously think that home prices won’t be 30% higher in Utah in 5 years?
I think there’s more credibility in Lawrence Yuns comment than yours….
June 12, 2008 at 10:09 am
HILARIOUS! There is NO way in the world that Utah will see another bubble in the next decade let alone couple years. What an idiot?
Land is plentiful, the area has plenty of room to grow. Housing has tanked because people cant afford homes since the prices shot up and their pay hasn’t followed. The only homes selling are on the low end and the only high end homes that are selling have been discounted 100k-300k from the asking prices of the rediculous bubble.
Real estate tracks inflation, it doesn’t double in value every 10 years like the NAR says… otherwise my 90 year old home would be worth 42 million dollars… trust me I couldnt sell it for 150k right now.
June 12, 2008 at 10:21 am
Ricky, if your house is worth $150,000 right now, and you actually take care of it, just appreciating at about the rate of inflation, 4% annually, It would be worth $182,500 in 5 years… That would be an 18% appreciation over the five year period.
Now if Utah continues to rapidly grow don’t you think that there might be a little more demand for a nice Bungalow like yours?
June 12, 2008 at 11:16 am
Average is 3% historically, and I dont think that anyone will pay 182k for it in 5 years, I bought it 4 years ago for 89k and I know that it shouldn’t be at 150k right now… only got valued this high because of the run up/bubble that went on.
June 30, 2008 at 2:58 pm
I think that applying traditional ’supply and demand’ economics to Utah, or any real estate market for that matter is far too simplistic.
The reality is demand for housing never diminishes, only the availability of financing does. Housing demand is directly driven by availability of financing. This was perfectly displayed in the run up from 2002-2007 as loose lending guidelines and underwriters willing to look the other way allowed an unprecedented number of people enter the ranks of ‘homeowner’.
Once the availability of funds returned to its regular levels…or dipped below it depending on your perspective, inventory rose accordingly and prices are coming down to levels commensurate with the actual enabled demand (or in other words those who want to own homes who CAN own homes). That is the major difference. If you polled everyone in the Wasatch front, what percentage do you suppose would say they just weren’t interested in owning a home if they could?
I’d bet its a very small minority who would say “no I just want to rent”. And those only because of circumstance such as a short stay or instability etc. Take those out and you have a very very small sampling who just simply don’t want to own a home provided the circumstances warranted it.
Wanting to, and being able to are two entirely different things, and too often people discuss supply and demand in housing as though its mutually exclusive or a given. The bottom line is, nearly everyone wants it (demand) but only a certain amount can (enabled demand).
So while the economy and population growing will help drive some growth in the housing sector of Utah, its not a given how much or what percentage of that growth will be able to get financing for real estate given the current dilemma with the secondary mortgage market and the possible death of CDO’s all together.
My take is that inventory in Utah is pointing to another “shoe to drop”. If current financing trends continue, and based upon the whisperings I hear behind the scenes from banks and FDIC…we have not seen the bottom of our price correction. Id be much more inclined to bet on history vs the NAR who are notorious for “Talking their book” as they say on wall street.