Utah’s housing market is heating up.
Unless otherwise indicated, all data comes from the Utah Association of REALTORS®.
Utah home sales rose for the 10th consecutive month in March.
- Utah home sales increased 6.4% from March 2011.
- Utah REALTORS® sold 2,931 homes (including townhomes and condominiums) in March 2012 compared to 2,755 sold in March 2011 — an increase of 176 homes.
- Among the more populated areas (those with more than 30 sales), sales were strongest in the following counties: Iron (up about 41%), Tooele (up about 38%), Weber (up 19%), Davis (up about 17%) and Salt Lake (up about 8%).
Sales gains were in the double digits in the first quarter.
- Utah home sales rose 11.2% in the first quarter compared to the first three months of last year.
- Utah REALTORS® sold 7,359 homes compared to 6,617 in first quarter 2011 – an increase of 742 sales.
- Among all counties, first quarter sales were strongest in the following counties: Daggett (up 300%), Beaver (up 175%), Duchesne (up about 64%), Grand (up 55%) and Kane (up about 46 %).
Sales gains should continue in coming months.
- The number of contracts signed to buy homes (pending sales) increased nearly 18% in March, signaling a likely rise in April closed sales. Pending sales measure future home sales activity since a transaction typically closes a month or two after the contract is signed.
- 3,686 contracts were signed to buy homes in March compared to 3,134 contracts signed in March 2011.
- The number of March pending sales has not been higher since 2007.
Excess housing supply is being absorbed, which should help home prices.
- The number of homes available for sale has fallen significantly over the past year. At the end of March, inventory levels were down nearly 25% compared to March 2011.
- With 19,964 homes for sale at the end of March, inventory has not been lower since February 2007.
- For the past year, inventory declines have been in the double digits. The number of active listings has fallen year over year since December 2010.
- At the current sales pace, it would take 6.9 months to clear the entire inventory, assuming no additional homes were put up for sale. This is the fastest absorption rate since June 2007 before home prices began falling. That’s significantly improved from last year’s 10.4 months.
- A balanced market typically has a supply of about 6 months. Some counties that are already at or under 6 months are Uintah (4.4 months), Salt Lake (5.1 months), Piute (5.5 months) and Washington (6.0 months). Davis (6.2 months) and Utah (6.5 months) are also absorbing supply faster than the rest of the state. The tighter supply will put upward pressure on home prices in those areas.
- New listings were down 9% in March, which in combination with higher home sales has pushed down inventory levels.
High affordability, increased homebuyer confidence, low interest rates and improved employment conditions are reasons for the improvement.
- Affordability in Salt Lake is at its highest level since brief periods in 2003 and 1993. Nearly 81% of homes sold during fourth quarter 2011 were affordable to families making the median income. (National Association of Home Builders)
- In March, the UAR’s Housing Affordability Index was at its third highest level on record. A Utah family making the median household income had 176% of what it needed to buy the median-priced home under prevailing interest rates. (The UAR has tracked affordability since 2006.)
- In March, the average rate on a 30-year fixed-rate mortgage was 3.95%. The only time rates have been lower was in January and February when rates were only slightly lower at 3.92% and 3.89%, respectively. (Freddie Mac Primary Mortgage Market Survey)
- Utah’s improved employment situation is helping housing. In March, Utah job growth was up 2.3%, compared to a 1.5% gain nationally. For the 12 months ending in March, Utah’s economy created 27,400 jobs. Utah’s unemployment rate is 5.8% compared to the national unemployment rate of 8.2%. (Utah Department of Workforce Services)
Most Negative Issues and Responses
While the median price of $170,100 was down about 3 percent from last year, there are signs of improvement.
- The 2.8% decline in the median sales price was the smallest decline in more than a year. The average price rose 3.8% from last March, registering $226,840 compared to an average of $218,503 in March 2011.
- More lower-priced homes were sold this year, which can skew the comparison. During the 12 months ending in March 2012, homes priced $150,000 and below accounted for 39% of all home sales. The year earlier that share was only 31%.
- The prerequisites to home price increases are happening: increasing sales, decreasing inventory, decreasing month’s supply, increasing jobs, etc.
- A report from Fiserv, with analysis from Moody’s Analytics, says Utah home prices are set to rise 1.5% by the end of summer 2012 and more than 7% during the subsequent year. That will be the seventh-highest appreciation in the country. (Fiserv)
- Sellers are receiving more of their asking prices. In March, sellers received about 93% of their original list prices compared to 89% during the same period a year earlier.
- There are many ways to track prices, and one indicator is already showing improving Utah home prices. While the U.S. saw home prices drop 2% in February 2012, Utah prices were up 2.4% compared to the same month a year prior, according to CoreLogic’s February Home Price Index.
- Compared to other states, Utah had the 10th highest appreciation.
- Excluding distressed sales, such as foreclosures and short sales, the situation was even better. Utah home prices were up nearly 4% in February compared to last February, giving Utah the fourth highest appreciation in the country. For the U.S., prices were down 0.8% when distressed sales were excluded. This index is helpful because it measures price changes on the same properties, which eliminates the problem of comparing one mix of homes to a different mix. (CoreLogic)
- Realtor.com recently named Salt Lake City as the sixth best market in the country to invest in real estate (along with Palmetto Bluff real estate) based on housing inventories, price trends and unemployment rates. (Realtor.com)
Utah has fewer foreclosures than other states.
- In February, Utah had the 13th-lowest percentage of non-current loans compared to other states. Utah had 8.4% of loans that were noncurrent versus 11.7% for the U.S. (LPS Applied Analytics)
- Utah’s foreclosure rate in February was 2.1% compared to the U.S. rate of 4.1%. Utah’s delinquency rate was 6.3% compared to 7.6% nationally.
Utah’s foreclosure rate is declining.
- Utah foreclosures have steadily fallen. Utah’s combined foreclosure and delinquency rate peaked in February 2010 when 10.6% of Utah loans outstanding were not current. (LPS Applied Analytics)
- Utah’s combined foreclosure and delinquency rate fell more than 14% from the prior February. (LPS Applied Analytics)
The inventory of available homes has dropped sharply, which would help absorb foreclosures, if they were to rise.
- Utah inventory levels are down 42% from their peak in 2008.
- We’re hearing about multiple buyers bidding on properties and pushing up home prices, so it’s likely the market would absorb new foreclosures pretty quickly.
- Inventory represents a supply of 6.9 months, which typically signals a market balanced between buyers and sellers. This is the key indicator to look at when analyzing a market’s health.
New guidelines aim to promote short sales and avoid foreclosures.
- Starting in June, the Federal Housing Finance Agency is having Fannie Mae and Freddie Mac implement several new procedures to speed up the short sale process. Mortgage servicers will be required to confirm receipt of a short sale offer in three days and must make a decision on the short sale within 60 days. (Federal Housing Finance Agency)
- Utah was one of 12 states that had short sales outnumber foreclosure sales in January. (Realty Trac) This is beneficial to the market as a whole since short sales are typically sold for higher prices than foreclosures.