Down for the count: Utah's residential real estate market remains stagnant.

AuthorHaraldsen, Tom
PositionSpecial Report

Two years ago, as the nation's residential real estate market began to fully feel the impact of the recession, industry analysts pointed to the end of 2010 as the beginning of the recovery. Now, as that milepost has passed, many believe it may not improve substantially until near the end of 2012.

Real estate professionals say that three things must happen before the market can improve: a loosening up of credit by lending institutions, a reduction in the inventory of distressed homes that have inundated the Utah market and a boost in consumer confidence.

Furthermore, something has to change to reverse the worst depreciation rate for residential home prices in Utah's history--a drop of 10 percent in value through the second quarter of 2010. Though better than the nationwide average, it's still among the bleakest economic developments in real estate in Utah since records have been kept.

"Economists felt things would look good in 2011, but I'm not so sure that's going to happen right now," says Jillinda Bowers, past president of the Salt Lake Board of Realtors and an associate broker with Prudential Real Estate. "With all of the pending foreclosures--and what banks decide to do with releasing them on the market--that will determine what 2011 will look like."

Bill Heiner, president for 2010 of the Salt Lake Board of Realtors and a realtor for Remax, says the current environment feels a bit like the 1980s. Depreciation during some of those years ranged in the 3 to 4 percent area but, as Heiner points out, "Interest rates were much higher then and prices were lower. Back then, frankly, a lot of people were trying to get out of Utah. Now, the state is creating jobs, which is a real positive, and people are trying to come here."

A Buyer's Market

Heiner is astounded that "we don't have more sales than we do. This seems like a prime time to buy."

In the second quarter of 2010, there were 3,537 homes sold in the Salt Lake valley, according to Heiner. That dropped 36 percent during the third quarter, to 2,245. The last forecast he saw predicted a 3 to 5 percent loss in pricing for the year, continuing the downtrend in values. What was once considered normal was a 5 to 6 percent improvement in value.

Industry analysts thought that two years after the economic downturn, values might return to a positive--perhaps up 2 to 3 percent. That hasn't happened.

Purchasing a home under current conditions would seem to be an inviting prospect. Interest rates on home...

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