Home sweet home: Utah's residential real estate market.

• Author: Browning-Hess, Teresa

HOME SWEET HOME

Utah's Residential Real Estate Market

Economists often look at a state's residential real estate market to gauge economic conditions. When housing is in a slump, the same generally holds true for the economy as a whole, and a dynamic residential market usually indicates an upswing.

If such is the case, Utah's economic horizon looks increasingly bright. Residential real estate sales are on the rise in the vast majority of the state's markets, with some areas reporting the highest sales experienced in more than a decade.

Turning the Corner

The Wasatch Front region's population and industrial base makes it the primary market for residential sales in Utah, but smaller cities, like Brigham City and Logan, are also posting impressive gains, and Park City and St. George have emerged as housing "hot spots."

"Utah appears to have turned the corner economically," says Doug Richards, president of the Salt Lake Board of Realtors. "The demand for housing is up, and interest rates are down. It's as good a market as we've seen in 10 years."

After years of rampant new construction in the mid-1980s and a resulting backlash of oversupply and depressed prices in the latter part of the decade, Utah's market has stabilized with a positive outlook for the future, according to Richards.

"The increase in residential sales is a reflection of Utah's healthy economy," he said. "More companies and individuals are realizing that we have wonderful resources here, and the positive national attention we've received from things like the Olympics bid and the Fortune magazine story has made a real difference. It's only a matter of time before people outside Utah realize this is a wonderful place to live."

The boom in Utah's residential real estate comes when housing is depressed in other parts of the country, the opposite of what occurred in the late 1980s when the state's stagnant market paled in comparison with other regions such as California and the East Coast.

And while the tables have now turned, Utah still benefits from efforts to spur housing sales in these markets, most notably a drop in interest rates over the past 18 to 24 months. The current availability of mortgage loans at rates between 9 and 10 percent has propelled increased activity in an already bullish market.

That doesn't indicate, however, that Utah is insulated from the tighter lending conditions in effect throughout the U.S. The positive aspects of lower interest rates are balanced by more exacting FHA regulations and a requirement for increasingly large downpayments at the time of sale. Also, a new FHA mandate effective July 1 raised the amount of mortgage insurance that must be paid up front, a move expected to eliminate many first-time buyers.

Despite increasingly stringent lending policies, the demand for new housing along the Wasatch Front has outpaced supply, according to Joan Pate, a sales associate with Coldwell Banker Premier and the firm's No. 1 producer from 1987 through 1990.

New Consumer Demands

While downturns in the local residential...