Moving up will residential real estate see market stabilization or "crazy" growth?

• Author: Webb, Gaylen
• Position: Residential Real Estate

The economists at Zillow, Inc., which operates the largest home-related marketplace on mobile and the web, predict Salt Lake City will have the hottest residential real estate market in the country for 2014, ahead of metros like Seattle, Austin, San Jose and Miami.

Dave Anderton thinks the Zillow prediction is a year late. "2013 was our best year in seven years:' says Anderton, communications director at the Salt Lake Board of Realtors. "But the national ranking tells you we are in a good place now"

That's not to say 2014 won't be a great year for real estate, but realtors think in terms of home prices and units sold--and in those two areas, 2013 was an incredible year. Utah experienced a 13 percent jump in the median price of a home and a whopping 35,253 units sold statewide.

"That's the best it's been for units sold since 2006," adds Cal Musselman, president of the Utah Association of Realtors. "That's a lot of units sold. It's good for the state; it's good for the real estate market and for the economy."

Market Shock

Overall, Utah experienced a 10-percent increase in units sold over 2012. In Salt Lake County, home values jumped 15 percent while home sales for all housing types jumped 9 percent. The spring of 2013 saw a home buying frenzy in some Utah markets, with multiple buyers in bidding wars for the same properties. It was a crazy time, with interest rates in the 3 percent range, low home prices and extremely low inventory.

"People had to hurry if they were going to get in the home they wanted:' says Anderton. "And when the sellers saw they were getting three and four offers for their properties, they thought, 'If the demand is this high, I am going to raise my prices: Word got out that the market was back and prices went up."

Musselman says there was also some "buyer's shock" that accompanied the frenzy because buyers wanted to offer 10-20 percent less than sellers were asking.

"In reality, if their offers were more than 3 percent less than the asking price, they would miss out," he says. "It was a bit of a shock to realize they had to dance to the tune of the sellers after being in a buyer's market for two and a half years."

Hitting the Brakes

The market settled down as the year progressed, but remained strong across the state for most of the year. The greatest weaknesses were in the rural areas of the state still trying to recover from the economic woes of the recession, while the hottest markets were in Summit and Washington...