Top 10 U.S. Cities with Highest Rates of House Price Appreciation

After five consecutive quearters the highest rates of house-price apprecaition in the nation, Utah fell to no. in this year's first quater, according to a May report by the U.S. Office of Federal Housing Enterprise Oversight.

For the three months ended March 30, Utah home prices appreciated 5.58 % compared to the first quater of 2007. When compared to the fourth quarter of 2007, Utah home prices declined slightly at 0.20%.

Wyoming saw the strongest house-price apprecaition of all states at 6.34%. California ranked dead last, with home prices there dropping 10.58%. Besides California, 14 other states (including Nevada, Florida, Arizona and Michigan) saw home prices fall.

Three Utah cities made the top 20 list of 292 U.S. cities showing the highest rates of apprecaition.

Nationally, home prices were down 0.03% in the first quarter compared to a year ago and down 0.23% compared to the fourth quarter of 2007.

James B. Lockhart, OFHEO director, said the naitonal price declines bring positive and negative news, " For homeowners and financial market observers, these declines spell further erosion in home equity levels and potentially more trouble for mortgage markets," Lockhart said. " To prospective home buyers who have been shut out of homeownership because of affordability constraints, these declines may be welcome news, as are continued low mortgage rates."

Top 10 U.S. Cities with Highest Rates of House Price Appreciation

Houma-Bayou Cane-Thibodauz, LA-11.22%
Grand Junction, CO-9.08%
Wenatchee, WA-8.02%
Austin-Round Rock, TX-7.74%
Billings, MT- 7.09%
Provo-Orem, UT- 6.76%
Anderson, SC-6.73%
Mobile, AL-6.64%
Ogden-Clearfield, UT-6.64%
Hickory-Lenoir-Morganton, NC-6.41%

Utah's Real Estate Market

Two recent real estate reports show Utah's real estate market is considerably weaker than a year ago, but home prices continue to appreciate. A report out yesterday on April's home sales in Salt Lake show a volume decline of 33%, but a price increase of 2%. This is reflective of other areas of the country that showed a decline ahead of us.

The Salt Lake Board of Realtors is optimistic about these numbers:

But Realtor officials said Tuesday they believe that any downturn here will be comparably shallow and short-lived.

Board president Jillinda Bowers said April was the third consecutive month in which home sales increased in the county. Last year, sales started to slip in the summer, with January's total of 634 an eight-year low for monthly sales. April's total of 972 units sold is up from 934 in March and 746 in February.

"It appears to be a trend" of increasing sales, Bowers said.

I disagree. Utah's housing market is having a downturn and will continue to do so for probably a year. Looking at month over month sales is a poor indicator of progress. However, demand for starter homes and low cost homes will continue to increase with commensurate price increases. Homes above $300k in the valley will have slight problems selling. Price points above $600,000 will see the greatest price drops, especially next year, the most difficult price to sell.

Even though the analysis may not sound good, what we should focus is:

1. the interest rate is still low
2. it is a good time to buy: you can negotiate concessions and possibly lower price
3. if you are buying the house for more than two years, you will be fine. And, in the meantime, your house is still appreciating
4. The rent market is strong and very competitive, definitely landlord's market
5. we are going through this economically difficult times better than other states.


Utah is No. 1 among states in home-price appreciation with a 5.6 percent increase, relinquishing the top spot to Wyoming, which posted a 6.3 percent gain, according to a report released today.

Montana rounded out the top 3 with a 4.9 percent increase, according to the House Price Index report by the Office of Federal Housing Enterprise Oversight.

The OFHEO numbers reflect refinances as well as purchases and that's why they show bigger increases than the Board of Realtors that only reflect sales of existing homes. Realtor numbers showed less than 1% appreciation in the first quarter.

I don't expect a housing crash. It will slower than 2005 and 2006, little slower or same as 2007.

Solid Fundamentals

Markets rise and markets fall. Utah is no exception. But as talk of a national recession intensifies, Utah keeps adding new jobs and new people.

In fact, by year-end 2007 Utah gained nearly 45,000 new jobs, a 3.6 % increase compared to 2006 and the highest job growth rate of all 50 states, according to Mark Knold, chief economist of the Utah Department of Worforce Services. The phenomenal job growth put Salt Lake City at the No. 1 spot in the nation for the "Best Cities for Jobs in 2008", according to Forbes Magazine. And the job growth has led to a surge in net migration-the number of people moving into a place minues the number of people moving out. As of July 1, 2007, Utah saw a net migration of $44,252 people. In addition, there was a record 53,953 births, resulting in the highest single year population increase in the state's history. Combined, new job growth and net migration establish the foundation of a strong real estate market. While many places are experiencing job losses, population declines and flat house-price appreciaiton, Utah's fundamental economic picture remains solid.

"I don't believe that Utah is subject to the bubble concerns that exist in other markets.", said Juliette Tennert, chief economist to Gov. Jon Huntsman Jr. "Our demian home price right now is $206,000 compared to national home price of $220,000. We're well below the national mediam. Our housing demand is solidly rooted in populaiton increase as opposed to specualtion."

Since 1970, Utah has experienced four housing booms. The housing booms of 1971-1972, 1976-1978, 1994-1996, and 2004-2005 all had one common element-high rates of net migration, according to James Wood, director of the University of Utah's Bureau of Economic and Business Research. As Utah's Echo Boom generation comes of age-those born in the late 1970s and early 1980s-new ouseholds formation is certain to keep demand for housing strong. Utah's Echo Boom generation is larger in numbers that that of the state's Baby Boomers,a phenomenon unique only to the state of Utah, according to Tennert.

Although Utah's houseing market has slowed a little, the issue has little to do wuth overbuilding, according to the 2008 Economic Report to the Governor. "There are plenty of consumers and mane more to come who are willing buyers of homes," the report noted. "Instead, the porblem is in the mortgage markets....that is the primary reason for the Utah's slowing housing market. They have severely restricted mortgage lending."

By Brian Kohler
SLBR Chief Executive Office

Contact for more information
Marina Vialtsina
801-649-5883

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Economists: Utah home sales market solid despite numerous challenges

Article from Salt Lake Tribune:

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Economists: Utah home sales market solid despite numerous challenges
By Lesley Mitchell The Salt Lake Tribune
Article Last Updated: 10/23/2007 07:48:26 AM MDT

After years of increases, home sales along the Wasatch Front were down sharply in the third quarter, compared with last year, while prices increased at a slower pace. In Salt Lake County, 2,712 homes changed hands in the July-August-September period, down 33.8 percent from the same three months last year, according to a new report by the Salt Lake Board of Realtors. Among other counties, Tooele had the biggest decline in sales, down 36.4 percent, followed by Utah County, down 33.9 percent. Sales in Davis County were down 24.3 percent, with Weber County, down 22.4 percent. The drops, at levels unseen in years, are in stark contrast to the steady increases in home sales seen since the early 2000s. "It's like we were speeding along at 150 miles per hour and now we're going the speed limit," said Gary Cannon, president of the Salt Lake Board of Realtors. "The market is just slower now, and we just need to get used to it." Slower sales have led to slower appreciation, which is tilting the landscape in favor of buyers. Median selling prices, which had been increasing in many areas along the Wasatch Front in excess of 20 percent in 2006 when compared with 2005, are rising at a lower rate this year. Price gains in Salt Lake County (read the remaining on http://www.sltrib.com/ci_7253946?source=email)

Call to Action: Salt Lake Tribune gets it wrong

According to UAR (Utah Association of Realtors), Salt Lake Tribune gets it wrong...See what UAR thinks:

"UAR encourages members to contact Trib regarding Thursday’s story

At a time when Money Magazine and The Associated Press are reporting that Utah is bucking the national housing slump, the Salt Lake Tribune is saying “ Utah ’s housing boom now a bust.” Thursday, the Salt Lake Tribune reported on its front page that new home demand was at a 17-year low, a story that included broad generalizations about the Wasatch Front housing market. The Utah Association of REALTORS® is encouraging REALTORS® to contact the Tribune directly to tell them why they got it wrong.

What to Say to the Salt Lake Tribune

The story’s headline, which said, “ Utah ’s housing boom now a bust,” was misleading and inaccurate. The story only cited statistics regarding home-building permits; the story did not mention existing home sales or the pockets of new-home construction that are doing well. The headline led Tribune readers to believe that all segments of Utah ’s housing market are doing poorly. If such broad generalizations are going to be made in headlines, the Tribune needs to include information about each part of the housing market in the story.
The Tribune article quoted an individual who said, “ ‘People are afraid to purchase’ a home right now,” a misleading statement that could cause buyers to miss out on great appreciation opportunities. It’s a disservice to the Tribune’s readers to suggest that prospective Utah home buyers shouldn’t buy now when the National Association of REALTORS® projects Utah will see home prices increase anywhere between 7 and 10 percent in 2008. That means the buyer of a $200,000 home could miss out on $14,000 worth of appreciation by waiting to buy.
The story suggested that Utah buyers have been unable to obtain loans when in fact financing is readily available and affordable. Mortgage rates are still at historic lows, with interest rates on a 30-year fixed mortgage near 6.38 percent, much more affordable than the double-digit rates seen over the years. For buyers who would have needed subprime loans that are no longer available, safer FHA products will be able to help serve their needs.
Utah has strong market fundamentals — good job growth, population gains and low unemployment, which will keep demand for housing high.
Real estate markets are complex and the Tribune’s readers are not served by misleading generalizations that don’t tell the entire story.

Contact Salt Lake Tribune business reporter Lesley Mitchell at (801) 257-8714 or business editor Michael Limon at (801) 257-8798 to let them know you want to see more complete coverage of Utah’s housing market."

Provo-Orem, Utah may lack glamor but they are among the few places in the country where housing prices are growing at double-digit rates, according to

SALEM, Ore. – Aside from being Oregon's capital city, Salem doesn't have much to boast about. Most downtown restaurants close by 7:00 p.m. and Lefty's – the only cool bar in town, according to local college students – is known for its karaoke fundraisers.

But the real estate market here is buzzing. For-sale signs litter front yards and the local paper is fat with ads for homes.

The community of 150,000 or so souls is a prime example of an overlooked phenomenon in the country's overheated housing market: While demand for homes has nose-dived from Florida to California, some smaller metropolitan pockets continue to thrive.

Sleepy towns like Salem, Ore.; Wenatchee, Wash.; and Provo-Orem, Utah may lack glamor but they are among the few places in the country where housing prices are growing at double-digit rates, according to a recent federal study.

Experts say population growth and job growth are one reason. Local factors – like proximity to ski slopes, mountain bike trails, or nearby cities – are also helping some Western markets escape one of the nation's worst housing downturns in years. And most of these small-to-mid-size cities weren't a part of the original housing boom and speculation that followed, so many of them are still playing catch-up.

“The Pacific Northwest was a little bit late coming to the party,” said Andrew Leventis, an economist with a federal housing agency. “The extreme appreciation over the past five or six years in the country only just began in the Northwest a few years ago.”

In Wenatchee, Wash., a 30,000-resident town east of the Cascade Mountains, homes appreciated an average of 25 percent between the first quarter of 2006 and the first quarter of 2007, according to a recent study by the Office of Federal Housing Enterprise Oversight. The agency tracks average home appreciation for mortgages and refinancings not greater than $417,000, on single-family properties.

Bob Seltzer, a local real estate agent, said the boom there is being fueled by an influx of retirees from rain-plagued Seattle who are looking for warmer weather.

“The economy here does not support high-paying jobs,” said Seltzer. But “people can come from Seattle and buy an equivalent house for half the price.”

But it's not just the Pacific Northwest that's seeing double-digit home appreciation. While some of the worst hit housing markets include cities in California, Nevada and Arizona, many of the remaining strong markets are also clustered west of the Rocky Mountains.

Fifteen out of 20 metropolitan areas with the highest rates of home appreciation in the country were in Washington, Idaho, Utah, Oregon, Colorado or New Mexico, according to the federal study, which looked at markets with at least 15,000 transactions over the last 10 years.

Between the first quarters of 2006 and 2007 homes in Salem appreciated 13.4 percent, 14.5 in Boise City-Nampa, Idaho, and 16.8 percent in Grand Junction, Colo.

Nationwide house prices, based on sales and refinancing data, rose only 0.5 percent the first quarter of this year above the fourth quarter of last year – the lowest rate in the past decade, according to the federal study. Meanwhile, Oregon had 10.77 percent growth in home price appreciation over the past year.

“Our corner of the world has really held up pretty well,” said John Mitchell, an economist for U.S. Bancorp, based in Portland. “We've got very strong population growth, we've got good employment growth and we didn't have the kind of speculation you saw elsewhere.”

In Portland, Oregon's largest city, the median home price climbed from $169,000 in 2001 to $270,500 in 2006, according to a local real estate association. Average home price appreciation grew by 11 percent between the first quarter of 2006 and the same quarter this year, according to the federal agency.

Just 40 minutes to the south, prices in Salem are rising faster and closing in on Portland's. That's because until recently the capital city has been overlooked and bargains are still easy to find.

The median price for a home in Salem was $221,600 at the beginning of this year, according to the National Association of Realtors. Still, that's one of the cheapest buys along Oregon's heavily populated I-5 freeway corridor, real estate agents say.

“The $185,000 range is actually not bad at all,” said Ben Brubaker, 24, who along with his wife, Chantle, 23, is planning to buy his first house in the area.

On a recent sunny afternoon a real estate agent showed the couple a three-bedroom, two-bathroom, pale-blue home in a subdivision in south Salem, with a list price of $184,500. A small but trim backyard, large living room and kitchen tiles caught the couple's eye.

“You'll be able to be there for a few years, turn it around and make some money out of it,” said, Sylvia Perry, a real estate agent for RE/MAX equity group.

Young, first-time homebuyers like the Brubakers are also triggering demand in Utah, said a state economist, Mark Knold.

Utah, which has the highest job growth rate in the country this year at 4.5 percent, has the youngest work force in the country with 48 percent under the age of 35. Knold said over the last few years low interest rates have turbocharged that demand.

“We had a spike of young people hitting the market” the past few years, said Knold. “A 23-year-old who might have waited until they were 28 to buy a house may have jumped on and bought one.”

The Provo-Orem metro area was ranked second in the nation in house price appreciation with nearly 20 percent between the first quarters of 2006 and 2007 in the federal study.

Still, some observers caution smaller Western markets are far from immune from the same forces that have tanked housing markets across the country.

“It's pretty plain to me that the same patterns that have played out in all these other inflated markets are playing out in the Northwest,” said Ben Jones, a consultant who runs www.thehousingbubbleblog.com. “It's almost unavoidable. They (builders) are going to continue to build until there is no longer any profit in it.”

In Portland the amount of time it would take to sell homes on the market at the most recent month's rate of sales increased from 2.6 months in June 2006 to 5 months in June of this year. In the western half of Washington where 80 percent of the state's population lives, the number of homes and condos available to buy is up 51 percent from a year ago – an all-time high.

But Brubaker said he's not too concerned about a Salem housing bubble and he expects to turn a profit if he sells his new home five years from now.

Besides, he added, it's time for a change: “Quite honestly, I'm tired of living in a rental.”