Utah's home values fell 9.3 percent in the year that ended in March, and though it was the sixth-highest drop among all states, the decline coaxed even some reluctant buyers into making a move.
The state, which just a couple of years ago led the country in home price appreciation, is among 46 states with year-over-year home-price declines from the first quarter 2008 to the first quarter 2009, according to a report released Wednesday by the Federal Housing Finance Agency, which tracks values based on appraisals made during home purchases.
Only Alaska, Oklahoma, North Dakota and South Dakota saw increases in home prices -- and among them, only Alaska had a gain of more than 1 percent. Nationwide, home values fell an average of 7.1 percent, according to the agency's House Price Index.
The largest drop was in Nevada, where prices were off 31 percent year-over-year, followed by Florida (22.5 percent), California (22.1 percent) and Arizona (19.5 percent). Utah fared better than Maryland, where prices fell 10.1 percent, but was slightly worse than Virginia (8.6 percent).
Local Realtors point out that Utah is still the fifth-best among all states in terms of appreciation over a five-year period, but much of that can be attributed to the fact that the state's real estate downturn began two years after most other states.
Today's lower prices, combined with super-low mortgage rates, are motivating buyers such as Bobbi and Jacob Hansen, who are building a home in South Jordan.
Bobbi Hansen said she's not too worried about where the market is headed.
" We got a great price, we're getting some great incentives and a 4.5 percent interest rate," she said.
Among the nearly 300 metro areas covered in the report, Logan was the highest-ranking Utah city in terms of home-price increases, at No. 57 nationally, with an increase of just under 1 percent. Corpus Christi, Texas, was ranked No. 1, with a one-year gain of 4.1 percent. Merced, Calif., was the worst, with prices off 37.8 percent.
In Utah, the Ogden-Clearfield metro area was ranked No. 163, a decline of 2.3 percent. Salt Lake City was next, at No. 202, with a 4.8 percent drop, followed by Provo-Orem, No. 221, at 6.4 percent.
St. George was closer to the bottom of the ranking, at No. 257, with a 13.1 percent tumble.
In the metro areas, ranking is based on appraisals made during home purchases and refinancings.
Utah's depreciation levels contrast sharply with its stellar performance less than three years ago. The state first topped the nation in appreciation in the fourth quarter 2006 and remained at either No. 1 or No. 2, with double-digit annual increases in home values, until late 2007.
By last year, smaller appreciation numbers gave way to no appreciation, and eventually, falling prices.
As in other parts of the country, Utah's housing-price downturn stems from tighter lending standards put in place after the subprime lending crisis. And despite low mortgage rates, years of double-digit home price increases have put home ownership out of reach of many Utah families. Even with state and federal incentives designed to encourage home buying, sales of new and existing homes remain at 10-year-plus lows.
This environment has prompted a number of people -- who have the means to buy a home -- to put off purchases out of the expectation prices will fall even more.
So what now? Various economists say Utah's economy and real estate market may not bottom until early 2010. But many say they already are seeing encouraging signs.
"I'm not saying that the market is hot," said Salt Lake City Realtor Tony Fantis. "But things are picking up."
He and others think the segment of the market performing worst is the one for high-end properties, with those in the $300,000 to $400,000 range, depending on the neighborhood, generally still selling well.
"There is a lot of expensive stuff, sitting empty, even though their prices are down 50 percent from a year ago," Fantis said.
But at lower price ranges, there are signs of hope. Ryan Kirkham, president of the Salt Lake Board of Realtors, said business has picked up over the past month.
Although sales of existing homes and condos in Salt Lake County in April are down 17 percent compared with April 2008, sales are up 16 percent from March to April.
Utah's largest builder, Ivory Homes, said sales of new homes so far this year are up slightly over 2008 levels. "We feel like we're at the bottom and that sales will continue to improve," said spokesman Nate Packer.
