This is an archived article that was published on sltrib.com in 2007, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

In the market for a new home? Don't count on finding many properties priced below $200,000.

Only about 19 percent of new homes being constructed in seven of Utah's most populous counties were priced below $200,000 in the first quarter of 2007, down sharply from about 62 percent in the same quarter just three years ago, according to a new residential construction report.

"Pretty much all of those homes priced for less than $200,000 are condominiums or townhomes," said Eric Allen, director of Utah and Idaho for Metrostudy, which tracks the residential real estate market. The Metrostudy report covers the real estate markets of Salt Lake, Utah, Davis, Tooele, Weber, Summit and Wasatch counties.

Even in the existing home market, entry-level priced homes are disappearing, said Gary Cannon, president of the Salt Lake Board of Realtors. Real estate investors are focusing on properties priced under $200,000, he said, increasing the competition for first-time home buyers.

"An existing home in decent condition in a decent area under $200,000 will often get multiple offers almost immediately," he said.

Double-digit increases in selling prices along the Wasatch Front have in recent years shrunk the inventory of homes in lower price ranges.

The median selling price in Salt Lake County in the first quarter was $241,000, up 20 percent from the first quarter of 2006, according to the Salt Lake Board of Realtors. Selling prices in Tooele County are up a hefty 31 percent over last year, followed by Davis County (25 percent), Utah County (24 percent), and Weber County (10 percent.) Even areas of the Salt Lake Valley, which just a few years ago were known for their fairly inexpensive homes, now are more pricey.

In downtown Salt Lake City, for example, developers are building townhomes and condominiums for $300,000, $400,000 and even $500,000 - prices that for the most part were unheard of in the area just a few years ago.

Mary Murphy, who recently sold a home in Salt Lake City, had hoped to find a condominium or flat in downtown Salt Lake City in the mid- to high-$200,000s. She figures she'll probably end up shelling out closer to $300,000 for an urban flat in a new downtown development.

Scores of people on extremely tight budgets with no equity from previous homes are being priced out of the market, said Marion Barnhill, housing programs manager for Housing and Neighborhood Development department of Salt Lake City.

Barnhill said his program buys homes, rehabs them and sells them at super-low mortgage rates to low-income home buyers who may otherwise not be able to buy their own home. Because he's working with buyers with relatively low incomes, he tries to find properties priced at less than $190,000.

"It really became difficult starting last summer to find many homes in that price range," he said. "Houses were selling at an inflated prices regardless of the condition. And that makes it very difficult to help people who are looking for affordable housing."

Matt and Ruth Ann Cowley know all about how difficult it is to find a home they could afford. They have tried to buy a home for two years, but everything they could find in their price range had been in bad condition. The Cowleys qualify for a home, but they can't go any higher than $180,000.

In January, the Cowleys heard about the program offered by Housing and Neighborhood Development. With the help of the city and a below-market fixed-rate loan, the couple said they will be buying a home in good condition for around $165,000.

Prices may have escalated in recent years, but the market is slowing down now, which means it may not be a bad time to get a good deal on a new home, said Allen of Metrostudy.

"Interest rates are still very low, prices are leveling and builders are definitely offering some incentives," he said.

Incentives, which include perks such as favorable loan terms and free appliances and upgrades, stem from a decline in residential construction in the state in recent months. Work began on nearly 2,600 single-family homes started in the first quarter in the seven Utah counties in the report. That's down from 3,300 in the same quarter last year, according to Metrostudy.

The inventory of new homes that builders have finished but not yet sold rose from 1,100 last year to about 2,400 units in the first quarter, Metrostudy said.

Builders with finished homes that are not yet sold often offer incentives - or in some cases will lower prices - to get them sold.

While builders are offering more and greater incentives, Allen doesn't expect them to significantly cut the prices of homes they are trying to sell.

"There are too many positives out there right now for prices to drop," he said.

For example, Utah's employment growth is outpacing most other parts of the country, meaning jobs are plentiful.

Unemployment is low and interest rates are still low, which helps people qualify for financing.

Plus, Allen said, the share of newly constructed homes that have not yet sold represent only about 18 percent of the total inventory of homes at various stages of construction. As much as 25 percent is considered a healthy share, he said.

While the construction of homes priced at $200,000 or below is slowly disappearing, production of new homes priced above $250,000 continues to rise, according to Metrostudy.

At the end of the first quarter of 2007, 63 percent of all new homes being built were priced at more than $250,000, compared with 45 percent in the same quarter last year and only 32 percent in first quarter 2005.

While the declining affordability of homes can be alarming to some, prices can't escalate forever, Allen said. "I think we've pretty much peaked in terms of pricing."