This is an archived article that was published on sltrib.com in 2007, and information in the article may be outdated.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.

The Wasatch Front's red-hot real estate market is losing steam - and few are feeling the pain as much as those trying to sell houses for more than $500,000.

Just look at the numbers.

There is now a more than six-month supply of existing homes for sale in Salt Lake, Utah and Davis counties in all price ranges, putting the area on the cusp of becoming a buyer's market.

The situation is worse for those selling higher-priced homes. In the three-county area, more than 2,600 houses priced at more than $500,000 are listed for sale on the Wasatch Front Regional Multiple Listing Service (MLS). The problem is that only 140 houses in that price range sold in the past 30 days.

That translates into a more than 18-month supply of higher-priced homes, up from the same time last year when it still wasn't unusual for many higher-priced homes to sell within several months.

George Morris, associate broker with Realty Executives of Utah in Midvale, believes that in addition to the 2,600 used homes for sale, there may also be as many as a couple of thousands of newly constructed houses and properties for sale by owners in that price range - no one knows for sure because for-sale-by-owner properties aren't on the MLS, and most new construction isn't, either.

Once you add in an estimate of those properties that aren't listed on the MLS, Morris says there could be as many as 5,000 houses for sale costing more than $500,000, translating to a three year's supply of homes in that price range.

Comparatively, there are more than 13,000 active listings of properties in the three-county area in all price ranges, not including new homes, according to Salt Lake Board of Realtors. In the past 30 days, about 2,000 properties have sold. Morris notes that there was an estimated two-month supply this time last year, compared with more than six months today.

As for the upper-end market along the Wasatch Front, Salt Lake Board of Realtors president Gary Cannon said it started to soften in July 2006, adding that there have been a number of contributing factors. One is the investors and speculators who bought and built houses in recent years, hoping to cash in on Utah's strong home-price appreciation. Today, too many are trying to cash in at the same time, Cannon says.

Another issue is tightened loan standards. In recent years, many middle-income families bought huge homes using exotic mortgages with low introductory payments. Lenders now are being more careful to make sure that buyers are purchasing houses they can truly afford. And a number of lenders are charging anyone who wants to borrow more than $417,000 in a so-called jumbo loan as much as a full percentage point - in some cases more - those borrowing less than that amount.

"The availability of easy money is gone," Cannon said.

Ultimately, markets in which inventories are up and sales are down almost always see selling prices moderate, flatten and often, fall. In Utah's case, the higher-end market probably will be impacted the most.

Cannon said he doesn't see all doom and gloom ahead for the Wasatch Front's real estate market, though. Utah still has the highest rate of employment growth nationally, a super low unemployment rate and strong population growth. Companies continue to expand and move operations to Utah, adding a mix of low- and high-paying jobs.

"There are tons of jobs out there and people who want to buy homes," Cannon said. "We just have a lot of inventory we need to work through right now."

Even in Park City, where sellers benefit from a larger pool of buyers from other states and even other countries, there are some areas with growing inventories of homes for sale.

Jan Fields, who is trying to sell one twin-home property for more than $1 million and a $358,000 condominium in the Park City area, has been pondering why she's not getting a whole lot of inquiries.

Higher interest rates and tighter lending standards could be factors, but she thinks more so that there's a "general sense of apprehension" among buyers. "I think people are waiting to see if prices are going to fall."

Fields has reduced the price on the twin home she's been marketing by $100,000. She's thinking of splitting the twin home into two properties, and marketing half of the unit for $569,000. She also is trying to sell her condominium for below its appraised value.

Overall, home prices along the Wasatch Front in the second quarter were up from last year in most ZIP codes, although there were a few areas that saw declines.

Many anxious sellers are now wondering whether Utah's home-sale market will suffer as much as markets in Arizona and Nevada, which are in a pronounced slump.

Moody's Economy.com, an economic forecasting enterprise, says Utah's home-sale boom probably ended late last year. It is predicting a 4 percent drop in median selling prices by the end of this year or early next. That's just an average. Some areas may see prices hold steady, while others will see larger drops.

The good news, though, is that Utah's home-price "correction" probably won't nearly be as painful as some other states, believes Gus Faucher, director of macroeconomics for Economy.com. He said the average drop in home prices nationally is much higher than Utah, at about 10 percent.

There are tons of jobs out there and people who want to buy homes. We just have a lot of inventory we need to work through right now.

- Salt Lake Board of Realtors President Gary Cannon