This is an archived article that was published on sltrib.com in 2007, and information in the article may be outdated.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.
Utah still leads the country in home-price appreciation, but signs abound that prices are already starting to soften.
Home prices in Utah rose 15.3 percent in the second quarter, compared with the April-May-June period a year earlier, according to a report released Thursday by a federal agency that tracks housing values.
The state's No. 1 ranking marked its third consecutive quarter in the top spot, but rising inventories and declining sales of resale homes along the Wasatch Front point to more moderate price increases over the next year.
Impacts elsewhere have been a lot more drastic. Wyoming was the only other state to post a double-digit increase in home values in the second quarter, with a 12.8 percent gain. Washington state was third, with an increase of 9.1 percent.
About four years ago, Utah's home-price appreciation was the worst in the country, while states such as Arizona and Nevada were racking up some of the most impressive home-price gains nationally.
But in the past year the situation has turned around completely. Nevada is in last place, with a 1.5 percent drop in home values. Prices also are off 1.4 percent in California, while Arizona eked out a paltry 2.2 percent increase.
Nationally, prices were up 3.2 percent, the lowest annual price change in 20 years, according to the Office of Federal Housing Enterprise Oversight.
Although Utah's home prices are more than holding their own in comparison, change is coming.
Realtor Mark Alder said Thursday that 13,764 houses and condominiums are listed for sale in Salt Lake, Utah and Davis counties on the Wasatch Front Regional Multiple Listing Service. About 1,926 houses and condos sold in those counties in the past 30 days, which means there is about a seven-month supply of properties for sale.
Alder said that although five to six months of inventory equates to a stable housing market (less than that means sellers have the upper hand), a seven-month supply puts the three-county area in "buyer's market" territory.
He recently lowered the asking price on one of his listings that was generating little interest to $415,000 from $449,000.
Although job growth - an important factor in determining the health of a real estate market - remains high in Utah, a variety of factors are contributing to the rising inventories of houses for sale and to the decline in sales.
Mortgage interest rates are higher than they were a couple of years ago, which increases monthly payments for those trying to buy a home. The market also is being affected by tighter lending standards nationally, making it harder for many to qualify for loan.
Perhaps more importantly, prices in many areas of the Salt Lake Valley have risen so rapidly in recent years that fewer people can afford to buy a home now because their incomes have not kept pace.
Even those who have benefited from increased equity can be affected by the decline in affordability.
Retiree Gordon Tyler said he bought his home in Centerville about 10 years ago for $200,000. For many years, prices barely budged. But values in his neighborhood have soared in recent years, leading Davis County to peg the market value of his property at $330,000, he said.
But Tyler is quick to point out that in one important way, the equity doesn't do him and his wife a whole lot of good.
They were interested in buying a condo so they could downsize and have less yard work. But they learned that many condos are not a cheaper alternative.
"We couldn't believe they were selling a nice little three-bedroom condo for $380,000," he said. "That's more than our five-bedroom home, and we'd have to pay a condo fee, too."
So, they're staying put and fuming about yet another increase in their property taxes.
Besides affordability, the flight of investors from Utah is helping cool off the market in a big way.
Over the past year, fewer investors interested in "flipping" properties for short-term gain are buying in Utah anymore. Many have put their properties up for sale, adding to the growing inventory along the Wasatch Front, said Jaren Davis of Coldwell Banker Residential Brokerage in Utah.
And in most cases, growing inventories and fewer sales lead to moderating or even decreasing prices.
The softening of the local market probably will be more apparent in the federal agency's next report covering the third quarter, due out Nov. 29.
Moody's Economy.com forecasts that median selling prices in Utah will probably decline by an average of 4 percent by the end of this year or early 2008 - not the best news for homeowners but not as bad as the much larger price corrections seen in other states.
Davis, like some other Realtors, doesn't buy it.
He says home-prices appreciation in the Salt Lake Valley will remain strong, just at a lower rate than in the past year.
"Real estate appreciating at 5-7 percent is healthy," he said.