But in the latest report by a federal agency that tracks home values, Utah has fallen to No. 16, with an increase of 1.9 percent in the year that ended in June.
That compares with double-digit increases in home values from 2005 to 2006 and from 2006 to 2007. It's also down from a 5.6 percent increase in the agency's last report, which covered the year that ended in March, when Utah slipped just behind Wyoming after five consecutive quarters in the top spot.
The report, by the Office of Federal Housing Enterprise Oversight, underscores how quickly the real estate market in the state - particularly along the Wasatch Front and in St. George - has deteriorated. It also shows a trend that could lead to overall home-price declines if the market doesn't turn around soon.
In fact, some economists believe prices must and will fall before home sales pick up again. Already, homes in a number of higher-priced areas have declined in value from last year.
"It all boils down to affordability," said Mark Knold, chief economist for the Utah Department of Workforce Services. "Even if you have a strong economy, if home prices get too high, you stop buying."
Although still in positive territory, Utah's appreciation is far off the double-digit levels of the past several years. Utah's appreciation peaked at 17 percent in the year that ended June 2007, but by last summer, years of home-price increases had put ownership out of reach of a large number of Utahns whose incomes haven't kept pace. Tighter lending standards and higher mortgage rates haven't helped, making it even more difficult for many families to qualify for a loan.
Combined with other factors, such as rising interest rates, the state's real estate market began to fall into a particularly dogged downturn.
Sales of existing and new homes have since plummeted, compared with last year. Home prices overall, though, have remained "sticky," meaning that many buyers have let their homes languish on the market - or have taken them off - to avoid cutting prices significantly in order to get them sold. Others are leasing their properties in hopes the market will turn around in the near future.
But enough owners in just the last couple of months have come to a position where they have to sell, which has led to selling-price declines in a number of areas, especially with homes priced $400,000 or more.
Rod Linton of Holladay said he began noticing earlier this year that the real estate market was really in a downturn, with higher-end homes seeming to suffer the most.
"If you drive around Holladay you see all kinds of for sale signs. And homes priced above $500,000 - they seem to sit around forever."
The Office of Federal Housing Enterprise Oversight may actually be understating Utah's real estate downturn. Its report, based on data from Fannie Mae and Freddie Mac, includes more than 34 million sales transactions and appraisals ordered for refinancings. But it uses only conventional, "conforming" mortgages, not the larger loans on more expensive properties that owners are having the most problem selling.
The Salt Lake Board of Realtors said this week that 71 percent of home sales in Salt Lake County in July were for properties priced less than $300,000.
The most active price range was from $200,000 to $250,000, the board said.
In July, 1,006 existing single-family homes and condominiums in Salt Lake County changed hands, down 10 percent compared with 1,122 homes in June. Sales were down 22 percent compared with July 2007.
July's drop reverses five consecutive months of increasing home sales.
In the federal agency's latest home-value report, St. George is the worst-performing Utah metro area, ranking No. 233 among 300 metro areas nationally with a 5.1 percent decline.
The state's other metro areas all posted gains, but are ranked well below where they were in recent years. Logan was highest, at No. 34, with a 3.8 percent increase.
lesley@sltrib.com
