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Utah Real Estate
Utah 50th in Home Price Rise -- Sluggish
real estate prices a blessing for some, economist says
By
Dave
Anderton
Deseret
Morning News
Thinking of moving to Hawaii, Nevada,
Rhode Island or California? Be prepared to pay a lot more for a
single-family home.
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Deseret
Morning News graphic
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House price
appreciation in those states saw double-digit jumps in the 12 months
ended March 31, according to a new report by the Office of Federal
Housing Enterprise Oversight.
In Utah,
home prices inched up 1.95 percent in the same period, the lowest
appreciation of all 50 states and the District of Columbia. Rounding
out the bottom five were Texas, Indiana, Colorado and Alabama.
However, Utah's sluggish home price appreciation could be a
mixed blessing, according to Patrick Lawler, chief economist at
OFHEO.
"It depends on whether you are a
prospective buyer or a prospective seller," Lawler said. "If
you don't own a home but think you might like to buy one, or move to
a bigger house, it's a real good thing."
And while Utah's appreciation ranked last, it was higher than the
1.59 percent rate of inflation on non-housing goods and services over
the past year incorporated into the Consumer Price Index.
"While we're last, it's still a positive number,"
said Kelly Matthews, executive vice president and economist for Wells
Fargo in Salt Lake City. "In an environment where we have had
minimal job growth up until four months ago and more than 60,000 new
dwelling units over three years, to think that we haven't lost some
value I would say is a highly favorable situation."
Nationally, home prices increased 7.71 percent from the first
quarter of 2003 through the first quarter of 2004, about the same as
annualized increases over the past four years.
"But historically the (national) increase is quite rapid,
especially considering that general price inflation is low,"
said Lawler, who cautions that continued price spikes in some regions
raise the potential for price declines in the future.
Growth in new households is driven by migration patterns and
natural increase in income levels, job growth and the availability
of space for new housing are the main factors that drive Utah home
appreciation.
While Utah has witnessed
consistent gains in natural increase, boasting the highest fertility
rate in the nation, the number of people moving into the state has
slowed as job growth sputtered in the years following the 2001
national recession.
Also contributing to the
problem is Utah's average income, which ranks below the national
average.
Salt Lake City finished at No. 130
of 361 metro areas with a per capita personal income of $28,674,
according to a recent U.S. Bureau of Economic Analysis report. The
national average income is $30,906 per person.
The Provo-Orem, Logan and St. George metropolitan areas finished in
the bottom 10 of the nation's 361 metropolitan areas for per capita
personal income in 2002.
The top five biggest
housing appreciation increases by city occurred in Fresno, Calif.;
Riverside-San Bernardino, Calif.; Fort Pierce-Port St. Lucie, Fla.;
Ventura, Calif.; and Los Angeles-Long Beach, Calif.
Salt Lake City-Ogden and the Provo-Orem areas ranked in the
bottom 20 metropolitan areas for rates of appreciation. Austin-San
Marcos, Texas, ranked last.
But even with
slower appreciation, prices over time in Utah have shown substantial
gains. Since 1980, home prices in the state have increased 163
percent, higher than increases in 24 other states over the same
period.
"We had a big increase in values
in the early part of the last decade when several places around the
country were not," Matthews said. "Now we've leveled out
the last few years. I guess we never like to be last, but if we were
over a 15-year period we wouldn't be last."
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