While the nation weathers storm after storm of
housing-related problems, real estate markets in only a few
states are holding out with partly cloudy or sunny skies.
Lucky for us, Utah is one of those states. "Utah is one
bright spot compared to other parts of the country that are
in severe pain,” said Lawrence Yun, chief economist for the
National Association of REALTORS®. “It’s the shining star so
far if one wants to say which market is hot.”
But that’s not to say Utah real estate will be completely
free of cloudy conditions in 2008. Despite Utah’s strong
economy, housing sales are still expected to slow in 2008
and some markets may face affordability challenges. To help
REALTORS® prepare for these changing times, Utah REALTOR®
magazine talked to five economists, both local and national,
who gave their forecasts on Utah’s real estate market in
2008. Sales and Price - After seeing record years in both
sales and price growth, each of the economists interviewed
agreed that Utah real estate will see some stabilization in
2008. Yun says he expects Utah sales activity to slow or
moderately decline next year, but also says sales may
stabilize in 2008 after problems in the credit markets have
been resolved and funding returns.
“In Utah, you’re going to see home sales at a lower, more
sustainable rate, but they aren’t going to falter,” said
Jeannine Cataldi, senior economist for economic forecasting
firm Global Insight. She expects activity to pick up once
people know the full extent of the mortgage crisis, which is
expected to peak in 2008. “Once we know how that plays out,
people can make decisions and move forward,” Cataldi said.
The more debatable subject is what will happen with home
prices. Some economists expect to see single-digit price
growth in 2008 while others expect slight price declines.
Yun says he wouldn’t be surprised to see Utah prices rise 7
to 10 percent in 2008 because of the strong job and
population gains in the state. “Utah is clearly the
out-performer in 2007 in price growth,” Yun said. “I think
that momentum will carry into 2008,” but the current rates
of price growth won’t be sustainable over the next year.
Cataldi agrees. She says she expects prices to continue to
rise but at a reduced rate. Some local economists, however,
see a slightly different picture. Mark Knold, chief
economist for the Department of Workforce Services, says he
predicts prices will probably come down a little because he
thinks, “prices are flirting above what this market can
afford even in the face of good wage gains.” Kelly K.
Matthews, Wells Fargo’s executive vice president and senior
economist, also says Utah has an affordability problem,
which is why he expects prices to be down 6 to7 percent in
mid-2008. “I believe we are so far out of equilibrium, I do
not believe we can avoid some reduction in prices.”
Read Part 1 of
Utah Real Estate Forecast
Read Part 2
Read Part 3