Heavy lay-offs in construction and retail sales are hurting the Utah economy, which was one of the last states in the country to see its housing markets turn. The deflationary spiral has sent home values south, but government incentives have acted to aid the market, improving housing sales.
The lower price ranges were mainly assisted by the first time buyers’ tax credit and hopes are high that the expansion of the credit to move-up buyers will return a balance to the marketplace. However, home sales in most of Utah are projected to be sluggish during the winter months since most home buyers don’t care to look much for property in the cold of winter.
The high-end market in Salt Lake City remains troubling, but that could change as spring time buyers evaluate the local marketplace. Mortgage rates are low and housing prices have fallen to pre-bubble levels in Salt Lake, which experienced an inflationary cycle in housing values that the market had never seen before.
Foreclosures developed a market for bargain hungry investors in Salt Lake, and with a second round of foreclosures coming in the early part of 2010 the market will be ripe for investors again. The market soared for nearly a straight decade before coming back down to reality, and is forecast to deflate an average of 8.6% in 2010.
As the state’s second largest urban area behind Salt Lake, Ogden is the state’s hardest hit housing market with condominiums losing value at double-digit rates. The second home market in Utah may end up being the most severely damaged sector of the housing bust since second home owners have less to lose if they walk away from a vacation home, leaving it to foreclosure.
Whatever the case for Ogden’s future, home prices are still declining and are projected to continue losing value until the surplus inventory of homes can be sold off. That is expected to take through at least most of the year with average Ogden housing prices forecast to deflate 10.2% in 2010.
In Logan the housing downturn has been aided by government incentives in the lower price ranges, but an over-abundance of properties in the higher ranges is still bogging down the market. Since prices didn’t escalate at double-digit rates of inflation annually during the boom, Logan will sustain the downturn much better than other areas of the state. Home sales are projected to improve across all price ranges in 2010 in the Logan area, and are forecast to see less deflation than in the past at 3.8% for the year.
The hard hit economy has forced lawmakers to cut millions of dollars from the state budget, jeopardizing programs and municipal services. Until the financial crisis, Utah had one of the strongest economies in the nation.
In Provo the market has seen rising home and condo sales with government stimulus efforts. However, the financial crisis has taken a toll on Provo’s resort economy, which has some of the best white powder snow skiing in the country. Provo has gained a reputation for being a leading worldwide resort community, and the second home market has sustained a battering with rising foreclosures.
Weary bargain hunters are expected to make efforts to pick off deals as bankers slash prices on foreclosures to sell off the inventory. The sales will have a detrimental impact on the market, which is forecast to sustain 8.2% in deflation for the year.