Despite one of the strongest economies in the country, accelerating job losses in Utah across a range of industries are impacting the state’s economy, and triggering more foreclosures. While unemployment isn’t as high as other areas of the country, the downturn in housing is in the early stages.
A rise in home sales, due to the $8,000 federal tax credit for first time buyers has marginally lifted sales in most markets, but hasn’t been enough of a stimulus to produce stronger housing markets. Lay-offs in construction, manufacturing and retail sectors are contributing to a weaker economy. Utah’s housing market lags behind national trends typically about a year, but the national financial crisis may be changing that since it’s tougher for potential new home buyers to obtain financing.
A state approved $6,000 grant from federal stimulus money for home buyers purchasing newly constructed homes is nearing its end, which will act to weaken Utah markets.
The high-end market in Salt Lake is weak as housing sales in the lower price ranges compose the majority of transactions. Home sales will remain sluggish in 2009 after the market soared with growth for nearly a decade. The average home in Salt Lake is forecast by Housing Predictor to deflate 9.6% in 2009.
In Logan the downturn hasn’t yet been as severe as Salt Lake. A slower pace of housing inflation was protected by slower sales. As a result, home values shouldn’t fall as much as the rest of the state. Logan is forecast to meander through 2009 with slower home sales on modest forecast deflation of 4.6% on the average home.
 |
| City |
Forecast |
| Salt Lake City |
− 9.6% |
| Ogden |
− 8.7% |
| Provo |
− 10.6% |
| Logan |
− 4.6% |
The economic downturn has forced state lawmakers to make cuts of $350 million from the state’s budget. But Utah still has one of the strongest economies in the nation, which may prompt the state into recovery before many other areas of the country.
The hard hit economy is taking its toll on Provo, which depends on much of its local economy from tourists, who come to snow ski at its mountain resorts. Home sales have weakened as job cuts rose. The downward spiral has set up a market with a large inventory of foreclosed properties at bargain prices.
In Provo, which has some of the most beautiful mountain views in the country home sales have weakened as mortgages have become tougher and tougher to get. Provo is forecast to see home prices deflate an average of 10.6% by year’s end.
In Ogden the state’s $6,000 grant program for new home buyers has brought cries of protest from homeowners who already own their own homes. The program has only helped those making less than $75,000 a year in gross income. But as the state’s second largest city behind Salt Lake, new home builders in Ogden have benefited from the program along with new homeowners.
However, home prices in Ogden are still falling, despite the stimulus effort. A slower pace of sales and higher inventory of foreclosures for sale on the market is making an impact on local housing prices. Bankers are dropping prices on foreclosures to get the inventory off their books before another round of foreclosures hits. Housing Predictor forecasts Ogden will have housing deflation of 8.7% for the year.
