Where Are We Going?

So many numbers are out for Salt Lake City real estate, what to focus on? First, economic growth is slowing, according to the US Bureau of Labor Statistics for Utah(ex-farm) our numbers from Jan 2008 through June 2008 are, 2.5, 2.3, 2.3, 2.0, 1.5, 1.1. Projections were for job growth to stay between 2-3%, so these numbers show a disappointing trend. Even so, the fact they are still in positive territory is good news relative to other economies in the west.

So where are we going? My sources tell me rental vacancies are just over 5% for the first half of 2008 (5% is considered "fully rented.") That is good news for investors who want to put money in rentals. Alternatively, job growth will have a major influence on the direction of rentals in the next six months, if growth stays flat or increases, our rental market should follow suit.

Also consider our ranking as #10 for foreclosures nationwide, while St George is hitting the stratosphere for foreclosures, one in 86 homes, that's 1 in 226 statewide. I've said in previous articles I give less "weight" to foreclosure numbers due to cultural factors (lots of young couples buying homes) and our historically high level of real estate fraud.

One more factor is our housing inventory, and home sale figures. Salt Lake County experienced a 28% drop in number of home sales in the second quarter compared to last years numbers, yet prices dropped just 2%. Prices are likely to erode further, but that is HIGHLY dependent on how our economy looks in the next six months.

Put together our numbers stay a wash. Economic growth should lead us out of trouble, if it lags and/or goes negative we're likely to see housing inventory stall, and prices drop another 5-10%.