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Article

Just Got Real

Utah’s Residential Real Estate Market May Finally Be Getting Back to Normal

Brad Plothow

January 1, 2013


At 29, Kade Kidd has already experienced the peaks and valleys of home ownership. In 2005, he purchased a condo in St. George a few months before abandoning bachelorhood for a new life with his bride, Cami. The couple sold the condo 18 months later and put $20,000 of their equity into a single-family home across town—a larger place, better suited to the needs of a young family. While they didn’t make the stellar sums of many during the pre-bubble boom, the Kidds had a profitable real estate transaction under their belts before their second anniversary. This was easy.

In the summer of 2008, however, their luck changed in a significant way. Kidd sold his mobile car-washing business with plans to go back to school in Orem, necessitating relocation and the sale of their home. During their second go-round at selling a home, the Kidds lost all the equity they had earned to a real estate market in tailspin.

“We basically bought high, sold low,” says Kidd, an audio-visual systems engineer.

A little gun shy, the Kidds spent the rest of the recession as renters, even as their family grew with the addition of three children. Now, after more than four years of leasing, they’re back on the market, looking for a place to call their own. Wary at first, the couple became more aggressive in looking for a place to buy over the past year and finally entered a contract to purchase a four-bedroom, split-entry home in Orem in December.

The Kidds’ buying history is illustrative of the rollercoaster ride the nation’s real estate market has been on over the past several years. In addition, the Kidds’ most recent buying experience underscores a trend that local experts are dubbing a return to “normal market.” After years of turmoil, things are finally stabilizing and even inching up in Utah.

“The pendulum is starting to swing,” says Cal Musselman, president of the Utah Association of Realtors.

Utah’s residential real estate market appears to have hit the elusive bottom of the trough in early 2012, followed by a steady uptick in key indicators such as sales, prices and days of inventory. Barring a double-dip scenario, Utah’s real estate experts see the slow climb continuing into 2013.

“I really think we turned a corner in 2012,” says Vardell Curtis, chief executive officer for the Washington County Board of Realtors, noting that slow, sustained growth might not be such a bad thing this time around. “We’ve seen false starts as recently as the latter part of 2011, but 2012 was characterized by consistent building, month after month.”

Solid Fundamentals
A solid employment picture is a prerequisite for a healthy real estate market. Utah’s unemployment rate hit a 20-year high of 8.3 percent in January 2010 but has been on a steady decline ever since, settling at 5.2 percent in October. Job growth is also up in Utah. After about two years of losses, the state started adding jobs in the first quarter of 2010 and saw a surge as 2012 came to a close, with October registering a month-to-month increase of 8,700 jobs and a year-over-year addition of about 28,000, according to the Bureau of Labor Statistics.

With more Utahns finding work, consumer confidence has improved and stingier mortgage originators have been more apt to lend. It took Kidd more than three years of full-time employment to get up the nerve to get back into home ownership, and he’s not alone. Plenty of people have put off getting back into a mortgage after being burned just a few years ago. But steady income seems to be a pretty potent salve for those concerns.

“Job growth is the foundation for a strong home market,” says Donna Pozzuoli, president of the Salt Lake Board of Realtors and an active agent herself. “Utah’s unemployment rate is the fifth-lowest in the country now, and we’ve seen the ripple effects. Realtors are busy again. Things are looking good.”

Wringing it Out
During his most recent house hunt, Kidd says about half of the homes he saw priced less than $200,000 were short sales or foreclosures. These homes present the obvious problems of bank entanglements and neglect, so clearing distressed inventory has been an important aspect of Utah’s real estate rebound.

After an initial glut, the bottleneck seems to have mostly cleared. In October, one in 198 Utah homes was delinquent, which isn’t as high as the national rate of one in 230—but far better than the state’s 2010 ratio of one in 29, according to RealtyTrac. That year, Utah had the fifth-worst foreclosure clip in the country and was the only state to see its delinquency rate get worse compared to a brutal 2009.

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