(Salt Lake City, UT– February 1, 2011) The Greater Salt Lake housing market endured a tough year in 2010 but shows some signs of improvement, according to a recent report by Metrostudy, a national housing data and consulting firm that maintains the most extensive primary database on residential construction in the US housing market.

“The Greater Salt Lake market has endured yet another trying year for those involved with the building industry. Nonetheless, there have been some positive changes with indications of more in the future,” said Eric Allen, director of Metrostudy’s Utah / Idaho Region. While quarter over quarter new home starts declined 22%, annual new home starts for 2010 total 5,025, which is a 7.4% increase compared to the annual pace in 2009. Annual new home closings in the market totaled 5,887 for the year (2010), which is an 18.7% decrease from 2009.

“With production low, at the current pace of absorption overall new home inventory for detached homes in the Greater Salt Lake market remains within acceptable equilibrium levels,” said Allen. There are currently a total of 1,951 new detached homes in inventory, a 5.8 month supply.

Finished vacant home inventory continues to show improvement with 659 new detached homes currently on the ground, a 2.0 month supply. “Finished vacant inventory has steadily decreased since 2007, when it peaked at nearly 3,000 homes, which in large part has made it possible for builders to start building again.,” said Allen.

“New home inventory is within healthy equilibrium levels, home prices have reset and land has been written down. These are many positive factors influencing the Greater Salt Lake market, and are essential in the recovery process,” said Allen. “We now anxiously await the return of jobs and a more confident consumer, which should slowly return to the market late 2011.” As of December 2010 there has been a net decrease of 4,200 jobs within the Greater Salt Lake market, which is an improvement when compared to the 41,400 jobs lost at this same time in 2009.

For information contact:
eric allen @ 801.571.7700 x424
email eallen@metrostudy.com

About Metrostudy
Metrostudy is the leading provider of primary and secondary market information to the housing industry and related industries nationwide. In addition to providing its own primary housing data for approximately 70% of the United States housing market, the company is recognized for its consulting expertise regarding real estate development, marketing and economic issues, and is a key source of research studies evaluating the marketability of residential and commercial real estate projects. Services are offered through an extensive network of offices located in major metropolitan areas throughout the U.S. For more information, visit www.metrostudy.com.

 You may ask the question, “What is Buying Power”, and furthermore, how does it relate to home buying?  Simply put, it is the projected dollar amount that an individual can spend on a home based on their household income and the current interest rate.  Assessing buying power is essential in understanding the broader condition of the housing market.  Home affordability has weighed heavy on the minds of many would be buyers as well as home builders for many years, and as such consumer buying power is crucial to judging both the stability of housing demand and any projected growth. 

The affordability chart below highlights historical interest rates and how they can affect home buying power.  For demonstration purposes, the criteria set forth in the Affordability Chart below are based on an annual household income of $60,000, and a 20% down payment towards the home purchase, which will be referred to as our “general household”.  In 2004 when interest rates were roughly around 6.25% and the median home price was $190,000, our general household qualified for $190,000, making the buying power for the consumer equal to the median home price.  These conditions essentially allowed the home buyer to qualify, and afford the home they purchased, keeping the housing market healthy and well in check.  Read the rest of this entry »

(Salt Lake City, UT– November 1, 2010) The Greater Salt Lake housing market is showing signs of improvement in annual starts rates and inventory with steady closings, according to a recent report by Metrostudy, a national housing data and consulting firm that maintains the most extensive primary database on residential construction in the US housing market.

“While we continue to deal with the negative, there are many positive influences that will continue to benefit the housing market, mainly low home inventory, prices and interest rates,” said Eric Allen, director of Metrostudy’s Greater Salt Lake Division.

Over the past 12 months, the Greater Salt Lake market has lost around 11,700 jobs, a major improvement from the 51,100 jobs lost the prior year. Greater Salt Lake unemployment stood at 7.7% in August 2010, well below the national rate of 9.6% but higher than the 6.1% at this time last year.

“The third quarter of 2010 brought a slight change in new home production as preparations for the tax credit expiration date came to a halt,” said Allen. “However, annual starts improved.” There were 1,275 new homes (both attached & detached) started during 3Q10, 8% less than 3Q09 and 5.5% less than 2Q10. Annual starts were 19.1% more than 3Q09’s annual rate. A total of 1,780 homes were closed, bringing the annual rate to only 7.8% less than 3Q09’s annual rate.

Good news can be found in the decreasing housing inventory. Detached new home inventory totaled 2,162 units, a 5.8 month supply, down from 7.1 months at the end of 3Q09. Finished vacant inventory is down 25.9% since 3Q09, which translates to a 2.0 month supply. “This level of Finished Vacant Inventory in the Greater Salt Lake market is a strong improvement over the last 4 years and indicates that new home inventory is structurally on track to equilibrium,” said Allen.

“As an industry, we have done all that we can do at this point and any significant recovery will be driven by the addition of new jobs and an improvement in the overall economy,” said Allen.

For information contact:
eric allen @ 801.571.7700 x424
email eallen@metrostudy.com

About Metrostudy
Metrostudy is the leading provider of primary and secondary market information to the housing industry and related industries nationwide. In addition to providing its own primary housing data for approximately 70% of the United States housing market, the company is recognized for its consulting expertise regarding real estate development, marketing and economic issues, and is a key source of research studies evaluating the marketability of residential and commercial real estate projects. Services are offered through an extensive network of offices located in major metropolitan areas throughout the U.S. For more information, visit www.metrostudy.com.

(Salt Lake City, UT– August 1, 2010) During the second quarter of the year, the Greater
Salt Lake housing market has continued to gradually improve in spite of challenges, according to a recent report by Metrostudy, a national housing data and consulting firm that maintains the most extensive primary database on residential construction  in the U.S. Housing market.

“During the second quarter of 2010, the housing market showed some positive signs in spite of headwinds from no job growth, the loss of the tax credit, depressingly low Consumer Confidence, foreclosures and practically non-existent mortgage money,” said said Eric Allen, director of Metrostudy’s Greater Salt Lake Division.

During 2Q10, the Greater Salt Lake market started a total of 1,366 new homes, which is an 11% increase when compared to 2Q09 and a 1.6% increase from 1Q10. New home closings totaled 1,540 during the second quarter of 2010, 17.3% fewer than last year at this time, however a 17.3% increase from quarter.

Read the rest of this entry »

The pursuit of market equilibrium…the theoretical balance of demand and supply for a housing market.  When will we get there…will we ever get back? 

An assessment of equilibrium levels relies on understanding the nuances of each individual market: entitlement timelines,  the political will of elected and appointed officials, availability of land, builder strategies, the level of public builder activity as well as lot development and homebuilding timeframes. Contrasting every specific housing market inventory and demand levels to the broader market can further add insight into the general health of the housing markes.

The Greater Salt Lake market has remained one of the strongest markets across the nation during this downturn.  This largly due to the balanced levels of inventory that the market maintained prior to entering the downturn.  While this market has not been without its challenges over the past few years, they do seem to be less painful and have not lasted as long as many other markets across the nation.

While there is no expectation for housing production in the Greater Salt Lake market to return to peak levels, there has been a significant increase of starts over the past 12 months.  When compared to the same quarter last year, new home starts for detached product has shown a 123% increase, evidence that the market is improving as well as insight into the fact that a market with depleted inventory can and will warrant increased production.  Combined with the “borrow from the future” influence of the Tax Credit housing production was bound to increase. 

New home inventory for detached homes reached its peak of 9,375 homes in the 3^rd quarter of 2006, which translated to a 9.9 month supply.  In Salt Lake, Metrostudy considers new home inventory to be within equilibrium at a level of 6-9 months, so even at the peak, the Greater Salt Lake market exceeded equilibrium by only about .9 months, not too bad when considering the overall market conditions at that time.  Since that time, new home inventory has undergone steady depletion, and now sits at a 6.6 month supply, or 2,527 homes.  While the number of new homes under construction has increased only slightly compared to last year at this time, a modest 3%, an increase is still a step in the right direction.  The most notable change has been the 50% decrease in finished vacant home inventory over the past 12 months.  Finished vacant home inventory peaked in the 4^th quarter of 2007 at 2,986 and a supply of 3.5 months, however with the help of the Tax Credit and “Home Run” grants, there are now only 867 finished vacant homes on the ground or a 2.3 month supply, which is now back within equilibrium.  A diligent effort from the builders in the market to move this inventory has paid off. There are fewer “desirable” new homes available for the consumer to purchase, pushing builders to start the building homes to actual contract demand.

The attached home market (townhomes & condo’s) has lagged behind the detached market and inventory levels remain well above equilibrium levels.  New home inventory for attached units peaked in the 2^nd quarter of 2008 with 4,399 units, which was a 14 month supply; however with the slowdown in sales in the attached market, the supply has risen to a current level of 15.3 months, with 2,998 units.  Very specific insight into buyer preference for detached.

While the Greater Salt Lake market has in no way “recovered” from this housing and economic crisis, it is very much on the mend and continues to show many signs of improving conditions.  Score one for favorable equilibrium levels during a down cycle as silver lining for Salt Lake.

(Salt Lake City, UT—May 7, 2010) The housing market is improving in the greater Salt Lake area, according to a recent report by Metrostudy, a national housing data and consulting firm that conducts a count of 100 percent of all new housing units in subdivisions within the market area each quarter. During the first quarter of 2010, the Greater Salt Lake market started a total of 1,360 new homes, which is a 66% increase when compared to 1Q09, and an 8% increase from last quarter (4Q09).

New home closings totaled 1,327 during the first quarter of 2010, 19% fewer than last year at this time and 32% fewer than last quarter. “While closings have slowed in recent quarters, there is evidence that progress is being made on building new homes, which is primarily a function of the market becoming low on finished vacant inventory,” said Eric Allen, director of Metrostudy’s Salt Lake City division. “Buyers are being pushed into building a new home as there are fewer finished homes to choose from.”

Annual new home starts for detached homes have increased to 3,637, a 42% increase compared to 1Q09. “New home closings remain above starts, which has been good for reducing inventory,” said Allen. There have been 4,567 new homes closed over the past year, an 18% decrease compared to 1Q09, but only 2% fewer than last quarter’s annual pace.

Finished vacant home inventory has decreased 50% since last year at this time to a current level of 867 homes, a 2.3 month supply. “Detached finished vacant inventory in the Greater Salt Lake market is at record low levels which haven’t been seen since prior to 2005, which bodes well for new production,” said Allen.  Model home inventory has decreased 29% since last year to 206 homes.

“The attached market continues to face headwinds as financing for new projects becomes more difficult to obtain,” said Allen. Annual new home starts for attached housing has decreased 35% since last year at this time with a total of 1,598 units. Annual attached closings have decreased 22% since last year for a total of 2,355. Continuing the positive trend of detached homes, though, finished vacant inventory of attached homes has decreased 25% to 951 units, a 4.8 month supply.

Regarding lot inventory, only 635 new lots were delivered to the Greater Salt Lake market in 1Q10, compared to the 1,191 lots that were delivered last year at this time. Vacant developed lot inventory for detached homes has decreased 6% since last year, leaving a total of 24,609 lots on the ground, which translates to an 81.2 month supply. With a decrease in lot inventory and an increase in starts activity, the supply has decreased 41.6 months since the peak in 1Q09. Vacant developed lot inventory for attached units has decreased 6% from last quarter to 5,607. At the current pace of absorption, this equates to a 42.1 month supply.

“Perhaps the largest questions affecting the housing market and its recovery are the impact of foreclosures, job growth, and the effect of the tax credit expiring, which at this point cannot be determined,” said Allen.  “The homebuyer tax credit has generated some demand; however this may foreshadow the possibility of weaker than expected demand as buyers may have been stolen from the future. Even so, with finished vacant inventory and vacant developed lot inventory on the decline, and new home starts picking up, it appears that the Greater Salt Lake market is poised for a stronger recovery relative to other markets, due to improved underlying fundamentals.”