Midway through 2012, the National Real Estate Market continues its volatile state. The economy, which looked to be on the road to recovery, has slowed moving into the second half of the year. Weaker than expected job growth during the second quarter of the year has shaken consumer confidence and has had an effect on the housing market. Although the economy is not recovering at an ideal pace there are signs in certain segments and aspects of the housing market that are encouraging.
New home sales are a bright spot in the housing market. The National Association of Home Builders reports that in July builder confidence has risen by the largest one month gain in nearly a decade. Every region in the country witnessed an increase in builder confidence in July as buyers looked at the benefits of buying a new home while pricing is favorable and interest rates remain low. According to the Department of Housing and Urban Development sales of new, single family homes rose nearly 20 percent year over year in May. Additionally, the median value of new homes sold was $234,000 in May,which is an increase of 5.8 percent from May 2011.
Existing home sales are not fairing quite as well. One reason for the sluggish improvement of existing home sales is the fact that there is a large number of homeowners who are stuck with low or negative equity in their homes. According to market researcher CoreLogic, almost three in 10 homeowners with mortgages have no equity or less than five percent equity. These homeowners would have to write a check in order to sale their home under normal circumstances. The equity situation has also contributed to the decrease in inventory as potential sellers need to wait until prices improve before putting their homes on the market. Nationally there is a 6.6 month supply of homes for sale.
UTAH AS A WHOLE:
ACROSS THE STATE OF UTAH THE MONTHLY SUPPLY OF HOUSING INVENTORY is on par with the nation, but with a much more dramatic dip in the year over year inventory. In May 2012 there was a 6.9 month supply of homes in Utah. Compared to an 11.1 month supply in May of 2011, this is a significant 37.6 percent decrease in inventory in one year.
The drop in the housing inventory has had a positive effect on home pricing throughout the state. Two reports have Utah ranked very high in home price improvement. The Federal Housing Agency has Utah ranked number eight for home price appreciation, while CoreLogic ranks Utah number one, excluding distressed sales, with a 5.3 percent increase in pricing – they rank Utah number four when you include distressed properties. According to the Utah Association of Realtors April marked the first rise in the median sales price in Utah in four years. Sellers are also receiving 94 percent of listing price, the highest percentage since October of 2007.
Although inventory and pricing are improving in Utah, the foreclosure rate for the state still ranks very high nationally. Even though Utah’s rate of homes falling into foreclosure is on the down-turn, the state still ranks among the top 10 states with the highest rate of foreclosures. While nationally 1 in 126 homes is in foreclosure in Utah that number is 1 in 108. It is encouraging, however, that Utah’s foreclosure rate has fallen 42 percent from the first half of 2011, and has fallen 19 percent from the last half of 2011. The foreclosure market will continue to put stress on the Utah home market throughout the remainder of 2012.
PARK CITY CONTINUES A STEADY CLIMB BACK TO RECOVERY IN THE OVERALL ECONOMIC PICTURE. Job growth is picking up and expansion in certain industries is contributing to growth across the board including the housing market. Park City has received several national accolades, including most recently landing on Barron’s top 10 list of cities to buy a second home. This notoriety is bringing an increased number of potential home buyers to the area and helping to stabilize the housing recovery.
There are certain market segments and geographical locations that are performing better than others. For example, single family homes sales in the Park City city limits are up 18% for the first half of 2012 compared to 2011, whereas single family home sales in the Snyderville Basin are up only seven percent for the same period. Condominium sales in the city limits are down three percent while they are up 15 percent in the Snyderville Basin. This demonstrates the unevenness of the market. That being said, the Park City housing market as a whole is steadily improving and has been for the past few quarters.
This year started off a bit sluggish with sales in the first quarter down approximately 11 percent from the first quarter of last year. This was likely due to the lack of snow and the subsequently fewer visitors to Park City during our Winter months. During the second quarter, however, the numbers have picked up substantially and the market is now outpacing sales from 2011.
The number of active listings is sharply lower than it was twelve months ago. At the end of June there were 2,486 units on the market compared to 2,724 on the market at the end of June in 2011. Pended listings are up approximately 20 percent from where they were a year ago. The percentage of listings that are pended is increasing, showing that there is reason for optimism in the market.
The rolling total number of units sold over the past six months has stayed relatively stable with the exception of the dip in January and February. The six month total units sold in December 2011 and June 2012 was the exact same at 834 units. Comparing the total volume sold over the same period there was a significant increase, with total volume jumping from 500million the six months ending in December 2011 to 587 million in June 2012. This comparison of units sold and volume sold indicated that pricing has begun to recover and is moving upward.
The twelve month comparison of number of listings versus sold units is at the highest rate since February 2007. At the end of June, over the past 12 months, 44.48 percent of all listings were being sold. Listings in the area, as mentioned before, are down but the fact that this percentage is up over six percent points from a year ago is a good sign for homeowners looking to sell their properties. The absorption rate has remained stable over the past six months hovering between a 17 and 18 month supply of properties (includes all property types).
The sales price to list price ratio has remained stable for the first six months of 2012 holding right around the 95 percent level. During the same period the median home price in Summit and Wasatch Counties have maintained a steady price at near $515,000. During May and June, however, the median home price has moved upward to $540,000. Based on what we have seen with the number of listings and units sold we can expect to see home prices continue to move in a positive direction throughout the remainder of 2012.
Finally foreclosures and short sales are becoming less prevalent in the Park City market. Distressed properties in 2011 made up 27 percent of all sales. In the first and second quarter of 2012 that percentage has dropped to approximately 17 percent of sales. This is another indication that the overall market, as well as the local economy, are heading in the right direction as we move into the second half of the year.