NATIONALLY: The national housing market, although improving at a slow and steady pace, remains vulnerable, as the economy continues its sluggish rebound. Home prices continue to make improvements across the country, with certain regions recovering at a faster pace. CoreLogic, a housing market researcher, reported that home prices were up 4.6% in August, from a year ago. This increase is the largest year-over-year gain in six years. Prices, however, are still down between 25-30% from their 2006 peak, according to the report. Much of the increase in pricing can be attributed to the tightening supply of homes for sale. In August, existing home sales were up 9.0%, while the supply of listed homes for sale was down nearly 18%.
The increase in pricing is certainly helping owners regain or increase equity in their homes. This is causing a very positive movement in the housing market. In the first half of 2012, 1.3 million homeowners shifted from being underwater to having positive equity in their properties. This trend is helping many homeowners with the ability to refinance and take advantage of the near record low interest rates. It also allows those desiring to sell their homes the opportunity to do so without falling into the short sale pool, and to have more money for the down payment on a new home. Although more homeowners are moving to positive equity, there are still one in five homeowners owing on mortgages with balances greater than the market value of their homes.
One important sign of an improving market is the report from the National Association of Home Builders. The builder confidence index rose for the fifth straight month in September, to a level of 40 on the Housing Market Index. The three point gain in September raises the index to its highest level since June of 2006. The confidence level is up across all regions of the U.S., with the greatest increase in confidence in the western states. Tight credit is still limiting many builders on the size and scope of their projects and keeping others from starting new projects altogether. The overall outlook from builders is moving in a positive direction.
UTAH: The Utah housing market has experienced a positive swing in 2012, with improvement of both closed sales and median home prices. According to the Utah Association of Realtors, the state-wide year-to-date number of closed sales through September of 2012 was up 12.4% against the same period of 2011, while the 3rd Quarter number of closed sales was up 14.0%, compared to the 3rd Quarter of last year. At the same time, the median home price in Utah jumped 2.3% year-to-date over last year, and the 3rd Quarter price jumped a significant 7.5% vs. 3rd Quarter 2011.
Residential construction in Utah is showing improvement in 2012 as new housing starts are on the increase. From 2008 through 2011, new housing starts averaged between 5,000 and 6,000 units annually across the state. The current expectation for 2012 is between 7,000 and 7,500 new home starts, according to Utah’s Economy Report prepared by Commerce Real Estate Solutions. Utah ranks sixth nationally in the increase of new single family construction permits. Through September 2012, new single family building permits increased 38.4%. The uptick in new home construction is expected to continue to improve through the last quarter of 2012 and well into 2013.
The inventory for single family homes in Utah has seen a significant decrease from 3rd Quarter 2011 to 3rd Quarter 2012. In September of 2011, there was a 9.1 month supply of homes in the State of Utah. That number dropped to a 6.3 month supply by September of 2012, a 31.2% decrease in one year. The two contributing factors to this decrease in inventory are fewer homes being placed on the market and the increase in the total number of properties being sold.
Park City Area: The Park City housing market is on a solid base and has been moving forward at a steady pace for several quarters. All major indicators continue to point to a cautiously optimistic recovery. The local economy is improving and there is optimism that the 2012-13 ski season will be better that last year, with an increase in the number of visitor days through the season.
The number of active listings has remained relatively level throughout much of 2012, hovering in the 2,400 unit range. There have been slight bumps up and down over the past six months, but for the most part the number of active listings has remained constant. Pended listings have seen a slow and steady rise over the past 12 months. In September of 2011, there were 241 pended listings. That number reached 299 in September of 2012.
The total number of units sold for the rolling 12 month period continues to increase every month. The 12 months ending in September 2012 saw a total of 1,736 units sold, up over 7% from September 2011. This is also the largest number of units sold over a 12 month period since July of 2008. There was an even greater increase in the six month rolling number of units sold, indicating that sales are improving at a more rapid pace as time goes on.
In correlation with the number of units sold, the total sales dollar volume has also been increasing, however at a slower percentage rate than the units sold. The total volume sold over the 12 months ending in September was up 3% to $1.1 billion. The fact that the dollar volume is increasing at a smaller percentage rate than sales shows that home prices are lagging in their recovery, as compared to the actual number of units being sold.
The absorption rate is moving in the right direction for a market that is in recovery. At the end of 3rd Quarter 2012, there was a 15.54 month supply of homes, compared to a 17.84 month supply at the end of the 2nd Quarter of 2012, and a 19.94 month supply at the end of 3rd Quarter of 2011. The lower absorption number will have a positive effect on home prices moving forward, as fewer properties are available and demand increases. Related to the absorption rate is the number of listed vs. sold units. In September, 48.56% of all listed properties were selling, compared to 41.73% a year ago. The market has not seen this high of a percentage of listed properties sell since November of 2006.
The median sales price for a single family home has been fluctuating up and down for the past two years, ranging from $500,000 to $540,000. This variation is common in a resort community with large expensive homes that sell on a less frequent basis. When the median sales price drops in an area like Park City, it does not necessarily mean that values are decreasing. At this particular time, a drop in median price indicates there are a greater number of lower priced properties selling than the higher priced properties. Overall, individual housing prices in the market are improving.
Looking at Park City and Summit County real estate markets as a whole produces a feeling that the overall market is improving and doing so at a respectable pace. Home values are experiencing modest increases, properties are selling, and there is an optimistic view for the future. 2012 has been a good year for the real estate market in general, and will end in a positive manner, providing a solid foundation as we move into 2013.