The Proverbial Crystal Ball

Many clients want us to be able to predict the future for them as it relates to their homes. This is a hard task to do. Who would have guessed the subprime market tumble would happen when it did? We had been concerned about it for quite a while, in fact Becca had even blogged about it on her personal blog back in 2005. But who knew it would happen exactly when it did. It could have been sooner, it might have been later, thats hard to tell.

Now people want us to be able to predict when the housing market will stabilize again, or when will we hit the bottom? Well, Forbes Magazine and Moody's Economy.com together are attempting to answer that.

By analyzing the country's "Census-defined metro areas--including metropolitan and micropolitan statistical areas--with populations over 500,000" they prepared forecasts through 2011. Then they compared them with prices in the second quarter of 2008, which were the latest figures available, to calculate how far prices will likely fall before reaching bottom or how far away they are before reaching a recovery.

Utah showed up in the report twice in the 25 Weakest Housing Markets. Provo ranked in the top 5 with a projected mid 2011 recovery and a drop of -33.9% in housing prices. Salt Lake City was also named with a projected early 2011 recovery date and a drop of 29.3% in housing prices.

While 2011 may seem surprising and still far away, especially considering that Moody's is predicting on average, the nation to recover by the end of this year it is important to remember that Utah typically lags behind the national trends. While the rest of the country had already begun their decline in home prices, Utah was still on the rise.

That being said, we believe this article is a little bit on the doom and gloom side of the equation. Even though Utah DOES lag behind the rest of the country we don't feel that the correction will be as drastic as it has been for some of the rest of the country. In Utah the brakes were put on earlier than a lot of the other markets who had several years of crazy appreciation.

In addition, Utah has had a strong economy and is projected to continue it's population growth. We do believe there is an over supply in homes priced above $250,000 and the greatest demand will be for homes near the $200,000 price point. In the past year we have already seen drops of 20-30% in the homes that are priced over $300,000. We feel that this is due to the fact that Utah Incomes don't currently support the number of properties available in this price range. Without the creative financing of 2006-2008 these homes just are not affordable.

The best advice in this market, is to make your decisions based on what you can afford and with a long term outlook. Don't purchase a home planning on selling it in 2-3 years and making a profit.


You can read the report and see who else was on the list here.