Before we get alarmed… let’s look at some of the facts and compare today’s market to the market that we seen in 2008, when everything came to a head.
Real Estate Is Local
Keep something very important in mind, like the weather real estate is local and what is happening in Miami Florida, is not the same that is going on in your city or even neighborhood.
Two key metrics that is keeping a bubble from happening here in the Salt Lake area are affordability and foreclosure rates. First with affordability, People’s incomes have just not caught up with the rising prices of real estate here in Utah. Meaning large volumes of homes are not being bought up; in fact home sales are down by 6% for 2014 versus 2013.
Some cities like Austin Texas, Honolulu and San Francisco to name a few, are seeing higher median homes prices now, than when prices peaked during the 2005 to 2008 bubble.
What we are seeing here in Salt Lake County is about 5% below reaching the highest median home price that climaxed in the bubble going into 2008. Which at the time the median home price was at $268,900 and has of October 2014 median home price was at $255,000.
Low Foreclosure Rates
Several cities across the United States are experiencing higher than normal foreclosure rates on mortgages than were given out in 2014. Salt Lake area and Utah are not among these cities that are seeing a rise in foreclosure.
Loose Lending Practice
Another key factor is we don’t have the loose lending practices that actually help fuel the real estate market all across the country in past and helped lead to the bubble in 2008.
So are we heading towards another bubble? I believe some areas across the country may see a bubble due to homes are affordable, foreclosure rates are on the rise and the median homes prices are above what they were in 2008. But that isn’t the case here in Utah. Our foreclosure rate is low and unfortunately, home affordability is just out of reach for many which are keeping home sales down.
To those who have the income and credit to qualify, they can reap the benefits of very low interest rates and equity gains that will continue to increase slowly in the coming years.5 Things you should do in a multiple offer situation Salt Lake ranked #3 for homeownership New low down Utah mortgage program